GE to End $2.5B Long-Term Care Insurance Reinsurance Arrangement
The company reported then that Employers Re and an Employers Re subsidiary, Union Fidelity Life Insurance Co., had $30 billion in policy benefit reserves and claim reserves, or about $77,000 in reserves per person, backing long-term care insurance coverage for 342,000 people.
The American Association for Long-Term Care Insurance estimates that 7.5 million U.S. residents had long-term care insurance in 2020. GE may provide long-term care insurance coverage for about 4.5% of those people.
The company ended the first quarter of this year with $2.5 billion in claim reserves for insured events from prior years.
GE posted the 2019 teach-in presentation partly because of investor questions about a 2018 Kansas insurance regulator requirement that the company add $15 billion to long-term care insurance reserves. Since the Kansas department set that requirement, GE has added $11.4 billion in capital to the insurance business, and it expects to add an additional $3.6 billion by the end of 2024, the company said.
The Reinsurance Recapture
GE did not give many details about the move to terminate the reinsurance deal, but it said in its annual statement for 2021 that it had classified $2.7 billion in reinsurance recoverables as assets.
The company recorded an allowance for possible credit losses in connection with another $1.65 billion in reinsurance.
The company is increasing its allowance for credit losses on reinsurance recoverables by $400 million in connection with the new reinsurance recapture.
GE could recoup some of the losses recorded over time, as the investment securities in the recaptured portfolio mature, the company said.
The GE insurance business had a net loss of about $250 million in the third quarter, but it would have earned about $80 million without the charge related to the reinsurance capture, Happe said.
GE did not name the reinsurer involved with the recapture.
A 2020 financial statement for Employers Reassurance Corp., GE’s main long-term care insurance providers, shows that LifeCare Assurance Co. provides $2.7 billion of the $2.8 billion in accident and health reinsurance that Employers Re has been using.
Carolina Dybeck Happe. (Photo: General Electric)
