Judge Rosemary Collyer of the U.S. District Court for theDistrict of Columbia affirmedthe Financial Stability Oversight Council's conclusion that MetLife Inc. is eligible for designation, but it was thecouncil's "unacknowledged departure from its guidance and express refusal toconsider cost" that triggered her decision to overturn the company's designation,according to the text of decision that was unsealed with no redactions. A TreasuryDepartment spokesperson formally announced the administration's decision to appealthe ruling late, but there was no timetable provided.
MetLife Chairman and CEO Steven Kandarian facedskeptics in his own boardroom before he sued regulators over the SIFI tag, accordingto the The Wall Street Journal, whichdescribed the lawsuit as a "major gamble" for the CEO, who was known forhis caution and reserve. The CEO reportedly took his time in making sure that thedirectors were comfortable with the decision, reassuring them that the insurer hada solid case. Morgan StanleyPresident Colm Kelleher said the court ruling vindicated Kandarian's decision tofight.
A BloombergViewpost said MetLife's win is a "troubling development" that the governmentmust reverse. Collyer "may have poked a big hole in reforms aimed at protectingmillions of Americans from the next financial crisis," according to the article.The FSOC have to appeal the ruling to prevent other insurers from following in MetLife'sfootsteps.
Hawaii Insurance Commissioner Gordon Ito announced thatFamily Health Hawaii MBSwas ordered into liquidation.State First Circuit Court Judge Karen Nakasone signed the order authorizing Itoto take control of the company's assets as the liquidator.
Family Health Hawaii President and CEO J. P. Schmidt toldPacific Business News that the companywas "well received," but a Affordable Care Act provision that prohibitsinsurers from engaging in medical underwriting and the health care law's risk adjustment program provedto be the undoing of the company. Schmidt said the provisions are unconstitutionaland could "destroy" the small business group insurance market in the state.
Standard & Poor's Ratings Services does not expectto change its ratings on U.S. life insurers as a result of the Department of Labor'snew fiduciary rules, but sees potentialratings implications in the next couple of years depending on how lifeinsurers adjust to the new regulation.
Patriot NationalInc. said the committee of independent directors overseeing strategicvalue-creating initiatives continues to explorestrategic alternatives for the company to maximize value for shareholders, includinga possible sale.
Chubb Ltd.CEO Evan Greenberg said in an annual letter to shareholders that supply is outof balance with demand in the insurance industry in an increasingly competitiveenvironment amid the absence of major natural catastrophes. He said the supply-demandimbalance produced headwinds that will likely prevail for a number of years. Greenbergalso said obtaining financing may become more challenging. "We may be at thebeginning of a great unwind in credit availability," the CEO said. "Ifso, that bodes poorly for future growth and the interest rate outlook."
The pay package of TheHartford Financial Services Group Inc. Chairman and CEO ChristopherSwift nearlydoubled to $10 million in 2015, Bloomberg News reported. According to the insurer'sfiling, the independentdirectors approved an annual incentive plan award for Swift of about $2.5 million,which is 117% of the $2.1 million target. In approving the award, the independentdirectors considered that the insurer "delivered strong financial performanceand exceeded the annual operating plan" under Swift's leadership.
The U.S.Government Accountability Office discovered significant cybersecurityweaknesses in the health insurance websites of California, Kentucky and Vermontthat could allow hackers to access consumers' personal information, The AssociatedPress reported.
ArkansasHouse voted70-30 in favor of Gov. Asa Hutchinson's plan to rework the state's hybrid Medicaidexpansion, and the state Senate approved an identical bill, The Associated Pressreported.
OklahomaHealth Care Authority CEO Nico Gomez said the state's Medicaidprogram has been hit with budget cuts, leading to reduced benefits, BloombergPoliticsreported. He proposed a plan for Oklahomans who are on Medicaid or uninsured toreceive subsidized insurance through Insure Oklahoma, which is largely funded bytobacco taxes. He said his proposal would reduce the Medicaid rolls in the state,whose budget has suffered from years of tax cuts.
New projectionsby the Congressional Budget Office and the Joint Committee on Taxation suggest thatthe cost of Medicaid expansion over the next decade will be significantly higherthan initially expected, which raises concerns about the program's financial viability,Justin Haskins, executive editor of the Heartland Institute, wrote in an opinionpiece published on The Wall Street Journal.
In other parts of the world
The total number of people who sell insurance products in Chinaincreased 41% to 7.1 million as of the end of the first quarter, the Securities Daily reported.
Lloyds BankingGroup Plc could take the M&A route to expand its insurance business,Bloomberg reported,citing "a person with knowledge of the matter."
The day ahead
Earlymorning futures indicators pointed to a higher opening for the U.S. market.
In Asia,the Hang Seng rose 0.48% to 20,364.02. The Nikkei 225 climbed 0.46% to 15,821.52.
In Europeas of midday, the FTSE 100 was up 0.59% to 6,172.90, and the Euronext 100 had increased0.73% to 845.06.
On the macro front
The wholesaletrade report is due out today.
S&P Ratings and Global MarketIntelligence are owned by McGraw Hill Financial Inc.