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

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 07, 2019

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.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.