State efforts to limit long-term care insurance (LTCI) premium increases may be hurting some issuers more than others.
Frederick Crawford, the chief financial officer at CNO Financial Group Inc., gave that assessment Monday during a conference call with securities analysts.
Crawford said "various states" may not let a company raise LTCI rates enough to compensate for the performance of the policies.
"I would say the industry is no doubt experiencing rate increases that are far below what we hoped for and probably modestly below our expectations," Crawford said.
CNO may be in a better position than some other carriers since it started asking for small, relatively frequent increases early on, rather than waiting to ask for "massive and sizable" increases later, Crawford said.
"So, it's a little less of an impact item for us," Crawford said.
CNO, the parent of Bankers Life and Casualty, held the call to review second-quarter earnings. The company reported $77 million in net income for the latest quarter on $1.1 billion in revenue, up from $66 million in net income on $1.1 billion in revenue for the second quarter of 2012.
The LTCI business generated $6.5 million in new sales and $133 million in premium revenue, compared with $7.8 million in new sales on $139 million in premium revenue during the comparable quarter in 2012.
LTCI sales slowed partly because CNO has been shifting toward selling lower-risk, lower-priced products, Crawford said.
Interest rates are going up, and that could eventually help LTCI profit margins, but it's "too early to declare victory," Crawford said.
"There's still a long way to go," he added.
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