NEW YORK (TheStreet) -- Shares of Genworth (GNW) are tumbling after the company reported much lower than expected Q3 profit as a result of an increase in its reserves for long-term care and $517M in goodwill impairments.
WHAT'S NEW: Genworth reported a per share loss of ($1.70), versus analysts' consensus estimate of earnings per share of 19c. After reviewing its long-term care claim reserves, the insurer increased the reserves by $345M after taxes. Genworth also took $517M in goodwill impairment in its life and long-term care insurance businesses to reflect a smaller overall market size, the company's transition to new products, higher expected use of long-term care reinsurance on new business, and higher expected claim costs. Sales generated by Genworth's life insurance business last quarter came in at $28M, up from $12M during the same period a year earlier. However, its individual long-term care sales fell to $28M from $37M in the same quarter of last year. On a positive note, the insurer's Q3 revenue came in slightly above expectations.
ANALYST REACTION: In a note to investors, research firm Compass Point cut its rating on Genworth to Neutral from Buy.
WHAT'S NOTABLE: Also falling this morning are shares of Unum Group (UNM) , which also sells long-term care insurance. In a note to investors, research firm Sterne Agee recommended avoiding Unum until the company finishes its own adequacy review. That review is expected to be completed on December 16, the firm stated.