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Assurant expects $475M of dividends from runoff health biz in 2016

could collect asmuch as $475 million from its health segment in 2016 as it works toward exitingthe business altogether, executives said during a conference call to discussearnings.

TheNew York-based insurer, which is shiftingits focus to selling lifestyle and housing products, transferred $65 million ofdividends from its runoff health operations to the holding company in the firstquarter. Assurant could see another $410 million of intracompany dividendsthroughout the rest of the year, based largely on money it expects to receivefrom an Affordable Care Act-created reinsurance program aimed at financiallysupporting state health exchange participants.

Assuranthad $487 million of recoverables related to health care risk mitigationpayments, Treasurer and CFO Christopher Pagano said on the April 27 call. Itreceived $29 million connected to the reinsurance program in the first quarterand just took in another $38 million.

Assurantshould receive its final payment notification by the end of the June, with theremaining reimbursements starting in the third quarter, he added. The ultimateamount that it collects from the government will depend on how its 2015 claimsdevelop and whether it owes any money under a separate ACA-created supportprogram called "risk adjustment." The risk adjustment programtransfers money between companies, depending on how well or poorly theyperformed relative to the average.

"Itis the primary risk to the capital plan," Pagano said of the governmentpayments. "The risk adjuster estimate is the one that's got a little bitmore potential variability because it's us relative to the market as opposed tothe reinsurance recoverable, which is effectively a quota share."

Assuranthas rapidly shrunk its exposure to the health care market since pivoting awayfrom its health and employee benefits business in favor of lifestyle protectionand housing businesses that it believes will be more profitable in the longrun. The company boasted just 26,000 health insurance customers at the end ofthe first quarter, down 93% from the end of 2015.

Assurantis also anticipating dividends from its employee benefits segment during thesecond quarter. It closed the saleof the business in March and plans to transfer the proceeds from thattransaction to the holding company during the next couple months.