By Cyril Tuohy
August 13, 2018
Insurance
executives gushed for months about employee benefits and recast company divisions
to take advantage of the accompanying growth potential.
Now that the latest
batch of numbers are in, we know why.
Falling
unemployment, fatter payrolls, tax reform, rising interest rates and the
unsettled future of the Affordable Care Act is boosting benefit lines. More
consumers are relying on ancillary benefits to fill gaps in primary medical
plans.
The end result:
More sales and higher profits.
“Positive
employment and participant trends are contributing to strong underlying growth
across our U.S. businesses,” said Principal’s CFO Deanna Strable in a
conference call.
Individual
technology initiatives designed to lower costs and reach further into
underpenetrated market segments and new tools to help brokers also played a
part, insurance executives said.
Selling more
benefits' contracts “downmarket” to regional and smaller companies came in
above year-to-date targets, MetLife CFO John McCallion said in a conference
call.
Employer-sponsored
benefits offered to employees and supplied by life insurers often include
dental, vision, life, short and long-term disability and accidental death and
dismemberment coverage.
Depending on the
employer, those benefits are offered on a voluntary, or employee-paid basis, a
benefit line that saw sales grow 7 percent last year over 2016, according to
voluntary market tracker Eastbridge Consulting.
Benefit segments
performed better at some insurers than at others. But for those companies with
benefits business units that performed well, here is a breakout of their
respective results compared to the year-ago quarter:
Insurers
That Delivered
·
MetLife, one of the most salient examples of
a company recasting itself as a benefits behemoth, reported adjusted earnings
of $261 million compared to $203 million. The company divested itself of much
of its annuities business last year to focus on benefits.
·
Hartford, which bought Aetna’s U.S. group
life and disability income insurance portfolio in the fourth quarter, reported
profits in its group benefits segment of $96 million compared to $69 million in
the year-ago period.
·
Principal’s Specialty Benefits Insurance
segment saw operating revenues rise 7 percent to $573 million, the company
said. The Specialty Benefits business line includes group dental and vision
insurance, individual and group disability, critical illness and accident
insurance, group life and fee-for-service claims administration.
·
At Lincoln Financial, operating revenue in the
company’s Group Protection segment rose 73 percent to $937 million, and
operating income rose 29 percent to $45 million, the company said.
·
Aflac, the Georgia-based supplemental life and health with
operations in the U.S. and Japan, saw U.S. premium income rise 2.7 percent to
$1.4 billion, the company said.
·
Voya, which closed on the sale of the majority of its annuity
business in June, saw operating earnings in its Employee Benefits business rise
30 percent to $35 million due to higher sales of voluntary products, the
company said.
·
Unum Group’s Colonial Life subsidiary saw sales
rise 14 percent to $132 million, Unum reported.
InsuranceNewsNet
Senior Writer Cyril Tuohy has covered the financial services industry for more
than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.
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