A process developed by the National Association of Insurance Commissioners helped boost long-term care increases for Genworth Financial Inc. in 2023, CEO Thomas McInerney said during the company's fourth-quarter 2023 earnings call.
McInerney said Genworth saw "significant" rate approvals for its PCS II long-term care policy block in 2023 as a result of the National Association of Insurance Commissioners' development of a multi-state actuarial (MSA) review. Genworth's PCS II product represents the company's third-largest block and was the policy form the insurer decided to submit to the MSA review process.
The MSA review process was created to help address a lack of consistency at the state level when it comes to approving rate increase requests for long-term care insurance. Long-term care insurers have long struggled to obtain what they feel are adequate rate increases in the troubled business line.
Genworth was heavily involved in the creation of the MSA review, and although the process has not been the perfect fix, it has helped form a more common understanding between state regulators that has led to greater participation in rate increases.
Rate increases
Genworth was able to obtain $354 million in premium rate increase approvals in 2023, above the company's projected amount of $275 million. A total of $127 million in rate increases in the fourth quarter came from 13 states. The fourth-quarter increases averaged an increase of 75%, which McInerney said is one of the largest quarterly percentage increases the company has ever gotten.
Genworth reported a net loss of $212 million, or 47 cents per share, for the 2023 fourth quarter, a sharp decline from net income of $381 million, or 76 cents per share, in the year-ago quarter. The insurer booked an adjusted operating loss of $230 million, or 51 cents per share, in the period, a drop from adjusted operating income of $338 million, or 67 cents per share, in the fourth quarter of 2022.
The insurer also completed its annual assumption review in the fourth quarter, and the period marked the first time the insurer reported long-term assumption updates under the new long-duration targeted improvements accounting standard.
The completed annual assumption review resulted in unfavorable impacts in life insurance and long-term care amounting to $227 million, or 50 cents per share.
