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PPACA depresses disability RFPs

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The employer focus on Patient Protection and Affordable Care Act (PPACA) compliance may have reduced the number of employers seeking benefit plan quotes in the first quarter.

J. Gregory Ness, the president of StanCorp Financial Group Inc. (NYSE:SFG), talked about PPACA’s effect on the sale of group disability insurance and other benefits products Thursday during the company’s first-quarter earnings call.

StanCorp, the parent of Standard Insurance, is reporting $50 million in net income for the first quarter on $691 million in revenue, compared with $47 million in net income on $723 million in revenue for the first quarter of 2013.

Even as the focus on PPACA reduced the number of employers issuing requests for proposals (RFPs) for non-medical benefits, aggressive competition held down prices in the large-group market, Ness said.

But persistency remained high, and the company is adding sales representatives in every region, Ness said.

“Proposal activity is improving, as distractions from the economy and health care regulation begin to dissipate,” Ness said.

Sellers of long-term disability insurance depend heavily on interest income to support product obligations.

Interest rates continue to be volatile, and, even though rates have started to rise, the rates StanCorp gets on new investments are lower than the overall yield on its investment portfolio, according to Floyd Chadee, the company’s chief financial officer.

“We expect this downward trend on investment income will continue throughout 2014,” Chadee said.

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