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Mortality impacts from pandemic may moderate for US life insurers in Q3

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Mortality impacts from pandemic may moderate for US life insurers in Q3

Higher mortality rates due to the coronavirus pandemic are affecting the bottom lines of many life insurers, but long-term care businesses are also seeing lower claims levels as individuals shy away from assisted living facilities.

An S&P Global Market Intelligence analysis shows that eight of the 15 largest publicly traded U.S. life insurers are expected to see year-over-year growth in third-quarter EPS.

Elevated mortality was a much discussed topic during second-quarter earnings calls, given the potential for higher payouts on life policies. So far, the financial impact of policyholder deaths is less than what had been previously guided by most companies, sell-side analysts have noted.

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Credit Suisse analyst Andrew Kligerman in a research note said he anticipates COVID-19 related mortality and morbidity claims to decline sequentially, though it may still have a material EPS impact for some companies.

Actuarial reviews made lead to a "noisy" third-quarter earnings season, according to Piper Sandler analyst John Barnidge. History suggests that life insurers do not usually lower their long-term assumptions in consecutive years, but 2020 is all about exceptions, he said.

American Equity Investment Life Holding Co., Brighthouse Financial Inc. and Lincoln National Corp. may be among the companies to disclose lower long-term interest rate assumptions when they release results, Barnidge said.