Fewer Surgeries to Support Health Insurance Earnings but Headwinds Are Mounting, FVEs Unchanged

The coronavirus will have both positive and negative implications for private health insurers. We expect fiscal 2020 and 2021 earnings to be boosted by postponement of elective surgeries, resulting in a reduction in claims expenses. We believe many doctors and patients will opt for this, especially with older age groups (over 65) which face higher risk from COVID-19 and account for more than 40% of procedures. The positive benefits will likely be short-lived though, with the drop in claims costs for the next six to 12 months expected to normalise in fiscal 2022. Negatives include losses on investment portfolios, rising unemployment and policyholder numbers, and lower demand for travel and international student insurance.