A rating agency says Genworth Financial — a company that has faced years of epic battles with long-term care insurance pricing problems — is looking healthier.
S&P Global Ratings announced Friday that it had increased the long-term issuer credit rating it has assigned the Richmond, Virginia-based company to B+, from B.
For retirement and long-term care planners, the news may be one of several signs that the market for LTCI coverage and other long-term care benefits products might be starting to come back to life.
The Background
Genworth was once one of the biggest life insurance and annuity issuers in the country, and a major source of mortgage insurance.
Genworth also helped create the U.S. stand-alone LTCI market. It's paying LTCI benefits to about 47,000 claimants and still has 1 million policies in force.
The company based the prices for the older LTCI products on inaccurate assumptions about interest rates, how strongly the buyers would cling to their policies, and how often the insureds would use their benefits. Losses ate away at the company's capital.
The company suspended sales of life insurance and annuities, and it has not recorded significant new LTCI sales in several years.
Genworth has been trying to overcome the LTCI pricing problems, by persuading state insurance regulators to let it increase LTCI premiums.
In 2016, Tom McInerney, Genworth's CEO, told securities analysts during a conference call that, if regulators failed to approve the increases, Genworth could fail.
The Road Back
China Oceanwide, a Chinese financial services and real estate company, tried to acquire Genworth, but the COVID-19 pandemic and weakening relations between the China and the United States killed that deal.
But Genworth spent years seeking, and getting, LTCI rate increases. In a presentation on earnings for 2021, the company showed that LTCI premium increases accounted for about $655 million of its $3.4 billion in 2021 premium revenue.
The company increased a key indicator of solvency for the LTCI business, the consolidated risk-based capital ratio for its U.S. life insurance companies, to 290%, from 229% at the end of 2020.
Genworth has set up a Global Care Solutions unit, under the leadership of Joost Heideman, and has talked about the possibility of bringing an LTCI policy with adjustable rates to market.
