Newsletter September 2022



Hershey: 'We will not be able to fully meet consumer
demand' for Halloween
Ongoing supply chain pressures amid strong consumer demand make for a scary
combination as Hershey warned there will be a Halloween and holiday candy shortage.
“Seasonal consumer engagement is expected to remain high, and we expect high
single digit sales growth for both our Halloween and Holiday seasons,” Hershey
Chairman and CEO Michele Buck said during the earnings call. “Despite this strong
growth, we will not be able to fully meet consumer demand due to capacity constraints.”
Trick-or-treaters can partially blame a scarcity of raw ingredients and workers for the
lack of Reese's pumpkins this year. The CEO also mentioned that the Russia-Ukraine
war and geopolitical tensions strained supply chains when explaining that the company
had to make the difficult decision to prioritize producing its everyday candy offerings
over seasonal confections.

Buck warned that the supply constraint would put pressure on the stock in the second
half of the year, though she noted that the shortage was expected to be short-lived.
Hershey anticipates it will have inventory back up to meet consumer demand into 2023.
The chocolate manufacturer saw 19% sales growth in the second quarter versus a year
ago as consumers continued to buy up sweets and snacks despite the rise in inflation.
The company said it didn't see increased competition from private-label brands that
other consumer packaged goods purveyors have been facing.
Here’s how Hershey performed in the second quarter compared to Wall Street
estimates:
* Revenue: $2.3 billion vs. $2.2 billion
* Diluted EPS: $1.80 vs. $1.68
The company also raised its full-year earnings guidance to 12% to 14% growth (up from
10% to 12%). Hershey shares were up more than 2 in Friday afternoon trading.
The Hershey Company (HSY)
View quote details
NYSE - Nasdaq Real Time Price (USD)
231.61
+1.83(+0.80%)
As of 12:51PM EDT.Market open.
Add to watchlist
"We feel really good about having high single-digit growth," Buck said on the company's
outlook, "but we also feel good about as we get into the future being able to have more
capacity to really fulfill more of the demand that we see during the season."
?
What motorists need to know
about their auto insurance score
In most states, a person’s auto insurance score is one of the factors insurers consider
when calculating premiums, along with a range of personal and policy-based parameters,
which include age, gender, address, employment, driving history, and coverage limits. In
certain instances, however, this credit-based rating can play a huge part in pushing up car
insurance rates.
A recent analysis of auto premiums by personal finance firm NerdWallet has shown that
the average annual premiums for motorists with poor credit are about 71% higher at
$2,792 than for those with good credit at $1,630. The figure is even higher than those for
drivers involved in an at-fault collision at $2,462.
A separate study by insurance marketplace Policygenius, meanwhile, has found that while
rates for drivers aged 30 to 45 rose 55% from the yearly average of $1,652 to $2,555 after
an accident, those for motorists with poor auto insurance scores were 88% more
expensive at $3,107. By contrast, policyholders with good credit-based ratings paid 14%
less annually at $1,420.
How do auto insurance scores work?
Auto insurance scores, also called credit-based insurance scores or insurance credit
scores, were introduced by the Fair Isaac Corporation (FICO) in the early 1990s. This
rating system uses a person’s credit information to predict their likelihood of filing a claim.
The belief is that motorists with poor credit-based insurance scores are more likely to file a
claim than their counterparts with good auto insurance ratings.
Insurance companies also utilize this model to get a picture of how risky it is to cover a
driver and how much to charge for coverage.
“Your insurance score is a snapshot of your insurance risk at a particular point in time,”
FICO wrote in a guide on its website. “It is a number based on the information in your credit
report that shows whether you’re more or less likely to have claims in the near future that
will result in losses for the insurance company… The higher your score, the less risk you
represent.”
Apart from FICO, data analytics firm LexisNexis and credit reporting agency TransUnion,
as well as some insurance companies, have their own scoring systems. Each calculates
auto insurance scores differently. Therefore, a motorist’s score may vary between
insurance providers.
According to the National Association of Insurance Commissioners (NAIC), however,
insurers are not allowed to use credit-based insurance scores as the sole basis for
increasing rates or denying or cancelling policies. Some states – namely California, Hawaii,
Maryland, Michigan, Massachusetts, Oregon, Utah, and Washington – even prohibit or limit
insurance companies from utilizing auto insurance scores in underwriting or rating
decisions.
What is a good auto insurance score?
What is considered a “good” auto insurance score differs depending on the credit ratings
provider. These companies do not normally disclose how they come up with their ratings,
but FICO has revealed on its website a breakdown of the different factors it considers.
These are:
* Payment history (40%): Payments made on a person’s debt in the past, including
frequency and the amount paid off
* Outstanding debt (30%): Amount of debt a person has
* Credit history length (15%): Amount of time a person has had a line of credit
* Pursuit of new credit (10%): If a person has recently applied for new lines of credit
* Credit mix (5%): The types of credit one has, including credit cards, mortgage, and
auto loan
Typically, companies view ratings above 700 as a good score. A good auto insurance
rating for FICO starts at 700, while those for LexisNexis and TransUnion begin at 776. The
table below shows what these credit reporting entities deem as good and poor score
ranges.
Insurance score
provider
Good score range
Poor score range
FICO
700-900
250-500
LexisNexis
776-997
200-500
TransUnion
776-950
150-500
Source: WalletHub
How is auto insurance score different from credit score?
While the factors used to determine a credit score and a credit-based insurance score are
the same, these rating systems are not designed for the same purpose. Auto insurance
scores are used to predict how likely a driver will file a claim, while credit scores are
intended to determine if a borrower is in a stable financial position to secure a loan.
In addition, unlike credit reports, motorists do not have free access to their auto insurance
scores. According to personal finance website WalletHub, the only way consumers can
check their credit-based scores is by calling LexisNexis Risk Solutions.
According to the global data and analytics company, motorists who already have a
reference number from their insurers can get a copy of their credit-based insurance scores,
which also includes the top three reasons why they received the rating. For those without a
reference number, they can still obtain a copy of their information from LexisNexis Risk
Solutions.
FICO and TransUnion, meanwhile, do not provide auto insurance scores to consumers.
Why do auto insurance companies use credit-based scores?
Insurance companies primarily use credit-based insurance scores to determine whether a
motorist is eligible for coverage and how much premium they will be charged. But
according to FICO, auto insurance scores also help prevent drivers with good credit
standings from bearing some of the costs of higher-risk individuals.
“By using insurance scores, insurers can better forecast future performance and thus make
sure that each person pays a rate that more closely corresponds to the risk of loss they
represent,” the data analytics firm explained. “This means that if you are less likely to have
claims that will result in losses for the insurance company, your insurance company can
offer you a lower premium.
“And because those that will likely have claims (or larger claims) will end up paying higher
premiums, insurance scores help your insurance company make sure that you won't end
up paying more than you should to help cover someone else’s future claims.”
How can drivers improve their auto insurance scores?
For motorists who are struggling to maintain a good credit-based score, FICO recommends
treating their ratings “a bit like losing weight.”
“It takes time and there is no quick fix,” the firm added. “In fact, quick-fix efforts can
backfire. The best advice is to manage your credit accounts and debts responsibly over
time.”
To help motorists raise their auto insurance scores and save on car premiums, FICO
shared these practical tips:
* Pay bills on time as delinquent payments and collections can have a negative impact
on auto insurance scores.
* Be aware that paying off a collection account will not remove it from the credit report
as records stay for seven years.
* For those having trouble making ends meet, it is advisable to contact creditors or see
a legitimate credit counselor. Though this won't improve their credit-based scores
immediately, it can help them manage their credit and pay on time.
* Keep balances low on credit cards and other “revolving credit.”
* Pay off debt rather than moving it around.
* Do not close unused credit cards as a short-term strategy to raise credit score. In fact,
owing the same amount but having fewer open accounts may lower a person’s score.
* Do not open new credit cards just to increase available credit. This approach could
backfire and lower one’s credit score.
* Do not open a lot of new accounts in quick succession. New accounts will lower the
average account age, which will have a larger effect on a person’s score if they do not
have a lot of other credit history.
* Re-establish a good credit history. Opening new accounts responsibly and paying
them off on time will raise a person’s score in the long term.
* Checking one’s credit report won't affect their score, as long as it is obtained directly
from a credit-reporting agency or through an organization authorized to provide credit
reports to consumers.
* Apply for and open new credit accounts only as needed.
* Have credit cards – but monitor and manage them responsibly.
* Note that closing an account does not make it go away. A closed account will still
appear on the credit report and may impact a person’s score.







Stay up to date on your vaccines
It's especially important to stay up to date on your vaccines. Vaccines protect you
from serious illness and can even keep you out of the hospital.
Talk with your doctor about which vaccines may be right for you, many of which Medicare
covers:
* COVID-19 vaccines and booster shots. Staying up to date with your COVID-19
vaccines (including getting all recommended boosters when eligible) will keep
you best protected from severe COVID-19 illness.
* One flu shot per flu season. The CDC recommends getting your flu shot by the end
of October to stay protected throughout flu season.
* Two different pneumococcal shots. Medicare covers the first shot at any time and
a different, second shot if it's given at least one year after the first shot.
Visit Medicare.gov to see what other vaccines Medicare covers, and talk with your doctor
about staying up to date on your vaccine
?
'Recession coming faster than
expected' – Swiss Re economist
by Gia Snape 25 Jul 2022

A double whammy of soaring inflation and record interest rate hikes is stoking fears of
recession in North America. Those fears may soon come to pass, an economist told
Insurance Business.
“We do expect that there’s a recession on the horizon and maybe coming faster than we
expected,” said Thomas Holzheu, chief economist, Americas at Swiss Re. “The most
baseline forecast is that there will be a slowdown in the second half of this year.”
Two weeks ago, the Bank of Canada raised its key interest rate by one percentage point to
2.5% to rein in inflation, the largest hike in 24 years. Inflation in Canada hit 8.1% in the
year to June, its highest level in nearly three decades. Meanwhile, the US consumer price
index rose to 9.1% in June, a 41-year high that may prompt similarly aggressive policy
tightening from the US Federal Reserve.
Swiss Re has cut its annual GDP growth forecast for the US to 2.0% this year, from a 2.8%
forecast in June. It also predicted just over 1% GDP growth in the US in 2023 amid tighter
financial conditions and softer consumption activity.
The reinsurance giant also expects the Fed to raise fund rates by 3.50-3.75% as the
central bank fights inflation. Higher interest rates will gradually bring benefits to insurers,
but the short-term effects pose challenges.
“In the long run, there’s a gradual increase of investment yields, so that’s a positive impact
[for the insurance industry]. But the immediate impact is that bond portfolios are losing
value on a market-to-market valuation, so there’s some stress on insurance companies’
balance sheets with equity indices down and interest rates up,” Holzheu noted.
Claims shock
The biggest shock to the insurance industry stems from claims costs. The skyrocketing
prices of goods will continue to put pressure on underwriting profitability. In its outlook for
July, Swiss Re forecast a combined ratio above 100% in 2022 for the US property and
casualty (P&C) sector due to inflation.
Auto insurance remains among the worst-hit lines. Supply chain issues that kicked off
during the pandemic will continue to drive high costs for used cars and replacement parts.
Holzheu explained: “The cost for car repairs, and consequently claims costs for motor
insurance, will continue to rise due to the rising materials costs and supply chain
disruptions.
“The other sector that’s specifically affected is construction. Some of that also has to do
with rising material costs and supply chain issues. But there is also a very strong demand
for housing and home repairs – extra demand during and coming out of COVID
[lockdowns] that was unusual. It’s very much high-cost pressure in 2022 but that will also
be expected to continue into next year.”
In casualty lines, Holzheu pointed to wage inflation, healthcare expenditures, and a tight
labor market as key drivers of claims costs. Rate increases are seen to persist as insurers
play catch-up with spiking prices.
“We expect that the rate increases we have seen going up for commercial lines for the
past couple of years will continue. In personal lines, where the rise of claims costs was
more recent, we are also seeing an acceleration in US rate filings,” said Holzheu. Swiss Re
pegged premium growth at 8.0% for the year but said growth would slow to 6.3% in 2023
as the US enters a likely recession.
M&A activity
Mergers and acquisitions in the insurance industry have picked up steam amid the
pandemic. Forecasts for more dealmaking this year were optimistic after an upbeat 2021:
total deal volume rose 40% on-year according to a Deloitte study, as insurance companies
thrived amid the pandemic and sought to diversify their operations.
While it’s difficult to forecast how the imminent recession may impact M&A activity,
Holzheu noted that times of economic uncertainty usually sow seeds for consolidation.
“A time of high financial volatility doesn’t lend itself very well to the execution of deals. But
further down the road, if there’s balance sheet stress developing because of either market
disruptions or underwriting claims costs, that usually leads to further consolidation and
strategic reorientation,” he said.


US HEALTH INSURERS RAISE RATES TO MATCH INCREASE IN USAGE

US health insurers raise rates to match increase in usage
SACRAMENTO, California (AP) — After putting off routine health care for much of the
pandemic, Americans are now returning to doctors' offices in big numbers — a trend
that's starting to show up in higher insurance rates across the country.
Health insurers in individual marketplaces across 13 states and Washington D.C. will
raise rates an average of 10% next year, according to a review of rate filings by the
Kaiser Family Foundation.
That's a big increase after premiums remained virtually flat for several years during the
pandemic as insurers seek to recoup costs for more people using their policies,
combined with record-high inflation that is driving up prices for virtually everything,
including health care.
The rates review included Georgia, Indiana, Iowa, Kentucky, Maryland, Michigan,
Minnesota, New York, Oregon, Rhode Island, Texas, Vermont and Washington.
“We’re at a point in the pandemic where people are using health care that they may have
put off before,” said Larry Levitt, executive vice president for health policy with the
Kaiser Family Foundation. “We have a double whammy right now of people using more
care and inflation throughout the economy.”
In California, state officials announced Tuesday that rates would increase an average of
6% next year for the 1.7 million people who purchase coverage through Covered
California, the state-operated health insurance marketplace. That's a big jump after
years of record low increases, when rate increases averaged about 1% in the past three
years.
Increased use of health plans was the biggest reason for the increase, accounting for
four percentage points, according to Jessica Altman, executive director of Covered
California.
“That is really the consistent message that other states are seeing as well, and even more
so than California,” she said.
The rate increases come as Congress debates whether to extend financial help for
consumers through the American Rescue Plan — the $1.9 trillion economic aid package
Congress passed last year to combat the economic impacts of the pandemic.
The American Rescue Plan included significant funding to keep health insurance
premiums low for people who purchase coverage through state marketplaces.
California receives about $1.7 billion annually from that funding to make sure no one
paid more than 8.5% of their household income on monthly premiums.
If that assistance expires at the end of this year, about 3 million Americans — including
220,000 Californians — would likely drop coverage because they will no longer be able
to afford it, according to an analysis by Covered California.
Without guidance on whether Congress will extend the assistance next year, some
insurers have reacted by proactively raising rates in anticipation of people dropping
coverage. The uncertainty accounted for half a percentage point of California's 6%
increase, Altman said.
California officials have lobbied hard for Congress to extend the financial assistance
through the American Rescue Plan. In general, the price of health insurance premiums
depends on who is buying coverage. If its mostly sick people, the premiums are more
expensive. If more healthy people buy them, the premiums cost less.
Altman said California has managed to keep its rate increases below the national
average in part because more healthy people are buying coverage through Covered
California than most other states.
She said that's in part because of a California law that taxes people who refuse to
purchase health coverage. But she said it's also because of subsidies that keep premiums
low so more people can afford them.
Altman said not extending the federal financial assistance would price some people out
of coverage and “is the core outcome to be concerned about here.”
“That would be a big step backwards,” she said.
?
Millennial net worth seemingly doubled since
the start of COVID-19
Although the COVID-19 pandemic had devastating effects on the U.S. economy, one
key demographic was able to benefit during that time: Millennials.
Millennials, who are defined by the Federal Reserve as people born between 1981 and
1996 (meaning roughly those between the ages of 26 and 41 in 2022), saw their total
net worth double since the first quarter of 2020, when it was at $4.55 trillion, according
to a recent report by MagnifyMoney.
That number has since surged 106.2% to $9.38 trillion during the first quarter of 2022.
Meanwhile, millennials' average net worth doubled as well. In the first quarter of 2022,
millennials held an average of $127,793 versus $62,578 in the first quarter of 2020 — a
whopping 103.2% jump.
"There's not one specific reason for the substantial increase in millennials,"
MagnifyMoney Executive Editor Ismat Mangla told Yahoo Finance. "It was a perfect
storm of factors that has led to to the significant increase in total net worth."
These factors include taking advantage of the housing market, the student loan
payment pause, and even "side hustles."
Real estate, side gigs
A majority of millennial net worth is held in real estate, according to the report, while
20.2% is held in pension entitlements and 10.3% each in consumer durables and
private businesses.
“Historically low mortgage rates allowed millennials to affordably finance their homes, in
turn giving them a big leg up eventually when the real estate market took off and
housing prices skyrocketed,” Mangla said. “A lot of millennials got in at the right time.”
Real estate is also where most millennial debt is found — 62.6% is tied up in home
mortgages.
According to a 2022 report by the National Association of Realtors, millennials now
make up the largest share of home buyers at 43%, and that number is expected to keep
growing.
“Those in the housing market at the start of the pandemic, they have debt, but it's
manageable," Mangla said. "And those who didn't were left out."
This debt was made worse by the pandemic. With COVID came massive layoffs for
thousands of Americans, forcing many to learn new ways to generate income. This is
commonly referred to as a "side hustle" and may include activities like investing,
reselling products online, social media marketing gigs, and more.
A 2020 survey from LendingTree found that 50% of millennials had a side hustle during
the first year of COVID. These side hustles, coupled with elevated unemployment
benefits and stimulus checks, helped many millennials stay afloat financially.

Student loans 'an important driver'
Student loans are another key aspect of net worth, especially for millennials. Since
March 2020, all federal student loans have been in forbearance, meaning no payments
have been required and no interest has accrued during that time.
Because of the student loan payment pause, millennials were able to put their cash
towards other areas that helped build wealth.
“Student loan forgiveness was an important driver in millennials growing their total net
worth," Mangla said. "A majority of the generation has some kind of debt from student
loans.”
According to the Education Data Initiative, millennials hold an average balance of
$38,877 in student loan debt.
That "lack of transparency from the Biden administration on student loan forgiveness
and when that will be ending" is another concern for Mangla.
It's unclear how much student loan debt the Biden administration is planning on
forgiving — if any at all — at least until Aug. 31 when the latest payment pause expires.
'Worrisome' debt
Although millennials have made the most gains in terms of net worth since the onset of
the COVID pandemic, they still account for just 6.6% of America's wealth.
Baby Boomers have the most at $71.08 trillion, which is 50.4% overall, while Gen X
owns 29.9% at $42.16 trillion.
"It's good to see millennials 'catching up’ a bit to Baby Boomers and Gen Xers," Mangla
said. At the same time, "it's still small compared to the older generations, as those
generations made significant gains as well over the past two years," she added.
Part of this is because older generations have had more time to build their wealth and
also benefited from low housing costs, tax reductions, stock market upswings, low
tuition, and lower interest rates.
Millennials are still grappling with debt as well. While student loan payments have been
paused for the time being, 62.6% of their debt is embedded in home mortgages.
Consumer credit accounts for another 35.6% of millennial debt, more than any other
generation. Mangla stated this was "worrisome," particularly against the backdrop of
inflation as food and energy prices remain elevated.
The Federal Reserve is expected to keep raising rates throughout the year in order to
combat the inflationary environment, which likely means higher interest rates on credit
cards and people paying more for their credit purchases consequently.
Those with higher credit scores are typically able to obtain lower interest rates on credit
cards and loans, while individuals with lower credit scores result in higher interest rates
— in turn making purchases and loans even more expensive.
"Figure out a plan to pay that down or a way to consolidate it," Mangla said. "Try for
near-zero or low-percentage credit cards, which are dependent on an individual's credit
score, which is one of the most important things nowadays."
?

To contact us: go to www.healthcareil.com or Call (800) 739-4700
www.healthcareil.com Page | 1