Principal Financial Group has discovered that COVID-19-related deaths are only about half as damaging to earnings as the company once expected.
The Des Moines, Iowa-based insurer has been trying to estimate how much COVID-19 will affect after-tax operating earnings. The company has now cut the predicted impact to a $10 million reduction in operating earnings per 100,000 U.S. COVID-19-related deaths.
Earlier in the year, the company had estimated it might face $20 million in impact per 100,000 U.S. COVID-19-related deaths.
“This reduction reflects a lower incidence of COVID-related deaths in our insured population,” Deanna Strable, Principal’s chief financial officer, said Tuesday during a conference call.
Principal held the call to go over its second-quarter earnings with securities analysts. The company has posted a recording of the call on its website.
- A link to Principal earnings call recording is available here.
- An earlier article about Principal’s earnings is available here.
Strable said the company now has received about 150 COVID-19-related claims and now feels it knows more about what the claims will look like.
The change in the formula is helpful, because the projected number of U.S. pandemic-related deaths has doubled, Strable said.
The formula includes the effects of pandemic-related deaths on annuity and disability insurance benefits obligations as well as the effects on life insurance claims, Strable said.