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Lincoln Financial Feels COVID-19 Mortality Sting

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Lincoln Financial says COVID-19 caused a noticeable effect on benefits costs at its individual life insurance and group insurance units in the fourth quarter of 2020.

The pandemic contributed to life claims increasing 19% between the fourth quarter of 2019 and the latest quarter, to $1.1 billion.

At the group insurance operation, benefits costs increased 20%, to $920 million.

(Related: Principal Sees COVID-19 Impacting Earnings)

But Dennis Glass, chief executive officer of the Radnor, Pennsylvania-based life insurer, said that operating revenue rose and expense ratios fell throughout the company.

“Though the pandemic continues to impact our financial results, the health and economic environment is showing signs of improvement,” Glass said.

Lincoln National Corp. (NYSE: LNC)

Lincoln Financial — which is officially known as Lincoln National Corp. — is reporting $143 million in net income for the fourth quarter of 2020 on $4.1 billion in revenue, compared with $430 million in net income on $4.3 billion in revenue for the fourth quarter of 2019.

Lincoln’s annuities unit is reporting $338 million in pre-tax operating income on $1.2 billion in operating revenue, up from $312 million in pre-tax operating income on $1.2 billion in revenue for the year-earlier quarter.

Commissions incurred fell to $255 million, from $322 million.

Here’s what happened to deposits into the two major classes of annuities between the fourth quarter of 2019 and the latest quarter:

  • Fixed Annuities: $82 million (down from $1.2 billion)
  • Variable Annuities: $2.4 billion (up from $2.7 billion)

Lincoln’s life unit is reporting a $57 million pre-tax operating loss on $1.9 billion in operating revenue, compared with a $54 million pre-tax operating loss on $1.8 billion in operating revenue for the year-earlier quarter.

Commissions incurred fell to $152 million, from $337 million.

Here’s what happened to first-year premiums for some types of life products between the fourth quarter of 2019 and the latest quarter:

  • Universal Life: $3 million (down from $20 million)
  • Indexed Universal Life: $22 million (down from $76 million)
  • Variable Universal Life: $30 million (down from $107 million)
  • MoneyGuard: $22 million (down from $124 million)
  • Term Life: $32 million (down from $39 million)

Here’s what happened t sales for some types of benefits products:

  • Group Life: $144 million (up from $108 million)
  • Group Disability: $291 million ( up from $140 million)
  • Group Dental: $15 million (down from $49 million)

In other earnings news:

Globe Life Inc. (NYSE:GL)

Globe Life is reporting $204 million in net income for the fourth quarter of 2020 on $1.2 billion in revenue, up from $187 million in net income on $1.1 billion in revenue for the fourth quarter of 2019.

Here’s what happened to premium revenue for the company’s three main lines of business:

  • Life Insurance: $678 million (up from $631 million)
  • Health Insurance: $290 million (up from $275 million)

Here’s what happened to new net sales:

  • Life Insurance: $131 million (up from $107 million)
  • Health Insurance: $57 million (down from $64 million)

Net life insurance benefits obligations increased 43%, to $291 billion.

Globe Life sells through a traditional agent sales network as well as through direct-to-consumer programs.

The total number of agents increased 21% between the fourth quarter of 2019 and the end of the latest quarter, to 13,897. The number of new agents increased 26%, to 9,887.

The number of renewal year agents who stuck with Globe Life increased 10%, to 3,4010.

More on this topic

Horace Mann Educators Corp. (NYSE: HMN)

Horace Mann is reporting $48 million in net income for the fourth quarter of 2020 on $352 million in revenue, up from $33 million in net income on $334 million in revenue for the fourth quarter of 2019.

Horace Mann sells insurance and annuities to teachers and other school employees.

The Springfield, Illinois-based company’s retirement unit is reporting $12 million in core earnings on $117 million in annuity contract deposits and $4.8 billion in assets under management, compared with $2.1 million in core earnings on $118 million in contract deposits and $4.4 billion in assets a year earlier.

The total number of annuity contracts in force increased to 230,000, from 229,000.

Here’s what happened to contract deposits for two types of annuities between the fourth quarter of 2019 and the latest quarter:

  • Fixed Annuities: $59 million (up from $58 million)
  • Variable Annuities: $58 million (down from $60 million)

Core earnings at the life insurance unit fell to $3.6 million on $31 million in premiums and contract deposits, from $4 million on $31 million in premiums and contract deposits.

The number of life insurance policies in force increased to 202,000, from 201,000.

The amount of life insurance in force increased to $20 billion, from $19 billion.

Life sales fell to $3.2 million, from $4.2 million.

Life mortality costs increased 48%, to $10.5 million.

Mortality was up partly because mortality in the fourth quarter of 2019 was unusually low, according to Horace Mann.

American Financial Group (NYSE:AFGtarget=”_blank”)

American Financial Group is reporting $694 million in net income for the fourth quarter of 2020 on $2.6 billion in revenue, up from $191 million in net income on $2.1 billion in revenue for the fourth quarter of 2019.

The company gets a majority of its gross written premiums from selling property and casualty insurance.

The company’s annuity unit is reporting $77 million in pre-tax core operating income on $404 million in revenue, compared with $84 million in pre-tax core operating income on $465 million in revenue for the year-earlier quarter.

Here’s what happened to premiums at the annuity unit, which American Financial Group calls its annuity segment, between the fourth quarter of 2019 and the latest quarter.

  • Total Gross Annuity Premiums: $1.3 billion (up from $1.1 billion)
  • Gross Retail Annuity Premiums: $173 million (down from $195 million)
  • Gross Financial Institution Annuity Premiums: $728 million (up from $629 million)

— Read Q4 Life, Health and Annuity Earnings Calendar, on ThinkAdvisor.

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