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Strangfeld, M&A regulators among 2018's most influential in US insurance


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Strangfeld, M&A regulators among 2018's most influential in US insurance

S&P Global Market Intelligence presents a list of the year's most influential people or institutions in the U.S. insurance sector, with a look ahead to what could come next. Two mergers and acquisitions regulators and a CEO whose final act included the removal of a "too-big-to-fail" label took the top spots.

John Strangfeld, former chairman, president and CEO, Prudential Financial Inc.

The longtime head of one of the largest insurance companies in the U.S. stepped down Nov. 30 after more than 10 years at the company.

Strangfeld won the removal of the "too-big-to-fail" label that Treasury Department regulators applied to Prudential in the aftermath of the 2008 financial crisis. The Financial Stability Oversight Council de-designated the final nonbank systemically important financial institution a year after lifting the label from fellow insurers MetLife Inc. and American International Group Inc.

In a June interview, Strangfeld told S&P Global Market Intelligence that Prudential never "fit the label," which the CEO said was "inappropriately" applied in the first place.

The Committee on Foreign Investment in the United States, U.S. Department of Treasury

Amid intense debate on how much freedom the U.S. government should grant for foreign investments in the country, the primary foreign investments regulator finally approved a deal to allow China Oceanwide Holdings Group Co. Ltd. to purchase Genworth Financial Inc.

The Committee on Foreign Investment in the United States approved China Oceanwide's $2.75 billion bid to buy the floundering insurer, capping two years and five refiled applications with the regulator. The deal's long journey appeared to be nearing its end after a key insurance regulator in Delaware signaled that it would approve the deal, raising no red flags in a high-stakes hearing in November.

The companies pushed the deadline for completing the deal to Jan. 31, 2019, giving additional time to satisfy all other outstanding closing conditions.

U.S. Department of Justice

In just two years, the U.S. Department of Justice signaled that horizontal mergers between big health insurers were not going to fly. As a result, the industry broadened its horizon and looked to the pharmacy benefit manager business, and beyond, for growth.

Antitrust regulators at the department approved a pair of massive deals between health insurers and pharmacy benefit managers, or PBMs, in 2018, allowing vertical mergers between Cigna Corp. and Express Scripts Holding Co. for $54.95 billion and between CVS Health Corp. and Aetna Inc. for $70.75 billion.

Pharmacy benefit managers are companies that negotiate drug prices with manufacturers, pharmacies and insurers that cover drug benefits.

The DOJ approved both deals a year after it successfully sued to stop mergers between Cigna and Anthem Inc. and between Aetna and Humana Inc.

Alex Azar, U.S. Secretary of Health and Human Services

Although congressional Republicans failed in their efforts to repeal and replace the Affordable Care Act, Azar's department tweaked several rules at the direction of the White House to change how the landmark legislation is implemented.

Azar and Labor Secretary Alex Acosta finalized a model for association health plans, which allow companies and regulators to design plans with less comprehensive coverage than traditional ACA plans. Azar also approved the expansion of short-term plans from three months to a year, with the option of renewal for up to two years. Like association health plans, short-term plans do not have to offer the same level of coverage as the ACA, and they also have less stringent requirements around how much of the premiums generated must go toward direct care.

Michael Neidorff, chairman and CEO, Centene Corp.

Expansion by Centene was a significant contributor to establishing that every county in the U.S. had at least one insurer offering ACA plans, and the company saw its enrollment on exchanges surge. Yet the company's CEO had his sights on further ACA exchange expansion, contrary to a broader trend for insurers to abandon the unprofitable business.

Neidorff told S&P Global Market Intelligence in an October interview that the ACA departures by others presented an "opportunity" for Centene, and when asked if Centene would offer short-term plans under the new rules, he declined, at least for now.

The company announced in October that it would enter into four new states and expand its footprint in six existing markets, and it recently revised its ACA enrollment estimates, saying it now expected a rise of 150,000 to 200,000 members.