Filing: Florida Department of Financial Services

Transcription

1 Filing: Florida Department of Financial Services

2 I. Scope and Purpose Union Bankers Insurance Company Actuarial Memorandum Individual Comprehensive Long-Term Care Business The purpose of this filing is to request a rate increase on our entire block of comprehensive longterm care business (the forms are listed below) and to demonstrate that, after the requested increase, the expected lifetime loss ratio meets the minimum requirements of your state. This filing is not intended to be used for other purposes. FL Form Title LTC-92 Long-Term Care Policy NH86 w/rider UB-NH86GR Nursing Home Policy w/policy Amendment Rider (the rider makes the policy guaranteed renewable) NH87 GR Nursing Home Policy NH-88-GR Long-Term Care Policy UB-8801 Home Convalescent Care Benefit Rider Non-FL Form Title H Nursing Home Policy (Integrity National Life Insurance Company form assumed by Union Bankers Insurance Company) H-716 Long-Term Care Policy (Integrity National Life Insurance Company form assumed by Union Bankers Insurance Company) LTC-CV Long-Term Care Policy II. Benefit Description These forms are individual policies providing daily benefits for nursing home care. Benefits for home care are included in forms NH86, NH87, and H and were optional in forms LTC- 92 and H-716. Forms LTC-CV and NH-88-GR were sold with optional rider UB-8801 (which provides home care benefits). III. Renewability Clause The forms are guaranteed renewable. IV. Applicability This rate increase will apply to existing policies only, as this is a closed block of business. V. Morbidity Pricing claim costs were based on the experience of Bankers Life and Casualty as well as the 1985 National Nursing Home Survey and Medicare Program Statistics of 1982 (published by HCFA). VI. Mortality The mortality table used in the projections is the 1983 Group Annuity Mortality Table. FL Page 1 of 6

3 VII. Persistency The projections assume a lapse rate of 6.7%, based on the difference between the actual total decrement rate from 12/31/02 to 12/31/03 and the mortality rate. VIII. Expenses LTC-92 Renewal Commission 10% (add 5% for issues ages 55-75) Fixed - $1.282/policy/month Overhead 2.62% of premium earned Premium and DAC Tax 3.40% of premium earned Claims Administration 4.33% of claims paid NH86 and NH87 GR Renewal Commission 15% Fixed - $1.25/individual/month Overhead 6.00% of premium earned Premium and DAC Tax 2.40% of premium earned Claims Administration 1.00% of claims paid UB-8801 Renewal Commission 15%, decreasing to 2% in the 11 th year Overhead 3.0% of premium earned Premium and DAC Tax 2.0% of premium earned Claims Administration 6.9% of claims paid IX. Marketing Method These policies were marketed through brokers. X. Underwriting These forms were medically underwritten. XI. Premium Classes Premiums vary by issue age, premium mode, benefit period/maximum, elimination period/deductible, and optional benefits selected. XII. Issue Age Range The issue age range was for LTC-92 and NH-88-GR. For NH86 and NH87 GR, it was All premiums are on an issue age basis. XIII. Area Factors The premiums do not differ by area within a state. FL Page 2 of 6

4 XIV. Average Annual Premium Nationwide Florida Policy Annualized Average Prem Average Prem Policy Annualized Average Prem Average Prem Form Count Premium Before Inc After Inc Count Premium Before Inc After Inc H N/A N/A H , , N/A N/A LTC , , , , , , LTC-CV 11 7, N/A N/A NH , , , , , NH87 GR , , , , , , NH-88-GR ,489, , , , , , UB-8801* 73 16, Total ,266, , , , , , *Riders not included in total policy count XV. Premium Modalization Rules The modal factors are as follows: Mode Schedule Annual Semi-Annual Quarterly Monthly Monthly PAC LTC-92 3-yr max, 90-day elim, level Schedule 31 other Schedule 32 NH86 1-yr max, all elims Schedule 25 3 or 5-yr max, 100-day elim Schedule 23 other Schedule 20 NH87 GR 5-yr max Schedule 20 other Schedule 25 NH-88-GR 3-yr max, 20-day elim, increasing Schedule 31 level, sold after 7/89 Schedule 21 level, sold prior to 8/89 Schedule 23 other Schedule 32 UB-8801 all - Schedule 32 XVI. Claim Liability and Reserves The claim liabilities were calculated using a continuance table provided by Milliman USA. The nationwide claim reserve as of 12/31/03 is $6,591,654. FL Page 3 of 6

5 XVII. Active Life Reserves The active life reserve is calculated using Southwestern Life Insurance Company s reserve factor file. XVIII. Trend Assumption Medical and Insurance A. Medical Trend Due to the indemnity nature of the benefits provided by these policies, we have assumed no medical trend. B. Insurance Trend The aging factor is based on the ultimate trend of the expected durational loss ratios. Shock lapses are estimated as half of the rate increase in excess of 15%. Antiselection is calculated as one minus the shock lapse. XIX. Minimum Loss Ratio The minimum required loss ratio is 60.0%. XX. Anticipated Loss Ratio Exhibit B shows the nationwide experience by duration and compares the actual to the expected experience. This shows that the actual experience for the years for which we have data ( ) is 227% of expected. Adding in the experience (modeled at 100% of expected see Section XXIII) brings the number to 139%. We are filing for an increase of 30.0%. Exhibit C takes the experience from Exhibit B and projects it 20 years at 5.00% interest, with and without the requested increase effective 8/1/2004 (the nationwide effective date). Since this increase will not bring the future loss ratio to the target loss ratio, we will continue to monitor the experience closely, but we are not projecting future rate increases at this time. The projected durational loss ratios (from the original filings) are as follows: Pol Yr LTC-92 NH86 NH87GR NHST XXI. Distribution of Business Please see Exhibit A for the distribution of business by premium class. XXII. Contingency & Risk Margins NH86 and NH87 GR 10% FL Page 4 of 6

6 XXIII. Experience Past & Future The experience of these forms has been combined due to the lack of credibility of the individual forms, and rider experience has been included with the experience of the base policy. Claims are shown on a restated basis. For example, the 2001 incurred claims consist of claims paid on any date for all claimants with a 2001 original incurred date, plus the estimated remaining claim liability for 2001 incurred claims as of 12/31/03. Due to the lack of availability of data, we have estimated the actual incurred claims prior to 2000 as 100% of expected claims. Expected claims are based on the originally filed durational loss ratios for forms LTC-92, NH86, and NH87 GR. For the remaining forms, we used the originally filed durational loss ratios for the most similar form from the previous list. Earned premiums prior to 1998 (except NH86, NH87 GR, and LTC- 92 which are based on information from previous rate filings) were modeled from the 1998 premiums, with the same mortality and lapse assumptions as the projections. Historical premiums adjusted to the current rate level are shown in Exhibit D. XXIV. Lifetime Loss Ratio The projection shows the following loss ratios: Earned Incurred Loss Premium Claims Ratio Historical 138,700,031 75,837, % Future without Increase 13,532,702 34,698, % Lifetime without Increase 152,232, ,536, % Future with Increase 15,537,229 31,947, % Lifetime with Increase 154,237, ,785, % XXV. History of Previous Rate Revisions The only previous rate revision in FL was a 15% decrease on LTC-92, approved 9/16/1993. XXVI. Number of Policyholders Please see section XIV for both nationwide and Florida policy counts. XXVII. Proposed Effective Date The proposed effective date is 3/1/2005 (8/1/2004 on a nationwide basis), following 45 days advance notice and Department approval. FL Page 5 of 6

7 XXVIII. Actuarial Certification To the best of my knowledge and judgment, this filing is in compliance with the applicable laws of the State of Florida and with the rules of the Department of Insurance, and complies with Actuarial Standard of Practice No. 8, Regulatory Filings for Rates and Financial Projections for Health Plans, as adopted by the Actuarial Standards Board, January, 1989, which standard is hereby adopted and incorporated by reference, and that the benefits provided are reasonable in relation to the proposed premiums. Garry R. Reed, ASA, MAAA Vice President and Actuary May 25, 2006 FL Page 6 of 6

8 1001 Heahtrow Park Lane Lake Mary, FL Mailing Address: PO Box 3509 Orlando, FL , x , x Fax January 10, 2005 Mr. Frank Dino Florida Department of Financial Service Office of Insurance Regulation 200 East Gaines Street Tallahassee, FL RE: Union Bankers Insurance Company NAIC #69701 Request for Rate Revision Long Term Care Form(s): LTC-92, et al Dear Mr. Dino: Enclosed for your review and approval is a rate revision request for the above referenced filing. Union Bankers is requesting a 30% increase. If you have any questions, please direct them to my attention at , ext. 8319, by e mail at cboyd@uafc.com or by fax at Sincerely, Carmen Boyd AVP, Actuarial Compliance Tempdoc.DOC Subsidiaries: American Exchange American Pioneer American Progressive Constitution Life Marquette National Peninsular Life Pennsylvania Life Penn Corp. Canada Union Bankers

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13 Union Bankers Insurance Company Individual Comprehensive Long-Term Care Business Nationwide Distribution by Premium Class Exhibit A Issue Age All Forms Mode All Forms % Annual 45.7% % SemiAnnual 10.6% % Quarterly 10.9% % Monthly 32.8% % Total 100.0% % % Benefit % Period/Max FL Forms % 1 Year 5.2% % 2 Years 9.4% % 3 Years 31.7% % 5 Years 35.5% % Lifetime 18.1% % Total 100.0% % % Elimination/ % Deductible FL Forms % 0 Day 27.2% % 20 Day 32.6% % 30 Day 5.6% % 90 Day 13.6% % 100 Day 18.5% % 150 Day 2.6% % Total 100.0% % % % % % % % % % % % % % Total 100.0% FL

14 Union Bankers Insurance Company Individual Comprehensive Long-Term Care Business Projected Nationwide Experience Exhibit C NW Rate Increase: 30.0% NW Eff Date: 8/1/2004 Int Rate: 5.00% Projection Date: 12/31/03 WITHOUT INTEREST WITH 5% INTEREST ASSUMPTIONS Premium Factors Claim Factors Persistency Factors Interest Factors Cal Earned Incurred Loss Earned Incurred Loss Rate Effective- Rate Medical Mortality Shock Adverse Policy Claim Interest Year Premium Claims* Ratio Premium Claims* Ratio Increase ness Effect Aging Combined Trend Aging Combined & Lapses Lapses Selection Persistency Persistency Years Factor (B) (C) (D) (E) (F) (G) (H) (I) (J) (K) (L) (M) (N) (O) (P) (Q) (R) (S) (T) (U) (V) (W) (C)(-1)*(M)*(T) (D)(-1)*(P)*(U) (D)/(C) (C)*(W) (D)*(W) (G)/(F) (K)*(L) (N)*(O) 1-(R) 1-(Q)-(R) 1-(Q)-(R)*(S) Past ,464 33, % 541,272 79, % Experience ,665, , % 5,961, , % ,648,025 1,022, % 12,031,803 2,178, % ,105,780 1,286, % 12,387,566 2,610, % ,436,573 1,546, % 12,436,846 2,988, % ,409,494 1,785, % 11,794,783 3,284, % ,207,154 2,018, % 10,878,510 3,537, % ,861,973 2,234, % 9,784,338 3,729, % ,083,022 2,560, % 9,669,806 4,070, % ,250,905 2,920, % 9,463,503 4,421, % ,839,948 3,160, % 8,420,322 4,557, % ,499,780 3,491, % 7,552,239 4,794, % ,259,758 3,877, % 6,878,709 5,071, % ,566,766 3,859, % 5,688,013 4,807, % ,109,226 6,278, % 4,874,416 7,448, % ,463,569 6,979, % 3,912,885 7,885, % ,994,614 7,788, % 3,221,994 8,380, % ,124,341 4,901, % 3,201,497 5,022, % ,734,412 4,718, % 2,668,513 4,605, % 0.0% ,377,835 4,513, % 2,210,028 4,195, % 0.0% Projected ,053,759 4,288, % 1,817,926 3,796, % 0.0% Future ,761,192 4,045, % 1,484,719 3,410, % 0.0% Experience ,498,961 3,787, % 1,203,479 3,040, % 0.0% w/o Requested ,265,415 3,516, % 967,591 2,689, % 0.0% Increase ,058,869 3,237, % 771,102 2,357, % 0.0% ,506 2,950, % 608,597 2,046, % 0.0% ,151 2,660, % 475,019 1,757, % 0.0% ,140 2,368, % 366,209 1,490, % 0.0% ,903 2,080, % 278,532 1,246, % 0.0% ,735 1,800, % 208,684 1,027, % 0.0% ,916 1,532, % 153, , % 0.0% ,634 1,278, % 111, , % 0.0% ,261 1,043, % 78, , % 0.0% , , % 54, , % 0.0% , , % 36, , % 0.0% , , % 23, , % 0.0% , , % 14, , % 0.0% Past 86,756,617 56,181, % 138,700,031 75,837, % Future (w/o Rate Inc) 16,705,484 46,136, % 13,532,702 34,698, % Lifetime 103,462, ,317, % 152,232, ,536, % ,688,895 4,344, % 2,624,093 4,240, % 30.0% ,826,286 4,155, % 2,626,831 3,862, % 0.0% Projected ,441,090 3,948, % 2,160,780 3,495, % 0.0% Future ,093,346 3,724, % 1,764,731 3,139, % 0.0% Experience ,781,660 3,487, % 1,430,451 2,799, % 0.0% After 30% ,504,067 3,238, % 1,150,075 2,476, % 0.0% (Nationwide ,258,568 2,980, % 916,529 2,170, % 0.0% composite) ,043,000 2,717, % 723,377 1,884, % 0.0% Increase ,780 2,449, % 564,606 1,617, % 0.0% ,929 2,181, % 435,275 1,372, % 0.0% ,583 1,915, % 331,062 1,147, % 0.0% ,711 1,658, % 248, , % 0.0% ,273 1,410, % 182, , % 0.0% ,113 1,177, % 132, , % 0.0% , , % 93, , % 0.0% , , % 64, , % 0.0% , , % 43, , % 0.0% , , % 28, , % 0.0% , , % 17, , % 0.0% Past 86,756,617 56,181, % 138,700,031 75,837, % Future (After 30% Increase) 19,294,862 42,479, % 15,537,229 31,947, % Lifetime 106,051,479 98,660, % 154,237, ,785, % * Incurred claims do not include the policy reserve FL

15 Calendar Issue Year Year Earned Premium at Original Rate Level Claim by Incurral Year Actual Incurred Claims*,** Expected Incurred Claims Ratio of Actual to Expected Claims Union Bankers Insurance Company Individual Comprehensive Long-Term Care Business Nationwide Actual to Expected Claims Number on by Incurral Year Earned Premium at Original Rate Level Earned Actual Loss Expected Calendar Issue Earned IBNR+ICOS Actual Loss Expected Premium Ratio Loss Ratio Year Year Ratio Loss Ratio , , , , N/A N/A Total 230, , , , % N/A N/A , , , , , , ,702,343 1,702, , , , , ,668 67, , , , , , , , , , , , Total 2,665,227 2,665, , , % , , , , , , , ,728 32, , , ,375,331 2,375, , , , , , , , ,606,925 2,606, , , , , , ,929 1,342, , , , , , , , , , , , Total 5,648,025 5,648, ,022, ,022, % , ,819 1,114, ,279 1,230, , , , , , , , ,571,482 1,571, , , ,274 98, , , , ,337,736 2,337, , , Total 4,109,226 3,481,127 5,285, ,641 6,278, ,268, % ,739,270 1,739, , , , , , , N/A N/A Total 6,105,780 6,105, ,286, ,286, % N/A N/A , ,330 97, , , ,441,377 1,441, , , , , ,623 74, , , ,469,634 1,469, , , , , ,790 94, , , ,879,655 1,879, , , , , , , , , ,293,472 1,293, , , , , , , , , , , , , , , , , , Total 6,436,573 6,436, ,546, ,546, % , ,606 1,144, ,204 1,320, , , , ,942 98, , , , , , , , ,331 1,053, ,307 1,173, , ,351,747 1,351, , , , , , ,526 1,151, , ,345,588 1,345, , , ,163 71, ,764 60, , , ,627,195 1,627, , , Total 3,463,569 2,698,903 5,890,004 1,089,916 6,979, ,847, % ,048,624 1,048, , , , , , , N/A N/A Total 6,409,494 6,409, ,785, ,785, % N/A N/A , , ,858 87, , , , , , , , , ,341 55, , , , , , , , , , , , , ,232,045 1,232, , , ,751 90, , , , , ,229,579 1,229, , , ,917 99, ,441 72, , , ,434,975 1,434, , , , , ,882 67, , , , , , , , , , ,387 1,080, , , , , , , , , ,071 1,342, , Total 6,207,154 6,207, ,018, ,018, % , , , ,749 1,170, , , , , ,617 1,366, , , , , , ,697 69, , , , , , , , Total 2,994,614 2,211,905 5,780,130 2,008,682 7,788, ,593, % , , , , ,126,911 1,129, , , N/A N/A ,125,824 1,126, , , N/A N/A ,284,069 1,308, , , , ,445 32, ,652 70, , , , , , , ,800 74, ,789 62, , , , , , , , ,993 89, ,333 82, , , Total 5,861,973 5,934, ,234, ,270,601 98% , ,046 82,189 78,016 53, , , ,489 78, , , , , , , , , , , , ,639 72, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,028,836 1,033, , , , , , , , , , ,030,403 1,031, , , ,457 40, ,679 99,019 31, , , ,146,483 1,196, , , Total 3,124,341 2,195,551 1,862,764 2,067, ,844 4,901, ,699, % , , , , , , , , Total 13,691,750 10,587,486 18,818,067 6,160, ,844 25,949, ,408, % Total 6,083,022 6,234, ,560, ,648,862 97% 0 Grand Total 86,756,617 82,215,612 48,619,071 6,591, ,844 56,181, ,438, % , , , ,788 0 ** Incurred Claims do not include the Active Life Reserve , , , , , ,984 92, , , , , , , , , , , , , , , , , , , ,048,770 1,094, , , , , , , , , , , Total 6,250,905 6,386,007 92,500 2,920, ,012,995 97% , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Total 5,839,948 5,816, ,160, ,170, % N/A N/A , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,256 58, , , , , , , , , , , , , , , Total 5,499,780 5,216,154 58,375 3,491, ,321, % N/A N/A N/A N/A , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Total 5,259,758 4,460, ,785 3,877, ,241, % N/A N/A N/A N/A , , , , , ,504 16, , , , ,845 15, , , , , , , , ,753 62, , , , , , , , ,982 1, , , , , , , , ,640 73, , , , , , , , , , , Total 4,566,766 3,877, ,826 3,859, ,236, % 9 * Paid Claims by Incurral Year are not available prior to 2000 Paid Claims by Incurral Year Claim by Incurral Year Actual Incurred Claims** Expected Incurred Claims Exhibit B Ratio of Actual to Expected Claims Number on by Incurral Year FL

16 Union Bankers Insurance Company Exhibit D Individual Long-Term Care Policy Forms H ,H-716,LTC-92,LTC-CV,NH86,NH87 GR,NH-88-GR Nationwide Earned Premium Restated to Current Rate Level H H-716 Current Yr Cumulative Premium at Current Yr Cumulative Premium at Calendar Avg Avg Portion Premium 12/31/03 Calendar Avg Avg Portion Premium 12/31/03 Year Rate Inc Eff Date Remaining Trend Rate Level Year Rate Inc Eff Date Remaining Trend Rate Level % N/A 0.0% ,445 #### % N/A 0.0% ,030 #### % N/A 0.0% , % N/A 0.0% ,129 #### % N/A 0.0% , % N/A 0.0% ,178 #### % N/A 0.0% , % N/A 0.0% ,287 #### % N/A 0.0% , % N/A 0.0% ,451 #### % N/A 0.0% , % N/A 0.0% ,668 #### % N/A 0.0% , % N/A 0.0% ,933 #### % N/A 0.0% , % N/A 0.0% ,244 #### % N/A 0.0% , % N/A 0.0% ,599 #### % N/A 0.0% , % N/A 0.0% ,993 #### % N/A 0.0% , % N/A 0.0% ,426 #### % N/A 0.0% , % N/A 0.0% ,471 #### % N/A 0.0% , % N/A 0.0% ,359 #### % N/A 0.0% , % N/A 0.0% ,813 #### % N/A 0.0% , % N/A 0.0% ,699 #### % 01/10/ % , % N/A 0.0% #### % N/A 2.8% ,071 LTC-92 LTC-CV Current Yr Cumulative Premium at Current Yr Cumulative Premium at Calendar Avg Avg Portion Premium 12/31/03 Calendar Avg Avg Portion Premium 12/31/03 Year Rate Inc Eff Date Remaining Trend Rate Level Year Rate Inc Eff Date Remaining Trend Rate Level #### #### #### % N/A 0.0% ,024 #### % N/A 0.0% ,768 #### % N/A 0.0% , #### % N/A 0.0% , % 10/01/ % ,750 #### % N/A 0.0% , % N/A 0.0% ,530,924 #### % N/A 0.0% , % N/A 0.0% ,509,910 #### % N/A 0.0% , % N/A 0.0% ,518,567 #### % N/A 0.0% , % 08/19/ % ,362,514 #### % N/A 0.0% , % N/A 0.0% ,097,033 #### % N/A 0.0% , % N/A 0.0% ,762,453 #### % N/A 0.0% , % N/A 0.0% ,571,147 #### % N/A 0.0% , % 03/22/ % ,270 #### % N/A 0.0% , % 01/04/ % ,350 #### % N/A 0.0% , % N/A 1.2% ,322 #### % N/A 0.0% ,426 NH86 and NH87 GR NH-88-GR Current Yr Cumulative Premium at Current Yr Cumulative Premium at Calendar Avg Avg Portion Premium 12/31/03 Calendar Avg Avg Portion Premium 12/31/03 Year Rate Inc Eff Date Remaining Trend Rate Level Year Rate Inc Eff Date Remaining Trend Rate Level % N/A 0.0% ,265 #### % N/A 0.0% ,619,459 #### % N/A 0.0% ,851,903 #### % N/A 0.0% ,308, % N/A 0.0% ,088,543 #### % N/A 0.0% ,076, % N/A 0.0% ,613,580 #### % N/A 0.0% ,498, % N/A 0.0% ,784,196 #### % N/A 0.0% ,054, % N/A 0.0% ,249,045 #### % N/A 0.0% ,197, % N/A 0.0% ,849,210 #### % N/A 0.0% ,787, % N/A 0.0% ,466,984 #### % N/A 0.0% ,381, % N/A 0.0% ,206,485 #### % N/A 0.0% ,001, % 09/07/ % ,924,987 #### % N/A 0.0% ,644, % 09/13/ % ,618,648 #### % N/A 0.0% ,310, % N/A 0.0% ,511,169 #### % N/A 0.0% ,996, % N/A 0.0% ,435,480 #### % N/A 0.0% ,528, % N/A 0.0% ,267,522 #### % N/A 0.0% ,320, % 06/23/ % ,054,901 #### % 06/24/ % ,052, % 10/24/ % ,350 #### % 01/03/ % ,704, % N/A 0.0% ,440 #### % N/A 1.1% ,430,318 FL Page 4 of 7

17 Union Bankers Insurance Company Exhibit D Individual Long-Term Care Policy Forms H ,H-716,LTC-92,LTC-CV,NH86,NH87 GR,NH-88-GR Nationwide Earned Premium Restated to Current Rate Level All Forms Cumulative Premium at Calendar Premium 12/31/03 Year Trend Rate Level , ,624, ,266, ,355, ,368, ,108, ,708, ,186, ,613, ,931, ,282, ,468, ,765, ,871, ,283, ,136, ,384, ,128,127 FL Page 5 of 7

18 Union Bankers Insurance Company Individual Comprehensive Long-Term Care Business Projected Florida Experience Exhibit C-FL NW Rate Increase: 30.0% FL Eff Date: 2/1/2005 Int Rate: 5.00% Projection Date: 12/31/03 WITHOUT INTEREST WITH 5% INTEREST ASSUMPTIONS Premium Factors Claim Factors Persistency Factors Interest Factors Cal Earned Incurred Loss Earned Incurred Loss Rate Effective- Rate Medical Mortality Shock Adverse Policy Claim Interest Year Premium Claims* Ratio Premium Claims* Ratio Increase ness Effect Aging Combined Trend Aging Combined & Lapses Lapses Selection Persistency Persistency Years Factor (B) (C) (D) (E) (F) (G) (H) (I) (J) (K) (L) (M) (N) (O) (P) (Q) (R) (S) (T) (U) (V) (W) (C)(-1)*(M)*(T) (D)(-1)*(P)*(U) (D)/(C) (C)*(W) (D)*(W) (G)/(F) (K)*(L) (N)*(O) 1-(R) 1-(Q)-(R) 1-(Q)-(R)*(S) Past , % 8,760 1, % Experience ,809 21, % 321,669 47, % ,389 42, % 546,178 91, % ,182 51, % 515, , % ,262 56, % 452, , % ,747 64, % 431, , % ,550 73, % 397, , % ,834 82, % 437, , % ,320 87, % 375, , % ,299 91, % 319, , % ,093 98, % 279, , % , , % 242, , % , , % 208, , % , , % 179, , % ,366 89, % 153, , % , , % 121, , % ,127 64, % 85,135 69, % , , % 82, , % ,650 97, % 68,947 95, % 0.0% ,437 93, % 57,101 86, % 0.0% Projected ,063 88, % 46,970 78, % 0.0% Future ,504 83, % 38,361 70, % 0.0% Experience ,729 78, % 31,095 62, % 0.0% w/o Requested ,695 72, % 25,000 55, % 0.0% Increase ,358 66, % 19,923 48, % 0.0% ,672 60, % 15,724 42, % 0.0% ,581 54, % 12,273 36, % 0.0% ,041 48, % 9,462 30, % 0.0% ,012 42, % 7,196 25, % 0.0% ,450 37, % 5,392 21, % 0.0% ,310 31, % 3,972 17, % 0.0% ,546 26, % 2,870 13, % 0.0% ,115 21, % 2,028 10, % 0.0% ,979 17, % 1,398 8, % 0.0% ,099 13, % 938 5, % 0.0% ,436 10, % 611 4, % 0.0% , % 385 2, % 0.0% Past 3,133,501 1,393, % 5,158,964 2,022, % Future (w/o Rate Inc) 431, , % 349, , % Lifetime 3,565,124 2,346, % 5,508,611 2,739, % ,650 97, % 68,947 95, % 0.0% ,395 85, % 62,639 79, % 30.0% Projected ,033 81, % 55,795 72, % 0.0% Future ,054 76, % 45,568 64, % 0.0% Experience ,005 71, % 36,937 57, % 0.0% After 30% ,837 66, % 29,697 51, % 0.0% (Nationwide ,498 61, % 23,666 44, % 0.0% composite) ,932 56, % 18,679 38, % 0.0% Increase ,072 50, % 14,579 33, % 0.0% ,867 45, % 11,239 28, % 0.0% ,269 39, % 8,549 23, % 0.0% ,225 34, % 6,405 19, % 0.0% ,683 29, % 4,719 15, % 0.0% ,587 24, % 3,409 12, % 0.0% ,888 19, % 2,409 9, % 0.0% ,538 15, % 1,661 7, % 0.0% ,494 12, % 1,115 5, % 0.0% ,705 9, % 726 3, % 0.0% ,126 6, % 457 2, % 0.0% Past 3,133,501 1,393, % 5,158,964 2,022, % Future (After 30% Increase) 493, , % 397, , % Lifetime 3,627,359 2,278, % 5,556,158 2,689, % * Incurred claims do not include the policy reserve FL Not Credible

19 Calendar Issue Year Year Earned Premium at Original Rate Level Claim by Incurral Year Actual Incurred Claims*,** Expected Incurred Claims Ratio of Actual to Expected Claims Union Bankers Insurance Company Individual Comprehensive Long-Term Care Business Florida Actual to Expected Claims Number on by Incurral Year Earned Premium at Original Rate Level Earned Actual Loss Expected Calendar Issue Earned IBNR+ICOS Actual Loss Expected Premium Ratio Loss Ratio Year Year Ratio Loss Ratio ,730 3, N/A N/A Total 3,730 3, % N/A N/A ,356 6, , , ,809 21, , ,884 8, , N/A N/A ,886 9, , Total 143, , , , % ,739 4, , ,989 5, , , ,235 19, , ,614 14, , , ,154 23, , ,723 14, , N/A N/A ,970 24, , Total 256, , , , % ,709 24, , ,496 10, , ,860 68,860 10, , N/A N/A , ,471 19, , Total 129, ,407 89, , ,653 77% ,851 81,851 21, , N/A N/A N/A N/A Total 254, , , , % N/A N/A ,130 4, , ,419 37,419 5, , ,459 3, , ,462 63,462 12, , ,709 5, , ,800 79,800 21, , N/A N/A ,580 53,580 17, , ,142 6, , N/A N/A ,856 13, , Total 234, , , , % ,096 15, , ,583 23, , ,181 34,181 5, , ,547 18, , ,436 34,436 6, , ,670 7, , ,403 58,403 15, , N/A N/A ,191 67,191 21, , Total 107,192 99, ,099 20, , , % ,536 40,536 15, , N/A N/A N/A N/A Total 234, , , , % N/A N/A ,131 4, , ,870 12,870 1, , ,012 3, , ,405 31,405 6, , ,912 3, , ,639 31,639 8, , N/A N/A ,659 53,659 17, , ,293 6, , ,902 60,902 23, , ,392 9, , ,075 36,075 16, , ,073 12, , N/A N/A ,041 19, , Total 226, , , , % ,426 7, , ,847 6, , ,340 9,751 1, , N/A N/A ,803 11,803 2, , Total 79,127 72,312 64, , ,097 77% ,802 28,802 7, , ,016 29,016 9, , N/A N/A ,211 49,211 19, , N/A N/A ,499 55,499 25, , ,373 4, , ,586 32,586 17, , ,553 4, , N/A N/A ,131 6, , Total 261, , , , % N/A N/A ,294 6, , N/A N/A ,578 9, , ,548 10,057 2, , ,015 12, , ,803 10,803 2, , ,398 13, , ,360 26,360 8, , ,389 11, , ,557 26,557 10, , ,994 3, , ,040 45,040 20, , N/A N/A ,413 49,413 26, , Total 80,724 71,362 37,954 42,741 20, , , % ,884 27,884 17, , N/A N/A Total 396, , ,998 62,861 20, , , % Total 236, , , , % 0 Grand Total 3,133,501 2,841,348 1,310,269 62,861 20,532 1,393, ,362, % N/A N/A 0 ** Incurred Claims do not include the Active Life Reserve N/A N/A ,806 9,183 2, , ,865 9,865 3, , ,072 24,072 9, , ,251 24,251 10, , ,130 41,130 21, , ,251 43,251 26, , ,833 22,833 16, , N/A N/A Total 211, , , ,574 99% N/A N/A N/A N/A N/A N/A ,110 8,365 3, , ,986 8,986 3, , ,926 21,926 9, , ,089 22,089 11, , ,463 37,463 23, , ,073 39,481 28, , ,749 20,918 18, , N/A N/A Total 194, , , , % N/A N/A N/A N/A N/A N/A N/A N/A ,458 7,220 3, , ,161 8,161 3, , ,915 19,915 10, , ,063 20,063 12, , ,027 34,027 24, , ,397 34,107 30, , ,754 16,538 18, , N/A N/A Total 176, , , , % N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A ,847 5,945 3, , ,389 7,389 3, , ,030 18,030 11, , ,165 18,165 13, , ,807 30,807 25, , ,952 29,655 30, , ,884 13,253 18, , N/A N/A Total 159, , , , % N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A ,274 5,363 4, , ,666 6,666 4, , ,265 16,265 11, , ,386 16,386 13, , ,791 27,791 26, , ,727 26,752 30, , ,134 11,956 18, , N/A N/A Total 143, , , , % 0 * Paid Claims by Incurral Year are not available prior to 2000 Paid Claims by Incurral Year Claim by Incurral Year Actual Incurred Claims** Expected Incurred Claims Exhibit B-FL Ratio of Actual to Expected Claims Number on by Incurral Year FL Not Credible

20 Filing Details Work Unit Number: W Filing Purpose: Rates Only Line of Business: Non-Fraternal Accident and Health Products Date Created: 1/10/ :56:02 PM Filing Name: UBIC 2005 LTC FL Company Details Company Name FEIN NAIC CC NAIC GC UNION BANKERS INSURANCE COMPANY Filing Originator Information Company Contact Name: Ms. Carmen Boyd Contact Title: AVP, Actuarial Compliance Professional Designation: Contact Street Address: 1001 Heathrow Park Lane Suite/Room #: 5001 P.O. Box Mailing Address: Department: City: Lake Mary State: FL Zip Code: Country: Non US Postal Code: Phone Number: Ext 8319 Fax Number: Toll Free Number: Ext 8319 Non US Phone Number:

21 Company Contact Information Company Contact Name: Ms. Carmen Boyd Contact Title: AVP, Actuarial Compliance Professional Designation: Contact Street Address: 1001 Heathrow Park Lane Suite/Room #: 5001 P.O. Box Mailing Address: Department: City: Lake Mary State: FL Zip Code: Country: Non US Postal Code: Phone Number: Ext 8319 Fax Number: Toll Free Number: Ext 8319 Non US Phone Number: General Information A. Do you currently have in force business on this plan of insurance in Florida? Yes B. Are you selling new business on this plan of insurance in Florida? No If no, date discontinued: 1 / 1 / 1996 C. Are you currently selling this plan of insurance in other states? No D. What market restrictions (such as available to military persons only), do you have on this form? Life & Health Insurance A. Your policy or coverage is (Bold one) Health Life Variable Life Annuity Variable Annuity B. Your policy or coverage is (Bold one) Fraternal Individual Group D. Individual Policy Characteristics(Bold One)

22 1. Optional Renewable 2. Conditionally Renewable 3. Guaranteed Renewable 4. Non-Cancelable 5. Non-Renewable 6. Other(Specify) E. Is your policy or Coverage primarily for individuals over 65? YES F. Check the type(s) of benefit your policy or coverage provides:(bold One) 1. Disability Income 2. Major Medical 3. Long Term Care 4. Prepaid Limited Health Service Organization 5. Medicare Supplement 6. Small Employer Group Coverage (see section , F.S.) 7. Health Maintenance Organization 8. Other (specify)

23 Rate Filing History - Including Annual Rate Certifications (This section is for Florida experience only) (1) (2) (3) (4) (5) (6) (7) Rate Change Requested Total Annualized Premium Volume # of Certificates / Subscribers or Individual Policies Average Rate Change Maximum Rate Change Date Changed Approved or Acknowledged Florida Filing Number Current Filing 30 $ % 30 % % 1st Prior Filing 0 % $ % 0 % 2nd Prior Filing 0 % $ % 0 % Rate Request By Form (To be completed for all filings which include pooled blocks - Florida experience only) Primary Form Form Number Rate Change Requested Total Annualized Premium Volume # of Certificates or Policies LTC % $ Additional Form(s) NH86 30 % $ NH87 G 30 % $ NH88-G 30 % $ UB % $ Additional Data For New Form & Rate Filings (Provide current data for the form(s) submitted) Florida Only Nationwide A. Number of Certificates or Individual Policies Affected: B. If Group, Average Number of Certificates Per Policy/ Participating Unit (e.g. Employer Unit) 0 0 C. Annualized Premium Volume $ $ D. Average Annual Premium (current / proposed or new form) $ $ $ $ E. Anticipated Loss Ratio (Current / Proposed Premium) % % % % F. Lifetime Loss Ratio (Current / Proposed Premium) 49.7 % 48.4 % 72.6 % 69.9 % G. Loss Ratio Standard for The Form (or pooled group/forms) 60 % 60 % H. Total Past Incurred Loss Ratio Without Active Life Reserve Increases 39.2 % 54.7 % I. Current Year Loss Ratio for Policies 3 Years & Older (For Med. Supp.) Without Policy Reserves:

24 0 % 0 %

25 Uploaded Documents Document Type Filenet Number Form Number Title Actuarial Memorandum 0 Actuarial Memorandum Cover Letter 0 Cover Letter Manual/Rate Pages 0 Rate Pages Miscellaneous 0 Exhibits Rate Filing Certification gfedcb I certify that I and am authorized to make this Rate Filing on behalf of the company, further that the information contained in related transmittals and the filing is true, complete, correct, and in compliance with all applicable state laws. I certify that the proposed premiums are reasonable in relationship to the benefits provided. (Check one) nmlkj nmlkji I am an actuary I am not an actuary Name: Carmen Boyd Title: AVP, Actuarial Compliance

26 1001 Heathrow Park Lane Lake Mary, FL Fax Mailing Address: PO Box Lake Mary, FL January 20, 2005 Daniel J. Keating Bureau of Life & Health Forms & Rates Department of Financial Services Office of Insurance Regulation 200 East Gaines Street Tallahassee, FL Re: Union Bankers Insurance Company NAIC #69701 Long-Term Care Rate Increase Filing Forms: H , et al Your Filing Number Your of 1/18/05 to Carmen Boyd Dear Mr. Keating: I am writing in response to the above-referenced . Unfortunately, I have neither the total number of claims incurred in any year nor any open claim counts prior to 9/2001. The following are the number of open claims as of year end for each of the last 4 years: Nationwide Florida Please continue to direct any questions or requests for additional information to Carmen Boyd. She can be reached at , ext I look forward to the receipt of your formal approval. Sincerely, Eva L. W. Gaber, ASA, MAAA Assistant Actuary

27 Filing Details Work Unit Number: W Filing Purpose: Rates Only Line of Business: Non-Fraternal Accident and Health Products Date Created: 1/20/ :31:49 PM Filing Name: UBIC 2005 LTC FL Company Details Company Name FEIN NAIC CC NAIC GC UNION BANKERS INSURANCE COMPANY

28 Uploaded Documents Document Type Filenet Number Form Number Title Cover Letter 0 Cover Letter

29 KEVIN M. MCCARTY COMMISSIONER DEPARTMENT OF FINANCIAL SERVICES OFFICE OF INSURANCE REGULATION FINANCIAL SERVICES COMMISSION JEB BUSH GOVERNOR TOM GALLAGHER CHIEF FINANCIAL OFFICER CHARLIE CRIST ATTORNEY GENERAL CHARLES BRONSON COMMISSIONER OF AGRICULTURE via & telecopier: (407) January 21, 2005 Ms. Carmen Boyd AVP, Actuarial Compliance Union Bankers Insurance Company 1001 Heathrow Park Lane Suite 5001 Lake Mary, FL RE: UNION BANKERS INSURANCE COMPANY FORM NUMBER(S): LTC-92, ET AL FILE LOG NUMBER: FLR PLEASE REFER TO THIS FILE NUMBER WHEN CORRESPONDING Dear Ms. Boyd: The review of the above referenced filing is complete. This letter serves as notification that the filing is DISAPPROVED under Section , F.S., and for the following: 1 The company has not provided a count of incurred claims for each of the past five years, needed to determine the credibility of the experience data provided. 2 The company has not provided expected claim and expected loss ratio data for all forms included in the filing. 3 Experience and projected data was not provided in the format required by Rule 69O (3)(b)23 F.A.C. Consequently, the Office is unable to determine if the proposed rates are reasonable in relation to the benefits provided. The Office of Insurance Regulation s disapproval of this filing is a decision that affects the substantial interests of your company and, as such, your company may be entitled to a hearing to contest this decision. You have the right to contest this action pursuant to Section , F.S. An outline of your rights and procedures to follow is attached. Feel free to contact me if you have any questions. BUREAU OF LIFE & HEALTH FORMS & RATES 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

30 Sincerely, Daniel J. Keating, FSA, MAAA Actuary (850) Enclosures

31 NOTICE OF RIGHTS Pursuant to Sections and , Florida Statutes and Rule Chapters and , Florida Administrative Code (F.A.C.), you have a right to request a proceeding to contest this action by the Office of Insurance Regulation (hereinafter the Office ). You may request a proceeding by filing a Petition. Your Petition for a proceeding must be in writing and must be filed with the General Counsel acting as the Agency Clerk, Office of Insurance Regulation. If served by U.S. Mail the Petition should be addressed to the Florida Office of Insurance Regulation at 612 Larson Building, Tallahassee, Florida If Express Mail or hand-delivery is utilized, the Petition should be delivered to 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida The written Petition must be received by, and filed in the Office no later than 5:00 p.m. on the twenty-first (21) day after your receipt of this notice. Unless your Petition challenging this action is received by the Office within twenty-one (21) days from the date of the receipt of this notice, the right to a proceeding shall be deemed waived. Mailing the response on the twenty-first day will not preserve your right to a hearing. If a proceeding is requested and there is no dispute of material fact the provisions of Section (2), Florida Statutes would apply. In this regard you may submit oral or written evidence in opposition to the action taken by this agency or a written statement challenging the grounds upon which the agency has relied. While a hearing is normally not required in the absence of a dispute of fact, if you feel that a hearing is necessary one will be conducted in Tallahassee, Florida or by telephonic conference call upon your request. If you dispute material facts which are the basis for this agency's action you may request a formal adversarial proceeding pursuant to Sections and (1), Florida Statutes. If you request this type of proceeding, the request must comply with all of the requirements of Rule Chapter , F.A.C., must demonstrate that your substantial interests have been affected by this agency s action, and contain: a) A statement of all disputed issues of material fact. If there are none, the petition must so indicate; b) A concise statement of the ultimate facts alleged, including the specific facts the petitioner contends warrant reversal or modification of the agency s proposed action; c) A statement of the specific rules or statutes the petitioner contends require reversal or modification of the agency s proposed action; and d) A statement of the relief sought by the petitioner, stating precisely the action petitioner wishes the agency to take with respect to the agency s proposed action. These proceedings are held before a State Administrative Law Judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere, the Office will request that the hearing be conducted in Tallahassee. In some instances you may have additional statutory rights than the ones described herein. Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. Any request for an administrative proceeding received prior to the date of this notice shall be deemed abandoned unless timely renewed in compliance with the guidelines as set out above.

32 To: Sent: 1/18/2005 4:52:18 PM From: Cc: Bcc: Subject: Florida Office of Insurance Regulation [RE: Filing Number ] Attachment(s): Please provide the number of incurred claims for each of the last 5 calendar years, for both Florida and Nationwide business. Please provide this information by close of business Thursday, January 20, 2005 Sincerely, Daniel J. Keating, FSA, MAAA Actuary (850)

33 To: Sent: 1/21/2005 1:43:32 PM From: Cc: Bcc: Subject: Florida Office of Insurance Regulation [RE: Filing Number ] Attachment(s): FLR-Dis-Union-Bankers-Ins-Co.rtf Click the link below to view the documents for this filing: Please see the attached letter. A signed copy of the letter will be faxed and mailed. Electronic copies of the stamped documents may be viewed using the link provided. If you have any questions, please do not hesitate to contact me. Sincerely, Daniel J. Keating, FSA, MAAA Actuary (850)

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