Genworth reports progress on long-term care Genworth sees progress on long-term care

Richmond Times-Dispatch (VA)

Claims on its long-term care policies once again ran ahead of what <a href="https://www.genworth.com" target="_blank">Genworth Financial</a> had thought, but the Henrico County-based Fortune 500 firm says it is making progress getting the balance right in a business most others have dropped out of.

Meanwhile, another <a href="http://performance" target="_blank">Richmond Fortune 500</a> firm says cigarette price hikes helped offset the impact of slowing cigarette sales on the part of its business that supplies convenience stores, while homeowners' caution about home improvement projects sent a <a href="https://www.llflooring.com/corp/about-us.html" target="_blank">Henrico flooring firm</a>'s sales tumbling.

Genworth said its claims during the July-to-September quarter ran $110 million ahead of what it had assumed, leaving this part of its business with a $71 million operating loss, compared with income of $26 million a year ago.

Like the few insurers that still offer long-term care policies - insurance that helps pay for nursing home or other long-term care, often including home health services - Genworth has found claims keep coming in more often and for larger amounts than expected while the number of policyholders letting coverage lapse was lower than it thought.

As a result, premiums are not keeping up with claims on its older policies, while newer ones are not building up fast enough the reserves that will be needed as policyholders age and start making even more claims.

To deal with this, Genworth and other still-active long-term care insurers, have been asking state regulators for double-digit and triple-digit percentage increases in premiums, while asking policyholders to consider accepting reduced benefits to rein in their premium bills.

In the third quarter, this resulted in various states approving increases averaging 56%, Genworth said in a presentation to Wall Street analysts. That's up from the same period last year when regulators approved increases averaging 38%.

More policyholders have agreed to cut back on their coverage benefits, too: 49% have done so, Genworth told the analysts.

But the long-term care business remains under stress - looking at those policies that have not seen any premium rate increases since 2012, Genworth's pretax losses rose from $786 million a year ago to $1.03 billion in the 2023 third quarter.

Premium rate increases that have been approved meant other policies generated third-quarter pretax earnings of $674 million, up from $619 million a year ago.

Those earnings matter since claims on Genworth's older policies - where the average policyholder is in his or her 80s - are still running at more than $900 million a quarter, according to a Richmond Times Dispatch analysis of data the company presented to Wall Street analysts.

Claims on policies where policyholders are in their 70s increased from $689 million last year to $815 million in the 2023 quarter.

Overall, with income from its holding in mortgage insurer Enact offsetting some of the impact of long-term care losses, Genworth's third-quarter profit fell 79% to $29 million.

Income from Enact has helped the company slash its debt, a key goal.

Separately, another area Fortune 500 company, Performance Food Group, reported that higher cigarette and food prices boosted its unit that supplies convenience stores.

But the number of cartons it is supplying to conveniences stores is down, the company said.

Performance Food Group said its sales to restaurants got a boost as it cut prices for the foods it supplies to them.

The Goochland County-based Fortune 500 company said its sales for the July-to-September quarter, the first of its fiscal year, rose 1.5% to $14.9 billion.

Its snack food operation led the way, posting a 14.7% increase to $1.3 billion, but a decline in cigarette sales held down revenue from supplying convenience stores to a 0.8% increase to $6.3 billion. Sales to restaurants slipped 0.7% to $7.3 billion.

Net income rose 26.1% to $120.7 million.

Meanwhile, high interest rates and low consumer confidence continue to depress homeowners' interest in home improvements, according to Henrico-based LL Flooring Holdings Inc.

Its third-quarter sales fell 19.7% to $215.8 million, while its loss deepened to $36 million from a loss of $3.8 million a year ago.

<strong>Dave Ress</strong> (804) 649-6948[email protected]