Insurance provider Genworth Financial halted sales of its traditional life insurance and fixed annuity products in order to shift its focus to its struggling long-term care unit, the company announced Thursday.
The refocusing will help the company “develop solutions that meet the financial challenges of aging, including individual and group long term care insurance,” Genworth U.S. Life Insurance President and CEO David O’Leary said in a letter to customers.
The move comes after Genworth took a $1.24 billion loss related to long-term care coverage in 2014. Genworth Financial President and CEO Thomas McInerney has been selling assets and trying to stabilize operations in the time since, according to Bloomberg. The suspension of life insurance and fixed annuity sales is expected to cut the company’s expenses by $50 million annually.
“In our U.S. life insurance businesses, we are actively pursuing multiple restructuring actions to separate and isolate our LTC business and narrow our commercial focus,” McInerney said in the company’s earnings release.
Genworth posted a loss of $292 million in the fourth quarter of 2015. The company had a $760 million loss for the same period in 2014, due largely to funds set aside to cover claims on long-term care insurance policies.
In other insurance news, rates for LTC policies declined for many groups at the start of the year, according to a new report from the vendor-supported American Association for Long-Term Care Insurance.
2016 policies for single males saw policies drop between 1.9% and 4.2%. A married couple who were both age 60, had between a 7.4% and 9.4% decrease for 2016, report authors said.
Of the policies analyzed in the AALTCI report, only single females age 55 saw an increase in policy prices.
The decrease in average prices were driven by a few insurers who were selling high-cost policies in 2015 but are not selling in 2016, as well as some “tweaks” in the segments the report analyzed, AALTCI Executive Director Jesse Slome told McKnight’s.
