General Electric Co. shocked Wall Street last month when it announced a reserve shortfall of $15 billion in its portfolio of long-term-care insurance.
Wall Street better get used to it.
It’s an industrywide problem. There’s fear among analysts and some investors that GE may have to reserve more. Altogether, long-term-care insurers will have to boost reserves by more than $100 billion, according to Mike Kreidler, Washington state’s insurance commissioner. The insurers’ eventual gap may ultimately surpass $300 billion, Credit Suisse Group AG analysts said last year. Twelve million Americans will need the coverage by 2020, according to America’s Health Insurance Plans, a trade group.