by Richard Brown
Samsung Life to buy card affiliate stake
The heir apparent of Samsung Group continues to solidify family control as its life insurance arm is set to buy a stake in a credit card affiliate for $1.27 billion.
Samsung Life Insurance Co. Limited will add 43.4 million shares and increase its holding to 71.9%. It will acquire the shares in Samsung Card Co. from Samsung Electronics Co. for 35,500 won or $29.42 apiece, according to a filing Thursday.
Lee Jae Yong, the third-generation leader of Samsung Group, has already planned mergers, initial public offerings and the sell-off of parts of the chaebol, Bloomberg reported. The insurer said Thursday’s agreement will secure stable investment returns.
“Samsung Group is laying the groundwork for the Lees to have a greater control over the group by aligning the business structure,” said Lee Sang Hun, an analyst at HI Investment & Securities Co. in Seoul. Samsung C&T Corp., the de facto holding company, “will sit on top of that well-aligned businesses eventually, which would help Lee Jae Yong strengthening his power.”
After the purchase, Samsung Life will become the largest shareholder of Samsung’s financial units, holding 97.71% stake in Samsung Asset Management Co., 14.98% stake in Samsung Fire and Marine Insurance Co. and 11.4% stake in Samsung Securities Co.
Paulson reinsurance venture returns $470.3 million to investors
Billionaire and political donor John Paulson’s reinsurance venture PacRe Limited returned $470.3 million to investors in the fourth quarter.
Validus Holdings Limited, the Bermuda-based reinsurer that partnered with Paulson & Co, disclosed the amount in a statement Thursday.
Earlier this month, PacRe stopped writing new coverage while its insurance policies expired, two people familiar with the venture told Bloomberg, asking not to be identified due to private contracts.
Since 2014, U.S. officials have been targeting the venture, which was set up by Paulson’s hedge fund firm in 2012 with $500 million in capital.
Oregon Democrat Ron Wyden, who led the Senate Finance Committee at the time, urged the treasury department to crack down on PacRe and other companies established by hedge fund managers.
Wyden said the ventures were exploiting a loophole that allowed “billionaires to benefit from unwarranted and massive tax breaks.”
Paulson, a major donor to Republican candidates, has a net worth estimated at $9.8 billion, according to the Bloomberg Billionaires Index.
Aetna seals 4-year deal with Vitality Re
Aetna has entered into a four-year reinsurance arrangement with Vitality Re VII Limited as part of its long-term capital management strategy.
The transaction allows Aetna to cut its required capital and provides $200 million of collateralized excess of loss reinsurance coverage on a portion of Aetna’s group commercial health insurance business.
“Today’s transaction marks the successful completion of our seventh such reinsurance arrangement,” said Aetna’s Treasurer David Buda. “This reinsurance arrangement improves our capital efficiency and reduces our weighted average cost of capital.”
Vitality Re VII is a newly formed insurance company which issued health insurance-related notes in a private offering in connection with the transaction with Aetna.
AM Best withdraws ratings of Lifetime Healthcare subsidiaries
AM Best withdrew the ratings of Lifetime Healthcare, Inc.’s primary insurance subsidiaries upon management’s request to no longer participate in the agency’s interactive rating process.
The agency affirmed the financial strength rating of B++ and the issuer credit ratings of “bbb” of the insurance subsidiaries: Excellus Health Plan, Inc. (Excellus), MedAmerica Insurance Company, MedAmerica Insurance Company of New York, and MedAmerica Insurance Company of Florida.
The rating outlooks for all of the companies remain negative, according to AM Best.
AM Best said the ratings reflect Excellus’ strong market position in the central and upstate regions of New York as the state’s largest not-for-profit health insurer. Meanwhile, Lifetime’s long-term care subsidiaries, MedAmerica companies, continue to report statutory losses driven by the block’s poor performance.
