A Medicare plan player is disposing of a block of in-force life insurance policies and annuity contracts.
Universal American Corp., Rye Brook, N.Y., says insurance subsidiaries will generate about $55 million in statutory profits by reinsurance the life and annuity block through Commonwealth Annuity and Life Insurance Company, Southborough, Mass., a unit of Goldman Sachs Group Inc., New York.
Universal American hopes to get the regulatory approval it needs to complete the reinsurance deal by March 31, 2009.
Universal American is making the deal to increase capital levels and help it focus on its core Medicare plan operations and other core operations, the company says.
Universal American will have to write off some unamortized deferred acquisition costs, and the DAC write-off will lead to a loss of about $5 million in financial reports prepared according to the Generally Accepted Accounting Principles standard, Universal American says.
But the transaction should reduce company capital needs by more than $10 million, Universal American says.