Insurers talk about LTCI reserves

Executives at Unum Group Corp. (NYSE:UNM) and MetLife Inc. (NYSE:MET) say their companies may need to increase the level of reserves supporting closed blocks of long-term care insurance (LTCI) business.

Securities analysts at Sterne Agee have discussed the LTCI reserve moves in investor day reports.

John Nadel, one of the analysts, writes in a note on Unum that Unum may increase the LTCI reserves it holders under Generally Accepted Accounting Principles (GAAP), or the accounting rules that apply to all public companies, by about $600 million to $800 million this quarter. That would increase Unum’s LTCI reserves by about 7.5 percent to 10 percent, to a total of $8 billion.

The main driver of the reserve increase is the persistence of very low long-term interest rates, Nadel says.