A large insurer plans to apply to increase the price of most of its old long term care insurance policies about 8% to 12%.
Executives at Genworth, Richmond, Va., discussed the repricing today during the company’s second quarter earnings conference.
Profits at the long term care insurance unit increased to $41 million, from $37 million for the second quarter of 2006, but much of the increase was due to investment income, and the performance of the older blocks of LTC insurance policies was “unfavorable,” Genworth said.
Genworth has been trying to increase the profitability of the LTC block by managing expenses, improving investment hedging, and improving claim processing and case management, according to Genworth Chairman Michael Fraizer.
The company has decided to use a fifth tool – requesting price increases – for LTC insurance policies that generate about $700 million in annual premium revenue, or about 40% of the company’s total LTC insurance premium revenue, Fraizer said during the earnings conference.
“We consider this increase to be modest,” Fraizer said.
The increase will lead to a monthly rate increase of less than $20 per month for about 80% of the affected policyholders, and Genworth will offer the option of a “small” reduction in coverage for policyholders who would prefer not to pay more for coverage, Fraizer said.
Genworth has posted a link to a recording of the Webcast in the investor section of its Web site, at Document Link