Executives at Principal Financial Group Inc. now assume that COVID-19 will kill about 300,000 people in the United States in 2021, with more of the deaths occurring in the first half of the year.
The company is continuing to estimate that it will incur about $10 million in direct mortality and morbidity impact on earnings, after taxes, for every 100,000 U.S. COVID-19-related deaths.
The company recorded about $14 million in direct COVID-19-related mortality and morbidity impact in the fourth quarter.
The Des Moines, Iowa-based life and health insurer talked about its pandemic assumptions Thursday, when it released its earnings for the fourth quarter of 2020.
Company executives said that, overall, business overall has held up well.
Group benefits sales have been lower, but retention has been strong, and consumer interest in term life has also been strong, the company said.
At the Retirement and Income Solutions unit, which sells individual annuities, group annuities, pension plan products and services, and related services, sales of fixed annuities were down, because of low interest rates and pricing discipline. But a pandemic-related increase in mortality added $15 million to fixed annuity earnings, Principal estimated.
Variable annuity sales were down, and about 2% of retirement plan participants took COVID-19-related hardship withdrawals. But the amount of withdrawal fell to $800 million in the fourth quarter of 2020, from $1 billion in the third quarter of 2020, and recurring deposits increased 7% between the fourth quarter of 2019 and the latest quarter, according to Principal.
The company said it expects to see participant withdrawals return to pre-pandemic levels this year, and for sales to recover as the economy stabilizes.
Principal is known for having a large commercial mortgage loan business.