Globe Life executives are going on the assumption that the United States will record about 60,000 deaths related to the COVID-19 pandemic during the second half of the year.
The McKinney, Texas-based insurer reported about 155,000 COVID-19 deaths in the first quarter and about 30,000 in the second quarter. Globe Life's estimate would bring the total to 245,000 for the year.
Globe Life executives talked about their view of the pandemic on Thursday during a conference call the company held to go over earnings for the second quarter with securities analysts.
Frank Svoboda, the chief financial officer, said the company is now averaging about $2.4 million in extra claims per 10,000 pandemic-related deaths, or about $240 per in claims per death.
That's down from $3 million per 10,000 pandemic-related deaths, or $300 per death, earlier in the pandemic.
"As a result, the net COVID life claims reported in the second quarter were not significant overall," Svoboda said.
What It Means
If Globe Life's assumptions about future COVID-19 mortality are correct, the pandemic could fade as a significant source of life insurer earnings volatility.
For your clients, that could mean that estimating their overall and post-retirement life expectancy could become somewhat easier, and that the pandemic factor could become less of a drag on the U.S. economy, and on most investment portfolios.
Globe Life's Earnings
The second quarter ended June 30.
Globe Life is reporting $177 million in net income for the quarter on $1.3 billion in revenue, compared with $200 million in net income on $1.3 billion in revenue for the second quarter of 2021.
Net sales of life insurance increased 2%, to $140 million.
The company sells coverage through a network of about 9,400 agents.
The number of agents fell, year-over-year, but was higher than in the first quarter, and the company agencies are opening new offices and adding new sales technology, according to Larry Hutchison, the company's co-CEO.
"Also, in a slowing economy, it's always easier to recruit and retain new agents," Hutchison told Jimmy Bhullar, a JPMorgan analyst who asked about agent recruitment.
Another topic is the new Long-Duration Targeted Improvement accounting rules that are set to take effect in 2023.
Some observers have worried that the new rules might cut some insurers' earnings, and make their earnings more volatile.
