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March 01, 2009 at 02:00 AM
Bad news is making headlines everywhere; long-term care insurance is no exception. On January 6, Penn Treaty Network America Insurance Company and American Network Insurance Company, a Penn Treaty subsidiary, were placed under the statutory control of the Pennsylvania Insurance Department by a court Order of Rehabilitation. On January 8, Genworth Financial Inc. announced it was notifying some 1,000 employees that their jobs were being eliminated. And Genworth’s stock has tumbled–though it’s far from the only one.
According to Buck Stinson, president of Genworth, the company’s falling stock price is not an overall indicator of the company’s strength. “If you look broadly at the life insurance industry, the index was off 70% to 80% of market cap in 2008,” he says. “Our company is certainly impacted by that.” Genworth’s large mortgage insurance operation, he says, has colored investors’ views, but he adds that if emotion is discounted, what remains is a company with underlying financial strength. He points to Genworth’s ratings and reserves, saying, “The stock price is going to land where it is depending on where investors’ fears and emotions are going to drive it.”
Genworth’s LTC business is flourishing, he adds, citing the new strategic marketing relationship with the National LTC Network and its growing product base. Although the layoffs announced amount to some 14% of its global employee base, that will not affect LTC policyholders; in fact, Stinson explains, Genworth is adding to its already 300-plus staff of LTC claims personnel.
According to Melissa Fox at the Pennsylvania Insurance Department, Penn Treaty policyholders need not worry about their policies either, but should keep paying premiums to maintain coverage. The rehabilitation order gave the state insurance commissioner, Joel Ario, authority to preserve the company’s assets and oversee its current financial situation and operations. Any rehabilitation plan, adds Fox, will give payment priority to policyholder claims.
