NU Online News Service, Aug. 5, 2003, 6:01 p.m. EDT – UnumProvident Corp., Chattanooga, Tenn., scraped up a small increase in profits for the second quarter even though earnings fell at its disability insurance operations.
The company is reporting $98.5 million in net income for the second quarter on $2.6 billion in revenue, up from $97.7 million in net income on $2.4 billion in revenue for the second quarter of 2002.
The company, which sells disability insurance and other insurance products, benefited from a decrease in net realized investment losses to $17 million, from $55 million.
The long term care insurance unit generated $121 million in annualized new sales and $11 million in operating earnings during the second quarter on $99 million in premium revenue, up from $100 million in annualized new sales and $4.5 million in operating earnings on $81 million in premium revenue.
But operating earnings at the income protection unit, the unit that sells UnumProvident disability insurance, dropped to $110 million on $1.3 billion in premium revenue, from $161 million on $1.2 billion in revenue.
Profits at the group disability unit fell to $48 million, from $85 million, in part because more claims came in and in part because the low interest rate environment is forcing UnumProvident to lower the rate it assumes it will earn on the reserves that back its obligations to claimants. The lower rate means UnumProvident has to spend more on building up its reserves.
Similarly, profits at the individual disability unit fell to $46 million, from $67 million, because of an increase in claims and a decrease in investment earnings assumptions, UnumProvident says