Several of the largest U.S. individual long-term care underwriters have experienced direct loss ratios of more than 200% on their oldest blocks of policies, according to analysis by S&P Global Market Intelligence.
Of the 10 largest direct underwriters, based on lives covered, of individual long-term care insurance, Unum Group's direct loss ratio of 266.4% on policies issued prior to 2003 was the highest. Regulatory filings show that Unum had almost 94,000 lives in-force as of year end 2020, with its Unum Life Insurance Co. of America affiliate accounting for roughly 87% of that total. The approximately 81,400 lives covered by Unum Life Insurance Company of America on its oldest block had an average policyholder attained age of 77 and nearly 40% of those customers were male.
In aggregate, the three Unum subsidiaries reported almost an additional 40,450 lives covered, with the vast majority coming from policies issued between 2003 and 2010. The direct incurred loss ratio for polices issued between 2003 and 2010 stood at 134.3. Policies issued after 2010 had a loss ratio of 58.3%.
Changes to regulatory reporting for year end 2020 required direct writers of individual LTC to break out experience into three primary issuing periods: prior to 2003; from 2003 to 2010; 2011 and later. The period splits can be based on the year individual policies were originally issued or based on the entire experience of a single LTC policy form. If the company is using the per-policy form basis, the year is selected based on when the majority of the policies were initially issued.
Genworth Financial Inc. reported almost 978,600 lives covered for its individual LTC business at year end 2020. Around 47% of the lives in-force are on policies issued between 2003 and 2010, which collected $1.19 billion in earned premiums and had $792.4 million of reported incurred claims.
For Genworth's block of policies issued prior to 2003, the insurer has roughly 296,600 lives in-force and a direct loss ratio of 234.4%. That block recoded $1.73 billion in incurred claims and only $737.2 million of earned premiums.
The remaining 222,025 lives in-force for Genworth are on policies issued after 2010. Those policyholders are 45% male and have an average attained age of 66.
Manulife Financial Corporation's John Hancock affiliates had 521,516 lives in-force as of Dec. 31, 2020, the second largest total of individual LTC policies among direct underwriters. Roughly 25% of John Hancock's covered lives are on policies that were issued prior to 2003, while 63.4% were written between 2003 and 2010. The remaining 11.2% were issued after 2010. The direct loss ratios on the three blocks of policies were 225.4%, 77.4%, and 18.7%, respectively.
John Hancock is followed by Northwestern Mutual Life Insurance Co. with roughly 260,100 in-force lives as of year end 2020. Northwestern Mutual has a relatively newer book of individual LTC compared to its larger peers, as approximately 62% of its lives in-force are on policies primarily issued after 2010. The mutual insurer only has about 9,800 covered lives on polices primarily issued before 2003.
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Direct loss ratios exceed 200% on some older blocks of individual LTC policies - S&P Global
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