Genworth reports loss of $41M in CEO Tom McInerney’s final earnings

Genworth Financial reported a third-quarter net loss of $41 million in longtime CEO Tom McInerney’s final earnings report.

McInerney announced last week that he will retire at the end of the year, with Chief Financial Officer Jerome Upton taking over.

Genworth’s Q3 struggles saw continued strength at its mortgage insurance subsidiary Enact offset by unfavorable results in its long-term care insurance closed block and expenses associated with building its CareScout aging-care platform.

The Richmond, Va.-based insurer reported adjusted operating income of $102 million, excluding its closed block, driven primarily by Enact’s performance. Enact contributed $132 million in adjusted operating income to Genworth, including a $37 million pretax reserve release tied to continued strong mortgage borrower cure performance.

McInerney's 14-year tenure at Genworth included steering the company through the severe financial instability of the long-term care insurance sector while pioneering a new business model for the industry.

He stepped away from his executive roles on July 7 to focus on his health. In a Thursday conference call with Wall Street analysts, McInerney said it is the right time to retire.

“I turned 70 this year, and as I'm reflecting on what I wanted to accomplish when I joined Genworth,” McInerney said, “I'm very proud of the progress we've made … and the team that we built to lead the next chapter. Now feels like the right time to pass the torch to Jerome.”

Closed block troubles

Genworth’s closed block reported an adjusted operating loss of $146 million, including a $111 million pretax liability remeasurement loss reflecting experience that differed from expectations. The loss was driven primarily by lower policy terminations and higher benefit utilization in its long-term care business.

The insurer said its experience has been worse than its previous expectation of approximately $300 million in full-year losses, primarily because of lower mortality. Executives said the fluctuations do not affect cash flows or the economic value of the closed block.

“In the third quarter, mortality continued to follow normal seasonal trends, but remain below last year's levels,” Upton said.

Enact, in which Genworth owns approximately 81%, reported strong results and continued returning capital to its parent. Genworth received $122 million in capital returns from Enact during the quarter.

Enact’s primary mortgage insurance in force increased to $275 billion, up $1 billion sequentially and $3 billion year over year. New insurance written totaled $14.1 billion, down from the prior quarter as higher mortgage rates weighed on activity but also supported persistency.

“Enact’s strong balance sheet, disciplined underwriting, and financial flexibility position it to navigate a dynamic macroeconomic environment while continuing to create value for shareholders,” Upton said.

CareScout expands aging-care platform

Genworth continued investing in CareScout, its platform intended to help families navigate and pay for aging-related care. Demand is growing as more Americans take on caregiving responsibilities, executives said.

CareScout’s home care network now includes more than 1,200 locations, covering 98% of the U.S. population age 65 and older. Its senior living network also has approximately 1,200 communities, with the company targeting at least 2,000 by year-end.

The platform has more than 170 local advisors across 33 states, Upton noted. During the quarter, CareScout facilitated approximately 1,500 matches between care seekers and home care and senior living providers. Year-to-date matches have roughly doubled from the same period last year.

CareScout Services generated $7 million in third-quarter revenue and $19 million year to date. Genworth remains on track to achieve $25 million in full-year revenue from the business, while expecting to invest approximately $55 million in CareScout Services during 2026.

The company also launched Care Assurance Worksite, an employer-distributed long-term care insurance product, in August. The product had received approval in 40 states by the end of the quarter.

Genworth continues to pursue premium increases and benefit reductions to improve the sustainability of its legacy long-term care insurance business.

Since 2012, the company has secured approximately $35 billion in cumulative net present value from premium increases and benefit reductions, according to executives. In the third quarter, it received approval for $44 million in gross incremental premiums, with an average increase of 34%.

Genworth also introduced a voluntary family caregiver benefit for eligible policyholders in certain states who elect a benefit reduction alternative. The benefit allows qualified care provided by family members and can pay up to 75% of the median hourly cost of nonmedical care.

AXA litigation remains unresolved

Genworth also discussed its litigation with AXA over claims involving Santander. In September, the U.K. Court of Appeal ruled against AXA, finding Santander was not liable for the vast majority of losses AXA claimed.

AXA filed its first request for permission to appeal to the U.K. Supreme Court on Oct. 13. Genworth said a decision on whether the appeal will proceed could take approximately one to three months.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.