Executives at Genworth Financial Inc. (NYSE:GNW) said they are trying to find out why the severity of long-term care insurance (LTCI) claims increased so sharply in the second quarter.
The spike in claims cut net operating earnings at the LTCI business to $6 million, from $26 million in the second 2013, and it eventually might force Genworth to pump cash into the reserves backing the policies, executives said. Genworth is now paying LTCI benefits for about 53,000 of the 1.2 million people its policies insure.
Executives talked about the challenges facing the LTCI business during a conference call with securities analysts. Tom McInerney, Genworth’s president, started the call by saying, “Except for the our long-term care business, I’m encouraged by Genworth’s second-quarter results.”
McInerney later talked about a new, flexible family of LTCI products Genworth is rolling out. “We are confident that Genworth will be a leader in a more attractive long-term care insurance market,” McInerney said. “It is in the interest of all stakeholders to significantly increase the number of Americans who are covered by private long-term care insurance.”