Unum Group Corp. did well during the third quarter, but its group disability insurance operations ran into turbulence.
Unum, Chattanooga, Tenn. (NYSE:UNM), is reporting $206 million in net income for the latest quarter on $2.5 billion in revenue, compared with $221 million in net income on $2.5 billion in revenue for the third quarter of 2010.
At the individual disability closed block, operating income increased to $14 million, from $9.8 million.
At the Unum US unit, the group disability business is reporting $72 million in operating income on $509 million in revenue, compared with $78 million in operating income on $514 million in revenue for the comparable quarter in 2010.
Claims costs rose a little, to 85.5%, from 84.6%.
Sales of fully insured long-term disability (LTD) products actually increased 4.3%, to $22 million, and sales of fully insured short-term disability (STD) products climbed 7.8%, to about $12 million.
But holding on to group disability revenue was difficult, even though persistency – the likelihood that an employer would renew its coverage – increased to 88.7%, from 88.4%.
Revenue was soft because of “ongoing price competition” and “challenging economic conditions,” Unum says in a discussion of its earnings.
The economy has hurt growth of employment levels and wages, the company says.
The government may help unemployed people get free or subsidized health insurance from Medicaid and similar programs, but, oddly enough, it doesn’t help people without incomes pay to protect their non-existent incomes.
Meanwhile, low interest rates, one of the government’s tools for trying to hammer the economy into waking up, for goodness’ sake, is also pinching Unum.
Richard McKenney, the chief financial officer, noted during the company’s earnings call that the company’s investment yields have been holding up well despite the ultra-low-interest-rate environment, but that the company has cut the discount rate for Unum US by 0.25 percentage points to reflect the possibility that yields could drop if the current low rates linger.
Petersen International Underwriters Inc., Valencia, Calif., has hired John Russo to be legal director.
Petersen is a Lloyd’s coverholder that sells high-end disability insurance policies and other high-end insurance products.
Russo has a law degree from Loyola University and has been a senior partner in a Los Angeles law firm.