Genworth Financial Inc. and other struggling, longtime issuers of underpriced long-term care insurance (LTCI) policies have complained for years about a serious problem: LTCI policyholders are thoughtful people who love their coverage.
In the past, LTCI issuers have reported that even mammoth LTCI premium increases have led to just modest “shock lapse” figures.
Genworth executives told securities analysts Wednesday, during a conference call they held to go over second-quarter earnings, that they’re seeing a little give in the policyholders’ iron grip on their LTCI policies.
Genworth has now received approvals for rate increases for $11.5 billion in LTCI premium rate increases.
The company reported, in a conference call slidedeck, that the average approved increase fell to 37%, on $238 million in in-force premium revenue, in the second quarter, compared with an average of 58%, on $160 million in in-force premium revenue, in the year-earlier quarter.
But policyholders’ responses to LTCI rate increases helped reduce LTCI policy reserve needs by $118 million in the second quarter, up from $39 million in the second quarter of 2018.
The increases also led to $120 million in additional premium revenue, up from $102 million in the year-earlier quarter.
Kelly Groh, the company’s chief financial officer, said during the conference call that more of the LTCI policyholders affected by the increases are choosing to reduce their benefits and keep their premiums about the same, rather than keeping their benefits the same and paying the full, increased premium bills.
“We do expect the reduced-benefit trend to continue in the near-term, although with variability as we continue to implement the in-force rate actions achieved last year and in the first half of 2019,” Groh said.
A copy of Genworth’s earnings presentation slidedeck is available here.
— Read Genworth Filings Could Ease Sale of Genworth Canada, on ThinkAdvisor.