US health insurers' net underwriting income in the second quarter of 2020 increased to $28.3bn from $9.1bn during the same period in 2019 according to a new market segment report by AM Best.
The market segment report, titled, “Despite Pandemic, Health Insurers Report Record Profits in 2Q 2020,” said that actions taken by US state and federal agencies beginning in March 2020 to help limit the spread of the COVID-19 resulted in a significant decline in utilisation 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 utilisation 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 $26.6bn, according to the report, compared with $24.5bn in first half 2019. A $3.1bn reduction in investment income during the period and a $2.9bn increase in taxes limited the growth in net income.
Health insurers recorded a muted underwriting gain of $1.4bn 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 US health companies and health maintenance organizations (HMO) also show that net premiums written increased to $488.3bn in first half of 2020, compared to $455.3bn during the first half of 2019.