How has the COVID-19 pandemic affected Sun Life's mortality experience in its life insurance business? What about the impact until the coronavirus tapers off around the world?
Financial analysts asked the insurer's senior management these questions during a conference call that followed the release of Sun Life's Q1 2021 financial results.
Dean Connor, Sun Life's CEO, began by noting that the insurer’s earnings have not been badly impacted by the effects of COVID-19 because of its business model. “We have elevated claims on life insurance, offset somewhat by reduced claims in morbidity and by annuities. That balanced diversified business model has really served us well,” he commented.
Kevin Morrissey, Sun Life's Chief Actuary, provided additional insight. “We really benefited from the geographic as well as product diversification. So overall, we haven't seen a big impact to our financial statements where we've had some gains and losses over the quarters. On the morbidity side, largely, we've been taking gains, especially last year with a decrease in utilization. However, that is normalizing across many of the products. We'll have to see what happens longer term in terms of long-term disability and potential longer-term impacts related to the COVID disease as well,” he said.
Regarding lapses, Sun Life says it experienced a slight uptick in losses. “Since the start of the pandemic, policyholders seem to be holding on to their policies longer, which is a good thing for the clients and is a testament to the value to clients in this challenging time during the pandemic. So we have seen somewhat higher losses from lapses. But at this point, it's not clear what will happen, whether the policyholder behaviour will revert back at the end of the pandemic,” Morrissey says.
As a result, the impacts have not been that significant to date, the Sun Life chief actuary says. “Longer term, we're continuing to monitor the trends and the longer-term impact. We have not made any updates to our longer-term actuarial assumptions. It's just really too early at this point to make that call, but we are continuing to monitor that closely,” he continues.
Many unknowns lie ahead on the post-pandemic path, Morrissey notes, including COVID-19 variants and their effects on vaccines, both on the insurance and economic sides. “We're comfortable with that, and how we manage our risk and our overall profile. We are optimistic about the future, and we'll have to wait to see how that will unfold ultimately,” he says.
