Metlife Exiting LTC
- Thread starter briangruss
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- long term care
- 15,041
You seriously overestimate corporate executives. They are human just like the rest of us, and constantly make mistakes.
Also, the rate increases due to unexpected claims and lower than expected lapse rates doesn't mean the regulators didn't know what they were doing. It meant that this is a new product that no one properly understood. This wouldn't be the first time regulators got caught with their pants down.
Contrary to what most people think, there are no great conspiracies. Life is generally just a series of small decisions that lead to great consequences.
No one understood this product when it came out, and it looks like the actuaries still don't understand it. LTCi is under similar pressures to Medicare and health insurance. We continue to develop new techniques to rearrange the deck chairs.
I believe a fair comparison to LTCi would be the asbestos debacle. Tons of policies were written in the 30s, 40s, 50s, 60s, 70s, and 80s that covered this risk. However, they were not aware of the health effects and the impact they would have. Look it up, it destroyed Lloyd's of London. It had to be rescued and isn't your grandfather's Lloyd's of London. They've been writing insurance longer than we've been a country. Something tells me they know as much if not more about risk that our insurance departments. If they could misprice risk that greatly, so can our insurance departments and insurance companies.
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I guess Never a Dull Moment was allergic to logic and decided to take his toys and go home.
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- 1,271
I agree. The powers-that-be are much more clueless than we imagine.
- 10,330
It looks like it.... and just when I was about to pick his posts apart....
(apparently using this smiley face means that I am ignorant)He has really shown his professionalism here today....
It seems that logic eludes that guy along with civility.
Its sad when all someone does is make disparaging remarks about others and their viewpoints instead of logically debating a subject.
But when that happens it usually means that the person has run out of logic and is forced to resort to lesser means.
Whats ironic is that earlier this year he got all fussy about someone else making disparaging remarks about him; he actually took his personal/business info off of the site because of it, along with making a big deal to management I believe.
But if anyone actually believes that a company would stop sales because they were making money needs to go back to business 101.
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- 15,041
Exactly. Met just bought ALICO from the Treasury, courtesy of AIG. They are not hurting for capital for expansion and new business. They wanted to get out of a losing proposition before it got any worse.
Not only that, but the institutionals would have hung management from the flag pole if they discontinued sales of a profitable business line.
- 10,330
What's sad is that he could have turned this thread into a professional, logical, and informative discussion about LTC.
Instead he goes the other route..
He does know a good bit of technical info about the products and its variances between carriers.
Unfortunately anytime someone says something bad about LTC or says something he doesnt agree with he just goes into bashing mode against them and says how stupid they are.
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Yeah, I hadnt even had a chance to get to that aspect of it yet.
We forget that they are a publicly traded company along with JH.
They are required to disclose projections, losses, and gains in their quarterlies. Its public knowledge unlike at the mutuals were it is not.
Not only management, but the entire board would be gone if they discontinued a profitable business line.
At the same time they would be strung up if they didnt discontinue a line of business that they were loosing money on.
As a publicly traded company they have a duty to shareholders to disclose all of this info as soon as it comes to light, then act on it accordingly.
They would be facing tons of lawsuits if they did not.
Instead he goes the other route..
He does know a good bit of technical info about the products and its variances between carriers.
Unfortunately anytime someone says something bad about LTC or says something he doesnt agree with he just goes into bashing mode against them and says how stupid they are.
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Yeah, I hadnt even had a chance to get to that aspect of it yet.
We forget that they are a publicly traded company along with JH.
They are required to disclose projections, losses, and gains in their quarterlies. Its public knowledge unlike at the mutuals were it is not.
Not only management, but the entire board would be gone if they discontinued a profitable business line.
At the same time they would be strung up if they didnt discontinue a line of business that they were loosing money on.
As a publicly traded company they have a duty to shareholders to disclose all of this info as soon as it comes to light, then act on it accordingly.
They would be facing tons of lawsuits if they did not.
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- 15,041
Everyone has their quirk, I guess it is his.
I go back to my earlier statement. I think LTCi has the potential to be to American insurers what asbestos and other environmental risks was to Lloyd's of London. Companies that continue to write LTCi with no regard to rising claims experience are in for a world of hurt.
The statistic is what, 1 in 3 seniors will need at least 6 months of LTC? There is definitely a need, but what premium do you need to pay for that risk?
germanwine1
Super Genius
- 112
Amen VolAgent
The cost of LTC is extremely costly now and heading towards astronomical with the aging of many babyboomers will be intesting to see how it plays out.
The cost of LTC is extremely costly now and heading towards astronomical with the aging of many babyboomers will be intesting to see how it plays out.
There is much more to come of these types of announcements. A long time ago on this board, I described how the large LTC companies, Genworth, being one of them, were facing major headwinds in their in regards to their LTC business. I was called every name in the book, and told of how ignorant I was of the business. But I know like many, that these companies are walking zombies, and wrote all the business that they could, without any regard to actually having to pay massive claims in the future. For one, they were pricing their product way too low, and thought they could "grow" their way out of trouble, and just throw capital at the problem. The next step was to start pricing new products more in line with the actual risk, and then attempting to keep the existing block pricing intact. And now we are at the point where we either have rate changes on both new and old business, or some carriers exiting the business altogether. Along with the stock market follies of the past ten years, two major events happened that turned the LTC world upside down. 1. Somewhere around 2006, the number one claim for LTC went from stroke (somewhat easy to model for an actuary) to dementia and related illnesses (extremely difficult to model) and 2. The unprecedented rise in health care costs, which by some measures is outpacing inflation by 2-3%. When you factor in the difficulties of the equity market and combine the other 2 issues, it becomes difficult for a company that writes a significant amount of LTC insurance to price their product appropriately. The fact is that MetLife saw what was coming down the road, and didn't want any part of it. There is no way that a stock insurance company is going to be able to stay in this business long term, because at some point the claims are going to start piling up and ratios are going to get thinner, and Wall Street is going to balk. People can harp all they want about how I am wrong, etc etc, but the fact is that the math is not there, and it hasn't been for quite some time.
Although it really is a tangential issue, it is not uncommon for a business to exit a marginally profitable business and redeploy their resources in areas where they expect to get a better return. GE is famous for exiting lines of business where they cannot be #1 or #2. They also have used stringent return on investment analysis to evaluate existing and potential businesses.
Having said all that, it is troubling to see these latest reports from MetLife and JH. There is nothing yet to indicate that we are anywhere near the bottom.
The increasing longevity over the years causes us to see an increasing number of Alzheimer's cases. This has been coupled with the fact that the market in health care and long-term care doesn't work to keep costs and prices in line with inflation.
All of this does look bad for the future. I have been hoping for a real break-through in Alzheimer's for years, if we could somehow get a real break-through in prevention, then the need for LTC could drop and claims experience would get better.
It may happen in my lifetime, but with my luck I may not be aware that it is happening.....
Having said all that, it is troubling to see these latest reports from MetLife and JH. There is nothing yet to indicate that we are anywhere near the bottom.
The increasing longevity over the years causes us to see an increasing number of Alzheimer's cases. This has been coupled with the fact that the market in health care and long-term care doesn't work to keep costs and prices in line with inflation.
All of this does look bad for the future. I have been hoping for a real break-through in Alzheimer's for years, if we could somehow get a real break-through in prevention, then the need for LTC could drop and claims experience would get better.
It may happen in my lifetime, but with my luck I may not be aware that it is happening.....
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