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Pandemic Slows Primerica Agent Flow: Earnings

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Primerica Inc. managed to squeeze out higher earnings in the fourth quarter of 2020 in spite of the new wave of COVID-19 cases that rolled in.

“The fourth quarter saw a significant rise in COVID-related death claims,” Alison Rand, the company’s chief financial officer, said during a conference call with securities analysts.

The company had been estimating earlier in the year that it would get a little more than $1 million in death claims for over 10,000 additional pandemic-related deaths in the United States and Canada.

That formula continued to work in the fourth quarter — but the company had been expected the United States and Canada to record just 85,000 deaths. The actual number was about 140,000.

(Related: COVID-19 Might Have Caused $2 Billion in U.S. Life Claims So Far)

The pandemic also affected sales efforts.

Primerica focuses on using a large network of career agents to sell protection-oriented life insurance and annuities to middle-income households.

Glenn Williams, Primerica’s CEO, said pandemic-related training capacity shortages and exam backlogs continued to slow efforts to get new agents through the permanent licensing process.

But “we continue to see strong demand for term life insurance products,” Williams said.

Last month’s sales were stronger than the pre-pandemic results for January 2020, Williams said.

“A key question for 2021 will be whether we see sustained client sentiment in favor of our products and opportunity,” Williams said. “Our view is that the disruption in 2020 clearly reveals client needs in these areas and a record number of clients took action.

“These needs that suddenly became priorities have existed for many years and will continue to exist in 2021 and beyond. However, it remains unknown how they will be prioritized by potential clients in the future,” he said.

Primerica’s Numbers

Primerica (NYSE:PRI) is reporting $100 million in net income for the fourth quarter on $598 million in revenue, up from $94 million in net income on $532 million in revenue for the fourth quarter of 2019.

Here are how some of the Duluth, Georgia-based company’s distribution indicator numbers changed, year-over year:

  • Life-Licensed Sales Force: 134,907 (up from 130,522)
  • Recruits: 80,599 (up from 60,466)
  • Average Number of Policies Sold per Rep per Month: 0.21 (up from 0.18)

The number of life insurance policies sold increased to 87,307 policies, from 71,469 policies.

Spending on sales-based sales commissions increased to $103 million, from $94 million.

Brighthouse Financial (Nasdaq: BHF)

Brighthouse Financial is reporting a $1 billion net loss for the fourth quarter of 2020 on $2.2 billion in revenue before “mark-to-market” adjustments for net investment income and net derivatives values changes, compared with a $1.1 billion net loss on $2.2 billion in revenue before mark-to-market adjustments for the fourth quarter of 2019.

The Charlotte, North Carolina-based life insurer says adjusted earnings less notable items, which exclude fluctuations in the estimated value of investments and derivatives, increased to $272 million, from $265 million.

Sales of individual annuities increased to $3 billion in the latest quarter, from $1.9 billion in the year-earlier quarter.

Sales of life insurance increased to $15 million, from $12 million.

CNO Financial Group (NYSE: CNO)

CNO is reporting $112 million in net income for the fourth quarter of 2020 on $1.1 billion in revenue, compared with $278 million in net income on $1.1 billion in revenue for the fourth quarter of 2019.

Here’s what happened to new annualized premiums, or sales, for some types of products the Carmel, Indiana-based insurer sells, between the fourth quarter of 2019 and the latest quarter:

  • Supplemental Health Insurance: $30 million (down from $37 million)
  • Medicare Supplement Insurance: $12 million (down from $17 million)
  • Life Insurance: $37 million (up from $35 million)
  • Long-Term Care Insurance: $7.2 million (down from $8 million)

Annuity collected premiums increased to $345 million, from $324 million.

Like Primerica, CNO saw COVID-19 causing more problems for sales efforts in the fourth quarter than in the third quarter.

“During the quarter we saw continued improvement in several key metrics,” Gary Bhojwani, the company’s CEO, said. “However, the wave of COVID late in the fourth quarter created a headwind to certain sales and agent metrics.”

Voya Financial (NYSE:VOYA)

Voya is reporting $341 million in net income for the fourth quarter of 2020 on $2.2 billion in revenue, compared with a $799 million net loss on $1.8 billion in revenue for the fourth quarter of 2019.

Adjusted operating earnings, which exclude the results of operations Voya has discontinued, or is exiting, rose to $304 million, from $178 million.

Voya sells a large amount of group life and group disability coverage, through a unit that also offers medical stop-loss coverage, or insurance for employers’ self-insured health plans.

The company’s group life loss ratio increased to 82.3% for the latest quarter, from 72.2% for the year-earlier quarter.

Centene Corp. (NYSE:CNC)

Centene — a health insurer that focuses on serving low and moderate-income people and Medicare enrollees  — reported a $19 million net loss for the fourth quarter of 2020 on $28 billion in revenue, compared with $202 million in net income on $19 billion in revenue for the fourth quarter of 2019.

The St. Louis-based company ended the quarter providing or administering health coverage for 26 million people, up from 15 million people a year earlier.

Here’s what happened to key types of enrollment between the fourth quarter of 2019 and the latest quarter:

  • Medicare Plans: 955,000 (up from 359,600)
  • U.S. Commercial Major Medical Insurance: 2.6 million (up from 2.3 million)
  • Affordable Care Act Public Exchange Plans: 2.1 million (up from 1.8 million)
  • Medicaid and Similar Programs: 14 million (up from 8.7 million)
  • International: 597,700 (down from 599,8 00)

Centene said COVID-19 testing and treatment costs for people with ACA exchange plan coverage were especially high but did not give cost figures.

Molina Healthcare (NYSE:MOH)

Molina is reporting $34 million in net income for the fourth quarter of 2020 on $5.2 billion in revenue, compared with $168 million in net income on $4.3 billion in revenue for the fourth quarter of 2019.

The Long Beach, California-based company ended the quarter providing or administering major medical coverage for 4 million people, up from 3.3 million people a year earlier.

Here’s what happened to three types of health plan enrollment, when compared with the year-earlier quarter:

  • Medicaid Plans: 3.6 million (up from 3 million)
  • Medicare Plans: 115,00 (up from 101,000)
  • Affordable Care Act Public Exchange: 318,000 (up from 274,000)

Company executives estimated that, overall, the COVID-19 pandemic cut net income for all of 2020 by about 20%.

S&P Global (NYSE:SPGI)

S&P Global — a New York-based rating agency and publisher — is reporting $505 million in net income for the fourth quarter of 2020 on $1.9 billion in revenue, compared with $585 million in net income on $1.7 billion for the fourth quarter of 2019.

Rating agency revenue increased to $881 million, from $820 million.

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

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