General Electric Co.’s bet on selling long-term care insurance policies meant to pay for nursing homes and prescription costs have become one of the most unpredictable segments of the insurance industry, ballooning into a $16.5 billion liability.
GE’s skyrocketing liability is but only one example of an industrywide lapse in judgment when assessing the future cost of such care, industry experts said. Prudential Financial Inc., which stopped issuing long-term care insurance in 2012, recorded a $1.5 billion charge related to its portfolio in the second quarter. Genworth Financial Inc., which is among the roughly dozen companies still offering this type of insurance, has incurred more than $3 billion in losses stemming from these plans.
GE in January reported a $6.2 billion charge linked to liabilities for long-term care insurance policies, which prompted federal regulators to expand a probe into the company’s accounting practices. The company has said it is cooperating with investigators.The Wall Street Journal