* Says plans to stay in long-term care business
* CEO says open to all "strategic alternatives"
* Suspends dividend in life business until end of 2015
* Shares fall as much as 38 pct, top loser on NYSE (Updates to add CEO comment, details)
By Tanya Agrawal
Nov 6 (Reuters) - Genworth Financial Inc lost more than a third of its market value after the life and mortgage insurer said a turnaround in its long-term care business would take longer than expected and posted a surprise quarterly loss.
Shares of Genworth, the largest long-term care insurer in the United States, fell as much as 38 percent, wiping out about $2.7 billion of the company's market value.
A pre-tax charge of $531 million to cover losses in its long-term care insurance business pushed Genworth to a huge loss in the third quarter and raised questions on the future of the business.
The company said on a conference call on Thursday it was open to all "strategic alternatives" but did not provide further details.
Genworth, spun off from General Electric Co a decade ago, had years ago written generous long-term care policies offering long periods of coverage. However, the policies have become less profitable as interest rates hit rock bottom.
At the end of last year, CEO Chief Executive Tom McInerney said the company had adequate reserves for its long-term care business. However, he said in July that investors had misinterpreted his comments as they were made in a broader context.
"I owe you an apology," McInerney said on the call. "I made a misstep when my comments shifted responsibility away from the company and me."
McInerney has been focusing on the company's life insurance business by tightening underwriting standards and selling newer products that require less capital.
Rivals such as Manulife Financial Corp and Prudential Financial Inc are reducing their exposure to the long-term care business and focusing on wealth management, which generates predictable fee-based income and is less capital-intensive.
Despite setbacks in the business, Genworth said it plans to stick with the long-term care business as it negotiates higher rates for its policies.
"If we got out of the business, I think we would lose a lot of our negotiating ability with the regulators. I think they will not be willing to grant us as large an increase or more increases down the road," McInerney told Reuters.
The company said it had reached an agreement with 47 states to increase rates and had decided to stop selling policies in Massachusetts, New Hampshire and Vermont, states that had not approved higher rates.
Genworth said on the conference call that it had considered winding down the business but ultimately decided against it after reaching the agreements.
The company also said that it was suspending dividends in its life business until the end of next year.
Genworth shares were down 36.5 percent at $8.94 early afternoon, the stock's worst day since November 2008 - the peak of the financial crisis. (Additional reporting by Neha Dimri and Amrutha Gayathri; Editing by Maju Samuel and Saumyadeb Chakrabarty)