About long-term care insurance company financial strength?

Question

Hello,

I have long-term care insurance with Penn Treaty Network America insurance company.

Just found out that they have a B-minus financial strength rating.

Is B-minus "bad"? Are there stats concerning the failure rate of B-minus companies over the course, say, of 20 to 30 years?

Does anyone know how long they've been B-minus? What's it take for an insurance company to improve their rating? Where can I find this sort of information?

Thanks!

Answer 1

www.ambest.com is going to have a lot of financial rating info.

I won't sell a policy with a company that's a B-.   For one thing, my errors & ommissions coverage won't cover me, for a low rated company.  For another, the last carrier I had, that had a rating drop that low, DID go out of business, within 18 months of getting that B- rating.  

I don't know of any stats, but I'd be looking pretty hard at switching to a different carrier.

Answer 2

B- is not good-- it means that the ratings agencies consider Penn Treaty to be weaker financially than carriers with better ratings, meaning there is a higher risk of valid claims not being paid and/or significant rate increases.   This risk seems to have come about, because Penn Treaty has been criticized for claims handling and significant rate increases imposed on current policyholders.

Long term care insurance carriers are rated by various independent agencies, including AM Best, Duff Phelps, Standard & Poor's, and Moody's.   Leading ltci carriers like John Hancock, Genworth, MetLife and Massmutual have much better ratings from these agencies than Penn Treaty.

If you recently bought the Penn Treaty policy, you may want to dump it for one from a better company, but if you have had it for some years, changing policies will be quite expensive (unless of course Penn Treaty hikes its rates on your policy as it has others).

A painful lesson on why buyers should check a carrier's ratings before buying, not after . . .  Your agent should have given you this information even if you did not specifically ask for it, because financial strength is a key factor in Ltci decisions.

Answer 3

I agree with the above.  Unless the company is in the A (A-'s included), I wouldn't touch them with a 10 foot, grim covered, snake infested pole.

Answer 4

I personally wouldn't write for a company with a B- rating. You can check with A M Best. They recently downgraded them to B-, the outlook is negative, and the long term forcast is a BB- for creditor rating.

It can take a lot for a company to upgrade their rating and it can take years. They will have to show an improving bottom line for several years.