The COVID-19 summer surge pushed MetLife’s ratio of U.S. group life benefits payments to group life revenue to 106.2% in the third quarter. The normal level is less than 90%.
MetLife has paid a total of about $2.1 billion in life insurance benefits in connection with COVID-19-related deaths since the pandemic started in January 2020. The 2021 COVID-19 death benefits payments have been higher than the 2020 payments, according to Michel Khalaf, the New York-based company’s CEO.
Khalaf talked about the devastating impact of the pandemic on MetLife insureds Thursday, during a call with securities analysts to go over third-quarter results. The quarter ended on Sept. 30.
In spite of the pandemic, MetLife’s overall earnings were up, and even the U.S. group benefits division recorded a large profit.
Khalaf said events over the past two years show why a company like MetLife matters.
“Life insurance is not like other businesses where losses are just losses,” Khalaf said. “Every underwriting claim represents a beneficiary who is receiving the financial help they were promised.”
Paying COVID-19 claims is a way for life insurers to make a positive difference in the world, Khalaf said.
“The human toll of the pandemic on families is catastrophic, but, where life insurance is present, the financial burden is eased,” he said. “This is our purpose: to help prepare the financial damage after life’s most destabilizing moments.”
MetLife has done well, in spite of the worst pandemic in more than 100 years, because of the strong performance of private equity and venture capital investments.
MetLife accounts for about 6% of U.S. life insurance premium revenue, according to data from the National Association of Insurance Commissioners.
The MetLife life claim payout total implies that U.S. life insurers as a whole may have paid about $32 billion in death benefits.
If the pandemic were a hurricane, and it caused $32 billion in insured losses, it might rank as the hurricane with the third-highest level of insured U.S. losses, according to the Insurance Information Institution hurricane insured loss rankings.
MetLife is reporting $1.5 billion in net income for the third quarter on $17 billion in revenue, up from $633 million in net income on $16 billion in revenue for the third quarter of 2020.
Even the U.S. group benefits division is reporting $111 million in adjusted earnings
The U.S. business, which includes a retirement division as well as the group benefits division, is reporting $895 million in adjusted earnings for the latest quarter on $8.5 billion in revenue, compared with $900 million in adjusted earnings on $8.7 billion in revenue for the year-earlier quarter.
At the group benefits division, which suffered the biggest impact from the COVID-19 pandemic, adjusted earnings fell to $111 million, from $392 million, but revenue increased to $5.8 billion, from $5.2 billion.
An analyst asked MetLife executives about any changes at the U.S. group life division. Ramy Tadros, president of the U.S. business, implied that group life prices are going up.
“What is changing on the life side is pricing,” Tadros said. “We have made, and we continue to make, rate adjustments in the group life business, in line with our perspective view of the pandemic.”
He noted that coverage renewals for 2022 are already underway.
“We have been able to achieve rate adjustments and rate increases in line with our perspective view of mortality while maintaining pretty strong persistency,” Tadros said.