The group long term care market just got shorter.
Unum became the latest in a list of carriers – and one of the market leaders – to officially bail out of the business during their fourth-quarter earnings call this week.
Other than that, according to the Chatanooga-Tenn., based carrier, things are going great. They took a $561.2 million after-tax charge after deciding to shut down the LTCI division, but otherwise reported a respectable jump in after-tax operating income, bringing in $227.6 million, or 78¢ per share The year before, the company took in $208.6 million, or 66¢ per share.
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In announcing their strategic withdrawal from LTCI, the company's press release pointed to "today's historically low interest rates, and the difficulty of managing and pricing this kind of product, it did not meet its business and financial targets."
In a more blunt assessment, one broker suspected poor sales played a part.
"You talk to any broker out here, and there's just nobody buying it," said Kelly Fristoe, owner of Financial Partners in Wichita Falls, Texas. "It's too expensive. The economics [of these products] just don't make sense."
Despite the fourth-quarter bounce, Unum actually reported a net loss of $425.4 million, or $1.45 per share because of the LTCI charge.
In other divisions, Unum US operating income, aside from long-term care, jumped 7.5 percent to $208.6 million. "Sales trends were strong, particularly in our core markets of group disability, group life and voluntary benefits," the company reported. Colonial Life reported an 11.2 percent increase in operating income to $67.6 million, driven by core commercial market sales growth.
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