Was Q1 Really That Bad for Life, Health and Annuity Issuers?

UnitedHealth showed Friday that year-over-year revenue growth was possible.

UnitedHealth Group kicked off life, health and annuity issuers’ earnings release season Friday by posting great results.

The Minnetonka, Minnesota-based powered through worries about inflation, interest rates, geopolitical issues and strange happenings in Washington by reporting $5.6 billion in net income for the quarter on $92 billion in revenue, up from $5 billion in net income on $80 billion in revenue for the first quarter of 2022.

Revenue at the UnitedHealthcare health insurance business climbed to $70 billion, from $63 billion.

Results were good both at the company’s Medicare plan business and its commercial health insurance business. “We are optimistic for the rest of this year,” Andrew Witty, the company’s CEO, told securities analysts, during a conference call the company held to discuss its latest earnings.

Company executives noted that cash flow and other sources of liquidity are not an issue at UnitedHealth: Executives said the company has plenty of cash and turned over $3.5 billion to shareholders through dividends and share repurchases during the first quarter.

What It Means

Some of the companies that serve your clients or occupy slots in their investment portfolios, may have done poorly in the first quarter. But some did fine.

UnitedHealth Details

UnitedHealth ended the first quarter providing or administering health coverage for 53 million people, up from 51 million people a year earlier.

Medicare Advantage plan enrollment increased to 7.5 million, from 6.9 million.

The number of Medicare supplement insurance insureds held steady at about 4.3 million.

Questions

Here are five questions that could hover over other insurers as they prepare to post their own first-quarter results.

1. What are the competing forces of inflation and rising interest rates doing to sales of products such as life insurance and annuities/?

2. Do they need capital, and, if so, can they get capital?

3. If they’re capital providers, what kinds of returns are they getting on their own investments?

4. Are they seeing enough cash flow in at the right time?

5. Are the new Long-Duration Targeted Improvement account rules doing anything that an ordinary person can understand to their earnings?

Life insurers have been assuming for years that the LDTI accounting rules would put results on a rollercoaster, by requiring them to put fluctuations in the estimated value of future product benefits obligations in current financial statements. The rules are supposed to apply to public companies’ results starting with the first quarter.

For now, concerns about outbreaks of COVID-19 and other infectious diseases have receded as a top-of-mind concern, although a recent surge in omicron variant cases in India could be a sign that the pandemic will eventually make a comeback.

The Earnings Calendar

Here are the anticipated earnings release dates for some of the publicly traded life, health and annuity issuers that are based in the United States.

April 14

April 19

April 24

April 25

April 26

April 27

May 1

May 2

May 3

May 4

May 5

May 8

May 9

May 15

To Be Announced

(Image: tadamichi/Adobe Stock)

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