Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
Policy Form 7052MD
1. Scope of this Filing
T
his filing applies to the referenced policy forms issued in your state. These forms are also referred to by
Genworth Life Insurance Company (GLIC) as “Flex 1” and are no longer being sold.
F
or all the policies issued in your state to which the current filing applies, refer to the Supplement for state
and nationwide information on issue dates, number of issued and in-force lives, total and average
premium, average issue and attained age, distributions and history of prior approved rate increases.
2. P
urpose of this Filing
T
his actuarial memorandum has been prepared to request and support the approval of a premium rate
increase in your state.
W
e demonstrate that the requested premium rate increase satisfies the minimum requirements and all
applicable regulations in your state. This actuarial memorandum may not be suitable for other purposes.
I
n this filing, GLIC is requesting a premium rate increase according to the table below, applicable to the
base rates and associated riders of all in-force policies referenced in Section 1 of this actuarial
memorandum. GLIC acknowledges Maryland regulation COMAR 31.14.01.04(5) and requests that the
Administration consider premium rate increases phased over a multi-year period. In this filing specifically,
GLIC requests that the actuarially equivalent rate increases be implemented over an eleven-year period
for policies with lifetime high benefit increase option as follows: (15%, 15%, 15%, 15%, 15%, 15%, 15%,
15%, 15%, 15%, 3.2%); and over an eight-year period for policies with limited high benefit increase option
as follows: (15%, 15%, 15%, 15%, 15%, 15%, 15%, 12%). The requested rate increase reflects updated
assumptions and experience, and any remainder of the rate increase not approved in prior filings if
applicable to your state.
Benefit Period
Benefit Increase Option
(BIO)*
Requested Rate Increase for policies that are
not subject to revised couples discount
Lifetime
High BIO
188%
Limited
High BIO
132%
*High BIO does not include policies without BIO or 1% BIO
I
n order to maintain adequate Cash Flow Testing (CFT) Margin and to strengthen the claim paying ability
of the company, GLIC is differentiating its rate increases according to the projected experience, and
resulting level of risk, associated with certain key policy features. The most significant risks are observed
with policies with the richest potential benefits, meaning long benefit periods and large compound benefit
increase options, and thus higher rate increases are appropriate for those cohorts.
Flex 1
Maryland Page 1
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
In addition, GLIC is also updating its approach for developing the margin for Moderately Adverse
Experience (MAE) to be used as a threshold to trigger future rate increases.
3. Ju
stification of the Premium Rate Increase
R
edacted pursuant to Section 13, below.
4. Marketing Method and Underwriting Description
P
olicies were sold primarily through licensed producers.
T
he underwriting process included an assessment of functional and cognitive abilities at issue ages
considered by GLIC to be appropriate. Various underwriting tools were used in accordance with our
underwriting requirements, including an application, medical records, an attending physician’s statement,
telephone interview and/or face-to-face assessment.
5. D
escription of Benefits
T
his plan is a Guaranteed Renewable policy. These forms are a comprehensive product with benefits
payable on a daily or monthly basis. These forms also require an insured to meet benefit eligibility
requirements that are triggered by Activities of Daily Living (ADL) deficiencies or severe cognitive
impairment. The daily or monthly benefit, Benefit Period, Elimination Period (service day or calendar day)
and Benefit Increase Option (BIO) can be selected at issue.
A
ll of the following benefits are included in the base policy:
• P
rivileged Care Coordination Services
• Nursing Facility Benefit
• Assisted Living Facility Benefit
• Home and Community Care Benefit
• Bed Reservation Benefit
• Home Assistance Benefit
• Hospice Care Benefit
• Respite Care Benefit
• Alternate Care Benefit
• International Coverage Benefit
• Waiver of Premium Benefit
• Contingent Nonforfeiture Benefit
Flex 1
Maryland Page 2
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
All of the following benefits and riders are optional:
• Refund of Premium at Death– Graded or 10 year
• Restoration of Benefits Rider
• Transition Benefit
• Nonforfeiture Benefit Rider
• Shared Coverage Rider
• Shared Coverage with Joint Waiver of Premium Rider
• Waiver of Home Care Elimination Period Rider
• Enhanced Survivorship Benefit
• 10 Year Survivorship Benefit
• BIO (equal, compound, no benefit increase)
• Future Purchase Options
• Guaranteed Purchase Options
6. Alternatives to the Requested Rate Increase
GLIC will offer insureds impacted by rate filings several options for mitigating the impact of the rate
increase while still providing meaningful protection. These options will be provided in the policyholder
notification letter. In addition, policyholders will have the ability to call a dedicated team of customer
service representatives that can assist with providing customized quotes for any number of other benefit
adjustments.
Reduced Benefit Options. Insureds can change benefit features or coverage limits in order to maintain
reasonably equivalent pre- and post-rate increase premium levels, and the optimal balance of coverage
and cost based on their specific needs. The available benefit and rate combinations are consistent with
the combinations presented in the rate tables approved as part of the original filing. To balance coverage
and cost considerations, GLIC will offer policyholders, subject to rate increases on their long-term care
policies, customized options to adjust their benefits, which may include any of the following options
(where available):
1. Reduction in Daily/Monthly Maximum amount;
2. Reduction in Benefit Period;
3. Reduction or elimination of the BIO;
4. Increases in Elimination Period;
5. Elimination of policy riders or other optional features
If a policyholder elects to reduce the BIO, they have the ability to retain any prior increases to their daily
or monthly payment maximums. In addition, the company plans to offer, and has included as part of this
filing, a new BIO of 1% compound, which will be available for policyholders who wish to reduce their BIO
from a higher level.
Flex 1
Maryland Page 3
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
Rate tables for the 1% compound BIO are included in the Proposed Rate Schedule, attached separately.
Other Options. GLIC will continue to offer the applicable nonforfeiture option to each policyholder.
Policyholders that are eligible for the Contingent Nonforfeiture Option will be presented with that as an
option in their notification letter. Policyholders that have a nonforfeiture (NFO) rider with their policy may
elect that option. For those policyholders that do not have either the Contingent Nonforfeiture or NFO
rider available, GLIC will continue to offer its Optional Limited benefit, which provides a paid-up benefit
equal to the total of premium paid, less any claims paid.
7. Premiums
a. These policies are guaranteed renewable for life, subject to policy terms and conditions;
b. Geographic area factors are not used in rating these policies;
c. Semi-annual, quarterly and monthly modal factors are applied to the annual premium, with the
majority of policyholders selecting annual premium mode;
d. For a history of previous rate revisions refer to the Supplement;
e. The requested rate increase will apply to policies on their billing anniversary date, following a 60-day
policyholder notification period;
f. Premium rates are unisex, level (with the exception of approved rate increases) and payable for life
(except for in-force policies with limited pay). Premiums generally vary by issue age, daily benefit,
benefit period, elimination period, BIO, and any applicable riders selected;
g. Certain underwriting discounts may have been applied to the premium rates. A preferred risk discount
of 10% or 20% may have been provided to applicants in response to specified health underwriting
criteria specified on the application. Where the criteria for a couple’s discount were met, a discount
of 40% was provided to both individuals when both submitted valid applications and both were issued
coverage. If only one member of a couple was approved, the discount was reduced to 25%; and
h. A description of the calculation of the current and proposed rate tables has been attached separately
in the Rate document. A rate schedule by issue age will be submitted after the approval of this filing.
For more information about the rate tables on alternative options refer to Section 6 of this actuarial
memorandum.
8. Actuarial Assumptions
Redacted pursuant to Section 13, below.
Flex 1
Maryland Page 4
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
9. Development of the Requested Rate Increase
In developing the requested premium rate increase, the following has been considered:
a. In order to ensure maximum credibility, exhibits are based on GLIC nationwide experience excluding
Florida and California
1
, through December 31, 2021, for all the forms affected by this filing;
b. This rate action is considered to be subject to the Rate Stability regulation;
c. The nationwide premium has been restated at your state level, only reflecting your state’s approved
rate increases, in order to avoid subsidization among states;
d. The requested rate increase has been assumed to be implemented on August 31, 2023 and it has
been calculated to bring the MAE Lifetime Loss Ratio closer to the lifetime loss ratio at pricing , which
complies with the 58%/85% test defined in the Rate Stability regulation as demonstrated in the
Supplement;
f. Lifetime projections of earned premiums and incurred claims reflecting all the prior approved rate
increases in your state are set forth in Exhibit I. Lifetime projections of earned premiums and incurred
claims reflecting all the prior approved rate increases in your state and the requested rate increase
are set forth in Exhibit II; and
g. Historical and projected earned premiums and incurred claims include provisions for waiver of
premium;
h. The prior rate increase was not applied to policyholders with issue age 70 and above, policies with
no BIO and policies with elimination period 365 days. A small number of high BIO policies that did
not receive the prior rate increase were treated as if they received the rate increase; which is a
conservative simplification; and
i. Refer to the Supplement for contingent benefit upon lapse information.
9.1 New Business Premium Rate Comparison
GLIC has compared premium rates on the referenced policy form to the new business rates where the
policy characteristics are similar. There are significant differences in benefits, underwriting and other
product features between the Flex 1 products and the current form approved for sale in your state, Policy
Form Number 8000R1. Where possible, adjustments have been made so that new business comparisons
are meaningful. These differences affect the rate comparison in the following ways:
Benefit Differences: Several benefits, available in prior product generations, including F
lex 1, are not
offered in Policy Form Number 8000R1, including benefit periods of eight (8) years or longer, elimination
period of zero (0) days, and limited premium payment options (none of these benefits are currently
marketed). Policies with these benefit differences are not considered to exceed new business rates.
Underwriting: P
roduct Form Number 8000R1 is subject to several underwriting enhancements that did
not apply to Flex 1. While these underwriting enhancements are not directly reflected in benefits, they
1
Projected earned premiums and incurred claims and original pricing for Florida and California are based on pricing assumptions different from
nationwide and therefore experience for these states have been excluded from the nationwide experience.
Flex 1
Maryland Page 5
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
impact both original and new business pricing. In addition, Product Form Number 8000R1 has four
underwriting categories (Standard, Select, Preferred, and Best), while Flex 1 had only two such
categories (Standard and Preferred). GLIC recently made the decision to discontinue sales of Preferred
and Best. Ignoring Preferred policies would limit the comparison significantly. GLIC has made a good
faith effort to compare these policies and map the two underwriting categories of Flex 1 to the four
underwriting categories of Policy Form Number 8000R1 despite the differences.
Issue Ages: C
urrent marketing limits issue ages to between 40 and 75. Policyholders with issue ages
outside of this range are not considered to exceed new business rates.
Gender Based Pricing: P
roduct Form Number 8000R1 was priced on a gender-specific basis, as opposed
to the unisex basis applicable to Flex 1. A blend of female/male rates based on pricing assumptions was
used to develop approximate unisex rates.
I
n accordance with the Rate Stability regulation and the Long-Term Care Rate Stability Practice Note
issued by the American Academy of Actuaries in 2012, we believe the differences noted above sufficiently
justify a rate level greater than the new business rates for some of the Flex 1 in-force policies in your
state. Since GLIC prioritizes rate sufficiency and company solvency, the greater rate level is required in
order to certify that, if experience emerges as expected, no further rate increases are anticipated.
10. Active Life Reserves and Claim Liability Reserves
Active life reserves have not been used in this rate increase analysis. Claim reserves as of December
31, 2021, have been discounted to the date of incurral of each respective claim and included in historical
incurred claims. Incurred but not reported reserve balances as of December 31, 2021, have been
allocated to a calendar year of incurral and included in historic incurred claims. Discounting occurs at
3.8%.
11. Trend Assumptions
As this is not medical insurance, we have not included any explicit medical cost trends in the projections.
12. Future Rate Increases
Policies to which this premium rate increase filing applies may also be subject to future additional rate
increases if the full amount of the rate increases requested in this filing are not approved or if the
underlying assumptions are not realized, producing a best estimate lifetime loss ratio greater than
projected in Exhibit II of this actuarial memorandum.
Flex 1
Maryland Page 6
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
13. Confidentiality
Pursuant to Md. Code Ann., Gen. Provis. § 4-101, et seq., (the “Public Information Act”) and,
specifically, Md. Gen. Provis. § 4-335, GLIC respectfully requests that the following portions of the
Actuarial Memorandum be maintained by the Administration as confidential:
Sections 3, 8, the Supplement, Exhibit I and Exhibit II of the Actuarial Memorandum and the Additional
Exhibits.
The materials sought to be maintained as confidential are collectively referred to as the “GLIC
Confidential Materials” herein. GLIC respectfully requests that the GLIC Confidential Materials be
maintained as confidential and not subject to disclosure under the Public Information Act. See Md.
Code Ann., Gen. Provis. § 4-335 (“A custodian shall deny inspection of the part of a public record that
contains any of the following information provided by or obtained from any person…: (1) a trade secret;
(2) confidential commercial information; (3) confidential financial information….”) (Emphasis added);
Md. Code Ann., Ins. § 11-703 (“A carrier may request a finding by the Commissioner that certain
information filed with the Commissioner be considered confidential commercial information under § 4-
335 . . . and not subject to public inspection.”).
Maryland’s Uniform Trade Secrets Act, Md. Code Ann., Com. Law § 11-1201 (the “Trade Secrets Act”)
defines “trade secret” as “information, including a formula, pattern, compilation, program, device,
method, technique, or process, that:
(1) Derives independent economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain economic value from its
disclosure or use; and
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
See Md. Code Ann., Com. Law § 11-1201. The GLIC Confidential Materials contain GLIC’s confidential
trade secrets, including, but not limited to, actuarial formulas, statistics and/or assumptions, which are
not generally known to, or ascertainable by proper means by, persons or entities other than GLIC who
could obtain economic value from their disclosure or use.
The GLIC Confidential materials must be kept confidential by a record custodian under the Public
Records Law because they constitute trade secrets, confidential commercial information, and/or
confidential financial information. See Md. Code Ann., Gen. Provis. §§ 4-328, 335. Furthermore, Md.
Code Ann., Ins. § 11-703 specifically permits long-term care insurance companies to seek confidential
treatment of premium rate information filed with the Department.
The GLIC Confidential Materials fall squarely within the above definition of trade secrets and also
constitute confidential commercial / financial information. GLIC and its predecessors have been
providing long-term care insurance coverage to policyholders for more than 35 years. GLIC’s lengthy
Flex 1
Maryland Page 7
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
experience in the long-term care insurance business has placed it in a unique position in the long-term
care insurance marketplace, in that no other long-term care insurance carrier has as much experience
in that line of business as GLIC and its predecessors. Because GLIC has been marketing long-term
care insurance products longer than its competitors, it has been able to accumulate experience-related
data that its competitors have not been able to gather. Among other things, GLIC’s confidential,
experience-related data is used to price GLIC’s long-term care insurance products and manage its
existing policies, providing economic value to GLIC, and if it was released, would provide economic
value to GLIC’s competitors.
Additionally, the GLIC Confidential Materials are held and maintained as confidential by GLIC. The data
in GLIC Confidential Materials is not generally known to, or ascertainable by proper means by, persons
or entities other than GLIC who could obtain economic value from their disclosure or use. GLIC takes
active measures to maintain the secrecy of the information in the GLIC Confidential Materials. Among
other measures, GLIC obtains non-disclosure agreements with potential reinsurers before providing
those potential reinsurers with any experience-related data. Furthermore, access to the data is limited
and available only to employees of GLIC who are deemed likely to need the information in the course of
their duties; those employees are subject to non- disclosure agreements under which they agree not to
share the information except in furtherance of the business of GLIC. Thus, the GLIC Confidential
Materials are plainly information that “is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy,” and “derives independent economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper means by the public
or any other person who can obtain economic value from its disclosure or use.” See Md. Code Ann.,
Gen. Provis. § 4-335.
If disclosed, the GLIC Confidential Materials would permit GLIC’s competitors to exploit GLIC’s
confidential, proprietary, trade secret information for their own benefit, and to GLIC’s competitive and
economic disadvantage. GLIC’s hard-earned information should be kept confidential so that others
cannot gain from GLIC’s experience in order to more effectively compete with GLIC in the long- term
care insurance marketplace. The GLIC Confidential Materials include, among other things, compilations
of information regarding GLIC’s assumptions in pricing certain long-term care products, GLIC’s
proprietary persistency and incurred claims data, and GLIC’s policy demographics. None of this
information is available to GLIC’s competitors or to the public generally, and it is plainly protectable
under Md. Code Ann., Gen. Provis. § 4-335.
This submission contains the publicly available version of this Actuarial Memorandum and other
exhibits referenced above, which redacts the GLIC Confidential Materials. A complete, unredacted,
confidential version of GLIC’s Actuarial Memorandum has been filed separately.
Flex 1
Maryland Page 8
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
14. Actuarial Certification
I am a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries, and I
meet the American Academy of Actuaries’ qualification standards for rendering this opinion and am
familiar with the requirements for filing for increases in long-term care insurance premiums.
This memorandum has been prepared in conformity with all applicable Actuarial Standards of Practice,
including ASOP No. 18, 23, 25, 41 and 56. Policy design, underwriting, and claims adjudication practices
have been considered.
I have relied on historical cash flows and projections completed by GLIC’s In-force Actuarial Infrastructure
team. All future projections included in this memorandum, while based on GLIC’s best estimates, are
uncertain and may not emerge as expected.
I have relied on statutory valuations as of December 31, 2021, for Claim Reserves (i.e., Disabled Life
Reserves, Pending Claims reserves, Incurred But Not Reported reserves, and Dead But Not Reported
reserves) provided by GLIC’s Long-Term Care Valuation team.
I have also relied on assumptions developed by GLIC’s Long-Term Care Experience Studies team in
collaboration with other GLIC actuaries, which assumptions were approved by Genworth’s Assumption
Review Committee. The assumptions present the actuaries’ best judgement and are consistent with the
issuer’s business plan at the time of the filing. I have been unable to judge the reasonableness of
assumptions and methods without performing substantial additional work and disclaim responsibility for
material assumptions and methods selected by the issuer.
I hereby certify that, to the best of my knowledge and judgment, this rate submission is in compliance
with the applicable laws and regulations of your state and the Long-term Care Insurance regulation. If
the requested premium rate schedule increase is implemented and the underlying assumptions, which
reflect a margin for moderately adverse experience, are realized, no further premium rate schedule
increases are anticipated. In my opinion, the rates are not excessive or unfairly discriminatory
.
________________________________
Elizabeth A. Foreman, FSA, MAAA
Consulting Actuary
Genworth Life Insurance Company
December 2022
Flex 1
Maryland Page 9
Genworth Life Insurance Company
Address: 6620 West Broad Street, Richmond, VA 23230
Company NAIC No: 70025
Actuarial Memorandum
December 2022
PUBLIC
Memorandum Supplement
Redacted pursuant to Section 13, above.
Exhibit Ia: Flex 1 Policy Forms - Nationwide Experience
Lifetime High BIO - With Maryland Approved Rate Increase
Applicable to policies that are not subject to couple’s discount
Redacted pursuant to Section 13, above.
Exhibit Ib: Flex 1 Policy Forms - Nationwide Experience
Limited High BIO - With Maryland Approved Rate Increase
Applicable to policies that are not subject to couple’s discount
Redacted pursuant to Section 13, above.
Exhibit IIa: Flex 1 Policy Forms - Nationwide Experience
Lifetime High BIO - With 188% Requested Rate Increase
Applicable to policies that are not subject to couple’s discount
Redacted pursuant to Section 13, above.
Exhibit IIb: Flex 1 Policy Forms - Nationwide Experience
Limited High BIO - With 132% Requested Rate Increase
Applicable to policies that are not subject to couple’s discount
Redacted pursuant to Section 13, above.
Flex 1
Maryland Page 10
