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April 20, 2022 at 03:35 PM
What You Need to Know
- Life, health and annuity issuers are starting to show their first-quarter numbers.
- The Fed seems to be intent on raising interest rates.
- Long COVID is a wild card.
Life and annuity issuers will begin reporting their earnings for the first quarter of this year on Wednesday, when Globe Life posts its results, sometime after 4 p.m. Eastern Daylight Time.
Two large, publicly traded health insurers — UnitedHealth Group and Anthem — have already released their earnings. UnitedHealth reported higher net income on higher revenue than it reported for the first quarter of 2021.
Most public companies invite securities analysts to participate in quarterly earnings review conference calls. Members of the public, including agents and brokers, can listen to the livestreams in listen-only mode, and they can also listen to the recordings of the calls.
Insurers post links to the conference calls and the call records in the investor relations sections on their websites.
So, what will the analysts be asking the companies about? Here are five possibilities.
1. How are the interest rates affecting you?
The Federal Reserve Board has changed life, health and annuity issuers’ gameboard by moving to start a series of increases in the interest rate benchmarks it controls.
The Fed sees easy money fueling big increases in prices, and it hopes higher interest rates will push consumers to put more money in the bank and spend less on cars, houses and online streaming services.
Life, health and annuity issuers tend to be buy-and-hold bond investors. They try to keep the bonds until they mature and pay out naturally, rather than buying and selling bonds early.
The rate increases could help insurers by increasing yields on their trillions of dollars in bonds.
Increase could also hurt the prices of the bonds that insurers have made available for active trading.
And rate increases that are high enough to hurt the overall economy could hurt customers’ demand for some types of products, but boost sales of products that protect the holders against ups and downs in the financial markets, such as traditional fixed annuities, non-variable indexed annuities and registered index-linked annuities that offer access to strong protection against market swings.
2. What did COVID-19 do?
The pandemic led to long testing lines and full hospital emergency rooms in January.
