NOTE: The following data and analysis is based on experience through 6/30/2021, prior to the onset of the late-summer surge in COVID cases driven by the Delta Variant. As of this writing the data has not developed sufficiently to allow us to provide insight on the impact of the “4th Wave” on the Life Settlement population. We will provide another update in the coming months after enough data has been accumulated.
In our prior analysis we saw the first signs that vaccines may be reducing excess mortality in life settlements. Now, more than 6 months after the introduction of vaccines in the U.S. and widespread uptake among the Life Settlement (“LS”) (LS) age group, deaths and cases declined to their lowest levels since the onset of the pandemic.
This post is a continuation of our previous analysis on COVID-19’s impact on life settlements.
Respite in the Second Quarter of 2021
After the intense surge of cases during the winter of 2020-2021 (“3rd Wave”) that affected the entire nation, there was relief by the end of the second quarter. U.S. cases and deaths decreased to their lowest levels of the pandemic, indicating broad improvement.
Multiple factors may have contributed to the overall reduction to the pandemic’s intensity, including seasonality, increased immunity through infection, and the the introduction of vaccines. The chart below overlays vaccination totals with COVID death trends over time. The rapid decline in deaths among those 65 and older is coincident with the ramp-up of vaccination, giving a strong indication that the vaccines have been effective in curbing the virus.
Further, it appears that the oldest age group may have seen the largest benefit from vaccinations as their proportionate share of total COVID deaths has declined as vaccination levels have increased. Through June 2021 CDC data shows that 80% of the 65 and older population had been fully vaccinated and nearly 90% had received at least 1 dose. Comparatively, the population under age 65 had rates of 64% and 73%, respectively. In absolute terms there have been fewer total vaccinations in the 65+ age group compared to those below age 65, but the rate of vaccination has been much higher. According to CDC data through June 30, 2021, approximately 80% of the 65+ population had been fully vaccinated while nearly 90% had received at least one dose of the vaccine. For the population below age 65 those number were 64% and 73%, respectively.
Evidence of COVID Protection on Life Settlements emerged in 2021
As a brief refresher on our prior analysis, our equal-risk estimate models expected deaths by matching life settlement lives’ county of residence to reported COVID deaths in each county. Since COVIDs impact has been geographically heterogeneous, it creates a more accurate picture of the expected impact of COVID on life settlements. The COVID risk factor is the ratio of actual life settlement deaths to this equal-risk estimate. Our initial analysis concluded that the life settlement population is on average about 10 times more vulnerable to COVID death than the total US population. Comparing the risk factor to this 10x relative risk estimate, we can study any potential protection from COVID for life settlements.
Throughout much of 2020 our protection estimate for the Life Settlement population was negative – meaning the LS population was not protected from the excess mortality effects of COVID and even saw higher excess mortality than expected. However, in our last analysis there was indication of a downward trend in excess mortality at the start of 2021. Now, with data covering the first half of the year, 2021 shows marked improvement for the Life Settlement population, even offsetting some of the excess experience from earlier periods.
As the table and chart above illustrate, the Life Settlement population has experienced lower than expected mortality through the second quarter of 2021.
Glossary of Terms
LS Excess Deaths: deaths observed in the ITM 21st underwriting population that are in excess of expected deaths.
Equal-Risk Expected Deaths: an estimate of expected deaths which assumes that life settlement insureds experience the same mortality risk as the average citizen in their county of residence.
Risk Factor: A multiple used to estimate LS Excess deaths based on Equal-Risk Expected Deaths.
Further Evidence of Vaccine Effectiveness
Our prior analysis showed initial indications of vaccine effectiveness on the Life Settlement population. The additional data observed through June 2021 shows even further evidence of that effectiveness. Given the early focus of vaccination efforts on the older ages and highest risk members of the overall population, it is no surprise that the Life Settlement population would begin to benefit from vaccination. The chart below shows how much the excess mortality experience has diminished in recent months as compared to our “no-protection” estimate.
Considering these results in context with the national experience leads us to conclude that Life Settlements excess mortality is stabilizing. The proportionate share of all COVID deaths attributable to ages 65+ has been diminishing during 2021 and the Life Settlement population has seen excess mortality complete reverse course and fall below non-pandemic expectations. However, we believe this is a rebalancing rather than a trend – many of the pandemic-related deaths may have occurred over the next few years without a pandemic and the current dip in mortality likely reflects that. Our expectation for the coming months is that mortality will converge back to non-pandemic expected levels and then rise slightly above. Much like influenza, COVID-19 will become a permanent new cause of deaths that is hopefully managed down to a minimal level.
At the time of this writing, the Delta Variant of COVID-19 has been driving a 4th wave of cases and deaths. Experience from that wave will provide further clarity on the level of protection within the Life Settlement population. In our next post we will examine the effects of the late summer wave and re-evaluate our equal-risk estimate in light of possible changes in the risk relationships driven by the pandemic.