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Life Health > Health Insurance > Health Insurance

Non-medical health earnings: Aflac, Unum, Genworth, CNO

By Allison Bell

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As major medical issuers soaked up investor attention with news about actual, and possible, acquisitions, insurers in other health submarkets released earnings, too.

Aflac Inc. (NYSE:AFL) had news about its big operation in Japan, and efforts to realign distribution more toward the brokers that serve large employers in the United States.

Unum Group Corp. (NYSE:UNM) compensated for suffocating interest rates by increasing premiums for group long-term disability (LTD) insurance and in-force long-term care insurance (LTCI) policies.

Genworth Financial Inc. (NYSE:GNW) and CNO Financial Group Inc. (NYSE:CNO) continued to do battle with the effects of low rates on their LTCI blocks.

Unlike executives at major medical insurers, who seem to talk about agents and brokers as little as possible during their quarterly earnings conference calls with securities analysts, the executives at the insurers in the non-medical health markets still seem to be interested in agents and brokers.

For a closer look at what those companies said about their second-quarter results, read on.

Aflac

The Duck’s company is reporting $573 million in net income on $5.3 billion in revenue for the latest quarter, compared with $810 million in net income on $5.8 billion in revenue for the second quarter of 2014.

The yen-dollar exchange rate fell 16 percent between the second quarter of 2014 and the second quarter of 2015. Because Aflac gets twice as much premium revenue in Japan as it gets in the United States, the exchange-rate fluctuations hit the company hard.

The U.S. operations produced $293 million in pretax operating earnings for the latest quarter on $1.5 billion in revenue, compared with $300 million in pretax operating earnings on $1.5 billion for the year-earlier quarter.

Teresa White, Aflac’s president, noted that the company has hired 120 U.S. broker sales professionals, in an effort to increase sales to larger employers, and that the company is also trying to increase the number of district sales coordinators, to increase the number of career agent recruits and improve the quality of the training the agent recruits receive.

In the second quarter, the number of U.S. career agent recruits increased about 2.6 percent, White said.

Unum

Unum is reporting $224 million in net income for the second quarter on $2.7 billion in revenue, compared with $239 million in net income on $2.7 billion in revenue for the second quarter of 2014.

Group long-term disability revenue increased to $409 million, from $386 million, and group short-term disability (STD) insurance increased to $152 million, from $138 million.

U.S. sales of group STD insurance sales increased 39 percent, to $32 billion, and U.S. sales of LTD increased 11 percent, to $52 billion.

Sales at the Colonial Life voluntary unit increased 5.7 percent, to $96 million, with sales to public-sector employees growing the fastest and sales to employees of private-sector employers with more than 1,000 lives shrinking slightly.

LTCI revenue increased to $158 million, from $157 million, and policyholder persistency fell just slightly, to 91.1 percent, from 91.4 percent, in spite of LTCI premium increases.

Mike Simonds, Unum’s president, said during the company’s analyst call that one trend the company sees is “pretty strong interest” among brokers in getting away from depending heavily on major medical sales commissions.

“As consolidation continues in the health market, that’s going to put further downward pressure on health care commissions,” Simonds said. “That’s creates a demand for other sources of revenue.”

Colonial Life and Unum products are good candidates for becoming the additional sources of revenue, Simonds said.

Genworth

Genworth is reporting a net loss of $139 million for the second quarter on $2.2 billion in revenue, compared with $228 million in net income on $2.2 billion in revenue for the second quarter of 2014.

A charge related to a pending deal hurt net results. Excluding the effects of the charge, income from continuing operations fell to $175 million, from $224 million.

The LTCI unit is reporting $10 million in operating income on $597 million in premium revenue, compared with $6 million in operating income on $577 million in premium revenue for the second quarter of 2014.

CNO

CNO is reporting $47 million in net income for the second quarter on $960 million in revenue, compared with $78 million in net income on $1.1 billion in revenue for the second quarter of 2014.

New annualized Medicare supplement health premiums at the Bankers Life unit fell to $16 million, from $18 million, but other new supplement health premiums increased to $1.9 million, from $1.8 million.

At the Washington National unit, supplemental health product premiums held steady at $24 million.

Bankers Life LTCI new premiums increased to $5.6 million, from $4.7 million. LTCI total earned premiums fell to $121 million, from $127 million.

Scott Perry, the chief business officer, said the company had good agent recruiting results during the quarter and is now trying to focus on training to make the new agents productive.

LTCI sales rose primarily because of increased sales of shorter-duration products, Perry said.

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