Emphasis: All-Weather Insurance Securitization

Insurance-linked securitization is becoming a reinsurance program option no longer dependent on major catastrophic events.

Insurance-linked securities (ILS) continue to grow in unexpected ways irrespective of recent major catastrophic events. In the past, ILS issuance spikes occurred immediately after large catastrophes, as witnessed post-Katrina/Rita/Wilma. However, even without significant events, the popularity of ILS has increased. What used to be an alternative to the hard-market pricing of traditional reinsurance is evolving into an integral part of overall reinsurance programs as cedents look for ways to diversify their overall risk management plan, lock in terms and conditions over multiple periods, and create access to long-term, stable capacity relatively unaffected by market cycle and systemic risk.

Intuitively, when reinsurers are strong and reinsurance is cheap, alternative sources of capital such as catastrophe bonds and other ILS structures may not seem necessary. However, although ILS issuance is expected to decline in the fourth quarter of 2008 compared to 2007, it remains at all-time-high levels. The up-front transaction costs and time spent bringing bonds to market require a commitment to longer-term strategic solutions as opposed to tactical responses to managing risk. Cedents should take advantage of the lower risk-transfer costs and other benefits of this alternative source of capacity.

16th Milliman Survey Indicates Health Insurance Rate Increases in 2009 About 3% Lower for HMOs than PPOs

SEATTLE, Nov. 18 /PRNewswire/ -- Results from Milliman's 2008 Group Health Insurance Survey indicate estimated premium rate increases for January 2009 renewals are 8.4% for Health Maintenance Organizations (HMOs) and 10.7% to 12.1% for Preferred Provider Organizations (PPOs). The PPO results were compiled for a high deductible plan and a standard lower deductible plan, respectively.

The reported annual increase in premium (July 2008 versus July 2007 assuming no changes in benefit or cost-sharing levels) was 9.7% for HMOs and 10.3% to 10.7% for PPOs.

The Milliman survey is unique in that it asks HMOs and PPOs to respond to a given set of benefits and demographics. The survey thus removes three important factors that often skew the results of other health cost surveys: differences in benefit design, cost-sharing levels, and member demographics. These trends, therefore, reflect the increase in medical utilization and costs experienced by the HMOs and PPOs.

The 2008 survey also reports that the average premium savings incurred by switching from a $250 deductible to a $1,000 deductible is almost 12% and over 20% by switching to a plan with a $2,000 deductible. "High deductible plans are an integral part of consumer driven health (CDH) plans, for which health savings accounts (HSAs) and healthcare reimbursement accounts (HRAs) are used to help cover the deductible and other out-of-pocket healthcare expenses," notes Doug Proebsting, co-author of the report. The survey shows continued growth in CDH plans, with respondents anticipating 6% of their premium income to come from these products in 2009.
The 2008 report includes premium rates and trends for medical and prescription drug coverage per survey responses. Milliman also provides hospital inpatient cost and utilization data, physician reimbursement levels, medical expense ratios, and profit levels from Milliman databases. The 2008 survey also addresses prescription drug costs, broker commissions, and progress toward implementing ICD-10 coding per survey responses. This marks the sixteenth year that Milliman has conducted the survey.

The survey was sent to HMOs and fully insured PPOs that serve the nation's commercial, large and mid-group employer market. About 40% of all eligible insurers typically participate in the survey. Results are provided by metropolitan area, state, region and nationwide. Results for HMOs and PPOs are shown separately when possible.

Milliman is among the world's largest independent actuarial and consulting firms. Founded in Seattle in 1947 as Milliman & Robertson, the company currently has 49 offices in key locations worldwide. Milliman employs over two thousand people, with a professional staff of more than a thousand qualified consultants and actuaries, including specialists ranging from clinicians to economists. The firm has consulting practices in healthcare, employee benefits, property & casualty insurance, life insurance and financial services. Milliman serves the full spectrum of business, financial, government, union, education and nonprofit organizations.

LTC Global Announces the Acquisition of United Insurance Group

MEDFORD, Ore., Nov 11, 2008 (BUSINESS WIRE) -- LTC Global, Inc. today announced that it has completed the acquisition of United Insurance Group Agency, Inc. (UIG), a life and health insurance agency based in Milford, Michigan, from Penn Treaty American Corporation. LTC Global also acquired UIG's three subsidiaries. UIG executive Robert McClellan joined the LTC Global group of companies in connection with the acquisition and will serve as Executive Vice President of UIG. John Chitwood will serve as President of UIG.

With 15 offices located throughout the United States, UIG is a leading national distributor of Medicare Advantage insurance products in addition to offering other senior market insurance products. The acquisition marks LTC Global's entrance into the Medicare Supplement and Medicare Advantage market. "We feel very fortunate to have the opportunity to add UIG's proven distribution models and national sales force to our existing platforms," said Thomas A. Skiff, Chief Executive Officer of LTC Global. "We believe in LTC Global's vision for UIG, and LTC Global's expertise in marketing Long Term Care insurance will greatly benefit both our career agents and our brokers," said Robert McClellan.

UIG will remain headquartered in Milford, and LTC Global anticipates that there will be no involuntary work force reductions in connection with the acquisition.

About LTC Global

LTC Global, based in Medford, Oregon, is a leader in providing capital, sales and marketing solutions to the senior market insurance industry. LTC Global maintains a strong North American presence in the marketing and distribution of Long Term Care insurance and other insurance-related products through its subsidiaries ACSIA Long Term Care, Inc., Gelbwaks Insurance Services, Inc., Senior WealthCare Insurance Services and United Insurance Group Agency, Inc.