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Rates may rise if insurers lose ACA subsidies; individual market improved in '16

In the news

Insurers participating in the Affordable Care Act's health exchanges will have to increase average premiums for a benchmark silver plan by an estimated 19% if the federal government doesn't pay them for ACA cost-sharing subsidies, according to a Kaiser Family Foundation analysis, the Washington Free Beacon reported. The estimated rate increases will be higher in states that did not opt for Medicaid expansion under the ACA compared to states that expanded Medicaid, according to the Kaiser report.

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The ACA's individual market showed signs of improvement in 2016 after a difficult 2015, but it is still developing and will need a couple more years to reach target profitability, according to an S&P Global Ratings report. S&P's analysis of 2016 results and year-to-date market enrollment in 2017 indicates that while the market is not yet stable, it is not in a "death spiral" either.

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

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Private equity-backed insurance brokers are refinancing their debt at high leverages to fuel a wave of acquisitions in the space. As private equity's stake in the insurance brokerage space continues to grow, brokers such as Hub International Ltd., AssuredPartners Inc. and USI Insurance Services LLC are looking for buying opportunities to grow further, according to industry experts.

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Pricing on Everest Re Group Ltd.'s Kilimanjaro II Re Ltd. series 2017-1 and Kilimanjaro II Re Ltd. series 2017-2 catastrophe bonds has been fixed, Artemis reported.

The maturity of American Strategic Insurance Corp.'s Gator Re Ltd. catastrophe bond has been further extended to May 9 from April 9, Artemis reported. The extension will allow the company to continue assessing claims from qualifying severe thunderstorm events in 2016.

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Hub International Ltd. acquired certain assets of Insurance Supermarket Inc., a Canadian insurance marketing organization. Terms of the acquisition were not undisclosed.

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Nationwide reported net operating income of $910 million in 2016, compared to $1.23 billion in 2015. Net income attributable to the company declined year over year to $820 million from $1.22 billion.

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A discussion draft of a bill, aimed at altering key pieces of the covered agreement, circulated around Capitol Hill on April 7 in hopes that Congress would be given authority to negotiate international insurance deals. The bill, authored by Rep. Sean Duffy, R-Wisc., chairman of the House Financial Services Subcommittee on Housing and Insurance, would require international insurance agreements to be scrutinized under Congress' authority. Currently, the Treasury Department and U.S. Trade Representative have the authority to handle international insurance deals.

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British insurance regulators were to meet with U.S. policy experts and state insurance regulators in the last week to weigh the direction of U.S. insurance regulation, according to sources.

Featured news

Stada makes its pick; a better year for pharma; Fresenius, Akorn in deal talks: Stada-Arzneimittel said it would support a €66 per share takeover offer from Bain Capital and Cinven Partners; and S&P Global Ratings revised its outlook on the pharma industry to stable from negative for 2017.

Financial news in other parts of the world

Asia-Pacific: Religare to divest stake in insurer; Thailand denies manipulating baht

Europe: Barclays CEO investigated; HBOS probed; Brexit contingency plans due by July

Middle East & Africa: Fitch cuts South Africa to junk; GTBank in Tanzania expansion

The day ahead

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

In Asia, the Hang Seng declined 0.02% to 24,262.18, while the Nikkei 225 increased 0.71% to 18,797.88.

In Europe, around midday, the FTSE 100 was down 0.15% at 7,337.60 and the Euronext 100 0.44% lower at 985.86.

On the macro front

The Federal Reserve's labor market conditions index and TD Ameritrade's investor movement index are due out today. In addition, Fed Chair Janet Yellen is scheduled to give a talk at the Gerald R. Ford School of Public Policy.