Genworth Financial Inc. is looking to increase the rates on its long-term care insurance business as one means of improving shareholder value.
According to president and CEO Tom McInerney in an earnings conference call, the Richmond, Va.-based company is embarking on an “intense, very broad and deep review of all aspects” of its long-term care business in order to “accelerate the turnaround of the U.S. life insurance division.”
The three main strategies Genworth will utilize to improve its long-term care business include “significant premium rate increases on the older generation of LTC blocks written before 2002, to bring them closer to a breakeven point over time and reduce the strain on earnings and capital,” said McInerney. “Second, request smaller rate increases more proactively on newer blocks as needed. And third, introduce new products that are more tightly underwritten with appropriately priced benefits using more conservative assumptions.”
Early trends on policyholder premium rate increases indicate that 81% have decided to pay the rate increase; approximately 18% have agreed to pay their current premiums and take reduced benefits or they are taking a nonforfeiture option; and just 1% are choosing to allow their policies to lapse.
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