After a review of strategic alternatives for its health business, Assurant Inc. announced today that it will shut down its Milwaukee-based Assurant Health division in downtown Milwaukee over the next 18 months. The first phase of job reductions will occur this summer and affect an estimated 300 out of approximately 1,700 positions at Assurant Health.
Affected employees will be considered for open positions within Assurant, based on qualifications. Those unable to find another position will reportedly be offered severance, outplacement and job readiness support.
The New York-based firm first announced in April that it planned to sell or shut down the division.
To maximize shareholder value, Assurant will immediately begin to wind down its major medical operations and has reached an agreement in principle to sell certain business lines and assets to National General Holdings Corp., subject to final documentation and regulatory approval.
The company expects to substantially complete its exit of the health insurance market by the end of 2016. It will then sharpen its focus on housing and lifestyle specialty protection offerings.
Assurant estimates that total costs associated with its exit from the health insurance market will amount to $175 million to $250 million. These charges primarily include premium deficiency reserves, severance and retention, contract and lease terminations, and other transaction costs. The company estimates the total future incremental cash expenditures related to these costs will be $95 million to $110 million.
“Our decision to exit the health insurance market enables us to sharpen our focus on the housing and lifestyle markets, where we see the greatest opportunity for profitable growth. After a thorough review of alternatives for our health business, we believe the actions announced today allow us to uphold our commitments to policyholders while freeing up resources in 2016 to support our capital management strategy,” said Assurant president and chief executive officer Alan Colberg. “We remain strongly committed to ensuring a smooth and orderly transition for our customers, agents and employees.”
National General Holdings Corp., a specialty personal lines insurance holding company, will acquire Assurant Health’s supplemental and small group self-funded product lines and certain other assets including a proprietary small group sales channel. Assurant Health will continue sales of its supplemental and small group self-funded products as it finalizes the terms of the transaction with National General Holdings Corp. At the same time, as part of the wind-down process, Assurant Health will cease sales of its individual major medical, small group fully-insured and short-term medical health insurance policies on June 15 and will not participate in open enrollment under the Affordable Care Act for 2016.
The company will meet all claims, benefits, provider payments and agent commission responsibilities during these transitions. There will be no changes to Assurant Health policies or benefits currently in effect. Affected customers will receive letters from Assurant Health beginning the week of June 15. They can learn more at www.assuranthealth.com/nextsteps.