Rhode Island insurance regulators are reviewing a request by UnitedHealthcare of New England to transfer $36.8 million in profits generated in the state to its parent company UnitedHealth Group in Minnetonka, Minn.
The amount equals about 41% of the Rhode Island insurers total surplus, which now stands at about $90 million, according to the state Office of the Health Insurance Commissioner. State law requires insurers to obtain special permission to transfer out of state so-called extraordinary dividends, or funds that exceed either 10% of their surplus or their net income from the previous year.
In October 2006, the Rhode Island insurer transferred to its parent company an ordinary dividend of $17.1 million, or its entire net income earned in 2005. UnitedHealth spokeswoman Debora Spano said the insurer would spend 10% of the dividend on healthcare technology programs in Rhode Island if its request is approved. Spano also said the insurer would still have ample reserves to guarantee its continued solvency.
Critics oppose the move, saying Rhode Island consumers who spend thousands of dollars a year for insurance coverage expect the money to be spent in state, perhaps to lower premiums. A public hearing is scheduled for Tuesday and a final decision is expected by March 30. -- by Laura B. Benko