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  #1  
Old 08-16-2019, 07:09 PM
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Default Hedge-fund backed Markopolos tanks GE stock based on LTCI reserves

https://www.thinkadvisor.com/2019/08...20190716190242

Quote:
...Markopolos contends that GE has $9.1 billion in accounting issues tied to a non-insurance acquisition; $9 billion in reinsurance company reserve contributions it has to make under a $15 billion agreement with the Kansas Insurance Department; and $18.5 billion in contributions it needs to make to remedy LTCI reinsurance under-reserving that’s not covered by the agreement with the Kansas department...
Best article I could find on the subject. Pretty amazing how bold the disclosures of conflict of interest around this 'report' are.

Long-term care reserving has to be one of the toughest jobs in the business...
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Old 08-16-2019, 08:56 PM
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Quote:
Originally Posted by iwakura42 View Post
https://www.thinkadvisor.com/2019/08...20190716190242



Best article I could find on the subject. Pretty amazing how bold the disclosures of conflict of interest around this 'report' are.

Long-term care reserving has to be one of the toughest jobs in the business...
I am not a LTC actuary. I do find this quote particularly interesting
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Originally Posted by article
a GE reinsurance unit assumed a block of LTCI business from a unit of Allianz, with about $73 million in 2018 written premiums, had a 2018 loss ratio of 342%. The block of business Allianz retained, which had $153 million in 2018 premiums, had a 2018 loss ratio of 88%, according to the Markopolos report.
For 2018 business this seems like an exceptionally unusual dumpster fire.

It’s of course peanuts compared to the reserve hole alleged by the analyst (with ulterior motives)
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Old 08-16-2019, 10:35 PM
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I know nothing about this particular case, but looking at your quote, it's a damn good thing that they didn't have only 7.3 million of WP or else their loss ratio would have been over 3000%.

And god forbid they managed to get the WP down to, say, some trivial amount like $73,000 --- they could have had a loss ratio over 3 million percent!!
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Old 08-17-2019, 12:16 AM
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Originally Posted by Colymbosathon ecplecticos View Post
I know nothing about this particular case,
Clearly.

Quote:
but looking at your quote, it's a damn good thing that they didn't have only 7.3 million of WP or else their loss ratio would have been over 3000%.

And god forbid they managed to get the WP down to, say, some trivial amount like $73,000 --- they could have had a loss ratio over 3 million percent!!
Do you have a point? At least the article did, which is that GE’s reinsurance business was terrible at evaluating the risks assumed versus those retained in the primary insurer and ensuring equal distribution of risk. If you had an understanding of basic segmentation, you’d see that in both examples GE got the worse end of the deal by far.
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Old 08-17-2019, 07:56 AM
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Quote:
The block of business MassMutual retained, which had $161 million in 2018 written premiums, had a loss ratio of 1%, according to the Markopolos report.
No.
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Old 08-17-2019, 09:44 AM
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Do you have a point?
I thought he had a pretty clear point, that they're comparing two numbers that don't really appear to have much to do with each other. Or maybe they do, but the article doesn't connect them, which sorta makes you wonder if the author didn't know how to connect them, or just really didn't understand them. The loss ratio is probably (article isn't clear) just based on payments in 2018, which isn't connect to premiums in 2018 at all. Maybe you have a counterpoint that you want to share?

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Originally Posted by Bro View Post
If you had an understanding of basic segmentation, you’d see that in both examples GE got the worse end of the deal by far.
Well, reading the article, Markopolous is able to give a reason why he thinks GE got the worse end of the deal. Your much stronger conclusion isn't supported by the article at all, but would be glad to see your support if you have something.


Overall, Markopolous is brilliant, and if given a choice I'd bet on him not against, but I don't think he actually understands how complicated LTC is.
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Old 08-17-2019, 10:46 AM
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No.
Wow, just read highlight #5 that ended with that sentence.

That is just bad. Either ignorance of the product that is being sold or intentional misrepresentation of the facts.
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Old 08-17-2019, 11:57 AM
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Old 08-17-2019, 05:41 PM
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Wow, just read highlight #5 that ended with that sentence.

That is just bad. Either ignorance of the product that is being sold or intentional misrepresentation of the facts.
Right? I found myself looking for J. Robert Hunter in the footnotes.
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Old 08-19-2019, 05:31 AM
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I downloaded their report from their website https://www.gefraud.com/ but it's written in a breathless style without any narrative, the figures have no accompanying explanation and it's basically a big dog's dinner.

I have no knowledge of LTC reserving. What is a WP please?

[edit] That said, my first red light is always implausibly high returns, which we have with GE. Any thoughts?
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