By Brazil Stock Guide – Brazil’s health insurance regulator ANS has placed Select Operadora de Plano de Saúde under a special financial supervision regime, marking a further escalation in the crisis surrounding the health insurer.
The measure was adopted after ANS identified what it described as “serious economic, financial and administrative irregularities” that could jeopardize the continuity or quality of healthcare services provided to policyholders.
The decision was approved by the regulator’s board on September 18 and published in Brazil’s Official Gazette on Tuesday, September 22. It took effect immediately.
The move significantly increases regulatory pressure on Select at a time when the company is already facing scrutiny over its operations, finances and attempted restructuring.
Last Friday, Brazil Stock Guide reported that financial institutions cited by Select as being involved in a new phase of the company’s restructuring were, in fact, not participating in the process.
Select had named BTG Pactual, Planner and Banco ABC Brasil in an institutional statement describing financial support and a broader reorganization of the company.
Brazil Stock Guide’s reporting showed, however, that the banks were not part of the restructuring as presented by Select.
BTG said it was not financing Select’s reorganization. Following questions about the statement, Select also removed references to Planner and Banco ABC Brasil and issued a clarification saying it had grouped together discussions that were at different stages and of different nature.
The banks had not joined and later withdrawn from the restructuring. Rather, they had never been involved in the arrangement in the way Select’s original communication suggested.
Regulatory pressure intensifies
The latest ANS decision adds another layer to the regulatory intervention surrounding the insurer.
Select had already been placed under technical supervision earlier this month after ANS identified serious administrative and healthcare-service irregularities that it said could threaten the continuity or quality of care provided to beneficiaries.
The company is therefore now subject to two separate special regulatory regimes.
Technical supervision focuses primarily on operational and healthcare-delivery problems, while the newly imposed financial supervision regime addresses the company’s economic and financial condition.
The resolution published on Tuesday does not specify which financial indicators or events triggered the measure.
The decision refers to administrative proceeding No. 33910.013874/2018-51 and states that the regulator found serious economic, financial and administrative problems.
Under Brazil’s health insurance rules, the regime known locally as “direção fiscal” allows ANS to appoint a supervisor to closely monitor an insurer’s finances and require corrective measures.
The appointed supervisor does not directly take over the company’s management, but the regime represents one of the regulator’s strongest tools for dealing with financially troubled health insurers.
Restructuring increasingly under strain
Select had been seeking to present a plan to reorganize its operations and liabilities.
That process had already run into regulatory obstacles.
ANS previously said it had not recognized any change in control at Select and that, on July 31, it rejected a request for another party to assume control of the insurer.
Select later announced what it called a “new administrative phase” and included BTG Pactual, Planner and Banco ABC Brasil in a communication about financial support and restructuring.
Brazil Stock Guide subsequently found that the banks were not participating in the restructuring as the announcement suggested.
After questions were raised, Select issued a new statement, removed references to the financial institutions and said Vítrea was the company’s sole administrator.
The decision to impose financial supervision only days later further weakens the stabilization narrative Select had been trying to present.
In addition to the healthcare and administrative problems already formally identified by ANS, the regulator is now also explicitly acknowledging serious economic and financial irregularities at the insurer.
Brazilian regulation allows ANS to adopt further measures if an insurer under a special regime fails to restore its financial and operational position, including portfolio transfers and, in more severe cases, extrajudicial liquidation.
Tuesday’s resolution, however, orders only the financial supervision regime at this stage.
For Select, the sequence of events points to a rapid escalation of the crisis.
Within a matter of weeks, the company saw a proposed change of control rejected by the regulator, was placed under technical supervision, had to correct a public statement that associated banks with its restructuring, and has now been placed under special financial supervision as well.
What Select had presented as a corporate restructuring is increasingly unfolding under intensifying regulatory intervention and growing questions over the insurer’s financial and operational stability.
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