John Hancock Insurance, one of the companies that helped create the U.S. long-term care insurance market, is discontinuing sales of individual stand-alone long-term care insurance in the United States ”in response to industry trends and stagnant consumer demand.”
The Boston-based unit of Manulife Financial Corp. will stop taking applications for new coverage after Dec. 2.
Manulife is writing off $97 million in intangible assets related to the John Hancock long-term care insurance distribution network. The parent company is also talking a $415 million net charge in connection with a new review of John Hancock’s long-term care insurance assumptions.
Manulife says that John Hancock will continue to honor its obligations to the 1.2 million people who already have its long-term care insurance policies, and that it will continue to sell long-term care riders with life insurance policies. The company discontinued ordinary group long-term care insurance earlier, but it will continue to offer the insurance used to operate the Federal Long-Term Care Insurance Program.
In the past year, John Hancock has been trying to cope with low interest rates by offering “flex account” long-term care insurance. The flex account is supposed help reduce the net cost of the coverage to the policyholder if and when rates start to rise. Manulife did not give any specific details about John Hancock’s flex account long-term care insurance sales.
Toronto-based Manulife announced the individual long-term care insurance sales shutdown when it released third-quarter earnings. The company reported $1.2 billion in net income in Canadian currency for the third quarter on $14 billion in revenue, up from $672 million in net income on $7.1 billion in revenue for the third quarter of 2015.
Stand-alone long-term care insurance sales fell to $8 million in U.S. dollars, from $12 million in the year-earlier quarter.
Long-term care insurance premiums and deposits fell to $553 million in U.S. dollars, from $557 million.