COVID-19 Deaths Cause More Than $700M in Q1 Claims

COVID-19 returned to killing older Americans at a much higher rate than younger Americans in the first quarter, and that helped to hold down life insurers’ death claims.

The pandemic killed about 155,000 U.S. residents in the latest quarter. That was up from 127,000 in the fourth quarter of 2021, but down from 191,000 in the first quarter of 2021, according to statistics from the U.S. Centers for Disease Control and Prevention and other public and private sources.

Some life insurers and reinsurers that posted earnings last week skipped COVID-19 mortality details.

Companies that gave details said that, although the overall number of deaths was very high in the latest quarter, a drop in the COVID-19 death rate for people for under age 65 led to year-over-year decreases in pandemic-related life insurance claim costs.

What It Means

Life insurers, insurance agents and retirement planners continue to face a high level of uncertainty over how long older Americans have to live.

Actuarial groups and many planners have emphasized that the effects of the COVID-19 pandemic appear to be temporary, but, at this point, the pandemic has lasted for more than 26 months. That’s about 12% of the 2018 life expectancy of a 65-year-old male.

The Details

Reinsurance Group of America — a Chesterfield, Missouri-based reinsurer — said its U.S. COVID-19 individual life claims fell to $260 million in the latest quarter, from $340 million a year earlier.

“Our U.S. individual mortality results are very consistent with what we are seeing in the general population this quarter,” Jonathan Porter, RGA’s global chief risk officer, said Friday, during a conference call with securities analysts. “We saw a reduction in our claim cost per 10,000 general population deaths as compared to the third quarter and fourth quarter of 2021. This improvement, we believe, is in part due to the lower proportion of deaths in working ages.”

Here’s what happened to U.S. COVID-19 claim statistics at some other life insurers, including some that are known mainly for group life:

MetLife: $230 million in world group life claims this quarter, down from $280 million a year earlier.

Hartford Financial: $96 million before taxes this quarter, down from $185 million a year earlier.

Unum: 1,400 deaths at an average of $55,000, or $77 million, down from 1,725 deaths at an average of $65,000, or $112 million, a year earlier.

Lincoln Financial: $53 million in group life claim claims and $18 million in group disability claims this quarter, down from $83 million in group life claims and $7 million in group disability claims a year earlier.

Voya: $35 million in group life claims this quarter, up from $29 million a year earlier.

Primerica: $16 million in life claims this quarter, down from $21 million a year earlier.

At these insurers alone, first-quarter COVID-19 claims were down from  about $1.1 billion in the first quarter of 2021, but still totaled about $785 million.

These figures don’t include COVID-19 claims for some large publicly traded life insurers, or for any of the mutual life insurers.

MetLife’s first-quarter group life mortality ratio, or ratio of benefits to premiums, was 103.8% in the first quarter. That was down from the chilling loss ratio of 106.% recorded in the first quarter of 2021, but up from a normal loss ratio of 85% to 90%.

Similarly, at RGA, the loss ratio for traditional reinsurance in the United States and Latin America was 114.5%. That was down from 122.6% for the first quarter of 2021, but up from 95.8% in the first quarter of 2019, and up from 99.6% in the first quarter of 2020.

Kidney Dialysis Volume

DaVita — a Denver-based kidney care company — also reported pandemic-related mortality figures, because pandemic-related deaths have a direct effect on its service volume.

The company was providing dialysis treatments for 96,821 people per day in the first quarter of 2020, up 1.6% from the average for the first quarter of 2021.

The pandemic increased patient mortality enough to cut the average number of treatments per day by 2.3% between 2020 and 2021, and by another 2.4% between the first quarter of 2021 and the latest quarter.

Because of all of the deaths, the average number of DaVita dialysis treatments fell to 92,335 in the latest quarter.

Earnings

Life insurers presented the the COVID-19 numbers when they released their results for the first quarter.

Here’s a look at some of the earnings.

Group and Individual

Prudential Financial is reporting a $44 million net loss for the first quarter on $14 billion in revenue, compared with $2.8 billion in net income on $14 billion in revenue for the first quarter of 2021.

Prudential’s U.S. businesses are reporting $943 million in adjusted operating income before income taxes on $7.3 billion in revenue, compared with $843 million in adjusted operating income on $6.6 billion in revenue for the year-earlier quarter.

U.S. group life and group disability sales increased to $310 million, from $295 million.

Sales of individual annuities fell to $1.5 billion, from $1.9 billion.

Individual annuity sales through insurance agents increased to $614 million, from $613 million. Sales through independent financial planners fell to $766 million, from $1 billion.

Lincoln Financial is reporting $104 million in net income for the first quarter on $4.7 billion in revenue, compared with $225 million in net income on $4.8 billion in revenue for the first quarter of 2021.

Spending on commissions increased to $654 million, from $616 million.

Sales of indexed variable annuities fell 29%, to $1 billion.

Sales of variable annuities with guaranteed living benefits increased 6.3%, to $678 million.

Sales of fixed annuities increased to $374 million, from $86 million.

American International Group is reporting $4.7 billion in net income for the first quarter on $16 billion in revenue, up from $3.9 billion in net income on $14 billion in revenue for the first quarter of 2021.

AIG’s Life and Retirement business is reporting $724 million in adjusted pretax income on $4 billion in adjusted revenues, compared with $941 million in adjusted pretax income on $4 billion in adjusted revenues for the year-earlier quarter.

AIG said it still hopes to spin off the Life and Retirement business, under the name Corebridge Financial, by June 30. AIG said it expects to retain majority ownership of Corebridge after the completion of the spinoff.

Individual

Primerica is reporting $79 million in net income for the first quarter on $691 million in revenue, compared with $98 million in net income on $634 million in revenue for the year-earlier quarter.

Primerica’s spending on sales commissions increased to $134 million, from $122 million.

American Equity Investment Life Holding Co. is reporting $566 million in net income for the first quarter on $148 million in revenue, up from $272 million in net income on $962 million in revenue for the first quarter of 2021.

American Equity’s revenue was affected by a $478 million drop in the fair value of the derivatives used to support the company’s annuities.

Horace Mann Educators Corp. is reporting $15 million in net income for the first quarter on $347 million in revenue, compared with $39 million in net income on $322 million in revenue for the first quarter of 2021.

The company’s life and retirement unit increased net income 3.5%, to $12 million.

Group

MetLife is reporting $606 million in net income for the first quarter on $16 billion in revenue, up from $290 million in net income on $16 billion in revenue for the first quarter of 2021.

MetLife’s U.S. arm is reporting $693 million in adjusted earnings for the latest quarter on $10 billion in revenue, compared with $784 million in adjusted earnings on $8.4 billion in revenue for the year-earlier quarter.

Here’s the COVID-19 impact on adjusted earnings:

• Q1 2021: $280 million.
• Q2 2021: $75 million.
• Q3 2021: $290 million.
• Q4 2021: $300 million.
• Q1 2022: $230 million.

Unum Group is reporting $254 million in net income for the first quarter on $3 billion in revenue, compared with $153 million in net income on $3.1 billion in revenue for the first quarter of 2021.

Unum’s group long-term disability sales increased 30%, to $41 million.

U.S. Unum commission spending increased to $153 million, from $148 million.

Voya is reporting $27 million in net income for the first quarter on $1.6 billion in operating revenue, compared with $1.1 billion in net income on $1.6 billion in operating revenue for the first quarter of 2021.

Reinsurance

RGA is reporting $63 million in net income for the first quarter on $3.9 billion in revenue, compared with $139 million in net income on $4.1 billion in revenue for the first quarter of 2021.

RGA’s  traditional reinsurance business in the United States and Latin America reported a $166 million pretax loss on $1.5 billion in revenue, compared with a $338 million pretax loss on $1.4 billion in revenue for the year-earlier quarter.

Most life and health insurers that posted earnings this week reported profits, but lower net income than in the first quarter of 2021. Pictured: The corner of Wall Street and Broad Street in Manhattan. (Photo: Michael Nagle/Bloomberg)