GE expects $1.7 billion in rate increases for long-term care policies

The announcement comes a year after GE said it would need to inject roughly $15 billion to shore up its long-term care reserves

Mar 7, 2019 @ 2:37 pm

By Greg Iacurci

General Electric expects to institute $1.7 billion in premium increases for its long-term care insurance policyholders over the next several years, the company said Thursday, making it the latest of several insurers to raise premiums for customers as they contend with market forces making the insurance costlier for them to underwrite.

GE will institute the premium increases through 2029. It has 274,000 in-force long-term care policies on its books, all more than a decade old.

State regulators have already approved $500 million of the increases, which haven't yet been implemented. The remaining $1.2 billion have been filed with regulators or are expected to be filed in the future, GE disclosed in an investor presentation.

The disclosure follows GE's announcement last year that it would need to inject $15 billion into reserves over a seven-year period to shore up its long-term care business, a revelation that sparked an investigation by the Securities and Exchange Commission. (The company has since revised that figure to $14.5 billion.) At the time, GE also disclosed a separate $6.2 billion after-tax charge against earnings related to long-term care insurance.

GE holds a substantial legacy LTC business through a subsidiary, North American Life and Health Insurance, which covers costs related to nursing-home stays, assisted living and home health care via reinsurance transactions with other insurers. GE stopped underwriting LTC policies in 2008.

The company acquired these reinsurance obligations after spinning off Genworth Financial Inc. in 2004 and selling Employers Reinsurance Corp. to Swiss Re in 2006. In these transactions, GE retained the LTC liabilities of Union Fidelity Life Insurance Co. and Employers Reassurance Corp.

GE has $20 billion in reserves to cover future long-term care claims for the more than 340,000 people covered by its insurance policies.

GE and other insurers say premium increases are justified given a number of economic challenges, such as a prolonged period of low interest rates, longer lifespans and increased health-care costs. Many insurers also made some faulty actuarial assumptions, such as overestimating the number of policyholders who would lapse their policies over time, according to experts.

GE has a high proportion — 76% — of policyholders on its books who are still making premium payments. Its average policyholder is 77 years old.

0
Comments

What do you think?

View comments

Most watched

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Events

Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Latest news & opinion

This strategy can double your estate-tax exemption

'Portability' allows a surviving spouse to tack the decedent's exemption on to his or her own. Despite the higher threshold for paying estate taxes in the 2017 tax law, experts recommend filing for the benefit.

Couple in Morgan Stanley advisory account wins $519,000 arb case over unsuitable investments

Plaintiff's lawyer says junk bonds, futures contracts and derivatives were inappropriate for his clients.

The growth of factor-based investing

Advisers are making decisions about clients' portfolios by using the same characteristics that govern factor-based ETFs.

Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.

LTC insurer offering co-pays to blunt soaring premium increases

John Hancock policyholders would get a discount on their premium in return for agreeing to pay a bigger portion of their claims in the future.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print