Globe Life Inc. made more money in the first quarter of this year than in the first quarter of 2020, but the effects of the COVID-19 pandemic on mortality hurt the company's life insurance underwriting margins.
The McKinney, Texas-based life and health insurer is reporting $179 million in net income for the latest quarter on $1.3 billion in revenue, up from $166 million in net income on $1.1 billion in revenue for the year-earlier quarter.
Gary Coleman, a co-CEO, said, during a conference call the company held to go over its earnings, that the life units produced $137 million in underwriting margin — or premium revenue minus claims — on $708 million premium revenue. Revenue increased 9% from the figure recorded in the first quarter of 2020, but the life underwriting margin was down 24%, mainly because of COVID-19-related claims.
At the health insurance unit, underwriting margin increased 19%, to $19 million.
Frank Svoboda, the company's chief financial officer, said the COVID-19 pandemic led to an increase in life insurance claims both by causing deaths directly, and by causing a big increase in the number of deaths resulting from conditions other than COVID-19.
COVID-19 Deaths and Non-COVID-19 Deaths
"In addition to the COVID obligations incurred in the quarter, we also saw adverse developments in non-COVID claims relating to both medical and nonmedical causes of death, primarily those related to heart and other circulatory conditions, Alzheimer's and drug overdoses," Svoboda said. "This is a continuation of some of the adverse development than began to emerge last year."
Although the "non-COVID-19 deaths" are not directly attributed to COVID-19, "we believe the elevated deaths are related to the pandemic, due to the difficulties many individuals have had in receiving timely health care, as well as the adverse effects of isolation and stress," Svoboda said.
The amount of COVID-19-related death benefits was slightly smaller than what Globe Life had projected, Svoboda reported.
"We now believe we have seen the peak of COVID claims and anticipate a sharp drop off for the remainder of the year," he said.
Vaccinations should start to cut the number of COVID-19 deaths in the second quarter and sharply reduce the number for the rest of the number, Svoboda said.
