What about the potential lawsuits? It looks as if the believe there is some merit there, or that many firms wouldn't being potentially suing. Waiting to see what happens with the potential suits. Strange that no one is talking about any risk associated with the pending suits.
My post is based on certain assumptions. .
I have listened to every explanation Genworth has made multiple times.
Genworth said 3.5 billion is what they expected to pay in claims per yr.
So quarterly. ..
That is 875mil per quarter (breaking it down quarterly) to pay 50 thousand claims. .
Genworth fell very low. From 16.25 to as low as 11.97. . In this. .
The market may fear that Genworth burned through 3.5 billion in 2 quarters for what they expected to pay out in 1 year?? Nobody knows for sure. . The stock price has extreme fear built in.
I am going to assume worst case is not the case here, but the market is treating gnw stock as if something like that may have happened. . In that case Genworth should soar on a pleasant surprise.
Last quarter. .
60mil in extra ltc expense . But Genworth still made 6 Mil.
So what is happening?
Genworth makes on average an extra 15 million from rate increases.
Say in the 3rd quarter Genworth had a similar 60mil overage in LTC expenses.
Genworth also should have 15 mil more from rate increases.
So Genworth if no chargeoff makes 21mil from LTC. Which would be awesome. ( best choice )
Or Genworth can increase the DLR or take a 100mil chargeoff and report higher earnings next quarter.
Due to legal issues, I say report the 20 something mil in earnings and forget the chargeoff.
(Lawyers are salivating over a chargeoff prospect, so just report low earnings. .
And I am sure if Genworth could produce any positive earnings from ltc this quarter the stock could soar & make investors happy. I don't see any benefit to taking a chargeoff in order to report higher earnings later? ?
Why and get slamed by lawsuits?
So what makes People buy LTC coverage?
If you have a policy that covers at least $150k your assets would not get taken away and the cost is reasonable for most Americans. Many of us will need LTC !! That's life.
This would save gnw's ltc business, reduce government spending and eliminate the need for nasty ltc premium rate increases ( the big ones anyway)
Right now Genworth and other long-term care providers have run into financial problems trying to offer full benefits to LTC policy holders. People don't want to pay $3000 per year for full LTC coverage and at the same time the Government is paying for the majority of all long-term care costs. Most people are not covered by Long-term care policies. Genworth insures only 1.2 million and say over 100 million will need to pay for long-term care. A solution Genworth should propose to legislators is since the government bares most of the LTC cost burden now the government can significantly reduce overall cash outlays by offering to pick up the additional costs that LTC companies can't cover for people that buy partial coverage long-term care policies from companies like Genworth or other insurance companies that want to get back into LTC coverage business. Genworth had stated Americans will only pay $1,500 per year for LTC insurance, the CEO called this the 'sweet spot' for what Americans are willing to pay and that this covers $150,000 of LTC care.
This coverage would be a significant help to the Government now paying most of LTC coverage anyway after the individual sells all assets. The government would realize significant savings by offering to pay what companies can't cover by paying the rest of long-term care costs above the $150,000 policy, provided the individual purchased a long-term care policy that covers at least $150,000 or pays $1,500 per year in premiums. This new government incentive would attract a huge influx of LTC buyers and more companies can rejoin the LTC insurance business. Also the government would save billions on LTC costs because more people would have substantial coverage.
Please pass this on to the board and Jim McInerney.
Did the weasels even GET a so-called "lead plaintiff" .. If so, it should be public domain.. shareholders have a right to know WHO is working behind the scenes
Not necessarily. Though it certainly would not be hard to retrace to that level, with the amount of market volatility we have seen as of recent.
Also, though I am encouraged by this rise in SP, it is on low volume.
Sentiment: Strong Buy
Is excellent, IMO.
Key here is that GNW's management knows the potential for a break up and also the presently ridiculous SP valuations. Many of the big hitter analysts and fund managers are all on the same page.
Just a matter of time.
No matter the result the accounting will be reliable. This may result in more than buyers kicking the tires. Whether intended or not GWN will transform into a different structure.
Awesome to see it!! Bringing back the days of 18 per share( paulson originally talked up a break up back then).
More talk and we can be there!
Very positive article. Just need some additional hedge funds to jump in and put LTC on the back burner as a non-issue