View this article online: https://www.claimsjournal.com/news/west/2007/04/27/79010.htm
Portland, Ore.-based StanCorp Financial Group Inc. has reported net income for the first quarter of 2007 of $0.90 per diluted share, compared to $0.70 per diluted share for the first quarter of 2006. Net income for the first quarter of 2007 was $48.3 million compared with $38.7 million in the first quarter of 2006. After-tax net capital gains were $0.6 million for the first quarter of 2007, compared to after-tax net capital losses of $1.7 million for the first quarter of 2006.
Net income, excluding after-tax net capital gains and losses, increased 20.5 percent to $0.88 per diluted share for the first quarter of 2007, compared to $0.73 per diluted share for the first quarter of 2006. Operating expenses for the first quarter of 2007 were $106.3 million, or a 21.2 percent increase compared to $87.7 million for the first quarter of 2006. The increase in operating expenses included additional expenses of $11.5 million related to operating the Invesmart business, which was acquired in the third quarter of 2006.
Results for the first quarter of 2007 primarily reflected comparatively favorable claims experience in the Insurance Services segment compared to the same quarter of 2006, the company said.
“In the Insurance Services group, claims were a little higher than expected for the group insurance business, offset by much better than expected claims for the individual insurance business,” said Eric E. Parsons, chairman, president and CEO.
The Insurance Services segment reported income before income taxes of $67.1 million for the first quarter of 2007, compared to $54.3 million for the first quarter of 2006.
Premiums for the Insurance Services segment increased 4 percent to $489.8 million for the first quarter of 2007, compared to $470.9 million for the first quarter of 2006. Premium growth for 2007 was affected by comparatively higher terminations in the group insurance products and by higher experience rated refunds for the first quarter of 2007 of $11 million, compared to $5.5 million for the first quarter of 2006. Adjusted to exclude the effect of the increase in experience rated refunds, premiums for the Insurance Services segment increased 5.1 percent compared to the first quarter of 2006.
Sales for group insurance products, reported as annualized new premiums, were $120.1 million in 2007 and $124.1 million in 2006 for the first quarters. The decrease reflected a continued price competitive sales environment in 2007 and the company’s ongoing commitment to pricing discipline, the company said.
The benefit ratio for the group insurance products for the first quarter of 2007 was 79.6 percent, compared to 79.2 percent for the first quarter of 2006. The benefit ratio for the first quarter of 2007 was above the company’s estimated range of 77.5 percent to 79.5 percent for 2007. The benefit ratio for individual disability insurance was 53.5 percent for the first quarter of 2007, compared to 108.4 percent for the first quarter of 2006, reflecting comparatively lower claims experience in the first quarter of 2007.
The discount rate used in the first quarter of 2007 for newly established long term disability claim reserves remained unchanged from the fourth quarter of 2006 at 5.50 percent. The average new money rate for the previous 12 months was 5.99 percent, which provided a 43 basis point margin over the average discount rate for the previous 12 months.
For more information, visit www.stancorpfinancial.com/