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5 Peeks Inside Unum, for Agents

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A team from  Unum Group met with investors Wednesday and presented a slidedeck full of details of interest to agents and brokers.

Rick McKenney, the company’s president, and eight other executives talked about the Unum’s recent financial performance, and the company’s outlook for 2018.

The executives said they see good sales and premium growth trends, and expect to report earnings at the top end of the predicted range, according to the slidedeck.

(Related: Unum Enters Health Stop-Loss Market)

The executives also gave some details about operations at each of its major divisions. That includes the Unum US business, the Colonial Life worksite benefits unit and the “closed block” unit.

The closed block unit is the division that oversees Unum’s long-term care insurance (LTCI) business. Unum no longer writes new LTCI coverage, but continues to manage a large amount of in-force LTCI coverage.

Unum’s comments on its own U.S. divisions may show what’s really happening in the markets for health-related products and employee benefits other than major medical insurance.

Unum filed a copy of the slidedeck with the U.S. Securities and Exchange Commission. The copy is available here.

Here are five highlights about Unum’s divisions, drawn from the slidedeck.

Crystal ball (Image: Thinkstock)

(Image: Thinkstock)

1. Health plan stop-loss numbers

Unum began offering health plan stop-loss insurance, or insurance that protects sponsors of self-insured employer health plans against catastrophic risk, this summer. The first stop-loss coverage sold through the new program will take effect Jan. 1, 2018.

Unum says in the slidedeck that it expects to generate about $10 million in stop-loss sales in 2018, with sales growing rapidly from there over the next three years.

2. Starmount deal impact numbers

Unum acquired Starmount Life Insurance Company and its affiliates, which are major sellers of dental and vision benefits, in August 2016.

Unum began offering dental and vision plans powered by Starmount in about half of the United States this year. Unum is offering Starmount-backed dental and vision plans throughout the United States for 2018.

Unum had received 40,300 requests for quotes for group dental and vision coverage as of mid-November, up from 8,300 requests for group dental and vision quotes in 2016, according to the slidedeck.

“In 2017, regions with access to Starmount dental experienced 10%-15% higher disability and life quote activity versus other regions,” according to the slidedeck.

3. Colonial Life distribution force

Voluntary and worksite insurers have been much more visibly focused on working with traditional insurance agents and brokers than many other types of insurers have been in the past few years.

Colonial Life has a total of 10,000 career agents and 14,000 brokers under contract.

At Colonial Life, Unum says, the number of new sales representatives is up 2.8%.

Sales from new reps are up 14%.

Broker channel sales are up 8.2%.

Dollar puzzle (Image: Thinkstock)

(Image: Thinkstock)

Sales to customers in the company’s core market, or employers with fewer than 100 covered lives, are up about 11%. Sales to customers in the core market account for about 69% of Colonial Life sales.

Colonial Life added three new sales territories this year, and expects to continue to add three or four new territories per year.

4. LTCI policyholder demographics

Unum’s closed block unit is still providing individual LTCI coverage for 148,000 people and group LTCI coverage for 818,000 people.

The unit gets an average of $1,976 in premium revenue per year for the individual LTCI insureds, and an average of $474 per year for group LTCI insureds.

The average LTCI issue age was 56 for the individual LTCI insureds and 43 for group LTCI insureds.

The average attained age of the insureds is 72 for individual LTCI and 52 for group LTCI.

5. LTCI rate increase progress

Like many other LTCI issuers, Unum has been asking state regulators for permission to increase premiums to reflect new information about how LTCI works.

The company says it has received rate increase approvals for 85% to 90% of the estimated value embedded in its LTCI reserves.

The LTCI block interest-adjusted loss ratio has been performing close to the high end of the company’s expectations, Unum says.

Unum now offers policyholders facing big premium increases a choice between dropping coverage, paying the higher premiums, or accepting a “landing spot.” A “landing spot” is a reduction in benefits that keeps the premiums the same.

In the past, LTCI issuers have reported that relatively few policyholders drop their coverage in response to premium increases.

Unum says many LTCI policyholders do accept landing spot offers: about 60% of the policyholders offered landing spots elect to take landing spots.

“This significantly reduces the future benefit growth rate and positively contributes to reserve margins,” Unum says.

—Read Unum Completes Starmount Deal on ThinkAdvisor.

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