What You Need to Know
- The company is still preparing for an IPO for its Enact mortgage insurance unit.
- The average increase for LTCI rate hikes approved during the second quarter was 60%.
- Genworth says it will launch the new LTCI business at some point in 2022.
Genworth Financial is firming up plans to return to the U.S. long-term care insurance (LTCI) market in 2022, company executives said Wednesday.
Genworth will work with other highly rated insurers to set up a new insurance company, which will probably provide support and advice services for older people who are still living in their own homes, as well as LTCI coverage, Tom McInerney, Genworth’s CEO, told securities analysts during a conference call.
McInerney said Genworth expects to contribute expertise to the new LTCI issuer, and possibly to contribute some capital as well.
Genworth is still a major player in the U.S. mortgage insurance market.
It was a key issuer of life insurance, annuities and long-term care insurance, and it’s one of the insurers that created the modern U.S. LTCI market. It still has large blocks of life, annuity and LTCI business on its books.
Many of the company’s older blocks of LTCI business are struggling because of the effects of inaccurate interest rate forecasts and inaccurate assumptions about how the policyholders would use their coverage.
In spite of the problems facing the older blocks of LTCI business, “there is a great need for long-term care solutions in the U.S. with 54 million Americans, ages 65 and older, at the end of 2019, and with that number expected to increase to 95 million by 2060,” McInerney said.
Both the government and private companies need to do more to help older Americans get the care they need where they want to get the care, McInerney added.
McInerney said Genworth now has the experience to get beyond the mistakes made in the past and to design new LTCI products with lower, more predictable risks.
The Legacy Business
Genworth held the conference call to go over earnings for the second quarter, which ended June 30.
Genworth reported $240 million in net income for the second quarter on $2 billion in revenue, and the LTCI business produced $98 million in adjusted operating income for the second quarter on $1.2 billion in revenue.