The pandemic, while devastating balance sheets now, may act, long-term, as a claims accelerator — essentially “pulling forward” costs that RGA eventually would have faced anyway.
“You can only die once,” said Erik Bass, an analyst for London-based market research firm Autonomous Research.
“It’s sort of a morbid thing to think about,” he said. “They pay that claim now and they won’t in the future.”
Moreover, the pandemic could have been a lot worse for companies like RGA. Older clients have paid thousands of dollars in premiums over time. If the disease had instead hit younger individuals harder, insurance companies would be paying out claims to customers who hadn’t yet paid decades of premiums.
Longer term, there are other ways in which the coronavirus could actually be good for RGA’s business. After all, there’s nothing like a deadly scourge to illustrate the importance of insurance to ordinary citizens, and the importance of reinsurance to insurance companies.
“I could certainly offer up that the value of reinsurance has been highlighted during this pandemic,” said Anna Manning, RGA’s president and CEO, on a call discussing quarterly earnings.
Ultimately, analysts like Bass share the company’s optimism for its prospects. He even thinks that in 2021, RGA can be “at or above” the earnings per share that the company generated in 2019, which was a record.
