Unum announced last week that they are exiting the group long-term care marketplace this quarter. Unum is not alone—just another victim of industry trends and lower interest rates. Unum, best known as a disability insurer, reported a $425 million net loss for the fourth quarter of 2011 on $2.6 billion in revenue, compared with $226 million in net income on $2.6 billion in revenue for the fourth quarter of 2010.
Exiting LTC has become an industry trend as other companies, including Guardian Life Insurance Co. and MetLife have put their LTC business into runoff within the last year or so. Regulators are also a factor, because they need to approve price increases. Most LTC players have sought sizable rate increases from regulators because original pricing has been insufficient to support current actuarial assumptions, and regulators are wary of price increases when it so directly impacts the consumers they serve.
Since LTC represented less than 5% of Unum’s operating earnings, the decision to withdraw from the market will not have a material impact on Unum’s overall credit profile, although it will cap the company’s exposure, Moody’s stated.