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Land of Lincoln Mutual reports Q1 net loss, will seek outside capital

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Land of Lincoln Mutual reports Q1 net loss, will seek outside capital

Land ofLincoln Mutual Health Insurance Co. plans to look for outsideinvestors to boost its financial resources after federal regulators they would loosenfunding restrictions on consumer operated and oriented plans.

The Chicago-based co-op said it would take advantage of thenew rules in the wake of a $7.1 million first-quarter net loss, according tofinancial statementsfiled with the NAIC. That represents a wider net loss than the $5.3 million itrecorded in theprior-year period.

Land of Lincoln's total capital surplus also slipped to$22.4 million in the first quarter, from $31.5 million at the end of 2015.Those results met the co-op's financial expectations, considering thedifficulties facing companies that participate on state exchanges, Presidentand Interim CEO Jason Montrie said.

"Like other insurers, Land of Lincoln Health hasexperienced financial losses largely due to the fluctuation in the post-ACAmarket," he said. "However, having taken proactive steps based on ourenhanced knowledge of the marketplace, our financials are in line with ourprojections."

Montrie nevertheless applauded the new policy changesproposed by the U.S. Health and Human Services Department, which aim to removebarriers to outside funding and make it easier to quickly raise capital. Co-opswould be allowed to give board seats to individuals who are not co-op members,as well as enter into "strategic financial transactions" with othercompanies. That could pave the way for the nonprofits to take on deep-pocketedinvestors or partner with larger, more stable entities.

"By allowing access to outside capital, [the Centersfor Medicare and Medicaid Services] is helping to provide consumers withgreater choice and lower costs in the marketplace," Montrie said."Given the new rule, [Land of Lincoln] will be actively engaged in findingthe right capital opportunities to help us meet our mission."

Land of Lincoln and its fellow co-ops remain underclose scrutiny fromregulators and lawmakers, following the collapse of more than half of the federally fundedstartups. None of the surviving co-ops turned a profit in 2015, though so farat least three havefinished the first quarter in the black.