GE says its reserves are enough, seeking premium increases

(Reuters) - General Electric Co said on Thursday it believed its current reserves for long-term care insurance policies were sufficient and that it was looking to further reduce insurance risk.

The Boston-based conglomerate said that it has achieved about $500 million worth of premium increases and is pressing for $1.2 billion in further increases to help stem losses on some 300,000 long-term care insurance policies, which cover such costs as in-home or nursing-home care.

GE shocked investors when it took a surprise $6.2 billion after-tax charge last year and began setting aside $15 billion - one of the largest such amounts ever - to cover the policies, which were underwritten more than a decade ago when actuaries did not yet know how costly the claims would become.

GE has since reduced its planned total for reserves to $14.5 billion by 2024 after completing an analysis of the policies. As a reinsurer, GE cannot ask for premium increases directly; it must rely on about 30 companies that underwrote the policies it holds to seek increases from regulators in the numerous U.S. states where the policies were sold.

GE also said it was putting more of its insurance assets into investments with higher yields. It said it currently invests about 2 percent of assets that way, compared with 12 percent for other insurers. It aims to lift that to 8 percent by 2024, it said.

GE’s target for new reserves amounts to about $55,000 per policy, in line with those of other long-term care insurers, according to an analysis for Reuters by Audit Analytics, an independent research company based in Massachusetts.

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For comparison, Humana Inc has set aside $77,282 per policy, while Unum Group has set aside $10,614, Audit Analytics said.

Reporting by Alwyn Scott in New York and Ankit Ajmera in Bengaluru; Editing by Bill Rigby, Saumyadeb Chakrabarty