Genworth Financial Inc (NYSE:GNW) reported preliminary charges for 3Q2016. During the same quarter, the firm closed its annual review of methodologies and assumptions pertaining to its LTC claim reserves. Following this assessment, which covered an additional year of entitlements experience since the last yearly assessment in 3Q2015, the company updated on various factors.
It reflected deviations in claim termination rate conventions between daily benefit amounts and product types. The company reduced claim termination rate norms for longer duration claims for some product types. Other update came on utilization rate assumptions and refined process related to computation of incurred but not posted reserves to better show the aging of the block.
Following this review, the firm projects to enhance LTC claim reserves by nearly $400 to $450 million pre-tax leading in an after-tax expense to earnings of $260 million – $300 million for 3Q2016. These results are for now being assessed by a third party actuarial company and also by company internally.
The final report will be launched in conjunction with the firm’s release of its 3Q2016 results. Moreover, the company projects the updated claim reserves norms to have an impact on margins. Genworth projects that future rate action measures and other management activities will help minimize the expected impact. For now, the net impact on margins is unknown, as the work and analysis will be closed in the fourth quarter.
The firm has updated on latest financial estimates, including the projected impact to future and current earnings related with higher expected claim expenses in LTC and constant low interest rates. Genworth expects to post a non-cash charge to come in between $275 million and $325 million primarily linked to deferred tax assets that are not projected to be consumed before their expiration.
Distinctly, the company and China Oceanwide Holdings Group Co, Ltd. reported that they have finalized a definitive deal. Under this deal, Oceanwide has agreed to buy the outstanding shares of GNW for a total transaction value of nearly $2.7 billion, subject to approval of stockholders and other closing terms, including the receipt of essential regulatory approvals.