Genworth Acquisition

[Arthur Rudnick]

originally posted by ltcadviser

Would you advise your clients that you sold Genworth policies to 2004-2012 to bail?

No, I would not Jack. But I would need a VERY strong reason to put a new client into a GNW policy.

And, according to your earlier post it seems that you probably feel the same way.

Do you think that the client who called you is the only one you're going to hear from?

So, a Genworth policyholder read about the sale and she wants to buy an additional policy just in case Genworth goes under. How does everyone here feel about the likelihood that Genworth becomes insolvent and goes belly up? High likelihood? Small likelihood?

 

[Mr_Ed]

originally posted by Mr_Ed



Pretty rich, successful & profitable company according to you.

Then please explain a few things, if you'd be so kind:

1) With all the money just sitting around (billions) what's the reason for so many rate increases (some up to 90%) almost every year for the past 8?
2) How come Genworth's stock price, which was $18.00/share 5 years ago is trading at $4.32/share today and was as low as $1.32/share within the past 12 months?
3) Home come their stock is rated a 'D' (Sell) by stock analysts?
4) How come their bonds are rated "Junk"?
5) How come their Comdex ratings are 53?

Just so many questions and as usual, I'm sure you just don't have enough time to answer them. But that's OK Scott, I think I proved my point

OMG. Arthur, please learn the following:

a) the difference between the creditworthiness of the bonds issued by the holding company compared to the financial strength ratings of the insurance company.

b) the value of a stock has nothing to do with the claims-paying ability of an insurance company.

c) whether or not someone should buy or sell a stock has NOTHING to do with the insurance company!

d) reserves are not assets, they are pre-paid obligations.

e) Comdex is not a rating it is a percentile.

 

[ltcadviser]

originally posted by ltcadviser



No, I would not Jack. But I would need a VERY strong reason to put a new client into a GNW policy.

And, according to your earlier post it seems that you probably feel the same way.

Do you think that the client who called you is the only one you're going to hear from?

Well, she is not my client yet. I have to write her a 2nd policy for her to become my client . But of course I receive numerous calls from consumers that want advice on what to do with their GNW policies and I tell them all to keep them in force,

 

[Arthur Rudnick]

originally posted by Mr_Ed

OMG. Arthur, please learn the following:
a) the difference between the creditworthiness of the bonds issued by the holding company compared to the financial strength ratings of the insurance company.
b) the value of a stock has nothing to do with the claims-paying ability of an insurance company.
c) whether or not someone should buy or sell a stock has NOTHING to do with the insurance company!
d) reserves are not assets, they are pre-paid obligations.
e) Comdex is not a rating it is a percentile.

Scott,
I'm not sure who's post you are replying to, certainly not mine.

None of the questions that I asked had anything to do with Genworth's ability to pay their present and/or future claims.

In fact Jack asked me if I was advising my GNW policyholders to bail out of their policies? I answered "no". If I thought they were about to default, I would have answered differently.

My questions were in reply to your statements:

current annual premium is about $2.5 billion, right?
Current claims are about $1.5 billion, right?
LTCi reserves are about $20 billion, right?
They must earn close to $1 billion on the reserves each year. Just the earnings on the reserves pays for most of the claims each year.
With that much in renewal premium and that much in reserves it would take a few decades to "run out of money".

I never stated that GNW was about to run out of money, nor did I question their reserves.

And, incidentally, you stated that Comdex is not a rating, it is a percentile.
The definition of a Comdex Score is:

"A Comdex score is a ranking from 1-100 that compiles the various ratings from the rating agencies. It is a composite of all the ratings that a company receives,” Rating agencies included in Comdex are A.M. Best, Standard & Poor's, Moody's Investors Service and Fitch"

Many times in the past this forum has referred to Comdex as a better way to view a carrier's financial ratings than looking at individual rating agencies.
GNW has a Comdex score of 53.
NY Life is 100
NW Mutual is 100
Mass Mutual is 98
MOO is 94
Transamerica is 90
John Hancock is 92

Here's one more question for you:
Are you presently selling Genworth policies at the same rate as you have done in the past? And if not, why?

 

[Mr_Ed]

originally posted by Mr_Ed



Scott,
I'm not sure who's post you are replying to, certainly not mine.

None of the questions that I asked had anything to do with Genworth's ability to pay their present and/or future claims.

In fact Jack asked me if I was advising my GNW policyholders to bail out of their policies? I answered "no". If I thought they were about to default, I would have answered differently.

My questions were in reply to your statements:



I never stated that GNW was about to run out of money, nor did I question their reserves.

And, incidentally, you stated that Comdex is not a rating, it is a percentile.
The definition of a Comdex Score is:

"A Comdex score is a ranking from 1-100 that compiles the various ratings from the rating agencies. It is a composite of all the ratings that a company receives,” Rating agencies included in Comdex are A.M. Best, Standard & Poor's, Moody's Investors Service and Fitch"

Many times in the past this forum has referred to Comdex as a better way to view a carrier's financial ratings than looking at individual rating agencies.
GNW has a Comdex score of 53.
NY Life is 100
NW Mutual is 100
Mass Mutual is 98
MOO is 94
Transamerica is 90
John Hancock is 92

Here's one more question for you:
Are you presently selling Genworth policies at the same rate as you have done in the past? And if not, why?

This statement you made is half true:

"A Comdex score is a ranking from 1-100 that compiles the various ratings from the rating agencies. It is a composite of all the ratings that a company receives,” Rating agencies included in Comdex are A.M. Best, Standard & Poor's, Moody's Investors Service and Fitch"


The Comdex website explains it differently than you stated above, it says: "Comdex ranks the companies, on a scale of 1 to 100, in relation to other companies that have been rated by the services."

You left out the most important part. The ratings are "in relation to other companies". When the ratings are "in relation to other companies" that means the rating is a percentile.

It's all explained here:

VitalSigns Comdex Ranking


Percentiles are a terrible way of explaining a company's financial strength.

Here's why: if a student takes an exam and gets 80% of the questions correct, that student has a pretty good understanding of the material, right? But if half of the other students got an 81% or higher and if the other half got 79% or lower, then this student who got 80% would get a 50 from Comdex. The student is in the 50th percentile because half of the students got better scores and half of the students got worse scores.

A "53 Comdex ranking" means that Genworth has financial ratings that are better than 52% of the rest of the industry.

All of the Prudential companies have Comdex rankings in the 90's. Yet, they have Weiss grades ranging from C- to B-.

Another company that Weiss grades a B- has a 60 ranking from Comdex.

Comdex is misleading. It should never be used to help determine if a company is financially secure.

 

[Arthur Rudnick]

originally posted by Mr_Ed

Understanding Comdex Ratings | BestLifeRates.org

You can spin it anyway that you want but here is the Comdex ratings explanation from Comdex......

At the end of the day, (if my math is correct) a 53 reflects a financial rating substantially less than 90-100.

Comdex is a ranking of a carrier's financial strength in comparison to other companies. And if you look at GNW compared to the companies that I listed, you can compare AM Best, Moodys, S&P & Fitch and come to the conclusion that GNW is rated lower. Are you going to deny that?

And, you didn't answer my question, which was:

Are you presently selling Genworth policies at the same rate as you have done in the past? And if not, why?

 

[goillini52]

You LTC guys fight about as much as they do in the FE Forum. There just aren't as many of you.

 

[Arthur Rudnick]

originally posted by goillini52

You LTC guys fight about as much as they do in the FE Forum. There just aren't as many of you

Not even close.

But, we're constantly looking for new members.

Open enrollment ends soon, so be sure to tell all of your friends about us.

 

[Arthur Rudnick]

http://www.lifehealthpro.com/2016/1...=1&LikelyCookieIssue=true&slreturn=1478558758

Let's all look up to Penn Treaty.
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