Partnership Life Assurance has signed an agreement with Genworth Life Insurance to launch a medically underwritten immediate annuity in the US, comparable to Partnership’s UK care annuity.
Genworth already has a strong distribution footprint in the US long-term care insurance market, where it is estimated that $45bn (£29bn) is spent annually by individuals self-funding their care costs and fewer than 10 per cent have any form of insurance to meet such costs.
The product launch is planned for launch in the first quarter next year, with a carefully controlled roll out to be undertaken with trained and licensed distribution.
The annuities are relatively short duration - typically three to four years on average - which will allow experience to be refined, learnings to be captured and capital to be recycled.
Assets backing Partnership’s US liabilities will be managed within mandates approved by its board, while the business will be substantially reinsured into Partnership’s main UK life company, with pricing that has undergone testing to confirm its validity for use in the US.
Plans for such a product have been brewing since this time last year, when Partnership revealed intentions to enter the US market by launching a ‘point of need’ care annuity, although details were not divulged at that time.
Steve Groves, chief executive of Partnership, stated the potential for this product is significant.
He said: “The market is huge and customers seeking to protect themselves against the cost of care over a highly variable future lifetime have limited alternative solutions at the point of need.”
Tom McInerney, president and chief executive of Genworth, added that Partnership’s expertise in managing longevity risk complements Genworth’s strategic vision for leadership and stewardship within the long-term care industry.
The dual company statement went on to explain that the medically underwritten immediate annuity provides a guaranteed income for life through a single premium product, which may be purchased at the point of entering a facility or requiring care and can be used to help fund the costs of care or any other living expenses as individuals age.
A clear distinction exists between this immediate annuity proposition and existing non-annuity US pre-funded LTC insurance products, it noted, adding that the majority of existing products are sold to healthy individuals in their fifties and sixties to meet the potential future costs of care they may have in later life.
“However, there are limited alternatives currently available at the point of need for individuals seeking a source of income to help offset the potentially significant costs of care over an extended period,” read the statement.
peter.walker@ft.com
