Genworth Financial, the nation’s largest seller of long-term care insurance, is engaged in an “intense, very broad, and deep review of all aspects of our long-term care insurance business,” President and CEO Tom McInerney told investors. Industry sources say the firm could withdraw from the market if it does not win regulatory approval for new rate hikes on about 650,000 older, existing policies. A company spokesman said the firm also needed states to approve changes that would allow the company to sell policies that are more tightly underwritten and that offer shorter benefit periods, lower daily benefits, and other changes. “We are prepared to take actions such as suspending sales in states and ending new sales through distribution channels where we cannot offer products within an acceptable risk-adjusted return,” the spokesman said.
The long-term care insurance business is struggling from a major downturn caused by a combination of higher-than-expected benefits and lower than anticipated returns on investments. The weak investment income is largely due to a long period of historically low interest rates. Long-term care insurance companies earn a significant portion of their revenues from their investments of premium income, nearly always in high-grade bonds.
Source/more: Forbes
