Rating agencies are reacting with skepticism to a Midwestern carrier’s latest earnings release.
Conseco Inc., Carmel, Ind., is reporting a $60 million net loss for the second quarter on $1.2 billion in revenue, compared with a $22 million net loss on $1.1 billion in revenue for the second quarter of 2006.
Sales and operating earnings for many product lines were solid, but the mortality rate was unexpectedly high for a block of universal life business, and new forecasts suggest that long term care insurance claims will be higher than expected, Conseco says.
Conseco says it is increasing LTC insurance claims reserves by $110 million to align the reserves with the new claim forecasts.
Conseco recorded a similar LTC reserve increase charge for the fourth quarter of 2006.
“While this strengthening should reduce the volatility of the loss experience in future periods, progress in the turnaround of that block of business will take several quarters before improvements in claims management and our re-rate program show significant impact,” Conseco Chief Executive C. James Prieur says in a discussion of the second-quarter results.