Genworth posts $531 million LTCI reserve increase

Company executives say they increased the LTCI reserves because they found that claimants are staying on claim longer than expected and using more of the available benefits than the company had assumed in earlier reserve calculations.

This quarter, the company is reviewing active life margins and believes it may have to reduce the active life margins, but it is also conducting other management actions that might offset much of the margin reduction coming from the claim reserve review, the company says.

The company also says it expects to make more use of reinsurance when it sells new LTCI business.

The company notes that it continues to develop and sell new LTCI products,

“The company is evaluating market trends and sales and investing in the development of products that will help expand the market and meet middle-income consumers’ needs,” the company said in a discussion of its earnings. “In addition to product development, the company is investing in key distribution and marketing areas to grow profitable new sales over time and better serve the company’s distribution partners and their clients.”

See also: Genworth to try two-track LTCI design

Tom McInerney, president of Genworth, said in a statement that the company believes its current LTCI strategy is the best option for Genworth.

“The turnaround in this business will be more difficult and prolonged because of the poor performance of the older generation of products,” McInerney said. “Despite this setback, we remain steadfast in our commitment to transform this business.”