What You Need to Know
- Prudential, Unum and Voya all made more money than they did in the third quarter of 2020.
- A Prudential executive said the number of U.S. deaths was more than three times what the company had hoped.
- A Unum executive said COVID-19 claims may have been higher in the United States than in the United Kingdom because of lower U.S. vaccination rates.
The wave of COVID-19 cases that swept over the United States starting in July stunned U.S life insurers, by increasing the number of deaths of working-age people far over what the companies had predicted.
Executives from Prudential Financial, Voya Financial and Unum Group have all talked about the impact of the COVID-19 delta variant surge on working-age Americans during the conference calls the companies have held to go over earnings for the third quarter. The quarter ended Sept. 30.
Andy Sullivan, the head of the U.S. businesses at Prudential, said the surge had an especially big effect in the South.
“The deaths in the third quarter were three times what we expected,” Sullivan said. “We were expecting 30,000 deaths, and we saw 95,000… U.S. deaths in the age group between 35 and 54 tripled, from a percentage perspective. And we cover a lot of younger workers.”
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Michael Smith, the chief financial officer at Voya, said the impact of the surge was higher than the company had expected, because the total number of deaths was high, and because deaths of people in younger working ages were more common than in previous quarters.
“We expect this age shift will persist going forward,” Smith said.
Executives from Unum talked extensively about the impact of pandemic-related mortality.
Richard McKenney, the CEO, noted that about 40% of the people who died of COVID-19 in the third quarter were working-age people. The share of deaths involving working-age people was double what it was in the fourth quarter of 2020 and the first quarter of this year, he said.
“We now see higher impacts in the working-age population, our primary customers, who are covered by our group and voluntary products,” McKenney said.
Because of the age shift, the average life insurance claim per COVID-19-related death has increased to $60,000, from $55,000 in the second quarter, according to Steven Zabel, Unum’s CFO.
“Looking ahead to the fourth quarter, our current expectation is for U.S. COVID-related mortality to continue to worsen, to approximately 100,000 deaths,” Zabel said.
COVID-19 now appears to be leading to an increase in absence and short-term disability claims as well as an increase in life insurance claims, Zabel added.