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Health Insurance Innovations shares plunge amid House committee investigation

Health Insurance Innovations Inc. saw its stock dive during a week that saw a U.S. House of Representatives committee launch an investigation into practices of companies that either sell or assist consumers in buying short-term, limited-duration insurance healthcare plans.

The week ending March 15 was a positive one for insurance companies and the broader market as well. The S&P 500 rose 2.89% to 2,822.47, while the SNL U.S. Insurance Index gained 3.15% to close at 1,041.44.

House Energy and Commerce Chairman Frank Pallone Jr., Health Subcommittee Chairwoman Anna Eshoo and Oversight and Investigations Subcommittee Chair Diana DeGette earlier this week started an investigation after an initial examination allegedly showed that companies selling shorter-term plans discriminate against people with pre-existing conditions. The House Energy and Commerce is seeking documents and information from 12 companies related to their sales and marketing strategy of these plans. The committee is also asking for details on the commissions brokers and agents receive for selling the coverage.

Health Insurance Innovations' shares tumbled 12.35% to close at $34.20.

Raymond James analyst C. Gregory Peters viewed the selloff as an overreaction. The analyst said Health Insurance Innovations' plans are regulated at the state level and noted that the company recently resolved a major multistate market conduct examination. Peters said he was not not surprised by the House committee investigation, but said nothing has changed from a policy perspective.

"They have already introduced legislation to walk back the Trump Administration's action on short term insurance plans, though that legislation has zero chance of passing the Senate," he wrote in a note to clients. "The only policy threat to short term health plans is if a Democrat wins the White House."

Peters does expect continuing volatility in the stock, due in part to high short interest. That said, he reiterated his "outperform" rating on the company.

Anthem Inc., eHealth Inc., Independence Holding Co. and UnitedHealth Group Inc. are also among the 12 companies being investigated by the House panel.

The House committee investigation seemed to have no impact on those companies, as Anthem saw its shares move up 2.70%, eHealth's shares increased 5.10%, Independence Holding rose 6.52% and UnitedHealth gained 5.95%.

Maiden Holdings Ltd.'s troubles continued this week as the company posted a wider year-over-year loss for the fourth quarter of 2018. The company reported non-GAAP operating loss attributable to common shareholders of $212.4 million, or $2.56 per share, compared with a loss of $126.4 million, or $1.51 per share, a year earlier.

Maiden announced last week that it expected to post a significant operating loss for the most recently completed quarter. It also earlier in the month inked a new adverse development cover deal with Enstar Group Ltd. The two sides agreed to drop a planned loss portfolio transfer to Enstar involving $2.68 billion of reserves and replace it with a new adverse development reinsurance cover arrangement that protects Maiden from further AmTrust losses through the end of 2018 in excess of a $2.44 billion retention, subject to adjustment, up to a $675 million limit.

Shares of Maiden plunged 20.37%, taking its stock price down to 70 cents.

Genworth Financial Inc.'s stock rose 10.19% for the week. The company on Thursday said it extended its merger completion deadline with China Oceanwide Holdings Group Co. Ltd. to April 30 from March 15.