Here's what Keefe, Bruyette analysts are telling investors about 3 big insurers' LTCI units...
1. Athene Holding Ltd.
Apollo Global Management LLC, a private equity firm, controls about 45% of Athene's shareholder voting power.
Keefe, Bruyette analysts say Athene probably won't be making LTCI deals on its own — because Apollo itself will do the variable annuity and LTCI deals.
If Apollo does make an LTCI deal, it might handle the LTCI claim liability risk while having Athene manage the asset investment job..
2. Prudential Financial Inc.
For Prudential, the main LTCI takeaway is that Prudential is hoping the $1.4 billion it recently added to its LTCI reserves will help it put LTCI reserving concerns behind it.
"Management stated that its comfort level on long-term care reserves is very high following the 2Q18 charge," according to the Keefe, Bruyette analysts.
3. CNO Financial Group Inc.
CNO's big Wilton Re reinsurance deal involved LTCI policies sold in and before 2003. CNO is comfortable with keeping the LTCI policies sold since 2003 on its own books and "is not targeting additional transactions at this point," the analysts write.
The analysts note that, based on public company accounting rules, the block CNO reinsured was actually generating a profit of about $20 million per year on $320 million in revenue. CNO reinsured the block to increase its flexibility, and because of concerns about what might happen to the block in the future.
CNO executives said that, once CNO completes the Wilton Re LTCI reinsurance deal, the company might acquire a financial services distributor, another life and health insurer, or a retirement savings platform.
Stand-alone long-term care insurance (LTCI) may still be in investors’ doghouse, but investors seem to be more interested in trying to make money on the doghouse.
Wilton Re recently agreed to reinsure a large block of LTCI policies from CNO Financial Group Inc.
An arm of HC2 Holdings Inc. has completed efforts to acquire an LTCI unit from Humana Inc.
Fitch Ratings hinted that life insurers might be able to make more LTCI deals if they would tell the public how their LTCI units are really doing.
Analysts from Keefe, Bruyette & Woods, an investment bank, recently gleaned a few more details at an insurance conference they held in New York.
(Related: Wilton Re Picks LTCG to Help It Manage CNO Policies)
The details matter, because many life and health agents have spent years learning how to sell LTCI, and why to sell LTCI. They may be counting on commission streams from their books of LTCI business, and they know that access to LTCI benefits may make the difference between clients barely getting by later in life and those same clients continuing to live with dignity, and in comfort.
Life and annuity products that offer long-term care (LTC) benefits and related benefits now generate far more total premium revenue than stand-alone LTCI, but advocates for stand-alone LTCI contend that high-quality stand-alone LTCI can generally do the most to maximize an insured’s protection against catastrophic long-term care costs.
For a sampling of the Keefe, Bruyette analysts’ LTCI insights, see the idea cards in the slideshow above.
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