# General Electric: The Next Enron? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [August 16, 2019, 5:46pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755 "2019-08-16T17:46:22Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [August 17, 2019, 9:49pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/21 "2019-08-17T21:49:19Z")
The financials of this are over my head, so what I’m wondering is this. What happens to all the people who bought long term care insurance backed up by GE? Do they just lose their life savings because they have to pay out of pocket for nursing home care? What happens to the fact that they paid billions in premiums and then the insurance they paid for can’t be paid out? Do they get a bailout? ---
**Author:** ![F.U.Shakespeare](https://avatars.discourse-cdn.com/v4/letter/f/aca169/32.png) [@F.U.Shakespeare](https://boards.straightdope.com/u/F.U.Shakespeare)\ **Post date:** [August 17, 2019, 10:05pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/22 "2019-08-17T22:05:02Z")
When I first saw the headline of this story and saw Harry Markopolos’s name, I was completely convinced it was real. Markopolos is indeed the person who figured out that Madoff was running a gigantic Ponzi scheme. His book “No One Would Listen” goes into great detail about how, for various reasons, the authorities refused to act on his findings. He came across as a smart, honest guy. However, GE is pointing out that he’s collaborating with a hedge fund which has bet against GE, so he stands to make money if the company tanks. My recollection of Markopolos’s actions investigating Madoff is that he didn’t make any money from Madoff’s failure (apart from a book deal). I’m withholding judgement for now on GE’s accusations. (FWIW, I would think that profiting from Madoff’s failure may not have been possible, since Madoff’s company was not publicly held.) GE’s accusations remind me of Barry Minkow, who first rose to fame as a teenage entrepreneurial genius until his company’s rise was found to be due to stock fraud. Minkow did time in prison, and after he got out, embarked on a career using his criminal experience to uncover financial frauds (sort of like Frank Abagnale of “Catch Me If You Can” fame.) But it later came out that Minkow had begun betting against the companies he was accusing by shorting their stock, and eventually was tried and convicted of fraud – insider trading – once again. Such accusations can wreck companies whether they are guilty or not. Minkow served five more years in prison, and was released earlier this year, owing $612 million in restitution. My gut feeling at this time is that Markopolos is no Minkow, who was also found to have committed countless financial frauds bilking “widows-and-orphans”-type investors in the church he preached at (he got religion – or appeared to – while in prison the first time). His crimes against individual churchgoers led to a whole separate trial from his securities fraud crimes. OTOH, Markopolos has no such acts on his record, and any profits he may reap if his investigation is proved accurate appear to be perfectly legal (as far as I can tell - those kinds of arrangements strike this financial layperson as dizzyingly complicated). It’s in GE’s interests to point such arrangements out, but their mere existence doesn’t disprove Markopolos’s analysis. I’m staying tuned. ---
**Author:** ![F.U.Shakespeare](https://avatars.discourse-cdn.com/v4/letter/f/aca169/32.png) [@F.U.Shakespeare](https://boards.straightdope.com/u/F.U.Shakespeare)\ **Post date:** [August 17, 2019, 10:16pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/23 "2019-08-17T22:16:25Z")
> [@Wesley\_Clark](#): > > The financials of this are over my head, so what I’m wondering is this. > > What happens to all the people who bought long term care insurance backed up by GE? Do they just lose their life savings because they have to pay out of pocket for nursing home care? > > What happens to the fact that they paid billions in premiums and then the insurance they paid for can’t be paid out? Do they get a bailout? My understanding is that the people are simply out of luck. I don’t know whether the insurance wing of GE would (or could) be bailed out by GE’s other operations. The financial advisers I’ve talked to in planning my retirement and estate have generally advised me against getting long-term care insurance. One reason they gave is that the steadily and rapidly rising costs of LTC make it hard for companies to cover decades in the future. So rate increases are common, making it hard for a potential buyer to compare the total cost of premiums with self-insuring. Another reason: insurance companies can fail. And bailouts are rare. ---
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [August 17, 2019, 11:09pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/24 "2019-08-17T23:09:35Z")
> [@SamuelA](#): > > Can you explain more of the business reasons why this is true? What has changed? [Bloomberg](https://www.bloomberg.com/news/articles/2018-02-01/conglomerates-are-broken)can explain it better. Paywall, though. It amounts to increased focus on short-term shareholder value, in lieu of the former long-term and balanced stakeholder value view. If a division of a conglomerate hits the rocks, the stockholders no longer say “Other divisions are strong, right? That’s how a conglomerate _works_”, but “Get rid of it, break it up and let me cash out”. [Another view](https://www.nytimes.com/2017/06/19/business/dealbook/amazon-conglomerate.html) is that they’ve morphed, that while the old ones are completing the Circle of Life, new ones are entering it. ---
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [August 17, 2019, 11:11pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/25 "2019-08-17T23:11:02Z")
> [@fricky00](#): > > There is nothing sad about watching companies that deserve to crumble die! Managements, and most major shareholders, deserve the costs of failure. Not employees or small investors. ---
**Author:** ![glowacks](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/glowacks/32/5548_2.png) [@glowacks](https://boards.straightdope.com/u/glowacks)\ **Post date:** [August 18, 2019, 9:39pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/26 "2019-08-18T21:39:58Z")
One of the major fairly recent corporate buzzphrases is “sticking to our core competencies”. That is, there is some reason why a business becomes successful enough to contemplate acquiring other businesses. But if the reason that they were successful doesn’t translate into how to run their acquisition, it’s not going to be pretty. General Electric being involved in reinsurance makes almost no sense. It has absolutely nothing to do with any sort of electrical or mechanical product that they are known for. It was simply a business they got into because they could, apparently without any of the corporate culture behind how to actually run a reinsurance business. Their lack of ability to recognize bad deals in this market is now causing the entire establishment to suffer from it. If this stuff is true, they will go bankrupt, and those that lent to them will be in possession of some possibly profitable businesses instead of cash. ---
**Author:** ![Isamu](https://avatars.discourse-cdn.com/v4/letter/i/7c8e57/32.png) [@Isamu](https://boards.straightdope.com/u/Isamu)\ **Post date:** [August 19, 2019, 1:20am UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/27 "2019-08-19T01:20:39Z")
> [@Chronos](#): > > GE might be dying; I don’t know about that. But it’s certainly not the next Enron. GE has actual products that they sell to make money. Enron was never anything but just smoke and mirrors. What I came to say. Even if it failed to disclose losses, it ain’t no Enron. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 19, 2019, 2:05pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/28 "2019-08-19T14:05:59Z")
> [@Chronos](#): > > GE might be dying; I don’t know about that. But it’s certainly not the next Enron. GE has actual products that they sell to make money. Enron was never anything but just smoke and mirrors. This is incorrect (re Enron). ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [August 19, 2019, 2:52pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/29 "2019-08-19T14:52:45Z")
F-P is correct. I didn’t want to turn this into an Enron discussion, so I just let those comments go, but Enron had billions of dollars of viable businesses. Just got off the phone with a friend in the reinsurance business - she says that most reinsurance contracts are written so that if the reinsurer collapses, the contracts revert back to the original issuer(s). She doesn’t have specific knowledge of the GE contracts (I wish!), but she would be surprised if they didn’t have such provisions. Her guess is that GE is going to go to these insurance companies and renegotiate the deals and/or gain other financial concessions (favorable loans to GE), but she also says that the report is correct - they need to do this NOW. Markopolos spoke. [General Electric Responds.](https://www.genewsroom.com/press-releases/ge-addresses-claims-harry-markopolos?utm_source=VM_SRCH&utm_medium=paid_search&utm_campaign=us_ge_Accounting&utm_term=US_Ad_2&utm_content=Search&gclid=CjwKCAjwkenqBRBgEiwA-bZVtiC16MKsJsGfGsmNOrXSwsNfuJGy3T2FtrPFR6hv58y3nfOvbeDrQhoCh7gQAvD_BwE) ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 19, 2019, 3:58pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/30 "2019-08-19T15:58:20Z")
> [@JohnT](#): > > I didn’t want to turn this into an Enron discussion, so I just let those comments go, but Enron had billions of dollars of viable businesses. It’s relevant to the discussion because it would be false comfort to assume that GE couldn’t be as bad as Enron. Per my recollection, not only did Enron have billions of dollars of viable businesses but the company as a whole was probably profitable at the time it went BK (though not nearly as profitable as they had pretended). The problem they had was that the opaque nature of their corporate structure and the accounting shenanigans they had pulled caused the investor and lender communities to lose confidence in their books. As a result, lenders refused to roll over their debt (which was the immediate trigger of their BK filing), and in addition, their energy trading business was dependent on their status as a reliable counterparty, which they had lost. If Markopolis’ allegations are accurate, then GE could well be in the same situation as Enron, and the way it would play out would be roughly the same. Mounting losses, restatements of liabilities and profits, increasing loss of investor and lender confidence, and at some point the lenders pull the plug on future financing and it’s all over. If his allegations are accurate, that is. [I feel like a guy like Markopolis is like an unknown fighter getting a title shot against the champ, or an unknown actor or writer in their first big role or published novel, etc. You can’t make really big bucks that first time out, because you’re an unknown and you get bad terms. But if you’re successful, then the next time out - even if that next time is unsuccessful - is your big payday.] ---
**Author:** ![Sage\_Rat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sage_rat/32/399_2.png) [@Sage\_Rat](https://boards.straightdope.com/u/Sage_Rat)\ **Post date:** [August 19, 2019, 9:26pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/31 "2019-08-19T21:26:18Z")
Somewhat off topic but I will note that the President of the United States has a fairly good position to tank the market temporarily, on cue. Markopolis could possibly find some suspicious shorting actions if he investigated those close to the President. ---
**Author:** ![SpoilerVirgin](https://avatars.discourse-cdn.com/v4/letter/s/4491bb/32.png) [@SpoilerVirgin](https://boards.straightdope.com/u/SpoilerVirgin)\ **Post date:** [August 19, 2019, 11:54pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/32 "2019-08-19T23:54:50Z")
I’ve read pretty much every book on financial fraud, including Harry Markopolis’s, and I have to say that in this case I’m with Harry. From everything I’ve heard about him, he’s a true quant - his commitment is to the numbers, no matter what they tell him. He’s always looking for a way to monetize the numbers, but I am convinced that he would never falsify them, or spin the data to try to make a profit. Goldman Sachs, on the other hand, can be entirely discounted. Their opinion on anything, from financial fraud to the weather, is entirely based on what is best for Goldman Sachs. The very fact that they are trying to defend GE makes me think that Harry is absolutely right. Their defense is a little strange, too. They’re saying that GE’s numbers are within the parameters of other insurers, not that GE’s reserves are adequate for their particular circumstances. That said, I think there is a huge difference between the Enron case and the current situation with GE. At Enron, accounting fraud was the purpose of a lot of the company’s business - it was set up to be fraudulent. At GE, they were running a legit business and may have made misrepresentations in their accounting statements once it started to go bad. I’m fascinated to see how it all plays out, although I hope that the core of the business and the employees not involved in accounting fraud can be rescued. ---
**Author:** ![Isamu](https://avatars.discourse-cdn.com/v4/letter/i/7c8e57/32.png) [@Isamu](https://boards.straightdope.com/u/Isamu)\ **Post date:** [August 20, 2019, 4:55am UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/33 "2019-08-20T04:55:59Z")
> [@Fotheringay-Phipps](#): > > It’s relevant to the discussion because it would be false comfort to assume that GE couldn’t be as bad as Enron. > > Per my recollection, not only did Enron have billions of dollars of viable businesses but the company as a whole was probably profitable at the time it went BK (though not nearly as profitable as they had pretended). Enron manipulated the energy market by shutting down energy producers in strategic locations thereby causing energy prices to rise for consumers. They were greedy criminals. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 20, 2019, 1:20pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/34 "2019-08-20T13:20:55Z")
> [@SpoilerVirgin](#): > > I’ve read pretty much every book on financial fraud, including Harry Markopolis’s, and I have to say that in this case I’m with Harry. You can short the stock (or buy put options) and make a lot of money off Harry being right. If he is. > [@](#): > > Their defense is a little strange, too. They’re saying that GE’s numbers are within the parameters of other insurers, not that GE’s reserves are adequate for their particular circumstances. From what I can tell, Markopolis is also basing himself on a comparison to other insurers. The only people who can make an independent assessment as to whether the reserves “are adequate for their particular circumstances” are the plan actuaries, who have the necessary expertise and detailed data. Neither Markopolis nor GS are in that position. So Markopolis is saying “GE’s reserves are lower than those of other insurers and therefore they must be too low”, and GS is responding “no, they’re not lower than those of other insurers and therefore there’s no reason to assume they’re too low”. Seems very on point to me, though I don’t know who is right. (I believe Markopolis pointed out that on a per contract basis GE’s reserves are much lower than those of Prudential, and GS countered that GE has a much lower percentage of 2-person contracts, and that on a per person basis their reserves are actually a bit higher than Pru. And so on.) ---
**Author:** ![SpoilerVirgin](https://avatars.discourse-cdn.com/v4/letter/s/4491bb/32.png) [@SpoilerVirgin](https://boards.straightdope.com/u/SpoilerVirgin)\ **Post date:** [August 20, 2019, 5:59pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/35 "2019-08-20T17:59:53Z")
> [@Fotheringay-Phipps](#): > > You can short the stock (or buy put options) and make a lot of money off Harry being right. If he is. Sadly, my employer prevents me from making this investment. > [@](#): > > From what I can tell, Markopolis is also basing himself on a comparison to other insurers. My reading is that Markopolis is basing his data on the actual reporting of the companies for which GE is the reinsurer. He’s not just comparing GE to other insurance companies, he’s saying that GE is not reporting its existing obligations. > [@](#): > > The only people who can make an independent assessment as to whether the reserves “are adequate for their particular circumstances” are the plan actuaries, who have the necessary expertise and detailed data. Neither Markopolis nor GS are in that position. This is exactly what was said in the Madoff situation. Everyone to whom Markopolis provided his data, especially the SEC, said that since he was not a Madoff insider or investor, he couldn’t possibly understand Madoff’s business. In fact, as Markopolis rightly points out, the very worst people to provide data about a company committing fraud are the people at the company who are falsifying the data. As I said, unfortunately I can’t put money on it, but I am convinced that Markopolis knows what he is doing and expect to see him vindicated, whether through GE changing its policies, being bailed out, or going under. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 20, 2019, 6:20pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/36 "2019-08-20T18:20:45Z")
> [@Fotheringay-Phipps](#): > > You can short the stock (or buy put options) and make a lot of money off Harry being right. If he is. Except I’ll bet that the price of those securities already reflects the possibility that he is correct. So the upside potential is limited. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 20, 2019, 7:08pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/37 "2019-08-20T19:08:08Z")
> [@SpoilerVirgin](#): > > My reading is that Markopolis is basing his data on the actual reporting of the companies for which GE is the reinsurer. He’s not just comparing GE to other insurance companies, he’s saying that GE is not reporting its existing obligations. I didn’t say HM is “just” comparing etc., but that this is a lot of what he’s doing. (You can see this in [his report](https://d279m997dpfwgl.cloudfront.net/wp/2019/08/0815_markopolos-report.pdf), Slides 73-79, at least.) Therefore, the GS response was on target in addressing this specific point. > [@](#): > > This is exactly what was said in the Madoff situation. Everyone to whom Markopolis provided his data, especially the SEC, said that since he was not a Madoff insider or investor, he couldn’t possibly understand Madoff’s business. In fact, as Markopolis rightly points out, the very worst people to provide data about a company committing fraud are the people at the company who are falsifying the data. You seem to be responding to a point that I didn’t make. I wasn’t saying that Markopolis couldn’t have any valid basis for his claims. Only that his claims would have to be based on comparisons of the sort that he made, since he didn’t have the ability to make an actual calculation. The context is that GS’s response, which addressed the comparisons that he made, was on target. This does not mean that GS is correct or that HM is wrong. Only that the fact that GS addressed the comparison to other insurance carriers and did not make an independent assessment of whether the “reserves are adequate for their particular circumstances” is not a reason to doubt them, since that’s about all they can do, or that HM could do, which is why neither of them did much more than that. Though FWIW, I see that the Kansas Insurance Commissioner’s office reviewed the HM report, and [they say](https://www.ksinsurance.org/documents/department/news-releases/Statement-on-GE-Allegations-8-19.pdf?mod=article_inline) “_After initial review, components of this particular report appear fairly simplistic in nature and don’t appear to incorporate certain technical reserve considerations that were considered during the Department’s most recent financial examination as of December 31, 2017 and the annual analysis review of the confidential Actuarial Opinion Memorandum at December 31, 2018_”. > [@Dewey\_Finn](#): > > Except I’ll bet that the price of those securities already reflects the possibility that he is correct. So the upside potential is limited. Of course it reflects the “possibility” that he is correct. A stock price reflects all sorts of possibilities, and the stock price also reflects the possibility that he is wrong. HM is claiming that GE will go BK, and that the true value is $0, and the market is pricing it a lot higher than that. If you believe that HM is right, then the market is wrong and you could make big bucks by shorting the stock (or buying puts, if you’re afraid of shorting). ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 20, 2019, 7:56pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/38 "2019-08-20T19:56:18Z")
Having scanned a bit more, I see that HM misrepresents GE statements in order to accuse them of dishonesty, on Slides 32 and 33. On Slide 32, the report says: > [@Markopolos Report](#): > > 25 BPS = +1B When P&L Favorable; 25 BPS = –(333.3M) When P&L Unfavorable (Three Months Later!!!) > > March 7, 2019 GE Teach-In Math: ~50 BPS Increase = $1.9 Billion Reserve Decrease (~$1B per 25 BPS) > > […] > > June 30, 2019 GE 10-Q Math: ~75 BPS Decrease = \< $1.0 Billion Reserve Increase (~$333.3M per 25 BPS) But Markopolos is being disingenuous here, and there is no inconsistency between the two GE statements. What the second statement actually says is: > [@June 30](#): > > For the reasons mentioned above, a decline in market interest rates would not result in an equivalent decline in our interest rate assumption. Since our 2018 premium deficiency test, market rates have declined by approximately 75 basis points. This will impact a component of out discount rate only … I don’t know why this is so, and the HM report doesn’t quote the rationale (the “reasons mentioned above”). But at any rate, what GE was saying is that a 25 BP move in the interest rate that they use in their valuation would impact the liability by ~$1B, but that a 25 BP move in market interest rates would only move the liability by ~$333M, since the interest rate used in the valuation would move by a lot less than the 25 BP. On Slide 33, the report claims: > [@Markopolos report](#): > > GE Creates a False Narrative During the LTC “Teach-In” That Actual LTC Reserves Could Fall Between the GAAP and Statutory Reserves But that’s not what the GE guy he quotes actually said. What the guy said was: > [@Bob Deutsch](#): > > Well if it turns out, I remember the tail here, it’s incredibly long. If it turns out that the GAAP assumptions are right, then that extra reserve will move into policyholder surplus at some point down the future and available for a upstream dividend, but that’s a long way away. We’re certainly anticipating the continued funding of that $9 billion - of the remaining $9 billion over the next 5 years So the guy was clearly saying that GE intends to recognize the entire $9B over the next 5 years. All he said was that if it turned out that the Stat accounting was too conservative, then over the lifetime of those policies the actual amount required would be lower and the excess amounts would be profit for GE. This is basic straightforward stuff. It’s hard to imagine that Markopolis is ignorant of basic finance and insurance concepts to that extent. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 20, 2019, 8:45pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/39 "2019-08-20T20:45:39Z")
The report’s discussion of GE’s deteriorating LTC experience is also deceptive. On Slide 40, the report demonstrates deteriorating experience in the form of worsening cash flow. But any fixed-rate closed group of long term LTC (or life insurance) contracts will show worsening cash flow over time, as increased morbidity and mortality catch up and overtake the level premiums. The way these are supposed to work is that reserves built up in earlier years (plus investment returns) offset the increased costs of later years. So the proper way to measure experience in later years is how that experience compares with assumptions used in pricing, and how they compare to the reserves being held for those policies. Simply pointing to increasing cash flow in a vacuum is misleading. Similarly the repeated assertions on subsequent slides that experience is bound to deteriorate further since the population is aging is only valid if you’re looking at “dollars paid out in future years versus dollars paid out in the current year”. But again, the proper comparison is “dollars paid out in future years versus dollars projected to be paid out in future years”, and increasing age does not necessarily imply that the future experience will be worse than current. Even if dollars paid out increase in the future, the experience could still be favorable (& the reserve be overly conservative) if the dollars paid out doesn’t increase as much as current projections say they will. I think the Kansas Insurance department is onto something here. This report is at a minimum overly sensational and at least to some extent is based on either surprising ignorance of basic insurance concepts or – more likely - plays to the expected ignorance on the part of its intended readership. ---
**Author:** ![Bosda\_Di\_Chi\_of\_Tricor](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bosda_di_chi_of_tricor/32/16845_2.png) [@Bosda\_Di\_Chi\_of\_Tricor](https://boards.straightdope.com/u/Bosda_Di_Chi_of_Tricor)\ **Post date:** [August 20, 2019, 9:39pm UTC](https://boards.straightdope.com/t/general-electric-the-next-enron/838755/40 "2019-08-20T21:39:53Z")
Disney. :smack: [Previous page](https://boards.straightdope.com/t/general-electric-the-next-enron/838755.md?page=1) [Next page](https://boards.straightdope.com/t/general-electric-the-next-enron/838755.md?page=3)