New, higher long-term care insurance (LTCI) prices have led to a sharp drop in U.S. retail LTCI sales at Manulife Financial Corp., the company says.
Manulife, Toronto (TSX:MFC), says overall LTCI sales at its Boston-based John Hancock Long-Term Care unit increased to $69 million in the third quarter, from $51 million in the third quarter of 2010, because of solid sales at the unit’s Federal Long Term Care Insurance Program, a voluntary LTCI program for federal employees and relatives of federal employees.
Although overall LTCI sales are up, “retail product sales declined 73% in the third quarter of 2011 compared to a year ago, reflecting new business price increases that have been implemented over the past year,” Manulife says.
“A more profitable, lower-risk retail product has been introduced in 47 states since May,” the company says.
John Hancock LTC also “has filed with regulators for premium rate increases on in-force retail and group business, averaging approximately 40% on the majority of our in-force LTC business,” the company says. “To date, approvals of in-force price increases on retail business have been received from 25 states.”
Manulife has put U.S. LTCI products in a category dubbed “products not targeted for growth.” During the company’s earnings call, company executives and analysts spent no time talking about LTCI products.
But the John Hancock LTC unit turned in solid results.
Manulife presents the results of the John Hancock LTC unit in U.S. dollars.
John Hancock LTC is reporting $159 million in net income for the third quarter on $700 million in operating revenue, up from $128 million in net income on $624 million in operating revenue for third quarter of 2010.
Premium income increased to $447 million, from $442 million, and investment income increased to $245 million, from $173 million.
Spending on commissions fell to $45 million, from $65 million.