State-owned health insurance group VHI has been given an extra month by the Government to raise the capital necessary to complete its switch to being a regulated non-life insurer as per an EU ruling in 2011.
A spokesman for the Department of Health confirmed that Minister for Health Leo Varadkar has extended until July 31st the date by which the VHI must have its capital in place to comply with Central Bank of Ireland rules as a regulated entity.
The Central Bank authorised the VHI on June 22nd, with the health insurer agreeing to have its capital in place within a certain timeframe. VHI had applied for authorisation in May 2014.
It is understood that VHI is seeking to raise close to €100 million to meet the Central Bank’s capital requirements but the company has declined to confirm this figure. VHI is thought to be seeking to raise this funding from capital markets.
“A certificate of authorisation has been granted and VHI is working closely with the Central Bank of Ireland to finalise all aspects of its authorisation,” VHI said.
Insurance intermediary
The Central Bank has authorised VHI Insurance as a non-life insurer and registered VHI Healthcare Ltd as an insurance intermediary. The insurance business of the current VHI will transfer to these two regulated entities when the necessary capital is in place.
A spokesman for the Department of Health said VHI is “committed to self-funding this capital requirement” and was working with the Central Bank on the matter.
“Separately, there is a requirement to extend the date by which VHI has the capital in place in amending regulations,” he said. “The date has been extended to July 31st to allow VHI to complete this process. The statutory order will be laid before the Houses of the Oireachtas in the coming days.”
In February 2010, the European Commission took a case against Ireland on the continuing exemption of State-owned VHI from the application of EU rules on non-life insurance. This followed complaints from rival insurers here about VHI's exemption from being a regulated entity.
On September 29th, 2011, the European Court of Justice found that Ireland had failed to fulfil its obligations under relevant directives in applying EU insurance legislation in its entirety to all companies on a non-discriminatory basis.
The State committed to having VHI authorised by the end of 2013 before extending the date on a number of occasions.
VHI is the biggest health insurer in Ireland with more than 1 million customers. It recorded a surplus after tax of €65 million in 2014 on premium income of €1.49 billion.
