Wall Street Transcript Interview with Thomas J. McInerney, the President and CEO of Genworth Financial, Inc. (GNW)

Wall Street Transcript

67 WALL STREET, New York - June 6, 2014 - The Wall Street Transcript has just published its Insurance Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Low Profitability and Low Interest Rates - Commercial Line Brokers and Underwriters - Consolidation Trends - Emerging Market Expansion - Analysis Of Personal, Commercial & Reinsurance Subsectors

Companies include: Genworth Financial Inc. (GNW) and many more.

In the following excerpt from the Insurance Report, the President and CEO of Genworth Financial, Inc. (GNW) discusses company strategy and the outlook for this vital industry:

TWST: You had mentioned your efforts to expand the products line; can you elaborate a little bit on that?

Mr. McInerney: We are rolling out a new product, we call it Privileged Choice Flex 3, and that - as you can imagine from the "three" - is the third generation. And that reflects the latest information we have and assumptions for morbidity, that is the cost of these long-term care claims, mortality - people are living longer and so they tend to be reaching ages where they have more dementia-related claims. Cognitive disorders account for about 51% of paid claims. So it is a significant issue.

Also what we find today is interest rates are much lower than they were in the 1970s and 1980s when the industry started. So the new products reflect that, and they also reflect the fact that our policyholders - once they buy the policies - understand their value, and they hold on to them. Our experience has been quite different than our original assumptions when we started. The new product reflects all of that.

We try to cover now four, five years and around $500,000 of coverage plus an inflation protector. The average cost of nursing home care is $87,000 these days, in-home care is about half that, so it is expensive. The $500,000 gives you coverage for a significant amount of time. On average, if men are going to have a long-term care claim it will be for approximately two years and women for four years, so that amount of coverage covers generally most cases. The challenge with that is, you know, it is expensive. The average cost of that kind of a policy will be around $3,000 for someone in their mid-50s - plus or minus, depending on age and health, etc. - and that's expensive for many Americans.

So the new product we are launching will include more affordable product options, such as lower ultimate coverage amounts. For some, that coverage will be more than sufficient. For others that might mean that if someone was to become disabled, they might not have full coverage, so they might have to use some of their own assets. But at least there would be a reasonable amount of coverage with the view that the costs of that would be more affordable. We know that clearly there is a much larger market if we could keep the costs to $1,200 or $1,500. Those are all annual costs. So that's one whole area of new products - more affordable, lower limit, lower per diem coverage, etc.

Then the other area that is growing very quickly is...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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