More than half of Bankers Life & Casualty Co.'s individual long-term care policy forms entered the market for the first time before 2003, according to a review of regulatory filings.
A company spokesperson for CNO Financial Group Inc. confirmed that its Bankers Life subsidiary had agreed to cede all its legacy comprehensive and nursing home long-term care policies first issued prior to 2003 to Wilton Reassurance Co. The transaction is subject to regulatory approval, but is expected to close prior to the end of the year.
Prior to the deal's announcement, Wilton Re was mentioned as a potential suitor to reinsure or acquire legacy blocks of long-term care business. Per terms of the transaction with Bankers Life, Wilton Re will form a domestic trust to hold assets backing 100% of the statutory liabilities, plus an additional $500 million of over-collateralization that will decline over time. The domestic trust will have rigorous investment standards with reporting and oversight obligations, CNO Financial executives said during a second-quarter earnings call.
CNO Financial CEO Gary Bhojwani said on the call that executives are "very, very comfortable" with the remaining blocks of long-term care policies in the company's book.
"There are certainly no compelling force to part" with the polices issued between 2003 and 2008, Bhojwani said, according to a transcript of the remarks, and business after 2008 is profitable. The CNO Financial executive did not, however, rule out additional transactions in the future.
As of year-end 2017, Bankers Life policy forms that were first issued before 2003 have a combined loss ratio of 157%; forms issued in 2003 or later have a combined loss ratio of 38.3%.
Click here for a template featuring life insurance companies reinsurance statement. Template includes Schedule S, Part 1, Sections 1 & 2 and Schedule S, Part 3, Sections 1 & 2 summary and relationship detail formatted to the order and categorizations as filed in the statutory statement.