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Tax bill to hit Bermuda insurance carriers; Oscar expects $1B in premium revenue


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Tax bill to hit Bermuda insurance carriers; Oscar expects $1B in premium revenue

Fitch Ratings maintained that the tax overhaul in the U.S. is credit-negative for the Bermuda re/insurance market. The rating agency said the cut in the U.S. corporate tax rate to 21% from 35% and a new tax on premiums ceded by U.S. insurers to foreign reinsurers will benefit U.S. reinsurers at the expense of Bermudian and other international reinsurers serving the U.S.

According to A.M. Best, the tax reform is a "mixed bag" for the insurance industry and "will initially have the greatest impact on insurers." In a briefing report, the rating agency said the sector will see overall benefits from the reduced corporate tax rate, but the benefits will be partially offset by certain revenue enhancements that will impact life and P&C insurance companies.

Bermuda-based insurers' shares tumbled in the wake of the tax reform bill's passage in the House and Senate. The SNL Insurance Index fell slightly 0.09% to 1,039.38 for the week ending Dec. 21, as the S&P 500 increased 0.33% to 2,684.57.

Just over 8.8 million people selected Affordable Care Act health insurance plans, Centers for Medicare and Medicaid Services said. That sum included about 2.4 million new consumers and about 6.4 million returning consumers who renewed their coverage.

Oscar Insurance Corp. expects to generate nearly $1 billion in premium revenue for 2018, up from the more than $300 million it generated in 2017, Axios reported, citing an interview with Oscar CEO Mario Schlosser. The health insurer also expects nearly 250,000 members in the individual markets, including in New York and California where 2018 open enrollment is still ongoing. Schlosser also downplayed concerns over the repeal of the ACA individual mandate in the GOP tax bill, saying it would not impact the stability of the individual markets.

The take-up rate of cyber insurance in the second half of 2017 remained relatively low at around 31%, according to a survey done by the Council of Insurance Agents & Brokers. The results were consistent with the results of a May survey that showed a take-up rate of 32% in the first half of this year. Even large-scale cyberattacks like the Equifax breach and the WannaCry and Petya ransomware attacks did not greatly influence adoption of cyber coverage, the latest survey results showed.

Elsewhere, a Bloomberg News report notes Chubb Ltd. is among at least three insurers experiencing an increase in costs related to claims from ransomware attacks and much of the cost surge is attributed to the rising price of bitcoin, a cryptocurrency that has become the preferred method of payment sought by cybercriminals.

Chubb Ltd.'s board authorized up to $1 billion of share buybacks through Dec. 31, 2018.

Humana Inc. completed a public offering of $800 million in senior notes.

Featured news

Roche snaps up Ignyta; Celgene's Revlimid fails cancer trial: Senate Majority Leader Mitch McConnell, R-Ky., told The Wall Street Journal that he was unlikely to bring up changes to Medicare or Social Security next year unless Democrats support them. House Speaker Paul Ryan, R-Wis., was hoping to make changes to entitlement programs as part of efforts to rein in government spending.

Financial news in other parts of the world

Asia-Pacific: NAB faces UK lawsuit; Taiwan central bank holds rates

Europe: Swiss regulator raps JPMorgan unit; BPCE gets new CEO; Banco BPI sells card biz

Middle East & Africa: Sanlam details Steinhoff exposure; SARB rebuffs nationalization demands

Latin America: Peru president survives vote; Gentera to buy minority stake in lender

The day ahead

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

In Asia, the Hang Seng increased 0.72% to 29,578.01, and the Nikkei 225 increased 0.16% to 22,902.76.

In Europe, around midday, the FTSE 100 was up 0.01% to 7,605.01, while the Euronext 100 was down 0.25% to 1,041.17.

On the macro front

The durable goods orders report, the personal income and outlays report, the new home sales report, the consumer sentiment report, the Kansas City Fed Manufacturing Index and the Baker-Hughes Rig Count report are due out today.