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S&P says tax bill may lower insurers capital adequacy; CMS renews Texas program

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S&P says tax bill may lower insurers capital adequacy; CMS renews Texas program

S&P Global Ratings said lower tax rate under the amended U.S. amended tax code will result in a write-down of deferred tax assets for insurers in the near term. This will reduce capital adequacy mainly for life insurers. The agency said it would downgrade affected insurers if they cannot adapt and regain their capital strength. However, non-life insurers will have higher after-tax earnings in the longer term, according to S&P Global Ratings.

Keefe Bruyette & Woods said the tax bill will cause Bermudians to lose their pricing advantage as regards tax rates and the shrinking difference between U.S. and Bermudian tax rates should "incrementally reduce" the demand for reinsurance. The agency said "widely varying" current underwriting profit outlooks may affect the speed of tax bill-related rate cuts in the property and casualty industry. Further, Keefe, Bruyette & Woods expects insurers to "either report bigger reserve charges or smaller reserve releases than would happen without the tax bill backdrop."

Shares in Boston Omaha Corp., an advertising company linked to Warren Buffett's grandnephew Alex Rozek, have more than doubled since the company was listed on the Nasdaq Stock Market in June, The Wall Street Journal reported. Rozek's Boulderado Group LLC and other entities he manages hold a 12% stake in the company which also sells surety insurance through its unit General Indemnity Group LLC. He touted the potential for the company to operate as a low-cost insurer in the surety market, which he described as fragmented and inefficient.

The IRS has extended the deadline for insurers, self-insuring employers, other coverage providers and large employers to provide 2017 health coverage information forms to individuals to March 2, 2018, from Jan. 31, 2018. Consumers use this information to determine whether they qualify for the Affordable Care Act premium tax credit.

The Centers for Medicare & Medicaid Services has approved Texas Health and Human Services Commissioner's request to extend the state's healthcare transformation and quality improvement program. The approval is effective from Jan. 1, 2018, through Sept. 30, 2022. Texas, which declined to expand its Medicaid program under the Affordable Care Act, needed the extension to secure Medicaid funds to help hospitals treat uninsured patients.

Enrollment in the federal Affordable Care Act exchange market fell slightly year over year, federal data shows, in an environment experts said would discourage far more consumers from signing up.

Humana Inc. agreed to buy back $1 billion of the company's common stock from Bank of America NA, a unit of Bank of America Corp.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.

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Mallinckrodt to acquire Sucampo for $1.2B; Japan approves Alexion's Soliris: Japan's Ministry of Health, Labour and Welfare approved Alexion Pharmaceuticals Inc.'s Soliris for treating certain cases of generalized myasthenia gravis, a disease causing skeletal muscle weakness. The approval is based on data from the phase 3 Regain study.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Nikkei 225 fell 0.20% to 22,892.69.

On the macro front

The Richmond Fed manufacturing index and the State Street Investor Confidence Index are due out today.