Genworth Financial Inc. today said it expects the risk-based capital (RBC) level at its U.S. life insurance business for the fourth quarter of 2018 to be about 190% to 200% of the company action level.
That RBC level would be down from 268% on Sept. 30, 2018, and down from 282% at the end of 2017, according to company figures. The RBC level for the fourth quarter would be about 82 percentage points, or 30%, lower than the year-earlier level.
Genworth, a Richmond, Virginia-based insurance holding company, released the life RBC figures along with its earnings for the fourth quarter.
Genworth is reporting a $329 million net loss for the fourth quarter on $2 billion in revenue, compared with $353 million in net income on $1.7 billion in revenue for the fourth quarter of 2017.
Genworth is a major issuer of mortgage insurance in the United States, Australia and Canada, and it has been a major issuer of long-term care insurance (LTCI), annuities and life insurance in the United States.
The company’s U.S. mortgage insurance operation increased its full-year operating income 58% in 2018, to $490 million, mortgage insurance capital levels are strong, and the company is still hoping to get billions of dollars in economic benefits from future LTCI premium increases, Genworth said.
Efforts by China Oceanwide Holdings Group Co. Ltd. to acquire Genworth continue to move forward, the company said.
The company’s latest earnings look worse partly because of a big, one-time boost that occurred in the year-earlier quarter: The Tax Cuts and Jobs Act of 2017 helped Genworth report a $555 million gain from income tax benefits in for the fourth quarter of 2017.
Genworth reported an income tax benefit of just $86 million for the latest quarter.
The LTCI Unit
Genworth’s LTCI unit is reporting a $314 million adjusted operating loss for the latest quarter on $1.1 billion in revenue, compared with $17 million in adjusted operating income on $999 million in revenue for the fourth quarter of 2017.
Results for the latest quarter include a $258 million after-tax addition to LTCI reserves, a $91 million after-tax adjustment to reflect changes in expectations for the future performance of the company’s universal life insurance products, and a $17 million after-tax adjustment to reflect changes in expectations for future performance of the company’s fixed annuities.
Excluding the $258 million after-tax reserve increase, LTC adjusted operating losses would be $56 million.
Genworth has about $101 billion in assets, including about $80 billion backing its life, annuity and LTCI business. The $258 million after-tax reserve addition amounts to about 0.3% of the company’s life unit assets.
Genworth said it increased its LTCI reserves to reflect expectations that policyholders are likely to use their benefits for longer periods at later ages than originally expected, and to reflect an increase in the severity of the LTCI claims filed in the latest quarter.