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Dan Houston (Photo: Principal Financial)

Life Health > Health Insurance > Medicare Planning

Principal Sees 401(k) Participants Saving More

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What You Need to Know

  • Aflac notes that recruiting an agent or broker is different from generating sales through that producer.
  • Molina says COVID-19 produced high hospitalization claims in January.
  • Centene would like to increase profit margins on Medicare plans it offers in 2023.

Principal Financial Group is seeing more cash flowing into the 401(k) plans it serves.

Executives from the Des Moines, Iowa-based life insurer talked about the shift Friday on a conference call the company held to go over first-quarter earnings with securities analysts.

Dan Houston, the CEO, said one trend he’s seeing is the economic recovery leading to increases in defined contribution plan savings.

“Compared to a year ago, the average dollars of deferrals per participant has increased 5%, and the average dollars of employer match per participant has increased 6%, both of which are fueling growth in recurring deposits,” Houston said.

Amy Friedrich, Principal’s president of U.S. insurance solutions, said small businesses are doing better.

“They are hiring,” she said. “They’re taking care of their key executives. They’re worried about competing with all-sized business in terms of what they do for their key executives and how they attract and retain talent.”

Chris Littlefield, Principal’s president of retirement and income solutions, said that labor market strength is leading to an increase in adoption of retirement plans as well as increases in how much of a participant’s contributions the employer will match.

Principal’s Earnings

Principal reported $376 million in net income for the first quarter on $3.1 billion in revenue, compared with $517 million in net income on $3.2 billion in revenue for the first quarter of 2021.

The decrease was due mainly to net capital gains realized in the year-earlier quarter and net capital losses realized in the latest quarter; operating earnings increased to $429 million, from $423 million.

Here´s a look at the earnings seasons themes at four other life, health and annuity issuers.

Aflac: Agent and Broker Conversion Rates

Aflac executives are talking about a source of agent and broker recruitment friction: Getting the agents and brokers who can sell Aflac products to sell the products.

The Columbus, Georgia-based insurer — which may be best known for the Aflac Duck — has been working to expand recruitment of agents and brokers in recent quarters, in the face of obstacles related to the COVID-19 pandemic.

Daniel Amos, the company’s CEO, said the company increased small-business broker-agent recruitment dramatically in the first quarter.

Virgil Miller, Aflac’s Aflac U.S. deputy president, noted on Aflac’s quarterly earnings call that the company saw an 11% increase in “conversion rates” for veteran agents. That figure means that the U.S. agents who had been with Aflac at least five years were 11% more likely to sell an Aflac policy.

Aflac is reporting $1 billion in net income for the first quarter on $5.3 billion in revenue, compared with $1.3 billion in net income on $5.9 billion in revenue for the first quarter of 2021.

Aflac gets much of its business from sales of health insurance in Japan.

The Aflac U.S. unit is reporting $325 million in pretax adjusted earnings on $1.6 billion in revenue for the latest quarter, compared with $445 million in pretax adjusted earnings on $1.6 billion in revenue for the year-earlier quarter.

Molina Healthcare: COVID-19 care cost more.

Joe Zubretsky, the CEO of Molina, said the severe COVID-19 surge in January led to a sharp increase in inpatient hospitalization claims, but that pandemic-related hospitalization claims subsided in February and March.

February COVID-19 costs were one-third lower at the Long Beach, California-based health insurer than January costs, and March costs were one-third lower than February costs, Zubretsky said.

Molina is reporting $258 million in net income for the first quarter on $7.8 billion in revenue, up from $228 million in net income on $6.5 billion in revenue for the first quarter of 2021.

The company ended the quarter providing or administering health coverage for 5.1 million people, up from 4.6 million a year earlier.

Humana: COVID-19 deaths were a source of Medicare Advantage enrollment friction.

Humana frightened health insurance company investors early in the quarter by pointing out that the sales environment for 2022 Medicare Advantage plans looked extremely competitive, and that it seemed as if some players might be underpricing coverage.

Bruce Broussard, CEO of the Louisville, Kentucky-based health insurer, said during the company’s conference call that annual enrollment period sales trends were slightly better than it had expected.

But “the outperformance was partially offset by higher deaths related to the pandemic in the first couple months of the year,” Broussard said.

Humana is reporting $930 million in net income for the first quarter on $24 billion in revenue, up from $828 million in net income on $21 billion in revenue for the first quarter of 2021.

The company ended the quarter providing or administering health coverage for 10 million people, up from 9.7 million people a year earlier.

Individual Medicare Advantage enrollment increased 5.8%, to 4.5 million.

The number of people with Medicare supplement insurance coverage fell 3%, to 318,400.

Centene: Medicare plan costs could rise.

Sarah London has just taken over as the CEO of Centene, following the death of the Clayton, Missouri-based health insurer’s longtime CEO, Michael Neidorff.

London indicated that Centene has no interest in underpricing the Medicare coverage it sells in 2023.

“The focus is absolutely on margins,” London said. “Still preserving slight growth, but really starting to turn the dial on margin expansion.”

Centene is reporting $852 million in net income for the first quarter on $37 billion in revenue, up from $699 million in net income on $30 billion in revenue for the first quarter of 2021.

The company ended the quarter providing or administering health coverage for 26 million people, up from 24 million people a year earlier.

Medicare plan enrollment increased to 1.5 million, from 1.1 million.

Pictured: Dan Houston (Photo: Principal Financial)