Interest rates started to rise a little in the second quarter — but not enough to give Unum Group Corp. much of an earnings boost.
Unum, a major writer of long-term disability (LTD) insurance, generates much of the revenue needed to pay LTD claims with earnings on bond portfolios.
Although interest rates have started to bounce back up from historic low levels in recent months, Richard McKenney, Unum’s chief financial officer, said yields on newly invested money are still well below the overall portfolio.
“So, the pressure on yields will continue,” McKenney warned during the company’s second-quarter earnings call.
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Unum is reporting $219 million in net income for the latest quarter on $2.6 billion in revenue, compared with $216 million in net income on $2.6 billion in revenue for the second quarter of 2012.
Group disability premium revenue increased 1.5 percent, to $524 million, group LTD sales fell 8.9 percent, to $33 million and group short-term disability sales fell 21 percent, to $19 million.
Unum also has a closed block of long-term care insurance (LTC) business.