TOI: LTC03I Individual Long Term Care Sub-TOI: LTC03I.001 Qualified

Transcription

1 SERFF Tracking Number: MULF State: Oregon Filing Company: John Hancock Life Insurance Company (USA) State Tracking Number: HL , HL , HL , HL , Company Tracking Number: MULF TOI: LTC03I Individual Long Term Care Sub-TOI: LTC03I.001 Qualified Product Name: Long-Term Care Insurance Project Name/Number: 2010 Inforce Rate Increases-JH / Filing at a Glance Company: John Hancock Life Insurance Company (USA) Product Name: Long-Term Care Insurance SERFF Tr Num: MULF State: Oregon TOI: LTC03I Individual Long Term Care SERFF Status: Pending State Action State Tr Num: HL , HL , HL , HL , Sub-TOI: LTC03I.001 Qualified Co Tr Num: MULF State Status: Review pending Filing Type: Rate Reviewer(s): Scott Fitzpatrick Authors: Michelle Fluet, Glenn Daly, Disposition Date: Carol Folsom, Pat Hamlett, Marie Roche, Joanne Witham, Richard Famiglietti Date Submitted: 10/13/2010 Disposition Status: Implementation Date Requested: On Approval Implementation Date: General Information Project Name: 2010 Inforce Rate Increases-JH Status of Filing in Domicile: Pending Project Number: Date Approved in Domicile: Requested Filing Mode: Review & Approval Domicile Status Comments: Explanation for Combination/Other: Market Type: Individual Submission Type: New Submission Group Market Size: Overall Rate Impact: Group Market Type: Filing Status Changed: 11/04/2010 Explanation for Other Group Market Type: State Status Changed: 10/18/2010 Deemer Date: Created By: Richard Famiglietti Submitted By: Richard Famiglietti Corresponding Filing Tracking Number: Filing Description: Re: John Hancock Life Insurance Company (U.S.A.) Company NAIC # 65838; FEIN #: Individual Long-Term Care Insurance Rate Revision Submission Revised Actuarial Memo s (See Policy Form List Below) Dear Commissioner: PDF Pipeline for SERFF Tracking Number MULF Generated 11/18/ :20 PM

2 SERFF Tracking Number: MULF State: Oregon Filing Company: John Hancock Life Insurance Company (USA) State Tracking Number: HL , HL , HL , HL , Company Tracking Number: MULF TOI: LTC03I Individual Long Term Care Sub-TOI: LTC03I.001 Qualified Product Name: Long-Term Care Insurance Project Name/Number: 2010 Inforce Rate Increases-JH / We have just completed our most extensive claims study to date and unfortunately we have concluded that, in order to ensure our ability to meet the needs of our policyholders in the long term, we need to request an enforce rate increase on the policy forms. Our study found that many more insureds are expected to claim than what we assumed in the pricing of these policy forms, reinforcing the value of the product to policyholders, but creating a pricing issue. Our morbidity study was conducted internally and peer reviewed internally as well as by an independent third party. We are requesting acceptance of a premium rate increase on the policy series listed below and are enclosing the actuarial memos, rates, and forms for your review and approval. Policy Series Approval Date Years Sold Average Increase LTC-OR-91 01/07/ % LTC-96 OR 9/96 11/21/ % LTC-96 CL OR 9/96 11/21/ % LTC2000 OR 4/00 12/11/ % LTC-02 OR 04/05/ % BSC-02 OR 04/05/ % LTC-03 OR 11/25/ % BSC-03 OR 11/25/ % LTC-03 OR (2007) 08/10/ % The proposed premium rates will be effective on the next policy anniversary date, following a 60-day policyholder notification period, which will be made as soon as practicable following State approval. We will also offer the affected insureds some alternative options to reduce their benefits in order to possibly maintain their current premium level. Policyholder Options We are fully aware that a premium increase may be difficult for our policyholders; therefore we will provide all policyholders with an array of options which will help them mitigate the impact of any increase. Most important, for those policyholders who elected compound or simple inflation, we will provide them with the ability to completely avoid the increase by reducing their inflation coverage from 5 percent compound or simple inflation to a lower percentage inflation coverage which will vary by policy series. Our policyholders will be able to keep all accrued inflation increase amounts to date and the lower inflation index will apply on a prospective basis only. We will be filing separately these endorsements. PDF Pipeline for SERFF Tracking Number MULF Generated 11/18/ :20 PM

3 SERFF Tracking Number: MULF State: Oregon Filing Company: John Hancock Life Insurance Company (USA) State Tracking Number: HL , HL , HL , HL , Company Tracking Number: MULF TOI: LTC03I Individual Long Term Care Sub-TOI: LTC03I.001 Qualified Product Name: Long-Term Care Insurance Project Name/Number: 2010 Inforce Rate Increases-JH / In addition, policyholders will be able to reduce their benefit period, adjust their daily/monthly benefit amount, or extend their elimination period. They will also be able to drop riders from their coverage. We will also submitting separately new Personal Worksheets LTC-PWK 4/11 and LTC-PWKDM 4/11 which includes the appropriate disclosure regarding this increase. No change will be made to this form other than state specific information that is requested by your Department or another state insurance Department. Where the NAIC contingent nonforfeiture benefit or the nonforfeiture benefit (if purchased) is triggered, customers will be offered paid-up coverage in accordance with the applicable provision. We are allowing contingent nonforfeiture if the rate increase trigger is met for all affected policyholders, even if it was not otherwise required in your State. This submission is being filed in all states, the District of Columbia and Puerto Rico. The following items are included in this submission: * the submission letter. * all actuarial material and referenced forms. * all required certifications. Please do not hesitate to contact us regarding this submission. We will be happy to meet with the Department either in person or via conference call at a time of your convenience. Thank you for your time and consideration in this matter. Company and Contact Filing Contact Information Richard Famiglietti, Sr. Contract Consultant rfamiglietti@jhancock.com 200 Berkeley Street [Phone] B [FAX] Boston, MA Filing Company Information John Hancock Life Insurance Company (USA) CoCode: State of Domicile: Michigan 200 Berkeley Street Group Code: Company Type: Boston, MA Group Name: State ID Number: (617) ext. [Phone] FEIN Number: PDF Pipeline for SERFF Tracking Number MULF Generated 11/18/ :20 PM

4 SERFF Tracking Number: MULF State: Oregon Filing Company: John Hancock Life Insurance Company (USA) State Tracking Number: HL , HL , HL , HL , Company Tracking Number: MULF TOI: LTC03I Individual Long Term Care Sub-TOI: LTC03I.001 Qualified Product Name: Long-Term Care Insurance Project Name/Number: 2010 Inforce Rate Increases-JH / Filing Fees Fee Required? Retaliatory? Fee Explanation: Per Company: No No No COMPANY AMOUNT DATE PROCESSED TRANSACTION # John Hancock Life Insurance Company (USA) $0.00 State Specific Have you reviewed the General Instructions attached at the bottom of the General Instructions page?: Yes Did you read the instructions regarding how to enter the form number and edition date in the Forms Schedule tab?: Yes Did you realize Oregon does not respond to Status Requests thru SERFF?: Yes PDF Pipeline for SERFF Tracking Number MULF Generated 11/18/ :20 PM

5 SERFF Tracking Number: MULF State: Oregon Filing Company: John Hancock Life Insurance Company (USA) State Tracking Number: HL , HL , HL , HL , Company Tracking Number: MULF TOI: LTC03I Individual Long Term Care Sub-TOI: LTC03I.001 Qualified Product Name: Long-Term Care Insurance Project Name/Number: 2010 Inforce Rate Increases-JH / Rate Information Rate data applies to filing. Filing Method: SERFF Rate Change Type: Increase Overall Percentage of Last Rate Revision: % Effective Date of Last Rate Revision: 10/01/2009 Filing Method of Last Filing: SERFF Company Rate Information Company Name: Overall % Indicated Change: Overall % Rate Impact: Written Premium Change for # of Policy Holders Affected for this Written Premium for this Program: Maximum % Change (where required): Minimum % Change (where required): this Program: Program: John Hancock Life Insurance Company (USA) % % $4,468,802 6,007 $11,539, % 0.000% PDF Pipeline for SERFF Tracking Number MULF Generated 11/18/ :20 PM

6 SERFF Tracking Number: MULF State: Oregon Filing Company: John Hancock Life Insurance Company (USA) State Tracking Number: HL , HL , HL , HL , Company Tracking Number: MULF TOI: LTC03I Individual Long Term Care Sub-TOI: LTC03I.001 Qualified Product Name: Long-Term Care Insurance Project Name/Number: 2010 Inforce Rate Increases-JH / Rate/Rule Schedule Schedule Document Name: Affected Form Rate Rate Action Information: Attachments Item Numbers: Action:* Status: (Separated with commas) Actuarial Memo LTC-OR-91 Revised Previous State Filing Number: Percent Rate Change Request: OR Adv Memo.pdf Actuarial Memo LTC-96 OR 9/96, Revised LTC-96 CL OR 9/96 & LTC2000 OR 4/00 Previous State Filing Number: Percent Rate Change Request: OR Gold Memo.pdf Actuarial Memo LTC-02 OR & BSC-02 OR Revised Previous State Filing Number: Percent Rate Change Request: OR CCI and ECI Memo.pdf Actuarial Memo LTC-03 OR & BSC-03 OR Revised Previous State Filing Number: Percent Rate Change Request: OR CCII and ECII Memo.pdf Actuarial Memo LTC-03 OR Revised Previous State Filing Number: Percent Rate Change Request: OR CCII07 Memo.pdf PDF Pipeline for SERFF Tracking Number MULF Generated 11/18/ :20 PM

7 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, 2010 Product Name Form Number Issue Date Range ProtectCare Advantage LTC LTC-OR-91 Jan 1992 May Scope & Purpose This memorandum consists of materials which support the development of new premium rates for the above captioned Policy series forms. The purpose of this memorandum is to demonstrate that the requirements of this State in regards to an in force rate increase request have been met. This rate filing is not intended to be used for any other purpose. 2. Benefit Description A brief policy description for each of the policy forms: LTC-OR-91 Individually underwritten long-term care policies that provide comprehensive long-term care coverage for care received in a nursing home or assisted care living facility or covered services received in a community setting. Provides reimbursement of 100% of covered long-term care expenses incurred after an elected elimination period is met, up to the nursing home or home health maximum daily amounts. There are separate pools for nursing home/assistance living facilities and home health care. The benefit eligibility is determined based on the insured's cognitive impairment or their requiring physical assistance to perform two out of five activities of daily living (ADLs) of dressing, eating, toileting, transferring, and maintaining continence. Premiums are waived after the insured has received 90 days of benefits and will continue to be waived until the insured stops receiving such benefits or the policy limit is reached. 3. Renewability All policy forms are guaranteed renewable. 4. Applicability This filing is applicable to in force policies only, as these policy forms are no longer being sold in the market. The premium changes will apply to the base forms as well as all applicable riders. 5. Actuarial Assumptions Morbidity The morbidity assumptions are derived from our own experience, following a comprehensive claim study just recently completed. The study has been peer reviewed both internally as well as by an Independent third party. A summary of the findings from the morbidity study is included in this filing as a separate document. Our claims projections include 12 years of future morbidity improvements at 1.1% per year. Oregon Page 1 of 10

8 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, 2010 Below are sample annual claim costs for an LTC-91 policy, 100-day EP, $10 daily benefit, with Indexed Inflation option: Issue Age 57 Issue Age 67 Issue Age 77 Age 4 yr Lifetime Age 4 yr Lifetime Age 4 yr Lifetime Voluntary Lapses The voluntary lapse rates are also based on our own experience: Mortality Policy Inflation Option Duration None/GPO All Other % 3.30% % 1.95% % 1.35% % 1.00% % 0.95% % 0.90% % 0.85% % 0.85% % 0.85% % 0.85% % 0.85% The mortality rates have also been derived based on our own experience within our individual long-term care block of business. The base mortality table is the unloaded 1994 Group Annuity Mortality Table, sex-distinct, with 16 years of improvements based on scale AA, and the following selection factors which vary by underwriting class: Oregon Page 2 of 10

9 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, 2010 Preferred Risk Class Standard Risk Class Policy Issue Ages Issue Ages Duration <= >= 82 <= >= % 11.42% 13.10% 15.41% 27.28% 20.56% 23.59% 27.74% % 15.31% 17.05% 20.24% 36.37% 27.10% 30.19% 35.84% % 19.32% 22.21% 25.88% 44.45% 33.65% 38.69% 45.08% % 21.81% 26.97% 31.69% 48.49% 37.38% 46.23% 54.33% % 27.69% 32.46% 38.36% 51.52% 46.73% 54.77% 64.74% % 32.64% 38.10% 39.49% 53.57% 54.23% 63.31% 65.62% % 34.92% 43.91% 43.70% 56.44% 57.13% 71.85% 71.50% % 37.25% 47.71% 49.40% 60.27% 60.04% 76.91% 79.63% % 40.73% 50.97% 55.26% 62.78% 64.69% 80.95% 87.76% % 44.31% 54.95% 61.26% 66.63% 69.35% 86.01% 95.89% % 47.97% 59.17% 66.86% 70.49% 74.00% 91.29% % % 50.85% 66.02% 73.12% 74.34% 75.11% 97.52% % % 54.58% 73.23% 76.24% 75.39% 77.32% % % % 58.44% 77.88% 79.36% 77.48% 79.53% % % % 61.56% 82.48% 82.48% 79.57% 80.60% % % % 64.74% 85.60% 85.60% 81.55% 81.68% % % % 65.59% 85.60% 85.60% 84.17% 82.76% % % % 68.29% 85.60% 85.60% 86.79% 86.16% % % % 70.99% 85.60% 85.60% 89.42% 89.57% % % % 73.69% 85.60% 85.60% 92.04% 92.97% % % % 76.39% 85.60% 85.60% 94.66% 96.38% % % % 79.08% 85.60% 85.60% 97.28% 99.78% % % % 81.78% 85.60% 85.60% 99.91% % % % % 84.48% 85.60% 85.60% % % % % % 85.60% 85.60% 85.60% % % % % Substandard 1 Risk Class Substandard 2 Risk Class Policy Issue Ages Issue Ages Duration <= >= 82 <= >= % 28.03% 32.16% 37.82% 46.65% 35.17% 40.34% 47.45% % 37.46% 41.73% 49.53% 63.06% 47.00% 52.35% 62.14% % 47.14% 54.20% 63.17% 78.13% 59.14% 68.00% 79.24% % 53.09% 65.65% 77.15% 86.38% 66.60% 82.36% 96.78% % 67.24% 78.81% 93.15% 93.00% 84.35% 98.87% % % 79.05% 92.29% 95.65% 97.97% 99.17% % % % 84.37% % % % % % % % 89.79% % % % % % % % 97.98% % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % Oregon Page 3 of 10

10 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, 2010 Factors for ages not listed above are interpolated. We are also projecting 12 years of future mortality improvement based on scale AA, consistent with the 12 years of future morbidity improvement in our future claim projections. Expenses Expenses have not been explicitly projected. It is assumed that the originally filed expense assumptions remain appropriate. 6. Trend Assumptions As this is not medical insurance, we have not included any explicit medical cost trends in the projections. 7. Marketing Method This product was typically marketed through our traditional agency system and brokers involving a personal contact with each applicant. 8. Underwriting These policy forms were underwritten using a medical and risk questionnaire. We also utilized Attending Physician Statement and personal interviews depending on the age of the applicant and medical conditions. 9. Premium Classes The base policy premium rates vary by Issue age, Benefit Period, Inflation Option, Home Health Care maximum benefit percentage, and Underwriting Class, as in the initial rate filing. All premium factors related to the insured elected benefit design options or any eligible discount remain unchanged from the initial rate filing. 10. Premium Modalization Rules Multiple of Plus Annual premium Annual Semiannual: $0.60 Quarterly: $0.90 Premiumatic: $0.80 Oregon Page 4 of 10

11 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, Issue Age Range The issue age range is for all policy forms. 12. Area Factors Area factors are not applicable to any of the policy forms or riders. 13. Average Annual Premium The table below summarizes the average annual premium per policy before and after the requested increase. Nationwide Oregon before the before the after the Form rate increase rate increase rate increase LTC-OR-91 1,790 1,630 2, Number of Policy Holders The table below summarizes, as of 12/31/2009, the number of policies inforce and their 2009 annualized premium that will be affected by this rate increase in your state. Form Number of Policies 2009 Annualized Premium LTC-OR , Reserves Active Life Reserves have not been used in this rate increase demonstration. Minimum Statutory Claim reserves as of 12/31/2009 have been discounted to the date of incurral of each respective claim and included in the historical incurred claims. Incurred But Not Reported claim reserves as of 12/31/2009 have also been allocated to the calendar year of incurral and included in historic incurred claims. 16. Requested Rate Increase The company is requesting an average rate increase of 30.6%, which varies by issue age, benefit period, and inflation option, and ranges from 0% to 77%. This was derived as follows: 1. The Company first determined the projected lifetime loss ratio for this form based on nationwide actual experience and projected future experience. We then determined the amount of cumulative rate increase (243%) that would be needed to revert to the original lifetime expected loss ratio for the Oregon Page 5 of 10

12 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, 2010 form. This cumulative rate increase includes the 13% prior rate increase which was implemented in 2010 on these policy forms, following your acceptance of our prior rate increase filing. 2. In order to limit the magnitude of the rate increase, particularly at the older ages, we capped the cumulative maximum rate increase to 100% for issue ages below 61; between issue ages 61 and 79, the cumulative maximum rate increase grades from 100% to 5% in 5% intervals, and there will be no additional rate increase for issue ages 80 and above. 3. In addition, the cumulative increases were reduced or eliminated if necessary, so that for any insured subject to a rate increase, the premium rates do not exceed the rates that have been accepted in your State for new business under our currently sold LTC-03 OR 6/10 policy form, adjusted for benefit differences and changes in underwriting guidelines and risk classification (this is demonstrated in Appendix A using LTC-91 as an example). 4. The prior implemented rate increases were backed out of the resulting final cumulative rate increases; if the cumulative rate increase is less than the prior implemented rate increase, the additional rate increase was set to 0%. 5. Finally, we ensured that the resulting overall increase in rates satisfies the rate stability rule ensuring no less than an 85% loss ratio on the rate increase portion, while applying the original loss ratio on the rest (as the original loss ratio was higher than 58%). This is demonstrated at the bottom of Exhibit 1 where it can be seen that the sum of past and future projected incurred claims exceeds the sum of (the original premium times the original loss ratio) and (the rate increase premium times the 85% loss ratio requirement). Appendix B contains the new proposed rate tables for all policy forms included with this filing. Please note that the actual rates implemented may vary slightly from those in Appendix B due to implementation rounding algorithms. 17. Analysis Performed The initial premium schedule was based on the originally filed pricing assumptions which were believed to be appropriate, given company and industry experience available, when the initial rate schedule was developed. The original pricing assumptions for morbidity, voluntary termination rates, and mortality were as follows: Morbidity: Claim assumptions were derived using data published by the National Center for Health Statistics National Nursing Home Survey (1977 and 1985 ), the National Health Interview Survey (1979 and 1984), the National Long-Term Care Survey (1982), Medicare data; and other experience furnished to us by consultants, with adjustments due to the impact of underwriting, inflation options, elected options, anti-selection considerations, and the saving incurred because the maximum daily benefit will not always be paid. Below are original sample annual claim costs for an LTC-91 policy, 100-day EP, $10 daily benefit, with Indexed Inflation option: Oregon Page 6 of 10

13 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, 2010 Issue Age 57 Issue Age 67 Issue Age 77 Age 2 yr Lifetime Age 2 yr Lifetime Age 2 yr Lifetime Mortality: The 1983 Group Annuity Mortality Table was used, weighted 40% males and 60% females. Voluntary Terminations: Issue Age Duration % 11.6% 13.0% 13.7% 16.2% 16.7% 2 9.3% 9.3% 10.0% 10.8% 11.5% 11.8% 3 8.8% 8.8% 9.3% 9.9% 10.5% 10.7% 4 8.3% 8.3% 8.7% 9.1% 9.5% 9.6% 5 7.9% 7.9% 8.1% 8.3% 8.5% 8.5% 6 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% 7 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 8 5.4% 5.4% 5.4% 5.4% 5.4% 5.4% 9 5.2% 5.2% 5.2% 5.2% 5.2% 5.2% % 5.0% 5.0% 5.0% 5.0% 5.0% As part of the inforce management of the business, the company monitored the performance of the business by completing periodic analysis for morbidity, voluntary lapse rates and mortality. The findings from these analyses were used in projecting the inforce business to determine the effect of experience on the projected lifetime loss ratio. These studies have indicated that actual morbidity experience, lapse, and mortality experience have deteriorated since original assumptions were developed, and the deterioration does not appear to be temporary. At the time of the initial premium rate development of these forms, there was barely any industry insured data or company data available for morbidity at the later durations and older ages; since that time, the volume of experience has increased dramatically. We now have 4 times the company experience data at ages 85+ and durations 10+ compared to just 3 years ago. However, the current morbidity assumptions for these forms result in durational loss ratios than are not higher than originally assumed, as can be seen in Exhibit 1. This is consistent with the comparison of our above original assumptions against our current morbidity assumptions (refer to Section 5 above), where it can be seen that the claim costs are generally not higher than originally assumed. Oregon Page 7 of 10

14 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, 2010 Similarly, there was little insured industry data available for mortality (for Long Term Care purchasers) when our initial premiums were developed, and we have observed lower mortality than expected. Furthermore, mortality improvements have been observed throughout the LTC and Life Insurance industries, consistent with our observations. We have also observed that our underwriting risk classification impacts mortality as well as morbidity and we have refined our assumption accordingly. For lapses, we continue to observe much lower lapse rates than what was expected at the time of the initial premium rate development of these forms. The following tables show how in aggregate how our new assumptions (Expected) compare to actual experience: Morbidity: Experience period: Inception through 2009 for incidence, inception through 2008 for claim terminations, and for salvage Claim Counts (incidence) A/E Claim Terminations (continuance) A/E Amount Paid (salvage) Dur % < 10 year BPs 98% GPO/No Inflation 100% Dur % 10 year + BPs 101% Simple Inflation 100% Dur % TOTAL 99% Compound Inflation 100% Dur % Total 100% TOTAL 99% Mortality: Experience period: 3 year study Voluntary Lapses: Experience period: 3 year study 6/30/2006-6/30/2009 Duration A/E by Policy Amt % % % Total 99% Duration A/E 1 109% 2 131% % % % % Total 113% Note that our current expected assumption was originally derived from our 2008 termination study which covered the period We updated the study this year and decided to ignore the early and late duration experience results shown above as the early duration deviation may be attributable to the economic downturn, Oregon Page 8 of 10 A/E

15 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, 2010 which we view as a temporary event, while the later duration 16+ is not credible yet (only 331 observed lapses) So there was no compelling reason to update our prior best estimate assumption. Exhibit 1 contains nationwide past premium and claims experience and future premium and claim projections and illustrates that the anticipated lifetime loss ratio with the requested rate increase is 88.9%, well in excess of the minimum loss ratio of 60%. The lifetime loss ratio as of 12/31/09 is calculated as the sum of accumulated past and discounted future claims divided by the sum of accumulated past and discounted future earned premium where accumulation and discounting occur at the maximum statutory valuation discount rate of 4.5%. In addition, Exhibit 1 contains the original expected loss ratio projections, adjusted for the actual mix of business issued, with the lifetime loss ratio also calculated as stated above. Furthermore, Exhibit 1 demonstrates that that the sum of the accumulated value of incurred claims without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following: 1. Accumulated value of the initial earned premium times the original assumed lifetime loss ratio, (which was higher than 58%), 2. 85% of the accumulated value of prior premium rate schedule increases, 3. Present value of future projected initial earned premium times the original assumed lifetime loss ratio, and 4. 85% of the present value of future projected premium in excess of the projected initial earned premium. 18. History of previous rate revisions A 13% rate increase on these policy forms was accepted by your state on October 1, Proposed Effective Date These rates will be effective on the next policy anniversary date, following at least a 60 day policyholder notification period. Oregon Page 9 of 10

16 John Hancock Life Insurance Company (U.S.A.) Actuarial Memorandum for Inforce Rate Increase - Advantage Policy Series October 11, Actuarial Certification I am a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries, and I meet the Academy's qualification standards for rendering this opinion and am familiar with the requirements for filing long-term care insurance premiums and filing for increases in long-term care insurance premiums. This memorandum has been prepared in conformity with all applicable Actuarial Standards of Practice, including ASOP No. 8. The preceding Actuarial Memorandum contains: a) the assumptions on which this certification is based; b) the adjustments to prior assumptions with an explanation of the reasons previous assumptions were not realized; c) a lifetime projection of the prior premium rate schedules and incurred claims plus future expected premiums and claims which demonstrates that the revised premium rate schedule meets the loss ratios standards and necessary details of this state; and d) disclosure of the manner, if any, in which reserves have been recognized. In my opinion the revised premium rate schedules are sufficient to cover anticipated costs if the underlying assumptions are realized, and no further premium rate schedule increases are anticipated. I have reviewed and taken into consideration the policy design and coverage provided, and our current underwriting and claims adjudication processes. In forming my opinion, I have used actuarial assumptions and actuarial methods and such tests of the actuarial calculations as I considered necessary. Based on these assumptions or statutory requirements where necessary, the premium rate filing is in compliance with the loss ratio standards of this state. The basis for contract reserves has been previously filed and there is no anticipation of any changes. David Plumb, FSA, MAAA Vice President John Hancock Life Insurance Company Oregon Page 10 of 10

17 4.50% 72% Original Assumptions Exhibit 1: Nationwide Experience Advantage (LTC-91, LTC-94, NH-91, NH-94) Historical & Projected Experience Before Proposed Increase With Proposed Rate Increase Incurred Incurred Incurred Calendar Incurred Earned Loss Incurred Earned Loss Earned Loss Year Claims Premium Ratio* Claims Premium Ratio* Premium Ratio* , ,872 8% ,872 0% 669,872 0% ,021 9,683,679 9% 551,497 9,694,310 6% 9,694,310 6% ,151,485 24,520,792 13% 1,732,165 24,648,172 7% 24,648,172 7% ,745,394 37,561,842 18% 4,653,636 38,479,740 12% 38,479,740 12% ,761,302 56,446,990 21% 8,693,448 59,311,187 15% 59,311,187 15% ,142,865 87,226,687 22% 13,914,299 93,647,086 15% 93,647,086 15% Historical ,594, ,345,566 27% 22,343, ,705,577 19% 114,705,577 19% Experience ,087,500 93,008,511 37% 30,736, ,706,921 27% 112,706,921 27% ,945,442 81,854,287 46% 38,767, ,501,830 36% 108,501,830 36% ,870,460 72,314,707 55% 47,510, ,877,061 45% 104,877,061 45% ,483,179 64,123,267 63% 55,927, ,608,893 55% 101,608,893 55% ,673,811 57,031,365 71% 62,072,517 98,508,302 63% 98,508,302 63% ,875,154 50,815,650 80% 69,907,700 95,131,665 73% 95,131,665 73% ,073,834 45,276,839 91% 80,343,532 91,685,778 88% 91,685,778 88% ,143,448 40,273, % 87,191,477 88,297,419 99% 88,297,419 99% ,976,482 35,722, % 98,236,938 84,650, % 84,650, % ,532,106 31,571, % 109,781,659 80,886, % 80,886, % ,830,148 27,788, % 106,145,569 76,985, % 76,985, % ,920,113 24,354, % 98,806,651 73,223, % 73,223, % ,851,383 21,250, % 115,404,128 77,176, % 77,176, % ,659,258 18,461, % 115,000,828 72,171, % 94,268, % Projected ,381,333 15,966, % 116,364,605 66,479, % 87,293, % Future ,050,825 13,743, % 116,513,366 60,927, % 80,438, % Experience ,661,109 11,776, % 114,934,799 55,530, % 73,722, % ,186,818 10,050, % 112,765,569 50,309, % 67,174, % ,617,586 8,542, % 110,807,891 45,285, % 60,824, % ,961,626 7,224, % 108,075,461 40,486, % 54,710, % ,244,289 6,075, % 103,787,906 35,942, % 48,877, % ,505,872 5,084, % 97,526,392 31,685, % 43,369, % ,804,695 4,244, % 91,225,788 27,738, % 38,222, % ,179,734 3,531, % 86,067,956 24,124, % 33,473, % ,605,470 2,919, % 81,021,971 20,854, % 29,141, % ,023,686 2,392, % 75,628,536 17,920, % 25,224, % ,409,110 1,947, % 69,313,141 15,308, % 21,708, % ,798,091 1,583, % 63,428,165 13,000, % 18,574, % ,236,593 1,284, % 58,835,012 10,978, % 15,805, % ,724,183 1,032, % 54,359,514 9,220, % 13,374, % ,244, , % 49,554,054 7,702, % 11,257, % ,809, , % 44,183,128 6,402, % 9,426, % ,494, , % 39,173,076 5,295, % 7,852, % ,364, , % 35,129,886 4,357, % 6,506, % ,382, , % 31,344,825 3,568, % 5,362, % ,501, , % 27,545,178 2,907, % 4,396, % ,721, , % 23,605,949 2,358, % 3,585, % ,043, , % 20,030,870 1,901, % 2,905, % ,467, , % 17,004,732 1,525, % 2,340, % ,996,072 79, % 14,297,764 1,215, % 1,872, % ,604,034 54, % 12,046, , % 1,488, % ,257,726 37, % 10,127, , % 1,174, % ,000,078 29, % 8,363, , % 919, % ,477 24, % 6,674, , % 714, % ,309 20, % 5,261, , % 549, % ,053 16, % 4,183, , % 419, % ,214 13, % 3,279, , % 317, % ,723 10, % 2,522, , % 237, % ,576 8, % 1,909, , % 175, % ,849 6, % 1,423,646 83, % 128, % ,256 4, % 1,047,444 60, % 93, % ,255 3, % 753,778 43, % 66, % Value as of 12/31/09*: Past 735,308,358 1,448,012, % 1,173,877,735 2,110,927, % 2,110,927, % Future 351,923, ,987, % 1,325,086, ,713, % 699,546, % Lifetime 1,087,232,027 1,560,000, % 2,498,964,384 2,649,640, % 2,810,474, % *reflecting 4.5% interest rate Test: Total Incurred Claims exceeds the Total Initial Premiums x Original Loss Ratio (instead of 58%) + Increased Premiums x 85% Accum Value of Past Initial Prem x 69.7% = 1,471,197,190 Present Value of Future Initial Prem x 69.7% = 332,706,563 Accum Value of Past Incurred Claims = 1,173,877,735 Accum Value of Prior Increases x 85% = 52,133,533 Present Value of Future Incurred Claims = 1,325,086,649 Present Value of Future Increases x 85% = 136,708,458 TOTAL = 2,498,964,384 > TOTAL = 1,992,745,744

18 Appendix A - Comparison to New Business Rates (Advantage Series) Rates shown are for a 90/100-day EP, Single, Standard policyholder, and are per $10 daily benefit Inflation Option: Guaranteed Purchase Option LTC-OR-91 Rates with FlexCare Rider Current New Business Rates (LTC-03 OR 6/10 policy): New Business Rates adjusted for Benefit Differences*: after requested Rate Increase: LTC-OR-91 Rate Increase %: Issue Issue Issue Issue Age Life Age Life Age Life Age Life % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 1% % 0% 0% 1% % 0% 2% 7% % 0% 8% 13% % 0% 14% 19% % 0% 21% 25% % 0% 24% 26% % 0% 24% 26% % 0% 20% 19% % 1% 25% 24% % 7% 31% 29% % 8% 37% 34% % 13% 48% 44% % 12% 44% 39% % 10% 45% 38% % 9% 41% 37% % 3% 41% 35% % 1% 40% 33% % 0% 39% 31% % 1% 38% 31% % 3% 40% 32% % 6% 41% 31% % 5% 41% 32% % 7% 39% 31% % 7% 39% 29% % 6% 38% 29% % 6% 39% 26% % 4% 39% 27% % 5% 38% 25% % 8% 40% 25% % 12% 42% 26% % 13% 42% 27% % 15% 37% 24% % 16% 33% 22% % 17% 28% 21% % 19% 24% 20% % 19% 19% 19% % 15% 15% 15% % 11% 11% 11% % 6% 6% 6% % 2% 2% 2% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% * Benefit Differences between LTC-03 and LTC-91: - LTC-91 is a two-pool policy, but with the addition of the FlexCare Rider, it becomes a one-pool policy. In this case, Benefit Periods of 2, 3, and 5 become equivalent to LTC-03 Benefit Periods of 4, 6, and 10 respectively - LTC-91 has a 2 of 5 ADL trigger, LTC-03 has a 2 of 6 ADL trigger - LTC-91 does not have the Double Coverage for Accident Benefit or Return of Premium Prior to 65 Benefit, the stay-at-home or respite benefits or coverage for a skilled family member - LTC-91 does not have the ability to convert from GPO to 5% Compound inflation option at age 65 - LTC-91 rates are for a 100 service day EP, LTC-03 rates are for a 90 day EP where one day of HHC counts as 7 - LTC-03 underwriting guidelines and classification are stricter than for LTC-91

19 Appendix A - Comparison to New Business Rates (Advantage Series) Rates shown are for a 90/100-day EP, Single, Standard policyholder, and are per $10 daily benefit Inflation Option: 5% Simple Increase LTC-OR-91 Rates with FlexCare Rider Current New Business Rates (LTC-03 OR 6/10 policy): New Business Rates adjusted for Benefit Differences*: after requested Rate Increase: LTC-OR-91 Rate Increase %: Issue Issue Issue Issue Age Life Age Life Age Life Age Life % 0% 0% 0% % 0% 2% 0% % 0% 5% 6% % 0% 12% 9% % 0% 15% 15% % 0% 22% 21% % 0% 29% 25% % 0% 32% 31% % 0% 39% 37% % 0% 46% 43% % 6% 53% 53% % 9% 59% 59% % 13% 67% 65% % 18% 74% 71% % 18% 74% 71% % 18% 74% 71% % 12% 62% 55% % 17% 71% 65% % 25% 77% 73% % 33% 77% 77% % 38% 77% 77% % 36% 77% 77% % 35% 77% 77% % 34% 77% 77% % 33% 77% 75% % 34% 77% 71% % 33% 77% 67% % 33% 77% 66% % 33% 77% 64% % 33% 77% 62% % 32% 77% 60% % 30% 75% 58% % 31% 73% 56% % 30% 68% 54% % 30% 64% 50% % 29% 59% 46% % 28% 55% 44% % 30% 50% 43% % 33% 46% 41% % 33% 42% 38% % 31% 37% 35% % 30% 33% 31% % 28% 28% 28% % 24% 24% 24% % 19% 19% 19% % 15% 15% 15% % 11% 11% 11% % 6% 6% 6% % 2% 2% 2% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% % 0% 0% 0% * Benefit Differences between LTC-03 and LTC-91: - LTC-91 is a two-pool policy, but with the addition of the FlexCare Rider, it becomes a one-pool policy. In this case, Benefit Periods of 2, 3, and 5 become equivalent to LTC-03 Benefit Periods of 4, 6, and 10 respectively - LTC-91 has a 2 of 5 ADL trigger, LTC-03 has a 2 of 6 ADL trigger - LTC-91 does not have the Double Coverage for Accident Benefit or Return of Premium Prior to 65 Benefit, the stay-at-home or respite benefits or coverage for a skilled family member - LTC-91 rates are for a 100 service day EP, LTC-03 rates are for a 90 day EP where one day of HHC counts as 7 - LTC-03 underwriting guidelines and classification are stricter than for LTC-91