Commentary Aug 09, 2022 at 07:44 AM Share & Print
What You Need to Know
- Amazon has agreed to acquire the company that makes the Roomba vacuum cleaner for $1.7 billion in cash.
- Karen Lynch, the CEO of CVS Health, says that company sees home health as a priority area.
- Genworth, CNO and Unum are all reporting operating profits at their long-term care insurance operations.
Amazon might have signaled an interest in entering the home care market without actually referring to aging, the elderly or home care.
The Seattle-based online services giant announced last week that it plans to acquire iRobot — the Bedford, Massachusetts-based manufacturer of the Roomba vacuum cleaner robots — for $1.7 billion in cash.
The announcement comes two weeks after Amazon announced an agreement to acquire One Medical, a San Francisco-based company that provides primary care through brick-and-mortar offices and telehealth systems, for $3.9 billion.
Colin Angle, the iRobot CEO, has talked about often about the role robots could play in health care and elder care.
In 2010, he suggested that robots could help caregivers monitor patients, help patients take medications, lift simple objects, or move heavy items, according to an account that appeared on SingularityHub.
In 2018, in an article that appeared in The Verge, he predicted that “elder care and extending independent living would be the first really large-scale application of consumer robotics.”
Amazon introduced a free Care Hub — a program that helps families use the Amazon Alexa home management system to care for elderly relatives — in January 2021, and it launched the subscription-based Alexa Together caregiver support service in December 2021. An Alexa Together subscription costs $199 per year.
An iRobot spinoff, Ava, is already making disinfection robots.
Other companies are also emphasizing their enthusiasm about the elder care market.
Karen Lynch, the CEO of CVS Health, the parent of Aetna, said last week, during the company’s earnings call for the second quarter, that she sees home health as an area of focus.
What It Means
Your clients may soon have more long-term care planning options, whether or not issuers of traditional LTCI coverage are in a position to help provide those options.
The LTCI Earnings
Insurers talked about their efforts to provide coverage for facility-based care and home care last week when they posted their second-quarter earnings.
CNO Financial Group is reporting $136 million in net income for the second quarter on $855 million in revenue, compared with $78 million in net income on $1.1 billion in revenue for the second quarter of 2021.
The Carmel, Indiana-based company generated $99 million in LTCI policy and investment income in the latest quarter, compared with $100 million in policy income and investment income in the year-earlier quarter.
Although interest rates are starting to rise and should help future investment yields, the average yield on investments allocated to CNO’s LTCI products in the latest quarter fell to 5.13%, from 5.44%.
Genworth Financial is reporting $219 million in net income for the latest quarter on $1.9 billion in revenue, compared with $240 million in net income on $2 billion in revenue for the year-earlier quarter.
The Richmond, Virginia-based company’s LTCI business is reporting $34 million in operating income on $1.1 billion in revenue, compared with $98 million in operating income on $1.2 billion in revenue for the year-earlier quarter.
The company’s overall annualized general account investment yield fell to 4.8%, from 5.1%.
Unum Group is reporting $370 million in net income for the latest quarter on $3 billion in revenue, up from $183 million in net income on $3 billion in revenue for the year-earlier quarter.
The company’s closed block of LTCI policies generated $79 million in adjusted operating income on $174 million in premium revenue, compared with $112 million in adjusted operating income on $175 million in premium revenue for the year-earlier quarter.
The company’s overall earned book yield was 4.68%, down from 4.91% a year earlier.
During their quarterly earnings calls, executives from the companies emphasized that LTCI business earnings were lower mainly because the COVID-19 pandemic killed fewer of the insureds and led to an increase in the ratio of claims to revenue.
Steve Zabel, the chief financial officer at Unum, noted that the decline in COVID-19 mortality increased the loss ratio at the LTCI block to 85.9%, from 70.2% in the first quarter of this year.
“This level of performance for long-term care is consistent with our long-term expectations,” Zabel said.
Genworth executives also reported seeing a lower level of LTCI claim determinations due to pandemic-related mortality.
Long-Term Care Services Growth
Unum executives talked about efforts to lower the risk level at their LTCI block.
CNO executives noted that their LTCI products are naturally designed in a way that lowers exposure to risk.
Genworth executives said they’re moving ahead with efforts to set up a Global Care Solutions business, that will offer families care management and care coordination services, through a network of 38,000 nurses.
Dr. Tim Pack, the head of the unit, hopes to have services up and running in several test markets by next spring, according to Tom McInerney, Genworth’s CEO.