Genworth Plans for Return to Long-Term Care Insurance Sales

Executives at Genworth Financial Inc. want to work with other companies to get back into the U.S. long-term care insurance (LTCI) market.

The Richmond, Virginia-based insurer also wants to team up with China Oceanwide Holdings Group Co. Ltd. — a company that spent more than four years trying to acquire Genworth — to sell long-term care (LTC) products in China.

Revival Plans

Tom McInerney, Genworth’s CEO, talked about LTCI revival plans Friday, during a conference call the company held to go over first-quarter earnings with securities analysts.

Genworth was a major player in the U.S. life insurance and annuity markets, and it was a dominant player in the U.S. LTCI market. It has suffered from financial problems in recent years because of the effects of low interest rates, incorrect pricing assumptions and tough rate stability rules on the LTCI business. Genworth still has a healthy mortgage insurance business, and it hopes to raise cash by selling a minority stake in that business to the public through an initial public offering.

Proceeds from the sale of the mortgage insurance company stake should help Genworth get its debt down to a more manageable level, McInerney said.

Genworth is also looking at ways to strengthen its U.S. life insurance business — the unit that includes the LTCI operations — by “developing and refining sustainable long-term care insurance business models,” McInerney said.

Increasing LTCI Premiums

One part of that effort, he said, will be to continue to ask state insurance regulators for permission to increase LTCI premiums and reduce benefit options.

“We are also exploring opportunities to partner with well-regarded third parties to launch a new long-term care insurance business in the United States,” McInerney said. “There is a huge need for long-term care solutions in the U.S., with 54 million Americans aged 65 and older at the end of 2019, and with that number expected to increase to 95 million by 2060.”

The problems with the LTCI policies sold in the past have left the United States with very few LTCI players, McInerney noted.

“We are evaluating opportunities to monetize our LTC expertise and own intellectual property in partnership with strong third parties to develop a number of new LTC products and services,” he said.

McInerney said Genworth has “potential partners” who believe that a U.S. LTCI partnership could be a profitable business. “The key to success in the future is to learn from the past, to design new LTC products and services with lower and more predictable risk,” he said.

McInerney said any LTC business in China would build on the strong relationship Genworth has developed with China Oceanwide.

Tom McInerney (Photo: Victor J. Blue/Bloomberg)