Unum’s Northwind, Tailwind life insurance-linked securities have ratings affirmed


Ratings agency Moody’s have affirmed their rating on two life insurance-linked securitization transactions sponsored by Unum Group. Northwind was the first securitization of individual disability insurance policies issued back in 2007, while Tailwind was the first securtization of a defined block of long-term disability claims in 2006. The transactions were seen as a way to release excess capital within the Unum Group businesses in a similar way to embedded value life securitizations.

The Northwind transaction saw Unum securitize an $800m closed block of individual income protection life insurance through Northwind Holdings LLC. The Tailwind deal involved the securitization and issuance of $130m of disability claim reserve linked notes through Tailwind Holdings LLC.

Moody’s said that they were affirming the Baa1(sf) ratings of the insured life insurance-linked securities of Northwind Holdings, LLC, with a stable outlook, based on the performance of the transaction to date. Tailwind received the same assessment, with the ‘Baa1(sf)’ rating affirmed.

Moody’s Senior Vice President Scott Robinson commented regarding both the transactions; “The affirmation reflects deal performance in line with our expectations as determined by modeling of the reinsurance cash flows and the performance of the underlying invested assets.”

Moody’s noted that the underlying investment portfolio, which is primarily composed of investment-grade securities, has experienced relatively good performance during the recently unfavourable economic environment. They specifically cited the minimal amount of exposure to real estate-related structured finance securities within the assets and said that this has enabled the notes to avoid some of the investment pressures which other life insurance-linked securities have faced.

Northwind Holdings is the shareholder of Northwind Reinsurance Company (Northwind Re), a special purpose captive reinsurance company domiciled in Vermont and set up for the sole purpose of executing reinsurance agreements with Unum subsidiaries to facilitate the funding of capital supporting a closed block of both active and disabled life reserves.

Tailwind Holdings is the shareholder of Tailwind Reinsurance, Inc. (Tailwind Re), a special purpose captive reinsurer domiciled in South Carolina and set up for the sole purpose of executing a reinsurance agreement with Unum Life Insurance Company of America to facilitate the funding of capital supporting certain disability claim reserves.

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