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Allstate Unit To Eit LTC Market

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Lincoln Benefit Life Company, a subsidiary of the Allstate Company, says it will no longer sell long term care insurance policies under its own brand.

The decision, which becomes effective Oct. 31, will not affect its existing LTC insurance customers, the company says. LifeCare Assurance, a third-party administrator that has handled the Lincoln Benefit product since it was launched in 1997, will continue to service the policies.

The decision to leave the LTC market is part of Allstate’s plan to simplify its lineup with a limited portfolio of strong products, explains John Lounds, senior vice president of product management, Allstate Life Insurance Company, Northbrook, Ill.

Since the end of 2000, Allstate has discontinued more than 100 products. The strategy has strengthened its business units, Lounds says.

Lincoln Benefit will continue to market a broad line of fixed and variable life insurance, and fixed and variable annuities.

Allstate says it understands many of its customers and agents still want LTC insurance and plans to offer such a product through a third-party carrier. It has yet to name that carrier, however.

The unit sold the LTC policies through appointed independent financial representatives and Allstate’s exclusive agencies and financial professionals.

The product and its administrator, LifeCare Assurance, actually have performed well, Allstate says. The decision to pull it has more to do with the type of product LTC insurance represents rather than its actual performance.

“Lincoln Benefit Life’s focus is on developing and offering retirement savings and life products, and we want to focus more of our attention and resources on our core product lines,” Lounds explains.

He says dropping LTC insurance will have no impact on Allstate’s earnings because it didn’t keep the business on its books. It reinsured all the business through LifeCare and another carrier, Employers Reinsurance Corp., a subsidiary of General Electric Company, Fairfield, Conn.

“As we tried to simplify things, we decided it would be easier and less expensive to go to another product carrier to carry the line,” Lounds says.

Although Lincoln Benefit was in the top 10 of those writing LTC business, the market is dominated by only a few firms, Lounds notes.

He estimates the company sold about $20 million in premiums last year and has just over 30,000 policies in force.

Lincoln Benefit’s LTC sales have been down over the past couple of years, Lounds says, a trend also reported by other carriers in the business.

Margie Barrie, principal, Hagelman Barrie, a training firm in University Park, Fla., says Lincoln Benefit’s LTC line “was a good product” but thinks it did not generate enough sales to justify the company’s continued attention.

“You need a significant amount of business, because otherwise you can’t afford to stay in the market,” she says.

One problem is that LTC agents need thorough training and support, she says, and because Lincoln Benefit producers have other products to sell, they may have been generating just a few LTC sales a year.

In addition, much of the sales effort relied on Allstate agents, who for the most part sell auto and homeowners insurance, she points out. “The LTC sale process is different from what property/casualty agents are used to.”

As of the end of 2004, Lincoln Benefit had $211.3 billion of life insurance in force and more than $2.7 billion in assets under management.

The decision to pull it has more to do with the type of product LTC insurance represents rather than its actual performance


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