CNO cedes $270 million Colonial Penn life reserves to captive

CNO Financial Group ceded about $270 million of inforce graded benefit life statutory reserves from Colonial Penn to its wholly owned Bermuda captive, CNO Bermuda Re, in a transaction that closed Oct. 1.

The Colonial Penn block is the third consecutive reinsurance transaction CNO has struck with the Bermuda entity, each covering a different product line and subsidiary, Insurance Business America first reported. A deal effective Oct. 1, 2023, moved roughly $6.2 billion of fixed indexed annuity reserves from Bankers Life. One effective Oct. 1, 2025, shifted $1.8 billion of supplemental health reserves from Washington National, with 50% of new supplemental health business ceded under the same agreement.

The captive structure frees capital because CNO Bermuda Re, operating under the Bermuda Monetary Authority, generally requires less capital against the same liabilities; the difference flows back to the holding company. CNO used some of that capacity for repurchases and dividends, buying back $60 million of stock in the third quarter at an average of $54.52, with $240.4 million of authorization remaining and $16.5 million of dividends paid.

CNO raised excess holding company cash flow guidance after the 2025 transaction, to $365 million to $385 million from $200 million to $250 million, attributing the revision to the Bermuda deal. The freed capital also funds TechMod, a three-year technology modernization program that cost $33.5 million through the first nine months of 2026 against a full-year budget of roughly $76 million.

Offshore cession is a sector-wide practice. US life annuity reserves ceded offshore have climbed to $1 trillion since 2017, with Bermuda the main destination, according to Moody's Ratings data. AM Best put Bermuda at more than 40% of total ceded reserves for US life-annuity writers by 2024.

The three CNO blocks were $6.2 billion, $1.8 billion and $270 million. CNO has not said whether a fourth block will follow.