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The New Earnings Season Starts Wednesday

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UnitedHealth Group Inc. is preparing to kick off the new life, health and annuity issuer earnings release season tomorrow, before the stock market opens for business.

(Related: Yeah, It’s Cold Out There: More Life and Annuity Issuers to Wall Street)

The first life and annuity companies to release earnings will likely be Principal Financial Group Inc. and Reinsurance Group of America Inc. Those companies could post their earnings Jan. 28.

The big question for UnitedHealth is will it continue to emphasize its role as a manager of health care delivery services and an administrator of Medicare and Medicaid plans, rather than as a commercial health insurance gorilla.

For Principal and RGA, the top questions will be interest rates, interest rates and interest rates.

Here are three more questions securities analysts may be thinking about, based on analyst commentaries from Morgan Stanley Research and Keefe, Bruyette & Woods.

1.  What’s up with currency exchange rates?

Many of the big U.S. life insurers have tried to diversify, and benefit from rapid economic growth overseas, by expanding in markets such as China, India and Indonesia.

Morgan Stanley analysts have noted, in a commentary on MetLife Inc., that international operations may be good for earnings in the long run but, in the short term, may increase a life insurer’s exposure to geopolitical risk and currency value fluctuations.

2. How are expenses?

The Keefe, Bruyette & Woods analysts pointed out that some life insurers tend to high expenses in the fourth quarter, and that the expense numbers can be high enough for some life insurers to throw off securities analysts’ earnings forecasts.

3. So, what’s Death been up to?

Mortality fluctuations have had only a modest effect on life insurers’ earnings in recent decades, but securities analysts always keep an eye out for surprises.

The Keefe, Bruyette & Woods analysts note that they track the U.S. population death figure from the U.S. Centers for Disease Control and Prevention. “While it’s far from a perfect indicator of insured deaths, we note that 4Q19 looks better than average at this point,” the analysts write.

The current flu season “has started off worse than normal but probably won’t cause too much impact in 4Q19,” the analysts write.

The flu could have more of an effect on earnings for the first quarter of 2020, the analysts write.

An increase in the death rate could increase life insurance claim costs and annuity death benefit costs, but it could reduce the costs associated with long-term care insurance claims, long-term disability insurance benefits and annuity income benefits.

Why This Matters to Agents and Brokers

Earnings season gives investors and other observers, including agents and brokers, a peek at how the insurers that have sold stock to the public are doing. Most publicly traded insurers hold conference calls with securities analysts to talk about the earnings releases.

Members of the public can listen to the earnings calls by going to the publicly traded insurers’ investor relations pages and following the webcast listening instructions.

Here are some of the scheduled life, health and annuity issuer earnings release dates, with the companies’ stock symbols in parentheses. You can use the stock symbol to use the “Fast Search” form on the U.S. Securities and Exchange Commission’s company search page.

Jan. 15

  • UnitedHealth (UNH)

Jan. 28

  • Anthem Inc. (ANTM)
  • Principal Financial Group Inc. (PFG)
  • Reinsurance Group of America Inc. (RGA)

Feb. 4

  • Aflac Inc. (AFL)
  • Centene Corp. (CNC)
  • Prudential Financial Inc. (PRU)
  • Unum (UNM)

Feb. 5

  • Humana Inc. (HUM)
  • Lincoln National Corp. (LNC)
  • MetLife Inc. (MET)

Feb. 10

  • Brighthouse Financial Inc. (BHF)
  • Voya Inc. (VOY)

— Read Is the World Functional Enough to Support Life Insurance?, on ThinkAdvisor.

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