- Insurer first disclosed material weakness in 2015 filing
- Genworth accounting shortcoming was tied to long-term care
Genworth Financial Inc., the insurer that’s been hit with higher-than-expected losses on long-term care policies, said it fixed a material weakness in its accounting.
The issue was remediated as of year-end, the Richmond, Virginia-based company said Friday in a regulatory filing.
“Our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective,” Genworth said.
Genworth disclosed in March 2015 that it initially failed to identify a $44 million calculation error tied to a review a of long-term care reserves. On Friday, the company said it had separated actuarial teams and expanded the scope of reviews when it changes assumptions or methods. Long-term care policies, which can last for decades, help clients pay for home-health aides and nursing home stays.
CEO Tom McInerney has been “aggressively pursuing” rate increases for older LTC policies and has announced plans to separate the business from other Genworth units. The CEO has also been selling assets and said this month that he would halt sales of traditional life insurance and fixed-annuity products, partly because customers were opting for rivals with better credit ratings. The insurer’s stock has dropped 42 percent since Dec. 31 after a 56 percent plunge in 2015.
Kelly Groh, who became CFO in October after Martin Klein left, said during the fourth-quarter earnings call that the company expected to remediate the material weakness by the filing of its 10-K.