By Allison Bell
Genworth Financial (NYSE:GNW) says its long-term care insurance (LTCI)
unit did well in the third quarter.
The Genworth Long Term Care unit is reporting $45 million in net operating income for the latest quarter on $809 million in revenue, up from compared with $17 million in net operating income on $785 in revenue for the third quarter of 2011.
In spite of the continuing low interest rate environment, net investment income increased to $266 million, from $244 million. Excluding the effects of unusual adjustments, the LTCI loss ratio increased to 74 percent, from 71 percent. "Claim termination rates were favorable versus the prior quarter from higher mortality and recoveries, offset in part by a higher average reserve cost on new claims," the company said.
Individual LTCI sales increased to $63 million, from $54 million.
sales rose to $6 million, from none.
LTCI sales were up because consumers were responding to pricing and portfolio actions that were announced in July. "Sales levels are expected to moderate in the fourth quarter," the company said in a discussion of its earnings.
The company reported that it already has implemented a previously announced 18 percent premium rate increase on a majority of the older LTCI policies. On Sept. 30, the company had received approvals for the increases in 45 states.
This year, the company announced another round of rate increases that will average 50 percent on older LTCI policies and 25 percent on "an earlier generation of new generation" policies.
The new round of increases should help offset the effects of low interest rates, an unfavorable business mix and a lower-than-expected lapse rate. On Oct. 26, the company had filed those rate increases in 18 states and received approvals from two states.
The company as a whole is reporting $70 million in net income on $2.5 billion in revenue, compared with $20 million in net income on $2.5 billion in revenue for the comparable quarter in 2011.
During a conference call with analysts, Martin Klein, the company's acting president, said Genworth
thinks of meeting long-term care (LTC
) planning needs as a core activity.