OCTOBER 14, 2020 08:57 AM (EDT)
Best’s Special Report: U.S. Health Insurers Post Record Profits in Second-Quarter 2020 Despite Pandemic
|Jennifer Asamoah |
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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 14, 2020 08:57 AM (EDT)
U.S. health insurers’ net underwriting income in second-quarter 2020 increased to $28.3 billion from $9.1 billion in the same prior-year period, according to a new AM Best special report.
The Best’s Market Segment Report, titled, “Despite Pandemic, Health Insurers Report Record Profits in 2Q 2020,” notes that actions taken by U.S. state and federal agencies beginning in late March to help limit the spread of the COVID-19 virus resulted in a significant decline in utilization for routine, elective and non-urgent visits and procedures. AM Best expects the level of underwriting income to temper in the third and fourth quarter, as utilization has picked up since midyear in most states.
With the sizable increase in underwriting earnings through second-quarter 2020, net income rose to a historically high level of $26.6 billion, according to the report, compared with $24.5 billion in first-half 2019. A $3.1 billion reduction in investment income during the period and a $2.9 billion increase in taxes limited the growth in net income. Health insurers recorded a muted underwriting gain of $1.4 billion in the first quarter of 2020, largely driven by the impact of the health insurer fee (HIF), which is expensed in the first quarter for statutory earnings. Variability in first-quarter earnings in recent years is a result of the HIF, which was waived in 2017 and 2019.
The consolidated financial statements of U.S. health companies and health maintenance organizations (HMO) also show that net premiums written increased to $488.3 billion in first-half 2020, compared to $455.3 billion during the first half of 2019. Premiums have been driven by rate increases, growth in enrollment in government-sponsored business and the return of the HIF, which is included in premiums. Overall enrollment increased in the second quarter as enrollment growth in Medicare Advantage and Managed Medicaid more than offset declines in commercial health coverage. The report notes that some employees were furloughed with health insurance benefits or were given the option to keep their health insurance benefits, thus limiting further negative impacts on commercial enrollment.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=301994 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.