Brighthouse Financial on Monday reported a second-quarter loss of $239 million as expenses rose and investment income dropped, the company said.<\/p>\n
The Charlotte, N.C.-based company, a big seller of annuities, reported a profit of $246 million in the year-ago quarter.<\/p>\n
Brighthouse, which celebrated its first-year anniversary as a publicly traded company, expects to reach its year-end targets, CEO Eric Steigerwalt said in a conference call.<\/p>\n
Quarterly expenses reached a \u201chigh-water mark\u201d of $288 million as the company invested in technology platform and a branding campaign, the company said.<\/p>\n
Annuity sales rose 42 percent to $1.4 billion due primarily to the company\u2019s Shield annuities and fixed index annuities, the company said.<\/p>\n
Brighthouse reported $2 million of life insurance sales, but expects to become a much bigger player in the life segment with the launch of a new product at the end of this year or early next year, Steigerwalt said.<\/p>\n
The company manages an in-force block of life insurance policies with $421 billion in face value.<\/p>\n
Spun off by MetLife a year ago, Brighthouse still has transition service agreement, or TSA, contracts with MetLife.<\/p>\n
Every TSA that Brighthouse exits lowers its expenses and the company exited 12 agreements in the second quarter.<\/p>\n
Fewer than 85 TSAs remain between Brighthouse and MetLife, Steigerwalt said.<\/p>\n
The company reported a loss of $2.01 per share. Earnings, adjusted for non-recurring costs, came to $1.27 per share.<\/p>\n
Results did not meet Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of $2.03 per share.<\/p>\n
The annuity and life insurance company posted revenue of $1.7 billion in the period. Its adjusted revenue was $2.09 billion.<\/p>\n
Accounting for LTC liabilities seems to be haunting insurers like a bad dream with Unum and Prudential the latest companies to suffer financial setbacks.<\/p>\n
Prudential last week said it would take a charge of $1.5 billion related to its long-term care policies and updated actuarial assumptions.<\/p>\n
The charge hit Prudential\u2019s bottom line hard as second-quarter net income of $197 million fell from $419 million in the year-ago period.<\/p>\n
The Newark, N.J.-based company said it had profit of 46 cents per share. Earnings, adjusted for non-recurring costs, came to $3.01 per share.<\/p>\n
Results fell short of expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $3.08 per share.<\/p>\n
Just days before Prudential\u2019s announcement, Unum said it could be taking a charge of up to $750 million for LTC policies, pending accelerated work on the company\u2019s LTC annual reserve analysis.<\/p>\n
\u201cOur current thinking, subject to the completion of our work is that we may need to increase our reserves as part of our third-quarter closing process,\u201d CFO Jack McGarry said in an analyst conference call.<\/p>\n
The surprises, coming after GE said it would boost reserves by about $15 billion over seven years in connection with its run-off insurance portfolio, signal more uncertainty around how much exposure life insurers face with their LTC blocks, analysts said.<\/p>\n
Analysts took GE\u2019s red flag as a signal to dig more deeply into the LTC blocks and note the increases in claims incidence earlier this year.<\/p>\n
Many insurers are saddled with LTCi policies sold years ago, but which were underpriced yet afforded very generous benefits such as compound inflation feature. Those benefits are getting more expensive every year as LTC costs rise and interest rates remain low.<\/p>\n
To meet their LTCi claims, insurers are going back to regulators and asking for premium increases or seeking to sell or mitigate their LTC books of business through reinsurance deals.<\/p>\n
In a deal with Wilton Re, CNO Financial said it would cede $2.7 billion in nursing home and LTC business written before 2003 and held at its subsidiary Bankers Life.<\/p>\n
The agreement, which will incur a change of $650 million before the end of the year, will improve CNO\u2019s cash flow and lower the company\u2019s exposure to volatility.<\/p>\n
Bankers Life will pay a commission of $825 million to reinsure the block, CNO said.<\/p>\n
Once the deal is closed, LTC reserves will comprise only 13 percent of the company\u2019s reserves, down from 25 percent.<\/p>\n
In addition to the Wilton Re deal, CNO said its subsidiaries would no longer issue home health care-only LTCi policies and cease selling nursing home LTC policies with benefit periods longer than three years \u2013 in effect moving to shorter-duration products.<\/p>\n
\u201cIt is clear these are the products that resonate most with our customers as the average benefit period across new sales is currently 10 months,\u201d said Gary Bhojwani, CEO of CNO.<\/p>\n
Remaining LTC policies with benefit periods of less than one year will represent over 50 percent of the in-force block while policies with lifetime benefits will fall to less than 3 percent, the company said.<\/p>\n
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.<\/em><\/span><\/p>\n \u00a9 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.<\/strong><\/span><\/p>\n The post 2Q Roundup: Brighthouse Posts Loss; Insurers Face LTC Pain<\/a> appeared first on InsuranceNewsNet<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Insurers report ups and downs in second-quarter earnings reports, with Brighthouse Financial reporting a loss. Meanwhile, long-term care policies continue to create plenty of headaches for insurers such as CNO Financial and Prudential.<\/p>\n The post 2Q Roundup: Brighthouse Posts Loss; Insurers Face LTC Pain<\/a> appeared first on InsuranceNewsNet<\/a>.<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/11608"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=11608"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/11608\/revisions"}],"predecessor-version":[{"id":11610,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/11608\/revisions\/11610"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=11608"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=11608"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=11608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}