Page 17 - Insurance Times August 2018
P. 17
Generali to sell German US President stops billions in Insurance payments un-
der obamacare
life insurance unit to
The Donald Trump administration halted billions of dollars in payments to health
Viridium insurers under the Obamacare healthcare law, saying
that a recent federal court ruling prevents the money
Italian insurance giant Assicurazioni from being disbursed.
Generali has agreed to sell 89.9%
stake in its German life insurance The Centers for Medicare and Medicaid Services, which
business to the Viridium Group for up administers programs under the Affordable Care Act,
to €1.9bn. The Italian firm holds a said the action affects $10.4 billion in risk adjustment
stake of 100% in Generali payments.
Lebensversicherung (Generali Leben)
through its subsidiary Generali Donald Trump's administration has used its regulatory powers to undermine
Deutschland, which will reduce its Obamacare after the Republican-controlled Congress last year failed to repeal
interest in the German life insurance and replace the law. About 20 million Americans have received health insur-
business to 10.1% after the comple- ance coverage through the program.
tion of the transaction.
The payments are intended to help stabilize health insurance markets by com-
The deal values Generali Leben up to pensating insurers that had sicker, more expensive enrollees in 2017. The gov-
€1bn, which includes €125m as earn ernment collects the money from health insurers with relatively healthy enroll-
out in case of changes in the reser- ees, who cost less to insure.
vation rules. Apart from that, €882m
of loans will be reimbursed to CMS, which is overseen by the U.S. Department of Health and Human Services,
Generali. Generali Group CEO said the move was necessary because of a February ruling by a federal court in
Philippe Donnet said: "This transac- New Mexico, which found that the federal government was using an inaccu-
tion will allow us to invest in innova- rate formula for allocating the payments.
tive solutions for our German cus-
tomers, guaranteeing a higher re- "We were disappointed by the court's recent ruling. As a result of this litiga-
turn for our shareholders. tion, billions of dollars in risk adjustment payments and collections are now on
hold," CMS Administrator Seema Verma said in a statement.
"Germany is a core market for
Generali. The management team A federal court in Massachusetts upheld the same allocation formula in Janu-
and all of our colleagues are work- ary. The CMS statement said the agency has asked the New Mexico court to
ing relentlessly to strengthen our reconsider its decision and expressed hope for a prompt resolution of the issue.
position as a leader in the insurance
industry. This commitment makes us Travellers defer insurance till the last minute
confident about our future in the
market." Based in Germany, Co-op Insurance has found that one in six UK holidaymakers do not buy their
Viridium is a specialist for the man- holiday insurance until the day of or day
agement of life insurance portfolios. before they depart for their trip.
The company is owned by Cinven, a
London-based global private equity "It concerns me that two in five (37 per
firm and Hannover Re, a global Ger- cent) of people don't take out travel in-
man reinsurer. surance, but for those who do, it's really
important cover is taken out as soon as
Upon completion of the deal, Generali a holiday is booked," Colin Butler, Head
Leben will become a new subsidiary of Travel Insurance at Co-op said. "By doing so, people are covering themselves
of Viridium Group, joining for scheduled airline failures, sickness meaning a holiday must be cancelled and
Heidelberger Lebensversicherung, accommodation cancellations."
Skandia Leben and Entis. Viridium said
that the acquisition will add a portfo- Co-op's research also highlighted the importance of why travellers should take
lio of nearly 4 million life insurance out insurance as soon as possible, with 26 per cent of parents claiming that they
contracts to its existing platform. have cancelled or considered cancelling their holidays because of an ill child.
"Children commonly pick up bugs which can result in families choosing to cancel
a planned holiday. Where this does happen and there's no insurance in place,
families can be left out of pocket for the cost of their holiday," Butler added.
The Insurance Times, August 2018 17
