VHI free to compete in open insurance market following regulatory change
Health insurer VHI has become a regulated entity, under the supervision of the Central Bank of Ireland.
The move follows a lengthy process, and came after the insurer secured €90m of capital from Warren Buffett’s Berkshire Hathaway in the form of a seven year subordinated loan.
It means VHI, which has operated on a statutory basis since it was set up by the State in 1957 can now compete across the insurance markets, outside of health.
The newly authorised entities will commence to trade from July 31 2015.
Commenting on VHI’s authorisation by the Central Bank of Ireland, John O’ Dwyer, Chief Executive said: “As the largest general insurance company in Ireland, authorisation will put the business in a strong position to deliver on Vhi’s business strategy over the next five years and beyond.
This has been a complex project completed during a challenging economic period but today is a very important day in the history and development of Vhi. We are particularly pleased that Berkshire Hathaway has extended its relationship with us through reinsurance and subordinated debt. This is a strong vote of confidence in the company and its future. The ability to raise this private finance, together with our strong financial performance in the past three years, has enabled us to meet the solvency requirements of the Central Bank of Ireland.”
In financial results for 2014 VHI reported a net surplus of €49.8m, down from €65m in 2013. The surplus was added to reserves. Total gross earned premiums were €1.462bn. At the end of December 2014 Vhi Healthcare had reserves of €453.7m.
Total gross claims incurred in 2014 came to €1.377 billion, up by 0.8% compared with €1.366 billion in 2013. The increase in claims costs on the previous year includes the increases in Public Hospital Charges introduced by Government in 2014.