You are betraying your whole life, if you don’t say what you think and you don’t say it honestly and bluntly.
Charles Krauthammer
As we look into the rearview mirror of the first quarter 2020, what did we see?
Well, we saw Genworth stock fall 3.9% as Q4 earnings missed analyst estimates and as its pending merger with China Oceanwide which they agreed to in 2016 drags on.
Although the two companies had received approvals from all necessary US Regulators for the deal earlier in 2019, the approval of the New York Department of Financial Services had expired, once again putting the deal in question.
Genworth’s CEO tells investors that the company is prepared to walk away from its pending merger with China Oceanwide if the New York Department of Financial Services fails to approve the deal by March 31st.
March 2, 2020
Announced that Genworth and China Oceanwide had reached an agreement in principle with the State of New York.
March 23, 2020
Genworth and Oceanwide remain committed to the transaction and continue to work towards closing the merger as soon as possible. As a result, the two companies are discussing a short extension of the merger agreement beyond the current deadline of March 31st.
March 24, 2020
Genworth Financial (GNW) jumps 15% in pre-market trading after New York Department of Financial Services re-approves Oceanwide Holding Group’s proposed acquisition of Genworth.
April 1, 2020
Genworth has been informed by Oceanwide that the previously disclosed financing Arrangement between Oceanwide and Hony Capital for 1.8 billion has been successfully extended to June 30th 2020. (The 14th merger extension since 2016).
Genworth and Oceanwide will remain committed to the transaction and are still targeting closing towards the end of May, if feasible.
However, given the unprecedented market disruption due to the Coronavirus pandemic, Oceanwide and Genworth previously extended the deadline to no later than June 30th 2020 to provide the parties with additional time if needed to close the transaction.
Keep our fingers crossed!
Just when you thought it was safe to go back into the water!
CNA, Genworth, MetLife/Brighthouse, just to name a few LTC insurance companies, have sent out letters to all their existing policyholders regarding Penn Treaty premium surcharges.
Back to the Future | March 2017
Penn Treaty Network America Insurance Company and its wholly-owned subsidiary, American Network Insurance Services Company, were placed in liquidation by orders of the Commonwealth Court of Pennsylvania due to financial difficulties.
All companies writing health insurance business, including Continental Casualty Company, a CNA Insurance company, are required to participate in the Life and Health Insurance Guaranty Association of each state.
If a company writing health insurance becomes insolvent, the Life and Health Insurance Guaranty Association of each state settles unpaid claims and assesses each insurance company for its fair share. The state of California, under section 1067.08 (j) of the California Insurance Code, allows all companies assessed a fee to surcharge policyholders to recover the assessments.
February 2020
According to Brighthouse Financial, they state California law allows all companies to surcharge their health policies to recover these assessments. The surcharge is not a premium under California law. Payment or non-payment of the surcharge will not affect the status of your policy with Brighthouse. Additionally, the surcharge is not connected to any premium rate change notices you may have received.
This exact same paragraph is in the Genworth notice, so here are a few questions that are above and beyond the announcements:
- Since the Life and Health Insurance Guaranty Association of California is requiring all companies writing health insurance in California to assess these surcharges, does this apply to hybrids? Does it apply to 101g’s? Does it apply to 7702b’s? or does it not apply at all to these products?
- In the Brighthouse in Genworth announcements, it says that “payment or non-payments of the surcharge will not affect the status of your policy.” What if I choose not to pay? If I choose not to pay, what course of action could the company take?
- Could the company choose not to levy the assessment on the policyholder?
- What about the SHIP trust? What impact will that have on future charges from any company?
On February 3, 2020, the Pennsylvania Department of Insurance announced the Senior Health Insurance Company of Pennsylvania (SHIP) placed in Rehabilitation.
On March 1, 2019 SHIP filed their statutory annual financial statement with the Department of Insurance and Pennsylvania, reflecting a surplus deficit of more than $466 million, rendering the company statutorily insolvent.
Also, the company’s most recent risk-based capital report indicates that its’ total adjusted capital is substantially below its mandatory control levels, thereby triggering a mandatory control level event the company is not able to develop a corrective action plan to remedy their conditions there for ship is being placed into rehabilitation.
Rehabilitation is a court-supervised process intended to remedy the company’s financial deterioration for the benefit of policyholders and creditors.
Some of you may be asking yourself, “so what?” to all of this.
- How does this impact my clients?
- How does this impact me?
Well, for many of our students who have been taking their LTC Insurance and or California Partnership training from us since 1994, you may remember American Travelers Life, Transport Life, Pioneer Life, JC Penney Life, Jefferson National Life and Continental Life.
All of these companies were merged into Conseco Senior Health Insurance Company (CSHI) as of August 1999, becoming the largest LTC Insurance company through acquisitions in the country. The common denominator among all these carriers include high commissions, low rates, substandard underwriting and rich benefits.
Just like Penn Treaty Network America.
So, needless to say, the implication here is insolvency. What will it mean to the various states that allow these companies to do business in their states as well as the implications to the guaranty funds of those states.
Stay tuned, because this will be big!
Please see the links that we have provided for our students who may have sold the LTC Insurance policies of these companies
Watch for our follow-up article regarding this event titled, “LTC Insurance and the Cost of Goods.”
Learn more about this and many other issues and opportunities regarding LTC insurance in California.
Register for our new and updated LTC Insurance/CTQ 8 Hour CE Webinar and our new California Partnership 8 Hour CE Webinar program, hosted by me, Tom Orr!
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