So, what Does Everyone Think About Genworth's 180?

[Charlie456]

Semantics.

Semantics? I posed the initial question because I think it's helpful to listen to other perspectives and I know many on this board are deeply entrenched in the LTC market. One pitfall to having discussions like these is when people interject inaccurate info that doesn't get corrected the conclusions will be off. Your statement that wholesalers are just one level above being as expensive as an agent to add to the sales force is just totally false, so it's unfair to dismiss their efforts to increase the wholesaling team. Whether you feel good about how Genworth is handing this situation now is a matter of opinion, but correcting your misstatement isn't "semantics" it's an effort to keep the conversation constructive and based on facts.

 

[Mr_Ed]

Semantics? I posed the initial question because I think it's helpful to listen to other perspectives and I know many on this board are deeply entrenched in the LTC market. One pitfall to having discussions like these is when people interject inaccurate info that doesn't get corrected the conclusions will be off. Your statement that wholesalers are just one level above being as expensive as an agent to add to the sales force is just totally false, so it's unfair to dismiss their efforts to increase the wholesaling team. Whether you feel good about how Genworth is handing this situation now is a matter of opinion, but correcting your misstatement isn't "semantics" it's an effort to keep the conversation constructive and based on facts.

Charlie,
you assume that scagent is interested in drawing accurate conclusions based upon facts.

 

[Arthur Rudnick]

originally posted by Mr_Ed

The extent of ignorance on this board never ceases to amaze me.

I have nothing better to do than to educate you, guys.

Oh Yoda, my Jedi Master, yes please teach us the way of the Force as only you know how.

But before you share with us Jedi-wannabes LTC 101, please enlighten us with some missing pieces from LTC 100. Surely you have the answers to these questions but you must have been mind-bending with the Dark Side and failed to share your wisdom with us.

Please shed your devine light to help me complete my Jedi training"

Regarding the Rate Stability Regulations:
You were asked:
"Does the Rate Stability Regulations prohibit states from approving future rate increases on LTC policies"? A simple question that only requires a simple "yes" or "no" answer".
Your answer was: "And, the simple answer to your simple question is "yes"
A follow-up question was:
Then how do you explain this earlier post that you made? I'm a little confused.
"For those policies protected by the Rate Stability Regulation, in order for that rate increase to be approved on that policy, the actuary had to certify that it was the ONLY rate increase that would be needed on that policy for the life of the policy."
Still waiting for an answer.

Here's another one Master Yoda:
Regarding Genworth:
You stated:
"Their newer policy forms (2005+) are very profitable for them and they want to sell more of them".
You were asked:
" Then please explain why rate increases are being requested for policies introduced in 2012"?
Still waiting for an answer.

(Also, IF you answer, please explain how any carrier can determine how a policy series that was only introduced 2 years ago can possibly be profitable? It will take at least a decade, until policyholders start to go on claim to determine if a series is profitable or not. Every policy series in history is profitable when carriers are only taking in premiums without paying claims)

And, here's a new question dear Yoda. Maybe you can share your wisdom with us?
McInerney stated that because New Hampshire, Vermont & Massachusetts did not grant rate increases on earlier existing policies, Genworth will not sell new policies in those states.
However, you clearly stated "Their newer policy forms (2005+) are very profitable for them and they want to sell more of them". That being the case, why wouldn't PCF2/3 be available for sale in those states? (other than punishment of course)

Please help me understand the ways of the Force.
Thank you and may the Force be with you.

 

[ned55]

Not only are they NOT getting out of LTCi, they are more commited now than ever to LTCI. In 2015, they will be hiring about 100 new internal wholesalers JUST FOR LTCi.

It is only their older policy forms that have been unprofitable and on which they are seeking rate increases.

Their newer policy forms (2005+) are very profitable for them and they want to sell more of them.

By increasing LTCi reserves by $541 million, shareholders lost value, but policyholders gained security.

What's good for a policyholder is oftentimes bad for a stockholder.

Genworth did the right thing!

Their commitment to honoring their LTCi claims is evident.





"Shareholders lost value. Policyholders gained security."

Although more premium increase means more revenue, even Genworth cannot predict the tail risk on claims. Genworth is unwilling to project profitability. What are the profitability estimates for the Long Term Care division? What margins are expected? Sure, the new higher-premium policies are either more profitable, but could also be less unprofitable, still remaining unprofitable. The lack of assurance from Genworth on future profitability, even with new higher premium policies, went over like a lead balloon.

Ratings Agencies like S&P acted, by cutting the Genworth rating to junk. Other Ratings Agencies may follow. Maybe someone in the know might convince the Ratings Agencies that they are wrong for not considering the sensibility of Genworth's long term care insurance strategy.

Oh I almost forgot the Genworth policy holders. In addition to higher premiums for their policies, now they also get that warm and fuzzy feeling that their insurance company has junk financial strength ratings. Yeah, the policy holders really benefit from that. There are no assurances from Genworth that they will not need more capital allocated to reserves in the future.

 

[ltcadviser]

So, what is the over under on the number of rate increases I should expect on my Genworth 10 Pay within the next 6 years? 2 1/2?

 

[scagnt83]

Your statement that wholesalers are just one level above being as expensive as an agent to add to the sales force is just totally false, so it's unfair to dismiss their efforts to increase the wholesaling team.

Wholesalers comp depends on the company they are with. Some pay a higher base, others pay a higher override or bonus structure on their territory.

I have a good bit of experience dealing with wholesalers. I have spoke to some whos comp is 70% overrides on the region. I have spoke to others whos override made up only about 30% of their total comp. It all depends.

Whatever the mix of their compensation may be, they are not an expensive addition for an insurance carrier. And they are not kept if they are not producing revenue for the carrier...


The method of their compensation does not really matter... what matters is that Genworth is suddenly making a huge push for added revenue suddenly after reporting financial troubles. That is the overall point that I made which is very relevant to the conversation.

----------

Charlie,
you assume that scagent is interested in drawing accurate conclusions based upon facts.

If anyone follows my posts on here they know that I always search for and evaluate the facts.

In your view on GWs LTCI biz you are completely ignoring the facts and trying to twist them into a positive for the future of GWs LTCI biz.

Was the increase in policy reserves good for EXISTING policy holders?
From a policy security standpoint, yes.
From a premium standpoint, no because unexpected premium increases helped to pay for that reserve increase.

Then there is the separate issue of the future of GWs LTCI biz. When a company states they are seriously considering winding down a line of business... I cant see how you see that as a bright future... those are the facts straight from the horses mouth. Ignore them all you want, it really does not matter.

 

[Mr_Ed]

Although more premium increase means more revenue, even Genworth cannot predict the tail risk on claims. Genworth is unwilling to project profitability. What are the profitability estimates for the Long Term Care division? What margins are expected? Sure, the new higher-premium policies are either more profitable, but could also be less unprofitable, still remaining unprofitable. The lack of assurance from Genworth on future profitability, even with new higher premium policies, went over like a lead balloon.

Ratings Agencies like S&P acted, by cutting the Genworth rating to junk. Other Ratings Agencies may follow. Maybe someone in the know might convince the Ratings Agencies that they are wrong for not considering the sensibility of Genworth's long term care insurance strategy.

Oh I almost forgot the Genworth policy holders. In addition to higher premiums for their policies, now they also get that warm and fuzzy feeling that their insurance company has junk financial strength ratings. Yeah, the policy holders really benefit from that. There are no assurances from Genworth that they will not need more capital allocated to reserves in the future.

S&P states that an insurer rated "A" (Strong) has strong financial security characteristics that outweigh any vulnerabilities, and is highly likely to have the ability to meet financial commitments. Insurers rated "A" (Strong), "BBB" (Good), or "BB" (Marginal) have strong, good, or marginal financial security characteristics, respectively. The "A", "BBB" and "BB" ranges are the third-, fourth- and fifth-highest of nine financial strength rating ranges assigned by S&P, which range from "AAA" to "R." A plus (+) or minus (-) shows relative standing in a rating category. These suffixes are not added to ratings in the "AAA" category or to ratings below the "CCC" category. Accordingly, the "A+", "A-", "BBB+", "BB+" and "BB-" ratings are the fifth-, seventh-, eigth-, eleventh- and thirteenth-highest of S&P's 21 ratings categories.

 

[Charlie456]

Wholesalers comp depends on the company they are with. Some pay a higher base, others pay a higher override or bonus structure on their territory. I have a good bit of experience dealing with wholesalers. I have spoke to some whos comp is 70% overrides on the region. I have spoke to others whos override made up only about 30% of their total comp. It all depends. Whatever the mix of their compensation may be, they are not an expensive addition for an insurance carrier. And they are not kept if they are not producing revenue for the carrier... The method of their compensation does not really matter... what matters is that Genworth is suddenly making a huge push for added revenue suddenly after reporting financial troubles. That is the overall point that I made which is very relevant to the conversation. ---------- If anyone follows my posts on here they know that I always search for and evaluate the facts. In your view on GWs LTCI biz you are completely ignoring the facts and trying to twist them into a positive for the future of GWs LTCI biz. Was the increase in policy reserves good for EXISTING policy holders? From a policy security standpoint, yes. From a premium standpoint, no because unexpected premium increases helped to pay for that reserve increase. Then there is the separate issue of the future of GWs LTCI biz. When a company states they are seriously considering winding down a line of business... I cant see how you see that as a bright future... those are the facts straight from the horses mouth. Ignore them all you want, it really does not matter.

Thanks for the info and now I understand why you would make such a comment since you were going with general industry info instead of the specific information relevant to how Genworth works. That being said, I agree it's not a key point in the discussion.

 

[scagnt83]

Insurers rated "A" (Strong), "BBB" (Good), or "BB" (Marginal) have strong, good, or marginal financial security characteristics, respectively.

S&P cut GWs ratings from BBB- down to BB+. They went from "Good" to "Marginal".

Not just "Marginal", but Marginal with a "negative outlook".

Not good for Genworth or their policy holders. The worse your ratings are the more expensive it is to issue debt. The increased future debt liabilities will cause a need for increased revenue to cover the increased debt payments in the future.


Also, Moodys put Genworth on "watch". A single level downgrade with them would move them from "Good" to "Adequate".

AM Best is standing by their A ratings for now.

 

[Mr_Ed]

S&P cut GWs ratings from BBB- down to BB+. They went from "Good" to "Marginal".

Not just "Marginal", but Marginal with a "negative outlook".

Not good for Genworth or their policy holders. The worse your ratings are the more expensive it is to issue debt. The increased future debt liabilities will cause a need for increased revenue to cover the increased debt payments in the future.


Also, Moodys put Genworth on "watch". A single level downgrade with them would move them from "Good" to "Adequate".

AM Best is standing by their A ratings for now.

Why do you post inaccurate information that is so easily disputed?
If you're going to make a post, it takes about 2 minutes to google the correct information before making a fool of yourself.

S&P's rating for Genworth Life Insurance Company is BBB+

www.genworthltc.info