NY Life

[2insureyou]

Please finish your sentence:

"I think NY Life will keep in-force rates intact because......."



No one is debating the balance sheets of NY Life or Mass Mutual. They are both very strong financial institutions. But, the decision to raise rates on existing LTC policyholders is not based upon the company's financial statement. It will be based on the profitability and claims experience of their LTC divisions.

Only a few years ago, the words "Rate increases on existing policholders" didn't exist (well maybe it did for Conseco & Penn Treaty).

It seems that claims experience & persistency is higher than anticipated and interest rates are lower than expected for every company on the planet. Why would NY Life & Mass Mutual not be faced with the same problems?

It will be based on both balance sheet and claims experience/profitability

They will be faced with the same problems as every other company, but to a lesser degree, as both of these companies made much better assumptions up front than almost every other company in the business.

The balance sheets of the respective companies can help them both weather and subsidize marginally poor returns or profitability on the LTC side of their business. Eventually, yes, all companies (even my prized nml MAY have to raise rates on inforce policyowners, but historically, even when things went terribly wrong in the DI marketplace (can of worms,I'm sure), Mass and NML were in a strong position and DID NOT raise rates on inforce clients, and NYL did what Guardian just did with LTC... got out of the biz, rather than raising rates (unless I've read my history wrong)

Maybe inforce rate increases are on the horizon for the "big 3 mutuals" maybe not, but to assume they will because everyone else has is absurd. No one knows. What we do know is NYL is raising rates on future policyowners to help offset problems they currently have. That's ALL we know about their plans for their LTC biz

 

[Arthur Rudnick]

They will be faced with the same problems as every other company, but to a lesser degree, as both of these companies made much better assumptions up front than almost every other company in the business.

You are correct...........
But, don't you think that carriers such as Prudential, John Hancock, Metlife and other major companies at one time also thought their actuarial assumptions were correct? Are the actuaries at NYL a whole lot smarter than their competition?
I don't think so. Do we know if rates will be increased? No we don't.

But, if history is any guide, wouldn't you agree that the potential for rate increases on existing policyholders for both NYL & NWL exists?

 

[VolAgent]

You are correct...........
But, don't you think that carriers such as Prudential, John Hancock, Metlife and other major companies at one time also thought their actuarial assumptions were correct? Are the actuaries at NYL a whole lot smarter than their competition?
I don't think so. Do we know if rates will be increased? No we don't.

But, if history is any guide, wouldn't you agree that the potential for rate increases on existing policyholders for both NYL & NWL exists?

I wouldn't say the actuaries at NYL and Mass are smarter than Metlife, John Hancock, etc., but I would say they are infinitely more conservative. It just happens to make them look smarter in instances like this as everyone was much too aggressive in their pricing assumptions.

Everyone liked to laugh at how Mass priced LTCi to have dividends in later years and avoid rate increases. Assuming they can at least avoid rate increases, their conservatism is making them look pretty darn smart.

 

[2insureyou]

You are correct...........
But, don't you think that carriers such as Prudential, John Hancock, Metlife and other major companies at one time also thought their actuarial assumptions were correct? Are the actuaries at NYL a whole lot smarter than their competition?
I don't think so. Do we know if rates will be increased? No we don't.

But, if history is any guide, wouldn't you agree that the potential for rate increases on existing policyholders for both NYL & NWL exists?

There is no question it exists, but as VolAgent went on to state, while their actuaries are probably not necessarily smarter, they do work within much more conservative guidelines & assumptions than anyone else in the industry.

NML, Mass, and NYL all have that whole "conservative, mutual" thing in common, and it has served them very well in recent years as interest rates have plummeted and stayed low...

And the benefit hasn't just been on one line of business, it's been across all major lines of "core" biz (life, di, ltc, and annuities)

However, even NYL has seen some issues with the interest rate environment on their ULSG (which I think they shut down, as a result)

NML's ULSG product (which we've been begging for, for years now) is crazy conservative compared to the rest of the market on assumptions.

When these three companies make the mistake of being too aggressive (which is rare) they typically try to correct that mistake on forward decisions, not existing clients.