Genworth sees long-term care progress Henrico-based Genworth sees long-term care progress

Two of the trends that made l<a href="https://scc.virginia.gov/boi/SERFFInquiry/LtcFilings.aspx" target="_blank">ong-term care coverage</a> a money pit for insurers depressed Henrico County-based <a href="https://www.genworth.com/" target="_blank">Genworth</a>'s business this spring, but the insurance giant's <a href="https://richmond.com/business/how-henrico-county-based-genworth-is-bouncing-back-from-debt-and-a-changing-insurance-industry/article_b8122998-bc63-11ed-b7bb-d7f196d9b340.html" target="_blank">best hopes</a> to get this line back in balance made significant progress this year.

Genworth said its long-term care business saw an operating loss of $43 million in the second quarter, compared with income a year ago of $17 million. Premiums revenue declined to $611 million from $617 million.

The main reasons were that fewer people than the company originally expected let policies lapse while totals paid for policyholders' care grew - people are needing care more often and for longer periods, Genworth said. Both trends have dogged long-term care insurers for decades, leading many to drop out of the business and others to press state regulators for double- and triple-digit percentage rate increases.

Claims paid in the first six months of 2023 totaled $2.35 billion - more than the $2.24 billion total for all of 2022, Genworth reported in a presentation to securities analysts Wednesday.

But the key efforts of its strategy to stabilize this business made progress.

State regulators approved rate increases during the quarter that will boost premiums by $94 million on some $300 million a year that Genworth now receives. That comes in the wake of $50 million worth of increases on policies that had been bringing in some $78 million a year during the first quarter - pretty much on track with the same periods last year, Genworth told the securities analysts.

And more policy holders are taking up the company's offers to hold down premium increases if they'll agree to accept reduced benefits. An additional 2% opted to do that just this year, boosting the cumulative total to 47.5% since Genworth started asking them to consider this in 2012.

Three legal settlements cleared the way for more benefit reduction agreements in a way Genworth expects could affect about 70% of three large blocks of coverage.

Two date from 1994 to 2001, and generate about $387 million a year in premiums. On average, these policyholders are in their 80s.

But Genworth paid claims from these policies of $1.04 billion just in the first half of 2023.

The third block, which generates about $1.1 billion a year in revenue, was sold from 2003 to 2011. Its policyholders are more than a decade younger than those in the first blocks, and while claims from them totaled $329 million in the first half of this year, payments for their benefits aren't expected to peak until several years in the future.

Genworth's operating loss from long-term care insurance was more than offset by income from the 81.6% stake it retained in its mortgage insurance business when it spun off that operation as Enact Holdings Inc. in 2021.

Rising interest rates boosted Enact's investment income while its loss ratio - the amount paid out in claims as a percentage of premiums - declined sharply. The mortgage insurance also benefited from a release of funds set aside in reserves as homeowners that were unable to keep up payments during the pandemic were able to get current again.

The company's old life insurance and annuity business reported operating income of $2 million versus a $15 million loss mostly because it saw fewer death claims.

In total, Genworth reported revenue for the quarter rose slightly to $1.89 billion, while net income fell 15% to $168 million.

<strong>Dave Ress</strong> (804) [email protected]@DaveRess1 on Twitter