“Private Equity Firms Are Acquiring Long-Term Care Insurance Policies. What Will It Mean For Policyholders?,” by Howard Gleckman, Forbes
“Some long-term care insurance companies are turning over their existing policies to private equity firms and other outside investors, a move that will wipe massive liabilities off their books but could put policyholders at risk. The problem: Unlike traditional insurance companies, private equity investors may be investing premiums in high-yielding but speculative securities such as junk corporate bonds. Such a step could boost their returns but, if the investments go bust, leave the firms short of assets to pay claims.”
LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):
As usual, this writer has the truth upside down and backwards. Private equity looking for opportunities in books of LTCI business isn’t a problem. It’s a solution; what’s left of a free market at work. The real problem is that there is not enough private equity in the universe to wipe the government’s gargantuan unfunded liabilities off the books.