American National Exec: Company to Stop Selling Individual Health Plans

Two subsidiaries of American National Insurance Co. will stop selling individual medical expense health insurance plans due to the minimum medical loss ratio requirements contained in the new U.S. health reform law, an executive with the multiline insurer said.

American National Life Insurance Company of Texas and Standard Life and Accident Insurance Co. will discontinue selling these plans, starting June 30, American National Insurance said.

The 80% minimum medical loss ratio requirement "causes us to be uncomfortable" about the company's ability to make money on these plans in the future, Jim Pozzi, senior executive vice president and chief administrative officer of American National (NASDAQ: ANAT), told BestWire.

The individual health plans are mostly high-deductible, major medical products that are a small part of the corporation's overall business, he said. They comprise about one-third of American National's total health sales a year, or about $30 million in annualized premium, Pozzi said.

The decision to stop new sales was made "after careful consideration of the recent health care legislation and based on the knowledge that the companies' individual medical expense plans will not meet the requirements" of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, the company said.

Under the new law, small-group and individual plans must spend at least 80% of premiums on medical costs and large-group plans, 85%.

For publicly traded companies -- the medical loss ratio -- a measure of health care expenses as a percentage of premium revenue -- is watched closely by Wall Street analysts and seen as a key metric of profitability.

Pozzi wouldn't speculate on if he thinks other companies that sell similar plans may also exit the business.

American National said it continues to be committed to the health insurance market and will focus on Medicare supplement insurance and large group coverage, and other supplemental health plans

Companies of the Galveston, Texas-based American National sell, among other products, life insurance, annuities, health insurance, credit insurance and property/casualty insurance for personal lines, agribusiness, and targeted commercial exposures.

American National Insurance Co. currently has a Best's Financial Strength Rating of A (Excellent).

On the morning of April 20, American National's stock was trading at $112.62 a share, up 0.93% from the previous close.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])