Genworth's Stock Decline Is Good for Policyholders

Bad news for INVESTORS.  Good news for POLICYHOLDERS.
OR: Shareholders lost value.  Policyholders gained security.

Stock price (shareholder value and return) and claims paying ability (policyholder security) are two separate issues.

The reason for the downdraft in Genworth's stock price is actually a good thing for policyholders.  The company put more than a half-BILLION dollars into its policyholder reserves.  What I take from this is that instead of simply pursuing yet another round of rate increases (which take a long time), the company has taken a charge to earnings which hurts shareholders in the short run in order to keep promises to policyholders for the long run.  

There may, or may not, be additional premium increases on older policies, but this should not be read as bad news for LTC policyholders, quite the opposite in my opinion.

From the web:

• After completing the Long Term Care Insurance comprehensive claim review, Genworth (GNW -30.3%) boosts reserves by $531M and takes an after-tax earnings charge of $345M.
• Q3's net operating loss of $317M or $0.64 per share stands against net operating income of $139M or $0.28 per share one year ago.
  
• CEO: Tom McInerney: "The turnaround in this business will be more difficult and prolonged because of the poor performance of the older generation products."​​

http://seekingalpha.com/news/2102685-genworth-plummets-after-ltc-charge

This information is not intended to be investment advice, nor a solicitation to buy or sell any particular stock or investment, but is presented as information about LTC insurance.