Here is something from WSJ.com that might interest you:
Collapse of long-term care insurer reflects deep industry woes
Could this happen to the insurers (Prudential, et al) that have acquired significant pension liabilities? If it does, don’t look for the PBGC to help, as once that liability is transferred from the corporate sponsor to the insurer, the PBGC is no longer on the hook.
According to the article, one of the primary reasons for the impending failure is the fact that “most actuaries badly underestimated costs, and the insurers then met resistance in many state insurance departments when trying to push the pricing miscalculation onto policyholders through steep rate increases.”
“Penn Treaty is the poster child for what happens if everything goes wrong—when key assumptions on…claims, morbidity and interest rates go wrong.” Sound familiar? We know that pension liabilities for public entities aren’t being accurately measured under GASB, as liabilities are discounted at the return on asset assumption (ROA). We’ve seen public pension liabilities explode during the last 15 years on an actuarial basis despite this hocus pocus accounting.