Beginning March 29: To help insurance agents and financial advisors like you guide clients in making critical wealth, health and life decisions we will be moving our coverage from to

Our comprehensive coverage will help you expand your knowledge base and adapt a new client-centric approach that incorporates both insurance and investment solutions.

ThinkAdvisor’s new Life/Health channel is your roadmap to thriving in a disrupted environment.


Filed Under:Health Insurance, Ltci

AALTCI tries to explain effects of interest rates

The American Association for Long-Term Care Insurance (AALTCI) is working to educate the investment community about the effects of interest rates on issuers of private long-term care insurance (LTCI).

Jesse Slome, the group's executive director, recently used a blog on Motley Fool to spread the word about the relationship between interest rates and earnings on LTCI reserves.

U.S. interest rates have started to rise in recent months after falling to record lows.

Slome cited LTCI specialist Claude Thau's observation that a 1-percentage-point increase in rates generates $100 million in extra earnings on a $10 billion insurance company bond portfolio.

Six publicly traded insurers with large blocks of LTCI business on their books are using $41 billion in reserves to support that business, Slome said.

If rates go up 1 percentage point, the six companies would have $410 million in extra revenue.

If rates rise 3 percentage points, as some are predicting, the companies could add about $1.2 billion in new revenue.

"Obviously, added future earnings are only one aspect of ultimate income and profitability," Slome said.

But the possibility that rates could continue to rise is a reason for optimism about the future performance of LTCI, Slome said.

See also:

Featured Video

Most Recent Videos

Behind the scenes with Vicki Gunvalson [VIDEO]


In this exclusive interview, Vicki Gunvalson shares how she built a $15 million a year annuity business by planning for...

Regulator: Market may need to reinvent LTCI


Cioppa says Maine's governor wants to spur the creation of better products.

Dementia: It's more than Alzheimer's


An association calls for policymakers to remember lesser-known neurodegenerative conditions.

Protesters Disrupt WellPoint Annual Meeting


Hecklers call for more disclosures of information about political contributions.

Related resources

More Resources


Power your business with up-to-the-minute insurance news, analysis, and best practices from LifeHealthPro Daily eNewsletter – FREE.

Power your business with LifeHealthPro Daily eNewsletter – FREE.

Enter a valid email address.
Nichole Morford

Nichole Morford
Managing Editor

Thank you for subscribing to LifeHealthPro Daily!

Check Out More eNewsletters Now! Close

Advertisement. Closing in 15 seconds.