Insurers Caught in Hurricane Losses

September hurricanes in Texas, Florida and the Caribbean cut into life insurance sales by as much as 2 percent, insurance company executives said last week.

In accordance with government relief guidelines, insurers earlier this year extended due dates for policy premiums by up to two months for policyholders in declared disaster areas. The extensions kept policies in-force even if the companies aren’t collecting premium.

The extensions amount to a “blackout” period of paid premiums and submitted claims, forcing insurers to estimate premium levels and submitted claims connected to the natural disaster, said Frederick J. Crawford, CFO of Aflac.

Companies affected so far by the hurricane-induced slowdowns include Torchmark, Alfac and CNO Financial. Industry behemoths MetLife, Lincoln Financial, Prudential Financial and Brighthouse Financial report later this week and could join the list.

Hurricane impacts are expected to amount to about 1 percent of U.S. 2017 sales in the third and fourth quarters, Teresa L. White, president of Alfac U.S., told analysts last week.

Over the course of a year, financial dislocations meted out by natural disasters like hurricanes often amount to a rounding error because of all the other moving parts that make up quarterly and annual financial statements, Crawford said.

On a per-share basis, the Columbus, Ga.-based company said it had net income of $1.80. Earnings, adjusted for non-recurring gains, were $1.70 per share.

The results beat Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $1.62 per share.

The insurer posted revenue of $5.51 billion in the period.

Hurricanes “an Issue” at Bankers Life

Short term, the hurricanes “absolutely were an issue” that affected sales, said Gary C. Bhojwani, president and CEO of CNO Financial, a holding company for Bankers Life, Washington National and Colonial Penn.

“We currently estimate that at Bankers Life in September, we were impacted by roughly 2 percent,” he said. “Our sales were impacted there so there’s no question that was a factor.”

CNO Financial, based in Carmel, Ind., last week reported third-quarter net income of $100.8 million. On a per-share basis, CNO Financial said it had net income of 59 cents.

Adjusted for non-recurring gains, earnings came to 45 cents per share, easily beating the average estimates (39 cents) of three analysts surveyed by Zacks Investment Research.

Recruiting Slows in the Agency Channel

An executive with Torchmark, a holding company based in McKinney, Texas, 30 miles north of Dallas, said the hurricanes had slowed sales in some distribution channels.

“Overall, the hurricanes slowed sales and recruiting in the three exclusive agencies during September,” said Torchmark co-CEO Larry M. Hutchison in a conference call with analysts last week. “We think recruiting of sales should return to normal levels during the fourth quarter.”

"The Florida hurricane caused United American sales to be lower than expected in the third quarter," he said. "Direct response sales were not affected by hurricanes during the third quarter, but we think sales will be down about 1 to 2 percent in the fourth quarter."

Torchmark subsidiaries specialize in life and supplemental health insurance for middle-income buyers.

Hurricane Harvey hit Texas in late August and early September, followed by Hurricane Irma, which roared up western Florida, followed by Hurricane Maria which flattened the U.S. Virgin Islands and Puerto Rico.

Torchmark last week reported third-quarter net income of $153 million, an increase of less than 1 percent compared to the year-ago period.

The company said it had net income of $1.29 per share. Earnings, adjusted for non-recurring gains, were $1.23 per share, three cents above the average estimate of six analysts surveyed by Zacks Investment Research.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].