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Life Health > Health Insurance

Aflac Sees COVID-19 Disruption Holding Down Claims: Earnings

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What You Need to Know

  • CNO’s long-term care insurance sales also increased.
  • CNO pushed life sales up to $53 million, from $41 million.
  • Aflac says U.S. employers are focusing on matters other than employee benefits.

Executives from CNO Financial Group Inc. dared to express hope Wednesday when they posted their earnings for the first quarter.

Executives from Aflac Inc. took a somewhat more cautious approach to talking about the future.

Both companies focus on selling health insurance products other than major medical insurance, along with life insurancek. Both have been selling individual products at the worksite.

Gary Bhojwani, CEO of CNO, noted that his company has achieved record life insurance sales and watched annuity sales come close to pre-COVID-19 levels.

CNO sees long-term opportunities ahead, “as we look forward to a world beyond COVID,” Bhojwani said.

Daniel Amos, Aflac’s CEO, stated that his company’s first-quarter earnings were strong partly because the COVID-19 pandemic kept the insureds from using the usual amount of care.

“We continue to expect these pandemic conditions to remain with us through the first half of 2021, but look for improvement in the second half of the year as communities and businesses open up, allowing more face-to-face interactions,” Amos said. “We are encouraged by the production and distribution of COVID-19 vaccines, but we also recognize that vaccination efforts are still in the early stages around the world.”

In the United States, Amos said, small businesses will likely be in recovery mode for most of the year, and larger businesses are focusing on getting employees back to the worksite.

Both Aflac and CNO reported much stronger earnings for the latest quarter than for the first quarter of 2020.

Aflac Inc. (AFL)

Aflac is reporting $1.3 billion in net income for the first quarter on $5.9 billion in revenue, up from $566 million in net income on $5.2 billion in revenue for the year-earlier quarter.

Total commission spending at the Columbus, Georgia-based insurer fell to $326 million, from $336 million.

The Aflac U.S. unit is reporting $445 million in pretax adjusted earnings for the latest quarter on $1.6 billion in revenue, compared with $326 million in pretax adjusted earnings on $1.7 billion in revenue for the year-earlier quarter.

The average number of weekly producer equivalents fell to 5,643 from 7,411.

New annualized premiums from sales of U.S. products fell 22%, to $251 million, because of the effects of the COVID-19 pandemic.

Annualized premiums from in-force U.S. coverage fell 3.2%, to about $6 billion.

Here’s what happened to new annualized premiums, or sales, for some types of products between the first quarter of 2020 and the latest quarter:

  • Disability Insurance: $58 million (down from $73 million)
  • Hospital Indemnity Insurance: $42 million (down from $55 million)
  • Life Insurance: $17 million (down from $25 million)
  • Dental and Vision Insurance: $11 million (up from $14 million)

CNO Financial Group Inc. (CNO)

CNO is reporting $147 million in net income for the first quarter on $1 billion in revenue, compared with a $22 million net loss on $717 million in revenue for the year-earlier quarter.

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

  • Life Insurance:$53 million (up from $41 million)
  • Supplemental Health Insurance:$21 million (down from $28 million)
  • Medicare Supplement Insurance:$8.2 million (down from $9.7 million)
  • Long-Term Care Insurance:$6.4 million (up from $5.9 million)

Annuity collected premiums increased to $325 million, from $292 million.

A COVID-19 vaccination. (Image: lakshmiprasada S/Shutterstock)


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