Executives at Manulife Financial Corp. (NYSE:MFC) say they think the benefits of staying in the private long-term care insurance (LTCI) market outweigh the benefits of getting out.
The executives talked about their LTCI pricing and sales strategy recently during the company’s third-quarter earnings call.
The company has emphasized over the past few years that LTCI sales at the company’s John Hancock unit are “not targeted for growth.”
The company conducted a review of its LTCI business, decided to take a $12 million charge to account for adjustments to mortality and morbidity and assumptions, and to start the process of asking for a new round of rate increases based on the results of the review. The average increase in the new round would be about 25 percent, up from an average of about 40 percent for increases filed in 2010.
But the company let Hancock LTCI sales increase to $15 million in the third quarter, up 15 percent from the total recorded a year earlier.
Laura Bazer, a senior credit officer at Moody’s Investors Service, said in a commentary that Moody’s views the Hancock unit’s need to seek a new round of increases as being credit negative.
“Regulators may balk,” Bazer wrote. “In addition, more policyholders, particularly healthier ones, may reject the higher rates, lapsing their policies.”