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Life Claim Trickle Could Grow: Voya Executive

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Voya Financial’s group life insurance business has received only a few dozen COVID-19-related death claims so far, according to Mike Smith, the company’s chief financial officer.

Smith told securities analysts Wednesday that he’s not sure whether what the final claim total will really look like.

Voya is a New York-based company that owns life insurance operations built over the decades by companies like Security Life of Denver, Life of Georgia, Equitable of Iowa, ReliaStar and Aetna Life.

Voya’s life insurance subsidiaries provide group life insurance for about 3 million people, Smith said. That amounts to about 1% of the life insurance policies and certificates in force in the United States. U.S. public health officials have reported about 70,000 COVID-19-related deaths so far.

“Under $1 million of claims is what we’ve seen so far,” Smith said. “That’s what we’ve seen to date. And, so, when you compare that to a base of insureds that’s in the neighborhood of 3 million people, we should be seeing a lot more.”

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The number of death claims received so far may be very low, when compared with 1% of 70,000, because the COVID-19 mortality rate among workers with life insurance might be relatively low, Smith said.

But Smith said one question that Voya doesn’t have an answer to is how much the low number of death claims is the result of a lag in reporting.

Voya will try to come up with a better estimate of the COVID-19 life insurance claim total when it reports its earnings for the second quarter, Smith said.

“But I think there’ll probably be a fairly meaningful tail in the third quarter,” Smith said. “We shouldn’t think of this as just a second quarter event. And then it depends on what happens after that, in terms of the overall progression of the pandemic.”

Smith was talking at an event that Voya organized to go over earnings for the first quarter with securities analysts.

Voya is estimating that, for every 100,000 COVID-19-related deaths in the United States, it will end up experiencing an impact of about $25 million to $45 million in employee benefits unit earnings impact.

Most of the impact would be related to group life claims, but some would be due to claims involving voluntary supplemental health insurance,  Smith said.

Voya has agreed to sell its remaining individual life business to Resolution Life US. But Voya has estimated, in a Form 10-Q quarterly earnings report it filed with the U.S. Securities and Exchange Commission, that, for every 100,000 COVID-19-related deaths in the United States, the company’s individual life business could face a $10 million to $30 million reduction in earnings due to increased life insurance claims.

The View From Manulife

Executives from Manulife Financial Corp. touched on COVID-19 claims expectations today, during a call they hold with securities analysts to go over Manulife’s earnings.

Steve Finch, the Toronto-based company’s chief actuary, said that Manulife expects to take a charge of about 30 million in Canadian dollars after tax, or the equivalent of about $21 million in U.S. dollars, for life insurance benefits for every 100,000 COVID-19-related U.S. deaths.

“But we’re not observing any materials trends at this point,” Finch said.

At the U.S. long-term care insurance (LTCI) unit, “we did not see a lot of observable changes or trends in the first quarter,” Finch said.

In April, Finch said, the company has seen early indications of a lower incidence of new LTCI claims.

Manulife will be watching for any signs of COVID-19 having an impact on LTCI claims very closely, Finch said.

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