MetLife's exit from LTC a positive for carrier: Moody's

MetLife Inc.'s decision to stop writing new long-term-care insurance should be viewed as a positive event, according to Moody's Investor Services. MetLife's announcement last Thursday that after Dec. 30, it will no longer accept applications for individual LTC coverage — or allow new enrollments in existing group and multilife LTC policies — is yet another sign of LTC's “unfavorable risk profile,” Neil Strauss, vice president and senior credit officer at Moody's, said in a report today. More policyholders than expected are holding on to their LTC policies, resulting in higher numbers of claims, Mr. Strauss wrote. At the same time, low interest rates are suppressing the reinvestment income insurers expected to get when they initially priced the policies, he wrote. At MetLife — the fourth-largest provider of LTC in terms of covered lives — long-term-care insurance accounts for less than 3% of the company's financial profile in terms of reserves, premiums and earnings, according to Mr. Strauss. In the report, he wrote that he doesn't expect the in-force block to create material losses for the insurer's overall earnings, and he noted that MetLife can ask for rate increases from regulators if claims go over expected levels. That approval may not be easy to get. “Regulatory approval is never a certainty, and the connection with senior citizens heightens the issue's sensitivity,” Mr. Strauss noted. “Most likely, these considerations were also factored into the decision to discontinue sales of the product, much like other companies that have curtailed or exited the business in recent years.” A call to Karen Eldred, a MetLife spokeswoman, was not immediately returned.