Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Life Health > Life Insurance > Term Insurance

LTCI claim spike worries Genworth

By Allison Bell

X
Your article was successfully shared with the contacts you provided.

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.”

Ten thousand Americans turn 65 every day, and the typical American has less than $107,000 in retirement savings, McInerney said.

But McInerney said Genworth needs state insurance regulators and other policymakers to help Genworth offer new kinds of products and let the company adjust to changes by imposing smaller, more frequent rate increases, rather than imposing giant increases of 50 percent or more after long periods of time.

Genworth estimates that LTCI rate increases it has already requested could help the company improve underwriting results by about $250 million to $350 million per year by 2017. Forty-three states have approved changes that should eventually improve results by about $190 million to $200 million.

In six states, however, Genworth has nearly exhausted mechanisms for appealing rate increase denials, McInerney said. “We’re evaluating all options, up to and including the suspension of sales in these states,” he said.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.