The Swiss Financial Market Supervisory Authority FINMA has in principle given approval for the planned merger between KPT and Sanitas. FINMA, however, has made its approval contingent upon fulfilment of strict conditions. It is now up to KPT and Sanitas to decide whether they will proceed with the merger under these conditions. FINMA will continue with the legal action taken against KPT on account of the structure of its employee participation scheme and rapidly bring it to a close.
Since the merger plan between KPT and Sanitas was announced in June 2010 in accordance with supervisory reporting, FINMA has been engaged in conducting the obligatory regulatory examination of the merger application. FINMA is not the regulatory authority for the basic insurances of KPT and Sanitas, but only supervises the companies of the groups that offer supplementary health insurance.
During the examination, FINMA's aim was to clarify a number of unusual facts that were of regulatory relevance. This proved to be a very complex undertaking which consequently delayed the progress of the regular approval procedure. Today FINMA has announced that it approves the merger provided the following conditions are met:
- Sanitas must increase its ageing reserves for policy holders insured with Sanitas Privatversicherungen AG.
- Internal transactions in the merged company of a certain size must be reported to the supervisory authority.
- The companies must ensure that technical provisions are used entirely for the benefit of the policy holders. FINMA must approve the tariffs and also the premiums for the supplementary health insurance. If technical provisions are formed from such approved premiums and are no longer needed, they may not be distributed to shareholders or employees, or be transferred to another company of the group, but must be used for the benefit of the policy holders to reduce premiums for instance. In this respect, the share repurchases provided for in the KPT employee participation scheme cannot be carried out as originally planned.
Further regulatory investigations
Next to the regulatory examination of the merger application, FINMA has performed other regulatory investigations at both insurance groups since the announcement of the planned alliance. In this case, the specific purpose was to ensure that its legal mandate to protect policy holders from insolvency risks and abusive practices is properly complied with.
In the case of Sanitas, the prime concern was to clarify certain issues concerning the financing of hospital products. After the necessary documents and calculations were presented, FINMA was able to clarify the open issues and define on this basis the merger conditions for Sanitas Privatversicherungen AG.
Concerning KPT, FINMA is investigating whether the employee participation scheme and other transactions violate insurance supervisory law. During this complex investigation, the supervisory authority has been in constant contact with KPT and obtained the information required. FINMA will conclude the legal action against KPT and its bodies if possible by the end of the first quarter of 2011. For the duration of the proceedings, the persons concerned may continue to be active as officers of the company and may also perform the function of office holders in the merged companies.
FINMA will provide information once the proceedings have been completed.
Tobias Lux, Media Spokesperson, Phone +41 (0)31 327 91 71, email@example.com