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Wells Fargo sales scandal hits Prudential Financial; Aetna defends exchange exit

In the news

Following news of Wells Fargo & Co.'s fraudulent sales practices, Prudential Financial Inc. — which sells a low-cost life insurance policy to the bank's retail customers as part of a joint venture — called for an internal review of its transactions with the bank and found that it was affected by the fraudulent activity, The New York Times reported, citing plaintiffs in a wrongful termination case against the insurer. Prudential Financial is facing a lawsuit filed by three former managers who alleged that they were fired when they asked the insurer to further investigate irregularities in policy accounts sold through Wells Fargo.


Aetna Inc. CEO Mark Bertolini defended the company's decision to pull out from ACA health insurance exchanges, saying the move was driven by increasing losses Aetna was incurring through the exchanges and was not a retaliation to government efforts to block its planned takeover of Humana Inc., Bloomberg News reported.


The National Association of Insurance Commissioners hosted executives from the Association of Health Insurance and the Blue Cross Blue Shield Association to prepare for any transition or repeal of the Affordable Care Act, with hopes of keeping the market stable and prices affordable.

The Wall Street Journal reported that insurers and other health-industry groups have intensified their lobbying efforts to urge President-elect Donald Trump's new administration to be careful in handling the repeal or replacement of the healthcare law. Molina Healthcare Inc. CEO Joseph Molina warned that insurers could exit the individual insurance market if the government takes the wrong steps.

Some congressional Republicans are concerned that the transition period between a repeal vote and the implementation of a new healthcare system could expose the party to angry voters and unsettled health insurers, The Associated Press reported. There have been calls for a transition period, but Republicans are divided as to how long the period should be.

In more regulatory news, the U.S. Treasury and the Office of the United States Trade Representative are expected to report as early as Dec. 12 progress made on a bilateral insurance agreement between the European Union and the U.S. on insurance and reinsurance supervision matters.

Michael Consedine, the incoming CEO of the National Association of Insurance Commissioners, failed to identify precise priorities for the organization but is expected to focus on retirement security and the role of insurance for the aging population.


M.R. "Hank" Greenberg and New York State Attorney General Eric Schneiderman agreed to explore a potential resolution via mediation of the civil fraud lawsuit filed against the former American International Group Inc. CEO for allegedly misleading shareholders over the state of the insurer's financial performance, The Wall Street Journal reported. Former New York Attorney General Eliot Spitzer sued Greenberg for allegedly making shareholders believe that AIG's core operating results were better than they were.


NI Holdings Inc. has filed a Form S-1 related to an initial public offering of up to 10,350,000 common shares at a price of $10.00 per share. NI Holdings is a company formed in connection with the conversion of Nodak Mutual Insurance Co. from a mutual to stock form of organization and the creation of a mutual holding company.

Athene Holding Ltd. CEO James Belardi said the company will now focus on expanding "as aggressively, or more" on both organic and inorganic basis following its IPO, the Financial Times reported. The CEO said the company has $2.5 billion of "dry powder" that can be deployed.


In deal news, the Beechwood reinsurance companies are in talks with large insurance and private equity firms to sell most or all of their operations, Reuters reported. Beechwood Re Ltd. is the Beechwood group's reinsurer licensed by the Cayman Islands Monetary Authority, while Beechwood Bermuda International Ltd. is licensed by the Bermuda Monetary Authority.

Less than one year after Auto-Owners Insurance Co. expanded the scope of its product offerings by way of an acquisition, the Lansing, Mich.-based company announced that it would broaden its geographic reach through an affiliation. Subject to certain closing conditions, Auto-Owners plans to complete the affiliation with the group led by Concord, N.H.-based Concord General Mutual Insurance Co. in the second quarter of 2017.

Liberty Mutual Holding Co. Inc.'s agreement to buy Ironshore Inc. is a deal that could be a model for insurance mergers in the near term, industry analysts said.


The U.S. Department of Health and Human Services approved proposed changes to Arkansas Works including letting the state charge premiums to certain patients and requiring participants with no income to attend job training and placement programs, The Associated Press reported, citing Arkansas Gov. Asa Hutchinson. Arkansas Works is the state's Medicaid expansion program.

Over in North Carolina, the state Supreme Court upheld a lower-level appeals court's ruling denying insurers' bid to increase homeowners' premiums in the state by 25% on average, according to the AP. Insurers sued to contest outgoing state Insurance Commissioner Wayne Goodwin's decision to reject their proposed increase in 2014.

Featured news

Capsugel gets a suitor; Sanofi cuts diabetes staff: Sanofi plans to reduce the number of staff at its U.S. diabetes division by 20%.

Financial news in other parts of the world

Asia-Pacific: China to roll out interbank yuan trading; ASEAN to cut nontariff barriers

Middle East & Africa: Non-OPEC countries join in oil cuts; Gambian president rejects loss

Europe: UniCredit, Amundi strike Pioneer deal; UK banks could face fresh PPI bill

Latin America: Banco do Brasil expects lower payroll costs; Fitch cuts outlook on Mexico

The day ahead

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

In Asia, the Hang Seng fell 1.44% to 22,433.02, while the Nikkei 225 increased 0.84% to 19,155.03.

In Europe, around midday, the FTSE 100 was down 0.32% to 6,931.70, but the Euronext 100 was up by 0.05% to 913.56.

On the macro front

The U.S. Treasury's budget data for November is due out today.