Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance > Life Insurance Strategies

Here's What You Could Do to Learn LTCI Issuer Secrets

Your article was successfully shared with the contacts you provided.

An insurance rating analyst has an idea for what investors — and other people, including insurance agents and brokers — could do to get some of the information that long-term care insurance (LTCI) issuers are giving state insurance regulators: Ask the issuers the same questions the regulators are asking.

(Related: AG 51 Gives State Regulators a Window Into LTCI Issuer Finances)

Douglas Meyer, a managing director at Fitch Ratings, talked about that idea Tuesday, at an insurance conference, in New York, that was organized by Fitch.

Many of the people in the audience were institutional investors.

A multi-state team of state insurance regulators is now asking LTCI issuers to give detailed information about their LTCI operations in Actuarial Guideline 51, to help the regulators understand how the issuers’ overall books of LTCI business are doing.

States are keeping the AG 51 filings confidential, Meyer said.

But nothing can stop the investors from getting a copy of AG 51 and asking insurance company executives questions based on those guidelines, Meyer said.

The August Analysis

Meyer was moderating a conference session on the health of LTCI issuers.

The issuers have written policies promising access to hundreds of billions of dollars in LTCI coverage to millions of people. Some analysts have predicted that the insurers will need

Anthony Beato and other Fitch analysts concluded, in a report issued in August, that some issuers appear to have more and better capital supporting their LTCI obligations than others do.

Beato said analyzing issuers’ performance is complicated, partly because issuers sold most of the LTCI policies in force years ago, when the consumers were much younger. Up till now, he said, claim volume has been relatively light.

“It just starting to hit the peak,” he said.

Beato said he feels better about an LTCI issuer when it shows more experience data, uses what appear to be reasonable investment yield assumptions, and includes a relatively low level of future rate hikes that have not yet been approved in performance projections.

Issuer Communications

Andrew Kligerman, a managing director at Credit Suisse Securities, has also published a review of LTCI issuers’ health.

He gave Ameriprise Financial Inc., Unum Group and General Electric as examples of companies that were especially easy to work with.

An accountant who said that he might make money if General Electric’s share price went down contended in an analysis released last year that General Electric’s LTCI reinsurance business appeared to have a high level of poorly disclosed or undisclosed reserving holes.

“We did a lot of work with them,” Kligerman said. “They were very open.”

Kligerman suggested that, when LTCI issuers aren’t being open, the LTCI rate increase requests they file with state insurance regulators can sometimes be a good source of information about what’s really going on.


The direct LTCI writers have had a hard getting reinsurers to take responsibility for unwanted LTCI business off their hands.

Matthew Morton, a principal consulting actuary with Long Term Care Group Inc., an LTCI program administrator and consulting firm, said he has seen a number of proposed deals being considered.

One challenge is that the deals are complicated, and another is that reinsurers are more comfortable with assuming responsibility for the interest rate risk inside LTCI blocks of business than for assumptions about what the claims will be like, or for assumptions about how easily state insurance regulators will approve LTCI rate increase requests, Morton said.


The NAIC’s AG 51 document is available for sale here, in the publication ”Accounting Practices and Procedures Manual.”

— Read Fitch: Some LTCI Issuers Look a Lot Better Than Others, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on FacebookLinkedIn and Twitter.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.