Insurers Ride Benefits To Higher Profits And Sales

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 [email protected].

© Entire contents copyright 2018 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.