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Insurer stands apart with steady growth in individual LTC policy issuance

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Insurer stands apart with steady growth in individual LTC policy issuance

One of the few companies to report materially higher levels of new individual long-term care policy issuance in 2017 has a variety of factors to thank for its expansion.

Mutual of Omaha Insurance Co. generated growth of nearly 14.3% in new individual LTC policies issued in 2017, according to an analysis of disclosures on the Long-Term Care Experience Reporting Form 2 of its annual statement. It was the only stand-alone U.S. life, health, property and casualty and fraternal company among 2016's top 10 issuers to produce year-over-year expansion in that regard. New individual LTC policies issued across the industry plunged 27.3% in 2017.

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Northwestern Mutual Life Insurance Co.'s Northwestern Long Term Care Insurance Co., the top producer of new individual LTC issuers in 2016, experienced a year-over-year decline of 42.2% in 2017. New issues at Genworth Financial Inc.'s Genworth Life Insurance Co., the largest individual LTC insurer based on earned premiums and policies-in-force, were 35.1% below its 2016 level and down 85.5% from its 2015 tally.

"Long-term care is a core product for Mutual of Omaha," said Mary Swanson, vice president and actuary at Mutual of Omaha. "It is foundational to help protect a customer's income and wealth."

Swanson said that customers' needs for long-term care coverage are "strong" and she expects demand to grow.

But the perceived imbalance between supply of and demand for individual LTC insurance coverage has continued to widen. Carriers such as John Hancock Life Insurance Co. (U.S.A.) and State Farm Mutual Automobile Insurance Co. have joined a list of entities that have discontinued sales of the product in recent years.

The number of new individual LTC policies issued has fallen for five straight years as the industry's 2017 tally marked a decline of 69.2% from 2012's levels. And even Mutual of Omaha's three straight years of growth has been insufficient to return it to levels seen in 2012. That year, the combination of Mutual of Omaha and United of Omaha Life Insurance Co. reported 21,645 new issues. Mutual of Omaha reported an industry-high 18,299 new issues in 2017.

Swanson, who indicated that the new issues statistic in the annual statement is generally representative of sales trends, said that Mutual of Omaha has seen growth from a majority of its marketers. She attributed that success to the company's ability to maintain a consistent product over the past five years, something that she said had "helped reduce confusion among our distribution."

"We offer a very customer-focused solution at a reasonable rate, which has been widely accepted in the marketplace," Swanson said. She added that the company is focused on the limited benefits market, which she described as "a very stable and profitable segment."

While Mutual of Omaha served as the leading exception to the rule of sluggish issuance of traditional LTC products in 2017, some carriers have stepped up the sale of life products with LTC-accelerated benefits to help address the demand of which Swanson spoke.

That Mutual of Omaha's individual LTC business is mostly composed of more-recent products than many of its peers has also helped its positioning. Two-thirds of the company's 2017 individual LTC earned premiums came from two sets of policy forms that have only been in use since 2009 or later. Many carriers have pursued sizable rate increases on older, legacy blocks of LTC business, but the newer policies benefit from rating and product design perspectives from more years' worth of experience data.

"We have also been quick to react to experience deviations, therefore helping to manage the product line's profitability," Swanson said. "Mutual of Omaha also has the benefit of being a mutual company, enabling us to evaluate profits over a longer period of time and allow for volatility of results."

Five of the eight individual carriers with the most new individual LTC issues in 2017 were either mutual companies such as Mutual of Omaha, New York Life Insurance Co. and Massachusetts Mutual Life Insurance Co., or stock subsidiaries of mutuals like Northwestern Long-Term Care and Blue Cross Blue Shield of Michigan Mutual Insurance Co.'s LifeSecure Insurance Co. Another of the top 8, Thrivent Financial for Lutherans, is a member-owned, not-for-profit fraternal benefit society. All of them, with the exception of Mutual of Omaha, reported declines in new issues in 2017.