Disability insurance claim headaches have drawn securities analysts’ attention during the early days of the second-quarter earnings release season.
Reinsurance Group of America Inc., Chesterfield, Mo. (NYSE:RGA), a reinsurer, says overall net income and revenue were both higher in the second quarter than in the second quarter of 2010, but it says disability claims were a concern for its U.S. operations.
“Income was adversely affected by higher-than-expected group disability claims, which are prone to quarterly volatility,” RGA says.
StanCorp Financial Group Inc., Portland, Ore. (NYSE: SFG), a direct writer, says its earnings dropped during the quarter. The company is reporting $19 million in net income for the second quarter on $706 million in revenue, compared with $41 million in net income on $691 in revenue for the second quarter of 2010.
StanCorp is attributing the drop in net income to an increase in long-term disability (LTD) claims for group and individual insurance businesses.
The benefit ratio for group insurance products rose to 84.8% for the second quarter of 2011, up from 79.9% for the second quarter of 2010, and 12% above the historical average.
Traditionally, disability insurance claims have spiked during recessions.
Shortly after the current downturn began in 2008, disability insurance executives said the level of
disability claims was surprisingly low, given the state of the job market.