Question-and-Answer Session
Operator
(Operator Instructions) And your first question comes from the line of Jimmy Bhullar with J.P.Morgan.
Jimmy Bhullar - J.P.Morgan
Thank you. I have a couple of questions. The first one is on slide 11, I think you are showing that the transaction is about 170 basis points accretive to ROE from 4.3% on a reported basis ex unusuals and on an adjusted basis 6%. The only question on that that I had is you are adjusting equity but it doesn't seem like you are adjusting the earnings and the closed block business that you are transferring I'm assuming it made some money. Is that right? Or is that not, can you comment on that and then I have a follow-up also.
Ed Bonach
Yes, Jimmy, thanks, this is Ed. We are aware of the fact that we did not adjust the numerator. This is for illustration purposes just as we don't think the $33 million is necessarily typical of what our earnings will be going forward. We used Q2 reported earnings times for the calculation just to simplify.
Jimmy Bhullar - J.P.Morgan
Okay. So do you have -- like this slide showing 170 basis points benefit to ROE. Do you have a number, the rough ballpark on how much the transaction is really accretive? It would obviously be, maybe a little bit less than this right?
Ed Bonach
Slightly less but not significantly because as you know up until this quarter the long-term care run-off block was producing losses.
Jimmy Bhullar - J.P.Morgan
Okay. And then, the second question that I have is just on your confidence in the roughly 14% or so of the LTC closed block LTC policies that you are retaining. Do you feel, you mentioned yesterday that behavior of those policies are similar to the block that you are reporting in runoff. Do you feel you are adequately reserved or is that something you are looking at the next few quarters? If you can you just comment on that?
Ed Bonach
No, we definitely believe that we are adequately and appropriately reserved. As you can see in the appendix to the presentation that is provided that our loss development continues to be in line with our expectations and most of the last four quarters have been positive slightly in their loss development. So, we believe our reserves are adequate and appropriate.
Jimmy Bhullar - J.P.Morgan
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