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Is Genworth LTCi Block At Risk?
- Thread starter MedSuppPro
- Start date
No, blick is NOT at risk... unless ALL blocks are at risk... meaning those of MOST/ALL companies. Genwroths Life and LTC operations are solvent, but their mtg ins unit is suspect. What is worse has been the investment mgmt arm of the company, as they have invested in some real stinkers.
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I dunno... although they have about $100 billion in assets, they are cash poor like a lot of folk. Last week they bought Interbank, a federal savings bank. The terms were not disclosed... yeah.... bet your bottom dollar there was some horse tradin' goin' on.... It's as plain as daylight that they are positioning themselves to get in line for some of that TARP money. Problem is, everyone and their brother is, too. It will be gone before they get their hat in their hands.
I don't think Genworth is going to survive. They are making desparate decisions....
OH?
GNW sells for about $3.13 (today), last month it was as low as $0.70... last year this time it was $26.25. Their growth rate is -36%... their 12 month performance is -86%. I don't think my evaluation can be dismissed as "ludicrous"....
They have exposure in the mortgage business, and that makes them vulnerable.
Anyone can make a short statement of dismissal.... how about supporting your contention with some facts that counter mine.
My contention is that they cannot qualify for TARP money because they aren't a financial org. That they are trying to become one by buying a bank is a day late and a dollar short... everybody is trying this and they are too far back in the line to expect to get anything before it's all gone.
I expect they will start selling off assets, and will slide into insolvency sooner or later.
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What's the real concern here, the solvency of the ins co and its contracts, or its stock price.
The reality is that Genworth itself may or may not survive, but even if it wilts the ins operations will be absorbed by a competitor and the ins contracts will be valid as written.
Now, can I say that unequivicably...? No, but if that statement isn't correct, then the industry has a huge problem as a whole... IMO, they and other companies will be fine, either in tact or consolidated.
Perhaps you are right... I'm no insurance guru like you and some others... but in my view Genworth has been weakened and due to its exposure in the mortgage market, will not be able to survive. That their contracts may survive is hope for the existing policyholders, but I wouldn't buy a policy from them at this point, and I don't think many others will either. For sure, I will not sell them.
Retread,
I'm sorry for not having provided my reasons before. I will outline them here:
Fact 1: The reason that GNW's stock has gone down is because several of its subsidiaries are mortgage insurers.
Fact 2: The title of this thread is, "Is Genworth LTCi Block at Risk?"
Fact 3: The Genworth LTCi policies are underwritten and guaranteed by Genworth Life Ins. Co. which is a subsidiary of Genworth Financial (GNW).
Fact 4: Genworth Life Ins. Co. has ZERO mortgage exposure. Genworth Life Ins. Co. underwrites long term care insurance, life insurance, annuities, and guaranteed investment contracts; all of which are very profitable products for Genworth Life Ins. Co.
Fact 5: Genworth Life Ins. Co.'s LTCi reserves CANNOT be used to pay the debts of GNW's mortgage insurance subsidiaries. The LTCi reserves are protected, by insurance regulations, for the LTCi policies. For lack of a better term, there's a "firewall" between the insurance subsidiaries. (That is why they create insurance subsidiaries, so that they can compartmentalize the risk.)
Fact 6: Lastly, to use real numbers, Genworth has a little under $10 Billion in reserves for just their LTCi policies. They pay about $1 Billion in LTCi claims every year. Assuming they invested all $10 billion in short-term treasuries paying only 25 basis points, and assuming they never set aside another penny of future premiums for reserves (which is impossible to do because a portion of every premium has to go into reserves) they still have enough in LTCi reserves to pay claims for the next 10 years.
After watching the Penn Treaty shenanigans for the past 13 years, it upsets me to see some in our industry "turn on" a company that has a sterling reputation and a company that has set a great example for the LTCi industry.
Again, I apologize for not delineating my reasons earlier. I hope this has helped.
I accept the apology, and offer mine for being short-sighted. You have some very good points....
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Very good post. Do you have your Series 7? If the answer is yes:
Where are you located?
