StanCorp Financial Group Inc. (NYSE:SFG) managed to increase net income during the first quarter in spite of the effects of painfully low interest rates on new investments, and on the discount rates it uses to value new long-term disability (LTD) insurance claims.
The company is reporting $47 million in net income for the first quarter on $723 million in revenue, compared with $35 million in net income on $741 million in revenue for the first quarter of 2012.
Total premium revenue from group disability products and other group insurance products fell 4.1 percent, to $486 million, and group insurance sales fell to $98 million, from $129 million a year earlier.
Sales fell partly because StanCorp’s insurance company units have been increasing group disability rates to reflect a sharp decrease in already-low interest rates to even lower levels.
The discount rate the company uses to value LTD claim reserves fell to 3.75 percent during the quarter, from 4.75 percent a year earlier.
The interest rate the company earns on new investments fell to 4.25 percent, from 5.5 percent, even though the company increases yields by making commercial mortgage loans directly to commercial borrowers.
Executives at WellPoint Inc. (NYSE:WLP), today said they have seen stabilization in employment levels at the group benefits customers it serves.