NU Online News Service, March 5, 1:06 p.m. – SAFECO Corp., Seattle, has agreed to acquire a medical excess-loss business and a small block of group life insurance from Swiss Reinsurance Company, Zurich.
The value of the deal was not disclosed. SAFECO hopes to complete it in June.
The excess-loss unit, which protects self-funded employee health plans from catastrophic losses, collects about $240 million in annual premium revenue, and the group-life block generates about $10 million in annual premium revenue, SAFECO says.
Swiss Re itself ended up with the excess-loss and group-life business after it acquired Lincoln Re from Lincoln Financial Corp., Fort Wayne, Ind., according to SAFECO spokesman Paul Hollie.
SAFECO acquired another block of U.S. excess-loss business from the ING Groep N.V., Amsterdam, in 1999. SAFECO wrote a total of $280 million in excess-loss coverage for self-funded health plans in 2001, the company says.
So why is SAFECO buying excess-loss business when most experts are complaining about how very, very difficult the product is to manage?
“Overall, we’ve been very successful in this line of business,” Hollie says.
SAFECO had a loss ratio of only 66.3% on its excess-loss business in 2001, and the block coming from Swiss Re had a loss ratio of only 69%, Hollie adds.
SAFECO would be happy to take a look at other good blocks of excess-loss business, but “right now, we’re not actively pursuing an acquisition strategy,” Hollie says.