NU Online News Service, July 24, 2003, 1:06 p.m. EDT – StanCorp Financial Group Inc., Portland, Ore., produced higher profits during the second quarter, but it says the state of the economy may be hurting sales of employee benefits.
The parent company of Standard Insurance Company is reporting $37 million in net income for the latest quarter on $406 million in revenue, up from $20 million in net income on $336 million in revenue for the second quarter of 2002.
About half the revenue gains were the result of the acquisition of a block of group life and group disability policies from the Teachers Insurance and Annuity Association, New York.
The low interest rates available on investments forced StanCorp to cut the interest rate used to discount new long term disability reserves to 4.75%, from 5.25%, the company says.
Meanwhile, sales were up only 4.1% from the sales total for the second quarter of 2002.
“Sales have been slower primarily in the smaller case market, we believe due in part to continued economic uncertainties and the impact of rising medical costs on employer budgets for employee benefits,” StanCorp says.
But the company is realizing gains on its investments this quarter, rather than losses resulting from bond defaults, and it notes that interest rates began to recover at the end of the quarter.
The second-quarter rebound in the stock market helped increase assets and asset-management fees at the retirement plans operation, StanCorp adds.