HC2 Completes One LTCI Deal, Seeks More

Kanawha

Humana — a Louisville, Kentucky-based health insurer — acquired Kanawha's parent, KMG, in 2007, when life insurers still thought that interest rates would go up and help improve the performance of blocks of old LTCI business.

Humana paid $188 million for KMG at the time and assumed $50 million in debt. KMG then was providing medical stop-loss arrangements, or insurance for health plans, for about 473,000 self-insured employer health plans, in addition to the LTCI business.

KMG executives said at the time that they believed the LTCI block was performing well.

Kanawha now has about $2.4 billion in cash and invested assets, about $160 million in statutory total adjusted capital, and about $150 million in statutory surplus, according to HC2.

HC2 says in a report filed with the U.S. Securities and Exchange Commission that it has agreed with South Carolina regulators to move the official regulatory home of Kanawha to Texas, from South Carolina, and to merge Kanawha with and into Continental General.

HC2 says it also has agreed to keep Kanawha's risk-based capital ratio to at least 450% for the required level for two years.

HC2 says it agreed separately, with Texas regulators, to keep Continental General's risk-based capital level at 450% of the minimum for at least two years, and then at 400% for the following three years.

LTCI Deals

Wilton Re, a U.S. reinsurance affiliate of the Canada Pension Plan Investment Board, agreed Aug. 1 to assume responsibility for a block of about 87,000 old LTCI policies from CNO Financial Inc.'s Bankers Life and Casualty Company unit.

A few days earlier, analysts at Fitch Ratings had hinted that they might know about more LTCI risk transfer deals in the pipeline, by suggesting that LTCI issuers could make more LTCI risk transfer deals if they give more information about how their LTCI businesses are performing.

Impact on Agents

LTCI policyholders could see changes in mailing addresses and, possibly, service levels when Continental General takes charge of the old Kanawha LTCI policies.

In theory, the idea that buyers for LTCI issuers and old blocks of LTCI business could help improve the overall state of the stand-alone LTCI market, by giving direct writers a sense that issuers can move ahead with resolving problems with old blocks of business and, possibly, arrange for new reinsurance more easily for any new LTCI coverage they sell.

— Read HC2 Still Wants Long-Term Care Insurance Blocks), on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on Facebook and Twitter.