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July 29 (Bloomberg) -- Genworth Financial Inc. Chief Executive Officer Tom McInerney is taking over supervision of the U.S life business amid higher claims costs at the unit selling long-term care coverage.
He replaces James Boyle, who is stepping down to become chairman of HealthFleet Inc., Richmond, Virginia-based Genworth said today in a statement. Boyle departs less than six months after joining Genworth as CEO of U.S. life.
Profit from long-term care fell to $6 million in the second quarter from $26 million a year earlier, the company said in a separate statement. Genworth also announced a review of the adequacy of its reserves. The company fell 2.7 percent in extended trading to $15.84 at 5:33 p.m. in New York after announcing quarterly profit that missed analysts’ estimates.
“I have been working closely with Jim and his team on developing the new Genworth LTC business model, as well as working with government leaders and regulators to change the regulatory framework for the LTC insurance market,” McInerney said in the statement. “It makes sense for me to assume the additional role of CEO of the U.S. life division at this time.”
McInerney had announced the hiring of Boyle Jan. 31 as part of a plan to improve the performance long-term care coverage, which helps pay for home-health aides or residence in nursing homes. MetLife Inc. and Prudential Financial Inc. have retreated from the industry as increasing life expectancies and low interest rates pressure profit.
McInerney said on Dec. 4 that Genworth had sufficient reserves for long-term care coverage and provided details to analysts on how the levels change based on interest rates and claim assumptions. He took over last year as CEO and presided over the doubling of shares as he cut jobs, boosted prices for long-term care coverage, sold a wealth-management operation and divested a stake in an Australia unit.
Second-quarter net income climbed to $176 million, or 35 cents a share, from $141 million, or 28 cents, a year earlier, led by results in the unit that backs home loans. Operating profit, which excludes some investment results, was 31 cents a share, trailing the 36-cent average estimate of 10 analysts surveyed by Bloomberg.
Profit at the U.S. mortgage-insurance division tripled to $39 million.
Boyle was previously president of John Hancock Financial Services Inc. He replaced Patrick Kelleher, whose departure from Genworth was announced in October.
“Jim is a proven business leader,” Bill Van Wyck, CEO of Norwalk, Connecticut-based HealthFleet, said today in a statement. He will help “execute on the significant opportunity for innovative technology solutions within the health-care sector.”
--With assistance from Zachary Tracer in New York.