Health Insurer Financial Insights Volume 3

As we present the third edition of our Health Insurer Financial Insights newsletter, we find ourselves in the midst of unprecedented times.

This newsletter focuses on market profitability and capitalization trends for public and non-public health insurers, and their claims experience through the first half of 2020. Section 04 provides insight into how health carriers are reporting the impact of COVID-19. Our aim is to keep you abreast of key market trends and dynamics that impact health insurer financial results and profitability. We hope you enjoy the newsletter and find it informative. 

Newsletter Highlights

2nd Quarter 2020 Year-to-date Statutory Financials: Individual, Group, Medicare, and Medicaid Markets

Overall, health insurer profit margins improved in 2020. Pre-tax margins increased in Q2 2020 with decreased loss ratios in all markets due to the impact of COVID-19 on developing claims experience. The differences by line of business indicate that COVID-19 has had a larger impact on the claim experience for certain services, such as Dental, when compared to major medical and Rx services. 

2019 Market Capitalization: Statutory Capital/Risk Based Capital (RBC) Trends

Market capitalization measured by Total Adjusted Capital (TAC) increased due to small increases in market size (measured by premium) and very little total change in Risk Based Capital ratios. Overall, Public Companies saw minor decreases to their RBC ratios in 2019, while Non-Public Blues saw increases in both TAC and RBC ratios.

Public Companies Financial Performance

Public Companies continue to perform well. We reviewed the profitability of their insured blocks of business and noted that margins increased, as loss ratios improved in Q2 2020 as a result of reduced utilization during the COVID-19 pandemic. However, operating expenses have been increasing in recent quarters.

COVID-19 Impact Carrier Insights

The United States experienced its first confirmed case of COVID-19 on January 20, 2020. Since that date, the virus has spread rapidly and driven dramatic changes to the healthcare landscape. The 2nd quarter earnings calls provide some insight into how health carriers are viewing the impact of COVID-19 on healthcare costs, utilization patterns, membership, and how they are assisting their customers during this difficult period.

Health Insurer Financial Insights Volume 3