Archive for November, 2014

What Happened to Genworth Two Weeks Ago?

November 18, 2014

Genworth Financial, enjoying a larger market share than any other long term care insurance company, suffered a sudden drop in its stock price earlier this month.  How did this happen?

  1. Higher than expected claims were experienced on policies issued before 2002.  So:

  2. Genworth increased their reserves (to cover higher claims) by $531 million.  So:

  3. This increase in reserves was largely responsible for Genworth’s posted third quarter loss of $317 million. So:

  4. Investors freaked.  Genworth’s stock price dropped from $14.07 per share at the 11/5/2014 stock market close to $8.66 per share at the 11/6/2014 close (a 38% one-day drop).

  5. And then Genworth announced it was temporarily suspending sales of long term care insurance policies in Massachusetts and New Hampshire…because of an inability to reach agreements about requested rate increases with insurance departments in the two states.

Should you be worried if you own or are contemplating applying for a Genworth long term care insurance policy?  No, you need not worry.  It is a solid, “A” rated company.  I expect them to be around longer than anyone reading this newsletter.  Genworth has made a long term commitment to the long term care industry.  Increasing reserves in response to higher than expected claims is a good move…it should inspire confidence in the minds of policy owners.

What if you live in Massachusetts or New Hampshire?  Your existing policy is a contract that Genworth is obligated (and both capable and willing) to honor.  You just cannot buy a new Genworth policy in those states…for now.

What if you are an investor?  Should you buy (or keep) stock in Genworth Financial?  Sorry, but I am not qualified to give investment advice.  By the way, Genworth Financial (GEN) stock closed at $9.27 on 11/17/2014, the evening before this eNewsletter was distributed.  Genworth Financial is more than long term care insurance.  The company is also a significant player in the life insurance, annuity, and mortgage insurance markets.


Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence. Long term care insurance policies vary widely from company to company & often within the same company. Raymond Smith, The Long Term Care Specialist, does not give legal, tax, or investment advice. Consult your tax advisor, attorney or investment advisor for these matters.


© Raymond Smith, The Long Term Care Specialist, 2014