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Health insurers' ambitions to gain scale hit by DOJ lawsuits; MetLife could take IPO route to separate US retail biz


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Health insurers' ambitions to gain scale hit by DOJ lawsuits; MetLife could take IPO route to separate US retail biz

In the news

TheU.S. Justice Department filed lawsuits to block the pending mergers of Anthem Inc./Cigna Corp. and Aetna Inc./Humana Inc.

Thedepartment has evaluateddivestiture ideas proposed by the companies and concluded thatthere was "zero confidence" they could preserve the status quo fornational and state health insurance markets, PrincipalDeputy Associate Attorney General Bill Baer said.

Matt Cantor, a partner andattorney at Constantine Cannon, believes Aetna and Humana might be able todefend their deal but he is skeptical about Anthem and Cigna's chances to winthe suit, CNBCreported.

The move delivers a blow toinsurers' plans to increase size, which they argued would allow them to trimcosts and deliver better products, TheWall Street Journal reported. If Aetna and Humana lose the suit, Aetnamay become reluctant to operate in the Affordable Care Act exchange business asa stand-alone company. If the Anthem/Cigna deal does not come through, Anthemmay repurchase its stock and consider other acquisitions in the Medicaid andMedicare space, while Cigna, with the help of existing cash and Anthem breakupfee, would likely pursue an acquisition of a Medicaid-focused insurer, orMedicare assets, according to the Journal.

announced it willrebrand its U.S.retail business after it is separated from the company. Sandler & O'Neill Partners analyst John Barnidge ina research note that this was another step forward for MetLife, adding that heexpects the separation will be most likely made through an IPO, given theannounced rebranding.

Evenif ACA premiums grow in the range of 10% to 15% in 2017, those premiums willstill be much lower than they would have been in the absence of the healthcarelaw, according to a report on HealthAffairs Blog.

Theaverage quarterly risk interest spread across catastrophe bonds issued in thesecond quarter was 8.40%, the highestaverage quarterly risk interest spread in four years, according to Aon Securities' latest report on the insurance-linked securities sector. Cat bond issuance in the second quarter was"relatively light" compared to the first quarter, with just $800million of risk capital issued across five deals, according to the report.

filed amotion and form ofcomplaint challenging the commonwealth of Puerto Rico's executiveorders diverting pledged toll revenue collateral that secures the payment ofbonds issued by the Puerto Rico Highways and Transportation Authority.

completed the sale of Tranzact Holdings LLC to an affiliate of privateequity firm Clayton Dubilier& Rice LLC.

AU.S. District Court rejected Evergreen Health Cooperative Inc.'s bid to postponepayment of its $24.2 million obligation to the Affordable Care Act's riskadjustment program. Evergreen is appealingRussell's ruling to the U.S. Court of Appeals for the 4th Circuit.

Sunrise,Fla.-based Sawgrass MutualInsurance Co., which maintained close ties to entered anew managing general agent agreement and filed at least two lawsuits in theaftermath of the reinsurer's sale to Endurance Specialty Holdings Ltd., alleging that a planto sell renewal rights would "eviscerate" and "effectivelygut" its business, regulatory filings indicate.

U.S.insurers hope international capital standards would be more like U.S.standards, but movement toward uniform standards continues, to an S&P Global MarketIntelligence report.

Finalexpense life insurance sales rose 5% in 2015, while policy count went up 4%,compared with 2014 results, according to a survey conducted by the Life InsurersCouncil, CSG Actuarial Inc. and Competiscan.

Switzerland-basedreinsurance investment manager Twelve Capital the issuance of a $21.3million Dodeka X private catastrophe bond, Artemis reported.

Financial news in other partsof the world


Europe:Postbank disposal rethink; AdminRe stake disposal plan; Bankia, Sabadell earnings

Middle East & Africa:Bank of Mozambique hikes ratesagain; Kenya eyes term limits for bank CEOs

The day ahead

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

InAsia, the Nikkei 225 dropped 1.09% to 16,627.25 and the Hang Seng decreased0.16% to 21,964.27.

InEurope, around midday, the FTSE 100 was up 0.42% to 6,728.27, and the Euronext100 was up 0.06% to 867.81.

On the macro front

ThePMI manufacturing index flash report is due out today.