Leading medical private health insurance companies

After the first vain attempt to toxic and asset managers, then, without voting rights, the investors in weak health insurance companies banks, the trio traveling exhibition of the President of the Federal Reserve, Ben S. Bernanke, the president of the Federal Deposit Insurance Corporation, Sheila C. Bair, and the U.S. Treasury Secretary Henry M. Paulson Jr. has at last weekend to himself as a new insurance company - in the following trio BBP Insurance Co.

The health insurance company of any kind based on so-called "quota agreements," whereby one party commits itself to a portion of the loss that the other party may, under certain circumstances, a certain.

An agreement on health insurance, for example. In the scenario, the simplest, a person buys a system of health insurance, to protect itself, in part against the cost of medical treatment suspends, if he is ill.

The insured pays a fee, or "premium" to the insurance company. In return, the insurer indicated suburbs to cover the necessary expenses for medical care needed by the insured in the event of illness. Normally, the policy-year contract "openness" which must be satisfied pocket by the patient before the insurer covers all costs. The May contract then tell the insurer a certain percentage, and approved the cost of medical treatment on the exemption until a maximum life span. The rest of the portion of the costs for medical treatment of the patient. This part is used as a co-insurance or co-payment.

The agreement last weekend between the trio and BBP Citigroup framework requires a similar contract.

Here are the words of Citigroup Insurance: The Bank has its balance sheet to around 2 billion U.S. dollars in assets of 306 billion U.S. dollars, mainly related to real estate, with undetermined value. In cases where such goods as a value of less than $ 306 billion, the American taxpayers cover - is to reimburse - Citigroup for certain losses. But before you with the repayment of the taxpayers of Citigroup for whatever, up to 29 billion U.S. dollars in losses from Citigroup. (It is about the liberation.) Following the $ 29 billion is reached, the taxpayer will absorb 90 percent of all additional losses, and Citigroup takes 10 percent (which is the co-insurance).

As with health insurance, there are up to an amount of potential losses that taxpayers will bear, but this has not been determined. After the "summary of conditions", published by the Ministry of Finance of the United States that the maximum of the exhibition is "based on an assessment [of the $ 306 billion book value of assets] by agreement between the institutions [ie, Citigroup] and SGA [the Government of the United States]. "

The premium of Citigroup Asset value for this insurance is an annual payment in cash of 560 million U.S. dollars, as a dividend of 8 per cent per year to $ 7 billion non-voting preferred shares of stocks, by Citigroup - $ 4 billion in the finance department and 3 billion U.S. dollars into the FDIC

It is not all BBP trio is busy. After the first on the hat of the insurers, BBP trio then on the hat of justice even more investors. The trio has directly with another 20 billion U.S. dollars of liquidity into Citigroup over 25 billion U.S. dollars rather injected. In return for the 20 billion U.S. dollars, the U.S. government, the non-voting preferred shares, which pay an annual dividend of 8 percent to 20 billion U.S. dollars, 1.6 billion U.S. dollars per year.

The two of the insurance - and equity investments door were tightened even further, with something called "10 years ran" You can Ministry of Finance of the United States to buy up to 254 million shares of Citigroup stock together with $ 10.61 at any time Over the next 10 years. The hope is that the market price of Citigroup stock is about $ 10.61 within the time, with the government to profit by acquiring shares in the bank and the resale at a higher price. Although the Ministry of Finance of the "summary of conditions" is not quite clear on this point, one thing may be that some 66 million of these options are part of the premium paid to the value of the assets of the insurance contract.

The cartel is this new trio BBP insurance raises two questions.

First: Is there no limit to the responsibility of the quotas, which the trio BBP (or its successor to Obama administration) can be at the expense of American taxpayers in this new sector?

The original operation toxic to the acquisition of assets by the Congress was beaten in the Treasury Inspector General's own words, "a mess." But also, at least there was a law $ 700 billion on this and, at least in principle, if not in reality. By contrast, there is a limit to the size of the book from the insurance company, to the BBP trio insurance can be the taxpayer, the draftsman final agreement on these insurance? I believe that there is something to fear.