The Texas Retired Teachers Association has expressed fears over a deal approved by state insurance regulators allowing HC2 Holdings to acquire United Teacher Associates Insurance Co.
The Texas Department of Insurance gave its approval for the acquisition in Dec. 21, with stipulations.
United Teacher Associates Insurance Co. is a carrier with 20,000 retired teachers as clients, holding long-term care policies that cover nursing home costs and other senior care-related expenses.
Texas Retired Teachers Association director Tim Lee expressed his worries that HC2 Holdings could demand higher premiums from policyholders after it acquires the educator-focused carrier. He also described the acquisition’s approval as “disappointing,” and called out the state’s Department of Insurance for failing to protect the interests of the involved policyholders.
In an interview with the American-Statesman, HC2 Holdings Inc. CEO Philip Falcone stated that he is committed towards supporting the carrier. Falcone - who has a colorful past - added that the company would be led by James Corcoran, a former insurance industry executive who once served as the insurance superintendent of New York state.
While Falcone has named an experienced head to run United Teacher Associates Insurance Co, it goes against one of the stipulations the Department of Insurance has laid out as terms for the acquisition.
According to an order signed by Doug Slape, deputy commissioner in charge of the Financial Regulation Division of the Department of Insurance, the sale would be allowed only if regulators retain the right to name an officer or director of the United Teacher Associates Insurance Co.
A spokesman for the department confirmed that Falcone is not listed as a director of officer of the company.
Another stipulation for the deal to work was that HC2 Holdings should maintain the carrier’s “total adjusted capital” at a minimum of 400%. Should it fall below 400%, the company would have five days to bolster reserves.
Falcone had admitted to the U.S. Securities and Exchange Commission in 2013 to “multiple acts of misconduct that harmed investors and interfered with the normal functioning of the securities markets” with his advisory firm. He was banned from the securities industry for a minimum of five years, and charged $18 million.
