Genworth Rethinks Long-Term Care Market Return

The Richmond, Virginia-based company was once a major issuer of life insurance and annuities as well as of long-term care insurance.

It continues to be a major player in the U.S. mortgage insurance market, as the controlling shareholder in Enact, a mortgage insurance business.

Genworth reported $149 million in net income for the first quarter on $1.9 billion in revenue, compared with $187 million in net income on $2 billion in revenue for the first quarter of 2021.

The LTCI business reported $59 million in adjusted operating income for the latest quarter on $1.1 billion in revenue, compared with $95 million in adjusted operating income on $1.1 billion in revenue for the year-earlier quarter.

The company’s board authorized spending up to $350 million on buying back the company’s own shares. That move was the company’s first shareholder return program since 2009.

COVID-19

COVID-19 continue to help Genworth’s long-term care insurance business in the first quarter by increasing the mortality rate for insureds already on claim.

The pandemic hurt the performance of the company’s life insurance operations by increasing death claims.

“We continue to experience excess mortality beyond COVID-19,” Dan Sheehan, Genworth’s chief financial officer, said. “Some of this excess mortality is likely attributable to indirect impacts of the pandemic, such as lack of preventative care, and stress-induced mortality, particularly for younger age groups.”

Interest Rates

Sheehan talked briefly about the effects of rising interest rates on Genworth’s investment earnings.

“Higher rates are positive for our U.S. life insurance business,” he said. “Over the medium term, portfolio yields will benefit as we’re able to reinvest new money at higher rates.”

But, at first, rising rates will squeeze yields, by reducing bond calls and commercial mortgage loan prepayments, Sheehan warned.

Pictured: Genworth CEO Tom McInerney. (Photo: Victor J. Blue/Bloomberg)