Insurance Business Transfer – LTC Solvent Run-off Facility

Insurance Business Transfer – LTC Solvent Run-off Facility

A proven business model that can be used to form a Long Term Care Runoff Facility

Regulator Presentation

November 2017

Long Term Care Legacy Liabilities

An industry in crisis?

  • The insurance industry is faced with major challenges associated with long term care (LTC) legacy liabilities.
  • There is a crisis of confidence in the LTC industry among all constituents, including policyholders, regulators, investors, companies and reinsurers.
  • There is increasing concern about the reserve position of the LTC industry.
  • There have been transactions (proposed and executed) where companies are working to find ways to wall off their LTC liabilities under various structures including sale to firms with minimal financial support.
  • The Penn Treaty liquidation has had a major impact on the industry. Policyholders are losing benefits and there continue to be significant rate increases.
  • FIO is convening meetings on the “LTC crisis”
  • NAIC president Ted Nickel referenced the “LTC crisis” in recent talks.
  • The increasing demand for premium rate increases from a senior population that is confronted with major uncertainties about its coverage and premium charges, as well as the limitations of fixed incomes, exacerbates the situation.
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