LTCI Watch: Investors

By Allison Bell

Commentary January 12, 2015 at 02:23 AM

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Wall Street is skeptical of companies that have any long-term financial commitments right now, and, clearly, stand-alone long-term care insurance (LTCI) has investment flu – or, perhaps, investment leprosy.

Being a hacker or a sea pirate might have a little bit of wicked glamor. Saying that your company has a large legacy block of LTCI business has no glamor whatsoever.

Investors view large legacy block of LTCI business the way…home buyers would have viewed a large, smelly, pest-infested brownstone rowhouse in Brooklyn's Park Slope neighborhood in 1990.

Many fine, upstanding people were still fleeing Brooklyn at that point. But real investors who had the cash, foresight and patience to buy a black hole brownstone and fix it up were richly rewarded for the gambles they made.

I think blocks of legacy LTCI business will probably be the rehab specials of the 2010s.

Real estate buyers knew Brooklyn brownstones were a good gamble because, at some point, if capitalist civilization as we knew it continued, the New York job market would have to improve, and people would want to live near their jobs.

Well-heeled buyers of blocks of LTCI business may see that, at some point, if capitalist civilization as we know it continues, interest rates will shoot up and turn what look like financial haunted houses into designer showcases.