Unum Group’s decision announced last week to exit new sales of group long-term care (LTC) insurance during the first quarter of 2012 is credit positive for the company, Moody’s stated, citing potential growing risks and losses from this business line.
Unum is not alone—just another victim of industry trends and lower interest rates.
Last Monday, Unum Group announced that it will discontinue new sales of group long-term care (LTC) insurance during the first quarter of 2012. See:
Unum, best known as a disability insurer, reported a $425 million net loss for the fourth quarter of 2011 on $2.6 billion in revenue, compared with $226 million in net income on $2.6 billion in revenue for the fourth quarter of 2010.
The company had increased policy and claim reserves by about $574 million, and said about $280 million of the increase in reserves is due to the effects of the current ultra-low interest rate environment on investment earnings.
Exiting LTC has become an industry and life expectancy trends as other companies, including Guardian Life Insurance Co. and MetLife have put their LTC business into runoff within the last year or so ,as Moody’s noted.