UnumProvident Corp., Chattanooga, Tenn., says it stuck with its tough new disability insurance pricing strategy during the second quarter.[@@]
The company is reporting $7.2 million in net income for the latest quarter on $2.5 billion in revenue, compared with $99 million in net income on $2.5 billion in revenue for the second quarter of 2003.
Net results for the latest quarter include a $87 million net investment loss and a $68 million loss on a closed block of old individual disability insurance policies.
The disability and long term care units all are reporting operating profits for the quarter, but UnumProvident says new annualized sales dropped 17% for individual disability insurance, 32% for long-term group disability insurance and 35% for short-term group disability insurance.
“The decline in sales activity is due primarily to the company’s disciplined pricing strategy and the competitive market environment,” UnumProvident says in a statement about its latest earnings.
Efforts to increase group disability plan rates to reflect actual claims experience caused the percentage of existing group disability policies that remain in force to fall about 2 percentage points, UnumProvident says. The latest persistency ratios are 82.5% for short-term disability plans and 84.9% for long-term disability plans.