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The reaction from Wall Street was far from positive as the company looks into its claims reserves.

When Genworth Financial Inc. announced that it would be reviewing the adequacy of their claims reserves with regards to their long term care insurance business, the reaction from Wall Street was to send the company’s stock tumbling.

The company has already reported that it had experienced a drop in its operating profits in the second quarter.

In fact, the long term care insurance company’s stock fell by 14 percent, bringing it down $2.28 to reach $13.98 on the New York Stock Exchange. The drop in the stock price arrived despite the fact that the overall financial results from the company had actually seen an improvement during that same second quarter. Genworth had also reported that its profits had increased by a more than healthy 25 percent, to reach $176 million, as its mortgage insurance business experienced improvements in its earnings. That was a considerable change for the business, which had been hit hard during the downturn in the housing market.

The long term care insurance business, however, has had the bottom fall out of its profits, with a 77 percent drop.

senior medicare long term care insuranceThis business, which provides coverage for the cost of assisted living care, nursing homes, and other related expenses, saw its profits fall by 77 percent, bringing them down to $6 million within the second quarter, from having been $26 million during the same time span in 2013.

Company execs recently held a conference in which they spoke to industry analysts and revealed that a review of the claim reserves is justified, when those profits results are taken into consideration. Genworth has every intention of completing that review ahead of the announcement of its third quarter results. Company officials have stated that they don’t know whether or not the earnings will be affected by the outcome of that review.

According to Morgan Stanley analyst, Nigel Dally, who was quoted in a research note about the long term care insurance situation at Genworth, this review “is a sizable negative surprise, with most investors having the impression that prior long-term care challenges were behind the company.”

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