Genworth Financial, the largest seller of long-term care (LTC) insurance policies, has agreed to be acquired by a privately-held Chinese investment firm. At the same time, it announced it will reserve an additional $400 million to $450 million against future long-term care claims.
The twin Oct 23 announcements are further indication of just how brutal the long-term care insurance business has become. Struggling with larger-than-expected claims and continued low interest rates that have slashed investment earnings, scores of carriers have abandoned the market in recent years, and those that remained have sharply raised premiums on existing policies and tightened underwriting standards and raised prices on new ones. As a result, sales have plummeted. Sales of individual stand-alone policies plunged from a peak of about 750,000 in 2002 to only about 130,000 in 2014.