In the wake of lackluster second quarter financial results for Genworth Financial’s U.S. Life and Long Term Care Insurance divisions, and the departure of James Boyle, the company’s executive vice president and CEO of the Life Division, a question arises: Will the company have to revise its go-to-market strategy to remain a viable player in the life and LTC spaces?
One issue of concern to company-watchers is Boyle’s short-term tenure at the Life unit, of which he took the helm only last January.
In a press statement released yesterday, the insurer noted that Boyle had accepted the position of Chairman at HealthFleet, Inc., a healthcare technology company. The company added that Genworth President and CEO Tom McInerney will, effective immediately, also serve as CEO of the U.S. Life Insurance Division.
“Under [Boyle’s] leadership, the U.S. Life Insurance Division made continued progress on its turnaround plan, including improving the focus on our distribution efforts and product development,” McInerney said in the statement. “The U.S. Life Insurance team remains focused on driving further improvement across its businesses.”
“I have been working closely with Jim and his team on developing the new Genworth LTC business model, as well as working with government leaders and regulators to change the regulatory framework for the LTC Insurance market,” he added. “Therefore, the Board and I believe it makes sense for me to assume the additional role of CEO of the U.S. Life division at this time.”
In a reply to a request for comment LifeHealthPro on Boyle’s departure, a Genworth spokesperson said the company had nothing to add to the press statement. As to the direction of Genworth’s Life Insurance Division, the spokesperson insisted that the unit’s priorities will “remain the same” under McInerney’s stewardship. Thus the company will continue to “complete the turn-around, rebuild the franchise and improve operational capabilities.”
Turning to Genworth’s three-part long-term care insurance strategy, the spokesperson added that Genworth will seek premium rate increases on pre-2002 LTC blocks of business. The aim: to bring these policies “closer to a break-even point over time and reduce the strain on earnings and capital.”
The company will also unveil new LTC products adhering to stricter underwriting standards, the solutions’ pricing to be based on “more conservative assumptions.” Whether these moves will improve earnings for Genworth’s Life and LTC units (which failed to match their 2013 results) remains to be seen. The U.S. Life’s operating income in the second quarter was $69 million, down from $79 million for the second quarter of 2013. And LTC operating income fell to just $6 million from $26 million a year ago—the marked dip due to rising LTC claims.
“[Genworth] is conducting a comprehensive review of the adequacy of its claim reserves,” and expects to have it completed before the release of Q3 results,” the company said in a press statement.