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July 29, 2020 at 03:12 PM
Unum Group says the COVID-19 pandemic increased the death rate for people collecting Unum long-term care insurance (LTCI) benefits by about 30% in the second quarter.
The increase in the number of LTCI insureds who died during the quarter was enough to cut the interest-adjusted loss ratio for the LTCI business to 67%, from a target range of about 85% to 90%, company executives said today during a conference call.
Unum executives also said they believe that the U.S. group life operations incurred about 1,100 more group life claims than usual, including 900 claims already received and another 200 claims that seem likely to come in.
Resources
- Links to Unum earnings resources are available here.
- An earlier article about Unum’s earnings is available here.
Unum held the call to go over its earnings for the second quarter, and it has posted a recording of the call on its website.
The Chattanooga, Tennessee-based company got through the quarter with solid results. It’s reporting $266 million in net income for the quarter on $3 billion in revenue, compared with $281 million in net income on $3 billion in revenue for the second quarter of 2019.
The company says it’s maintaining a high level of liquidity and has about $1.6 billion in cash.
COVID-19 helped earnings in some ways, by depressing claims costs for products such as dental insurance.
Sales at the Colonial Life worksite sales unit were down 43%, because of the difficulty of holding face-to-face enrollment meetings, but U.S. coverage persistency levels were high.
But Unum’s results reflect the pain COVID-19 has caused for the world.
McKenney said the quarter amplified the need for what Unum does.
“The fragility of many Americans’ financial lives has never been more obvious,” McKenney said.
People’s need for short-term disability insurance, long-term disability insurance, life insurance and other protection products “is why we’re here,” McKenney said.
COVID-19 Impact
In the United Kingdom, for example, Unum’s disability insurance operation knows it’s having trouble getting the health system information it needs to process disability insurance claims.
In the United States, many employers were too busy shifting to work-at-home strategies to seek quotes for 2021 benefits plans.
The U.S. absence management program team has been helping employers cope with a 50% increase in the number of employees seeking some kind of leave.
And many insureds died. Unum has noticed an increase in mortality for its U.S. group life business, its U.S. voluntary and worksite life policies, its U.K. life business, and its U.S. LTCI business.
“Clearly, mortality impacts are the biggest variable on people’s minds,” Richard McKenney, Unum’s chief executive officer, said during the conference call. “When the pandemic started, it was believed to impact older ages much more severely, which meant that the belief was that group carriers, such as us, would see less claims, as the working population skews younger. In fact, what we saw was that the death rates were similar to our overall non-COVID age distribution.”
