John Hancock Long-Term Care earned $227 million in profits before income taxes in the fourth quarter of 2012.
John Hancock’s parent company, Manulife Financial Corp. (TSX:MFC), included the Boston-based long-term care insurance (LTCI) unit’s results in its financial supplement for the quarter.
Manulife prepared the report using the Generally Accepted Accounting Principles (GAAP) rules that public companies use, not insurance regulators’ statutory accounting rules.
GAAP rules focus on how a company has done in the most recent reporting period, not how the company will do over time.
In the fourth quarter, according to GAAP rules, John Hancock LTC was less profitable than it was a year earlier but still made money.
John Hancock LTC is reporting $148 million in net income for the quarter on $465 million in premium income and $769 million in operating revenue, compared with $243 million in net income on $459 million in premium income and $758 million in operating revenue for the fourth quarter of 2011.
Total revenue, which includes the effects of realized and unrealizes changes in the value of invested assets, decreased to $416 million, from $1.1 billion.
But annualized premiums from sales of new LTCI policies fell to $10 million, from $15 million.
Spending on LTCI sales commissions fell to $33 million, from $37 million.
LTCI sales fell in part because of an increase in product prices and in part because of the lack of a federal LTC plan open enrollment period, the company said.
The company noted that it received approvals from two more states to increase rates on in-force LTCI policies in the fourth quarter. John Hancock now has permission to increase rates in 43 states, Manulife said.
John Hancock also has introduced a new product in 43 states. That product offers a new approach to inflation protection, the company said.
CORRECTION: The prior-year LTCI sales amount was given incorrectly in an earlier version of this article. The correct amount is $15 million.