Issuers of long-term care insurance (LTCI) continue to face low interest rates, and uncertainty about how well they can forecast claims. But company executives told securities analysts they also see reasons for optimism.
Genworth Financial (NYSE:GNW) reported $8 million in net individual and group LTCI sales for the quarter. Sales were down from $9 million in the second quarter, and from $29 million for the third quarter of 2014, in part because of a shift to new, higher-cost products. The LTCI unit posted a $10 million operating loss on $618 million in premium revenue, compared with an operating loss of $361 million on $587 million in premium revenue for the year-earlier quarter.
Premium increases are starting to improve revenue totals, Genworth said.
At CNO Financial (NYSE:CNO), LTCI sales at the Bankers Life unit increased to $6 million, from $5.6 million. The LTCI unit generated $122 million in premiums, compared with $124 million in premiums in the year-earlier quarter.
Unum Group Corp. (NYSE:UNM) reported $159 million in operating revenue at its closed block of LTCI business, up slightly from $158 million in LTCI operating revenue for the year-earlier quarter.
The companies all reported increases in loss ratios, but all said claims were in line with expectations.
Investment yields were at or near record lows. At Genworth, for example, the net investment yield for LTCI business increased slightly, to 5.41 percent, from 5.36 percent.
Erik Helding, CNO’s treasurer, said during a call with securities analysts that continued low interest rates put pressure on the company’s margins. “The amount of potential deterioration will depend on the assumed recovery of interest rates, as well as the project at ultimate rate,” he said.
Rick McKenney’s, Unum’s president, said in his company’s earnings call that the low-rate environment is challenging and dampens the company’s profit growth. But “interest rates can be modeled,” McKenney said. “It’s very clear, very straightforward, and can be priced.”