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Anthem forms pharmacy benefits manager biz; Assurant to acquire Warranty Group

Anthem Inc. confirmed that it will not renew its current pharmacy benefits management contract with Express Scripts Holding Co. as it plans to form a new pharmacy benefits manager. The new pharmacy benefits manager to be formed by Anthem, IngenioRx, will begin offering PBM solutions in 2020. IngenioRx will serve customers of Anthem-affiliated health plans and non-Anthem customers.

In North Dakota, Insurance Commissioner Jon Godfread notified Blue Cross Blue Shield of North Dakota, Medica and Sanford Health Plan that he will deny any additional rate increases for individual ACA plans to be offered at the state's exchange, starting Jan. 1, 2018, after President Donald Trump's decision to end the ACA cost-sharing reduction payments. ACA rates in the state will rise an average 7.9% to 22.6% in the individual market and between 2.3% and 11.8% in the small-group plan, Godfread said.

In response to Godfread's decision, Blue Cross Blue Shield said it will continue its ACA participation in the state's federal marketplace and plans to absorb the loss of ACA subsidies, The Associated Press reported. Medica has decided to pull out of the federal marketplace in North Dakota and Sanford Health Plan is still considering its options, according to the report.

Over in Washington, Insurance Commissioner Mike Kreidler warned state consumers of premium rate increases of 9% to 27% on silver plans offered at the state's ACA health exchange after Trump's decision on ACA subsidies, The Seattle Times reported. Kreidler has also directed health insurers offering ACA plans in 2018 to charge higher rates in response to Trump's move.

Elsewhere, the New Jersey Department of Banking and Insurance approved average rate increases of 24.3% for Horizon Blue Cross Blue Shield of New Jersey and 17.1% rate hike for Independence Blue Cross unit AmeriHealth New Jersey, reported. Horizon Healthcare Services Inc. does business as Horizon Blue Cross Blue Shield of New Jersey. AmeriHealth HMO Inc. and AmeriHealth Insurance Co. of New Jersey are collectively known as AmeriHealth New Jersey.

Shares of companies tied to embattled Affordable Care Act exchange markets rose modestly after Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., said they reached an agreement on a bipartisan deal to fund for two years the subsidies provided under the ACA that help low-income Americans cover the costs of their prescription drugs and doctor visits. But the bipartisan Senate deal may already be in trouble on Capitol Hill, with some House members declaring they would not support it and others giving it a lukewarm response. President Donald Trump has also sent mixed signals about his support for the agreement.

Earnings: MGIC Investment Corp. reported third-quarter adjusted net operating income of $120.7 million, or 32 cents per share, compared to $102.4 million, or 25 cents per share, in the year-ago quarter.

RLI Corp. is also expected to report earnings today.

Deals: Assurant Inc. agreed to buy Warranty Group, which provides protection plans and related programs, to advance its strategy in the global lifestyle market. The deal values Warranty Group at $1.9 billion in equity value, or $2.5 billion of enterprise value, including existing debt.

American International Group Inc. is reportedly considering bidding for Suncorp Group Ltd.'s life insurance operations. AIG recently met with investment banking advisers and other life insurance investors in Australia to discuss the prospects of the potential Suncorp deal, The Australian Financial Review's Street Talk blog reported, citing sources.

Estimated insured losses in Georgia from Hurricane Irma have increased to more than $550 million as insurers have reported about 103,163 claims, state Insurance Commissioner Ralph Hudgens said in a statement. The estimate is based on claims data reported to the state's insurance department by property and casualty insurance companies from damage to insured homes, vehicles and businesses.

XL Catlin plans to launch a $150 million catastrophe bond, Galileo Re Ltd. series 2017-1, Artemis reported, citing sources. This is the first of XL Catlin's cat bonds to include severe thunderstorm protection, according to the report. XL Catlin is the global brand used by XL Group Ltd insurance and reinsurance companies.

In people news, former Eli Lilly and Co. executive Alex Azar has emerged as a possible leading contender to be President Trump's next secretary of Health and Human Services following the resignation of Tom Price in September, who departed under a cloud of scandal involving his taxpayer-funded flights on chartered and government jets.

State and federal regulators are playing an increasingly important role in the execution of insurance M&A transactions and the growth of insurtech companies. "There's not a single Form A we do these days that doesn't have a complex component to it," Nicholas Potter, a partner at Debevoise & Plimpton LLP, said during S&P Global Market Intelligence's 8th Annual Insurance M&A Symposium. Potter was referencing the applications that insurers are required to file with regulators in their states of domicile upon a proposed change in control.

Featured news

Former Lilly exec Azar may lead HHS; Senate healthcare deal may be in trouble: Rep. Tom Marino, R-Pa., withdrew his name from consideration as the director of the National Office of Drug Control Policy, the White House drug czar. Marino came under fire after a probe revealed that he had pushed a bill through Congress that weakened the Drug Enforcement Administration's ability to rein in distributors selling opioids to rogue pharmacies.

Financial news in other parts of the world

Asia-Pacific: Thailand denies alleged currency manipulation; AIG eyes Suncorp's life biz

Europe: No MiFID II delay; Catalonia not backing down; Handelsbanken Q3 profit slips

Middle East & Africa: Commercial Bank posts profit drop; South Africa 'cautious' about monetary policy

The day ahead

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

In Asia, the Hang Seng rose 0.05% to 28,711.76, and the Nikkei 225 was up 0.13% to 21,363.05.

In Europe, as of midday, the FTSE 100 climbed 0.32% to 7,540.50, and the Euronext 100 had grown 0.48% to 1,054.99.

On the macro front

The MBA mortgage applications report, the Housing Starts report, the Atlanta Fed's business inflation expectations survey, the EIA petroleum status report, the Beige Book and the Treasury budget report are due out today.