Insurance execs pretty pleased with Q2 performance
Ameriprise, Torchmark, Centene and Anthem have all posted decent earnings.
Executives from Ameriprise Financial Inc., Torchmark Corp., Anthem Inc. and Centene Corp. have released results for the second quarter that look, overall, pretty good.
Jim Cracchiolo, the chief executive officer of Ameriprise, a life and annuity issuer, started his company’s quarterly conference call with securities analysts by pointing out that the stock market seems to have recovered from the turmoil at the end of 2018, and that the economy looks as if it’s improving.
“I feel good about our results and the ability to grow,” Cracchiolo said during his company’s call, which, like other publicly traded companies earnings calls, was streamed live on the web.
Related: Insurers returning to pre-ACA profitability
Reporters, securities analysts and credit analysts have tried to find some drama by wondering how prolonged low interest rates might affect life insurers, but Gary Coleman, the CEO of Torchmark, a company that writes and distributes life and health products, shrugged off the idea that low rates might have much of an effect on Torchmark.
“While we would like to see higher interest rates going forward, we can thrive at a lower-for-longer interest rate environment,” Coleman said.
Torchmark has focused on selling protection insurance products that are not especially sensitive to changes in interest rates, Coleman said.
Michael Neidorff, the CEO of Centene, and Gail Boudreaux, the CEO of Anthem, mostly sounded equally happy about their companies’ recent performance.
Centene sells some individual major medical insurance and is a major player in the Medicaid managed care plan market.
Centene is expanding its Medicaid plan business in North Carolina and Oregon, and it’s entering the Medicaid plan market in Iowa, and it’s pleased with its individual major medical performance, Neidorff said.
In some ways, he said, profit margins at the individual major medical business are falling a bit simply because the company is holding on to the insureds longer and, in some cases, reaching their annual out-of-pocket spending maximums
The margin normalization in the individual major medical line “shows that this business is really growing and performing as we expected it to,” Neidorff said. “The longer we retain a member, the better it is, because over time, we have demonstrated we’re keeping for a long period of time, we’re bringing the cost down for that person.”
At Anthem, Boudreaux and other company executives expressed happiness about the performance of its commercial plans and Medicare plans, but some consternation about the performance of Medicaid plan programs in some states.
One securities analyst asked Anthem executives whether the company is planning to exit from some states.
Boudreaux assured the analyst that Anthem’s Medicaid program is still performing within the expected range, even though it’s at the low end of that range.
“Overall, we still believe that the Medicaid is very good business,” Boudreaux said.
The numbers
Here’s a look at the four insurers’ earnings details. The stock symbol link leads to the company’s filings page on the U.S. Securities and Exchange Commission’s filing website. The companies post their earnings releases and, in some cases, earnings supplements there.
Information about listening to the earnings call webcasts is usually available in the companies’ earnings press releases.
Ameriprise Financial Inc., Minneapolis (Stock symbol: AMP)
Ameriprise is reporting $492 million in net income for the second quarter on $3.2 billion in revenue, up from $462 million in net income on $3.2 billion in revenue for the second quarter of 2018.
- Variable annuity ending account balances held steady at $78 billion.
- Fixed deferred annuity ending account balances fell to $8.5 billion, from $9 billion.
- The amount of life insurance in force fell to $195 billion, from $196 billion.
- Total sales of universal life insurance and variable universal life insurance fell 7%, to $70 million.
Torchmark Corp., McKinney, Texas (Stock symbol: TMK)
Torchmark is reporting $187 million in net income for the second quarter on $1.1 billion in revenue, up from $184 million in net income on $1.1 billion in revenue for the second quarter of 2018.
Torchmark agencies’ annualized life insurance sales increased 1%, to $112 million.
Health sales increased 14%, to $44 million. Health sales at the direct response unit fell 41%, to $582,000, but sales at the United American Independent Agency unit increased 24%, to $17 million.
The number of producing exclusive agents at the companies’ three agencies increased to 10,735, up 4.2% from the total for the year-earlier quarter.
The company also announced a major branding change: It will be changing its name to Globe Life Inc. Aug. 8. The company’s stock symbol will change to GL Aug. 9.
Anthem Inc., Indianapolis (Stock symbol: ANTM)
Anthem is reporting $1.14 billion in net income for the second quarter on $25 billion in revenue, up from $1.05 billion in net income on $23 billion in revenue for the second quarter of 2018.
The health insurer ended the quarter providing or administering major medical coverage for 41 million people, or 3.3% more people than it was covering a year earlier.
The number of people with Anthem Medicare supplement insurance increased 6%, to 877,000.
The number of people with Anthem Medicare Advantage coverage increased 25%, to 1.2 million.
Medicaid plan enrollment grew 11%, to 7.1 million.
Local group enrollment increased 0.2%, to 16 million.
Centene Corp., St. Louis (Stock symbol: CNC)
Centene is reporting $492 million in net income for the second quarter on $18 billion in revenue, up from $300 million in net income on $14 billion in revenue for the second quarter of 2018.
The health insurer ended the quarter providing or administering health coverage for 15 million people, up from 13 million people a year earlier.
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