Genworth Financial Inc. says the capital level at its Genworth Life Insurance Company of New York (GLICNY) unit may have fallen between the end of 2016 and the end of 2017.
GLICNY has written life insurance, annuities and stand-alone long-term care insurance (LTCI) in New York state.
Genworth estimates that GLICNY ended 2017 with about 280% to 290% of the amount of risk-based capital needed to be above insurance regulators’ company action level, the company said Wednesday in an announcement.
A copy of the announcement is available here.
GLICNY ended 2016 with a 438% company-action-level risk-based capital ratio, according to a similar announcement Genworth posted a year ago. A copy of that announcement is available here.
(Related: Genworth Asks to Change Terms of Notes)
Genworth says it tested the cash flow at the GLICNY unit and found that the unit now has a total “negative margin,” or gap between actual performance and expected performance, of about $400 million, after accounting for reserves Genworth set aside in case the unit performed worse than expected.
For 2016, the unit had a total negative margin of about $110 million.
Genworth did not add any cash to GLICNY reserves for 2016.
For 2017, Genworth added a total of $246 million in cash-flow-testing-related reserves to GLICNY for the second quarter of 2017 and the fourth quarter of 2017, the company said.
Genworth said it has agreed with regulators at the New York State Department of Financial Services to add another $300 million to GLICNY’s reserves over the next two years.
Genworth said the risk-based capital level at GLICNY would look better if New York state regulators would approve Genworth’s request for a premium increase for the LTCI policyholders in New York state.
“GLICNY currently has a LTC rate increase request filed with the NYDFS that, if fully approved and implemented, would eliminate the need for the phase-in of the additional [cash-flow testing] reserves,” Genworth said in the announcement that was released Wednesday.
Genworth’s Other Life Units
Genworth, a Richmond, Virginia-based holding company, is the parent of Genworth Life Insurance Company (GLIC) and Genworth Life and Annuity Insurance Company (GLAIC) as well as of GLICNY.
GLIC ended 2017 with a company-action-level RBC ratio of about 280% to 290%, and GLAIC ended the year with a company-action-level RBC ratio of about 420% to 430%, Genworth estimated.
— Read New York Regulators Look Over Genworth Buyer on ThinkAdvisor.