U.S. domiciled health insurer Oscar Health has entered into a new multi-year quota share reinsurance agreement with Berkshire Hathaway’s National Indemnity Company (NICO), reports Forbes.
Oscar Health established itself as a startup with a focus on providing Obamacare coverage, but according to reports, is looking to expand within the individual and small groups market.
The firm entered into a reinsurance arrangement with AXA in January 2018, and has now signed its second reinsurance agreement, bringing in Berkshire Hathaway’s reinsurance subsidiary, NICO.
In a statement accompanying the insurer’s recent financial results, Chief Financial Officer (CFO) of Oscar Health, Sid Sankaran said: “This quarter, we are excited to announce a new multi-year quota-share reinsurance agreement on the portfolio with Berkshire Hathaway’s NICO subsidiary, the largest U.S. reinsurer.”
He explained that the partnership with NICO is currently being reviewed by regulators, but that if approved, it will see Oscar cede 50% of its risk on the portfolio to NICO.
“This will allow Oscar additional capital flexibility to fuel our growth and further refine our already best-in-class technology stack. This marks the second material reinsurance agreement for Oscar after we brought on AXA in January 2018 and is a continued vote of confidence in our ambition to deliver profitable growth supported by our industry leading technology and customer experience,” said Sankaran.
Forbes states that a spokeswoman for Oscar would not confirm exactly where the health insurer plans to grow into in the coming months and years, but its increased use of reinsurance protection suggests that it will have a greater level of capital to expand, and also to invest in new technologies.
At this time, Oscar provides individual Obamacare protection in 14 markets across nine U.S. states.