Morgan Stanley Sees Negatives In 1Q Life Earnings – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Top Stories
Topics
    • Life Insurance
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Content
    • Webinars
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
Sign in or register to be an INNsider.
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
  • Insider
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
INN Exclusives
Top Stories RSS Get our newsletter
Order Prints
May 22, 2018 Top Stories No comments
Share
Share
Tweet
Email

Morgan Stanley Sees Negatives In 1Q Life Earnings

By Cyril Tuohy InsuranceNewsNet

First quarter earnings numbers from life and annuity companies reveal more negatives than positives with long-term care leading the way, analysts said.

“Results remained disappointing, and while some issues were temporary, other factors such as long-term care exposures are likely to remain a concern for years to come,” wrote Morgan Stanley analyst Nigel Dally, in a research note.

With respect to the negatives, the analysts pointed to:

  • Concern over long-term care and reserves.
  • The tepid pace of buybacks.
  • Market volatility dragging down investment results.
  • Asset flows remaining weak.

There was good news also and Dally and his team pointed two encouraging trends:

  • Interest rates continued to rise.
  • Regulatory risks ebbed as the Fifth Circuit Court of Appeals killed the Labor Department’s fiduciary rule.

LTCi Re-Emerges as Major Concern

This earnings season’s 800-pound gorilla was long-term care, and the market punished Unum with a 17 percent decline on the day of its results after the company reported a rise in its LTC loss ratio over the fourth quarter.

The entire LTC industry “could be significantly under-reserved,” Dally wrote in his research note titled “A Formidable Wall of Concern.”

GE earlier this year announced it was more than doubling its reserves to account for LTC liabilities and analysts have been pressing life and annuity industry executives about them ever since.

Meantime insurers continue to ask for, and in many cases receive, premium increases from regulators and analyst see that as a sign that insurers expect to pay a higher amount of LTC benefits than originally modeled.

In the latest example, MassMutual has asked regulators for a 77 percent rate increase in LTCi policies, A.M. Best reported last week.

The hike would affect two-thirds of MassMutual’s 72,000 LTC policyholders nationwide and help pay for the increasing and the rise in LTC costs, the company said.

An increase in LTC claims, unfavorable LTC experience and the need for reserve increases, “have continued to place pressure on many of these carriers capital and earnings,” A.M. Best Co. said in a February report on the LTC market.

Company Executives Move to Reassure Analysts

But in conference calls, insurance company executives moved to reassure analysts that so far as insurers were concerned, analysts’ worries were misplaced.

More than half of Unum’s business is in group LTC, not individual LTC, said CFO Jack McGarry.

Even within the group LTC exposures, the bulk of the business is employer funded, paid premiums have different lapse expectations than in individual LTC and group LTC plan designs remain very conservative, he said.

Between rate increases and reserve charges, Unum has put billions of dollars into its LTC block and has conducted two LTC reviews dating back to 2011, he said.

Unum was the No. 4 LTC writer with a 5.2 percent market share in 2016, according to A.M. Best Co.

Other companies with significant LTC exposures include CNO Financial and Manulife, parent of John Hancock, Dally said. Ameriprise, Prudential and MetLife have some LTC exposures.

Half of Ameriprise’s LTC exposure is reinsured through Genworth, the nation’s top LTC insurer.

Genworth executives say they are satisfied with the “additional protections” the company has in place, Dally said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]

© Entire contents copyright 2018 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

Lincoln Enters the Buffered VA Market

Newer

Indexed Annuity Sales Bust Out Of 2018 Gate

Advisor News

  • ‘Spring Cleaning’ Includes Your Client’s Finances, Too
  • Retirement Savers Remain Confident Despite Short-Term Woes
  • City of Memphis Helps Employees With Financial Wellness Programs
  • IRI CEO: ‘I Am Optimistic for Our Industry’s Future’
  • 2/3 Of Near-Retirees Failed Or Barely Passed A Basic Social Security Quiz
More Advisor News

Annuity News

  • Nationwide To Pay $5.6M For Annuity Violations, NY Regulators Say
  • LibertyMark Freedom Fixed Indexed Annuities Launch
  • Nationwide Adds BNP Paribas Global H-Factor Index To FIA
  • Transamerica Launches Structured Index Advantage Annuity
  • Recommending FIAs: Start With The Client’s Objective
Sponsor
More Annuity News

Health/Employee Benefits News

  • Insurance execs and others weigh in on the industry’s critical talent gap
  • Medicaid Managed Care Bill Wins Approval Of Oklahoma Lawmakers
  • EBRI Studies Expanding Pre-Deductible Coverage For Chronic Conditions
  • Most Consumers Choose To Pay Higher LTCi Premiums
  • CMS Creates More User-Friendly Medicare Website
More Health/Employee Benefits News

Life Insurance

  • Industry Looks To Extend COVID-Related Life Insurance Sales Boom
  • The 5 Secrets To Retaining Financial Sales Professionals
  • Life Insurance Activity Continues Dip In April But Still Stronger Than 2021, MIB Reports
  • Transamerica Adds Execs To Annuity And Life Insurance Team
  • Northwestern Mutual Invests $5M In Black-Led Financial Institutions
More Life Insurance

- Presented By -

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

FEATURED OFFERS

Get Linked INN to your industry Connect with INN on LinkedIn to be first on all the news and insights that matter to your industry.

Press ReleasesAll press releases

  • OneAmerica Commits $1 Million Toward Financial Literacy
  • Transamerica Structured Index Advantage Annuity Offers Investors More Certainty with Upside Growth and Downside Protection
  • Senior Market Sales Creates First-of-Its-Kind Lead Acquisition Platform
  • Growing financial services firm Kuvare opens Des Moines office in East Village, continuing expansion in Iowa
  • BetterLife Selects iPipeline® to Digitally Transform Its Business & Better Serve Future Generations
Add your Press Release >

Topics

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Content
  • Webinars
  • Monthly Focus

Top Sections

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2022 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • Sitemap
  • AdvisorNews

Sign in with your INNsider Account

Not registered? Become an INNsider.