⚠ The Jet Engine Company That Reinsures Long-Term CareModerate threat

GE Aerospace (GE) — threat to the moat

201,700 long-term-care policies, average holder aged eighty, sixty-three per cent with no cap on the claim — inside a jet engine company.

There is a business inside GE Aerospace that has no connection to aviation, is twice the size of the company's equity, and gets almost no attention.

The long-term care book, disclosed in fullPolicies in force201,700, covering 253,000 livesAverage attained age80 — ERAC 79, UFLIC 85Lifetime benefit period63% of policies — no cap on the claimInflation protection option77% of policiesPolicies already on claim19,300ERAC stopped writing after 2008; UFLIC closed in 2004. Liabilities $36,894m against $18,677m of equity.
The jet engine company’s largest single liability is nursing care, and the claims are arriving now.

The run-off insurance operations are Employers Reassurance Corporation, which assumed long-term care and life insurance from numerous cedents under reinsurance treaties and stopped accepting new policies after 2008, and Union Fidelity Life Insurance Company, which assumed long-term care insurance, structured settlement annuities and variable annuities from Genworth Financial and has been closed to new business since 20041.

The disclosure is unusually detailed and it repays reading. Together the two hold 201,700 long-term-care policies covering 253,000 lives. The average policyholder attained age is eighty — seventy-nine at ERAC and eighty-five at UFLIC. Sixty-three per cent of the policies carry a lifetime benefit period, seventy-seven per cent carry an inflation protection option, and 19,300 policies are already on claim. GAAP reserves at the locked-in rate are $23,837 million and gross statutory reserves $29,843 million2. On the balance sheet, insurance liabilities and annuity benefits total $36,894 million, against total shareholders' equity of $18,677 million3.

A lifetime benefit period means the claim has no cap. An inflation protection option means the daily benefit rises. An attained age of eighty means the claims are arriving now. This is the least forgiving product line in insurance, and the industry's history with it is a history of reserve strengthening.

The company states the mechanism by which it becomes a cash problem: statutory testing of insurance reserves is subject to assumptions about inflation, the discount rate, morbidity, mortality and future long-term care premium increases, and adverse changes could increase future policy benefit reserves and the capital GE Aerospace is required to contribute to its insurance subsidiaries4.

There is a counterparty wrinkle too. For UFLIC, trust assets are held for the benefit of insurance subsidiaries of Genworth, which has stated in the past that it will not bolster the capital position of its insurance subsidiaries; solvency concerns there could lead to actions affecting UFLIC, including control over the relevant trust assets5.

It reduces to the insurance liability balance: $36,894 million at end-2025 against $36,209 million a year earlier6. It should fall as the book runs off. A year in which it rises, or in which a capital contribution is required, is the year this stops being a curiosity.

The number that tests this threat
Reported
Long-term care policies in force
201,700, average attained age 80

Covering 253,000 lives, with 63% carrying a lifetime benefit period, 77% an inflation protection option and 19,300 already on claim. GAAP reserves at the locked-in rate are $23,837M and gross statutory reserves $29,843M, inside total insurance liabilities of $36,894M against shareholders equity of $18,677M. Watch the liability balance: it should fall as the book runs off, and a required capital contribution is the event that makes this real.

Source: GE Aerospace Form 10-K, fiscal year 2025 ↗
References
  1. ReportedThe run-off insurance operations are Employers Reassurance Corporation, which assumed long-term care and life insurance from numerous cedents under reinsurance treaties and stopped accepting new policies after 2008, and Union Fidelity Life Insurance Company, which assumed long-term care insurance, structured settlement annuities and variable annuities from Genworth Financial and has been closed to new business since 2004.
    GE Aerospace Form 10-K, FY2025 - Other Items - Insurance — the run-off insurance operations comprising Employers Reassurance Corporation and Union Fidelity Life Insurance Company, and the long-term care portfolio table giving reserve balances, policies and covered lives in force, average policyholder attained age, the proportions with lifetime benefit periods, inflation protection options and joint lives, policies on claim, and the structured settlement annuity disclosure. — FY2025 · publ. January 2026 · source ↗
  2. ReportedGAAP reserves at the locked-in rate are $23,837 million and gross statutory reserves $29,843 million.
    GE Aerospace Form 10-K, FY2025 - Other Items - Insurance — the run-off insurance operations comprising Employers Reassurance Corporation and Union Fidelity Life Insurance Company, and the long-term care portfolio table giving reserve balances, policies and covered lives in force, average policyholder attained age, the proportions with lifetime benefit periods, inflation protection options and joint lives, policies on claim, and the structured settlement annuity disclosure. — FY2025 · publ. January 2026 · source ↗
  3. ReportedOn the balance sheet, insurance liabilities and annuity benefits total $36,894 million, against total shareholders' equity of $18,677 million.
    GE Aerospace Form 10-K, FY2025 - consolidated financial statements — statement of operations including sales of equipment, sales of services, insurance revenue and their respective costs; statement of financial position including insurance liabilities and annuity benefits, shareholders' equity, property plant and equipment and shares outstanding; and the statement of cash flows. — FY2025 · publ. January 2026 · source ↗
  4. ReportedThe company states the mechanism by which it becomes a cash problem: statutory testing of insurance reserves is subject to assumptions about inflation, the discount rate, morbidity, mortality and future long-term care premium increases, and adverse changes could increase future policy benefit reserves and the capital GE Aerospace is required to contribute to its insurance subsidiaries.
    GE Aerospace Form 10-K, FY2025 - Item 1A Risk Factors — supply chain and supplier capacity, product safety and quality, run-off insurance and the Bank BPH mortgage portfolio in Poland including the Genworth trust counterparty exposure, borrowings and liquidity, and regulatory and legal risks. — FY2025 · publ. January 2026 · source ↗
  5. ReportedFor UFLIC, trust assets are held for the benefit of insurance subsidiaries of Genworth, which has stated in the past that it will not bolster the capital position of its insurance subsidiaries; solvency concerns there could lead to actions affecting UFLIC, including control over the relevant trust assets.
    GE Aerospace Form 10-K, FY2025 - Item 1A Risk Factors — supply chain and supplier capacity, product safety and quality, run-off insurance and the Bank BPH mortgage portfolio in Poland including the Genworth trust counterparty exposure, borrowings and liquidity, and regulatory and legal risks. — FY2025 · publ. January 2026 · source ↗
  6. ReportedIt reduces to the insurance liability balance: $36,894 million at end-2025 against $36,209 million a year earlier.
    GE Aerospace Form 10-K, FY2025 - consolidated financial statements — statement of operations including sales of equipment, sales of services, insurance revenue and their respective costs; statement of financial position including insurance liabilities and annuity benefits, shareholders' equity, property plant and equipment and shares outstanding; and the statement of cash flows. — FY2025 · publ. January 2026 · source ↗
Sources
Generated September 23, 2026