Assurant Inc. announced it plans to sell or shut down its Assurant Health division, which is based in downtown Milwaukee.
“Absent a sale of the health business segment, the company plans to substantially complete its exit from the health insurance market in 2016,” the New York-based firm said Tuesday.
Unless a buyer is found, the closure will mean a loss of about 1,200 jobs in the Milwaukee area. Assurant Health’s main office is at 501 W. Michigan St.
Assurant will focus its resources on niche housing and lifestyle protection offerings, where it holds market-leading positions to consistently generate specialty returns long term. Assurant said its sharper focus will enable the company to build upon its core capabilities to further capitalize on global consumer and market trends in the housing and lifestyle protection markets.
With nearly 1 million customers, Assurant Health provides a broad array of insurance coverage to individuals, families and small employers including major medical, short-term and supplemental plans. The company expects Assurant Health to report a net operating loss for the quarter in the range of $80 million to $90 million. Approximately half of the loss is attributable to a reduction in 2014 estimated recoveries from the Affordable Care Act (ACA) risk mitigation programs. The remainder reflects elevated claims on 2015 ACA policies. Absent a sale of Assurant Health, the company will begin the process this year to exit the health insurance market and will not participate in the next ACA open enrollment period beginning in November. The company’s exit will be substantially complete in 2016.
“We have established significant momentum in our specialty housing and lifestyle protection businesses where we have developed strong competitive positions in the U.S. and select international markets. Recognizing the wide array of additional growth opportunities in these areas, we will concentrate resources where we can generate sustainable specialty returns as we pursue our aspirations of outperformance,” said Assurant president and chief executive officer Alan Colberg. “The health and employee benefits business segments possess differentiated capabilities in their respective markets, but we do not believe they can meet our return targets at the pace we require. While this is a difficult decision, we believe they would be strong assets for new owners that are focused more exclusively on health care and employee benefits. During this process, Assurant remains dedicated to upholding our commitments to customers and policyholders.”
Assurant, a Fortune 500 company and a member of the S&P 500, is traded on the New York Stock Exchange under the symbol AIZ.
