Life Insurers See Q2 Mortality Decrease

Retirement advisors may be facing a new longevity planning problem: An easing of the COVID-19 pandemic could give clients extra years of post-retirement life.

The number of reported pandemic-related deaths fell to about 30,000 in the second quarter, which ended June 30. This is down from about 158,000 in the first quarter.

Life insurers say the drop has had an obvious effect on the flow of U.S. life insurance death claims.

“Our COVID mortality experience actually declined by 90% from the first quarter to the second quarter,” Daniel Fishbein, president of U.S. business at Sun Life Financial, told securities analysts last week.

Michel Khalaf, the CEO of MetLife, said group life mortality at that company fell to 85.8% in the second quarter, down from 103.8% in the first quarter, and down from 94.3% in the second quarter of 2021.

The mortality drop could be affecting working-age clients more than clients who are already retired.

“The age demographics for mortality continue to shift away from the working-age population to the more elderly population,” according to Steve Zabel, chief financial officer at Unum Group.

The percentage of pandemic-related deaths affecting working-age people fell to 16% in the second quarter, from 24% in the first quarter, and 35% in the fourth quarter of 2021.

At Unum, the number of pandemic-related claims fell to about 200 in the second quarter, from 1,400 in the first quarter, Zabel said.

The pandemic began making the news in January 2020. Mortality has dropped sharply, then roared back, several times since then. The pandemic is still killing about 2,800 per week, or about as many people as strokes kill each week.

Several life insurance company executives emphasized that they are taking a cautious approach to predicting what will happen to COVID-19 mortality.

Robin Raju, the CFO at Equitable Holdings, said the company is continuing to monitor U.S. COVID-19 trends carefully.

“Cases and hospitalizations are on the rise, but deaths are still not trending upward,” Raju said.

He noted that Equitable executives are pleased with the performance of the company’s protection insurance unit in the second quarter “but acknowledge the volatility around it with mortality.”

What It Means

A sustained decrease in COVID-19 mortality could make life more pleasant for clients, and boost the performance of the overall economy and of clients’ portfolios.

But a decrease could also force cautious clients to develop plans and funding arrangements that could support more expected years of life after age 65

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