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Life Health > Health Insurance > Life Insurance Strategies

Manulife May Up Prices on In-Force LTC

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Manulife Financial Corp. is warning it may soon increase premiums on in-force long term care (LTC) insurance products sold in the U.S.

The company sells LTC policies in the U.S. through John Hancock Life Insurance Company, Boston.

Manulife, Toronto, has already increased prices recently on new sales of LTC policies as well as life insurance in the U.S., it said.

The moves to boost premium income came as the company announced losses of $2.3 billion in the second quarter, compared to income of $1.7 billion in the second quarter of last year.

The company expects the price increases on new business to have a favorable impact on earnings in the second half, said Michael Bell, senior executive vice president and chief financial officer for Manulife, Toronto, during a conference call with financial analysts.

“We’ve also introduced additional universal life product designs to reduce the duration of the secondary guarantees,” Bell said.

The decline in results for its U.S business is partly due to higher new business costs and to losses on LTC policies, Bell said.

Bell said the company is conducting a new morbidity study on existing LTC insurance business because claims on these older policies have been higher than expected. This has been especially true for LTC contracts sold “many years ago, where plan designs tended to be richer and underwriting less stringent,” Bell said.

“We still need to complete our analysis of how we expect this to project out in future years. And after we complete the morbidity study, we expect to develop a state-by-state in-force rate increase plan and then file for these rate increases. We will then make judgments about the net impact of the increase in projected future morbidity, minus the projected value of the in-force rate increases.”

Bell declined to state when Manulife would make its decision on in-force LTC rates, saying only that the company still has “a lot of work to do” before it completes its morbidity study.


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