WellPoint Takes Another Hit -- This Time From Fannie and Freddie

As if things weren't already bad enough for health-insurance companies like WellPoint, they now have yet another hit to absorb: Losses due to the federal takeover of Fannie Mae and Freddie Mac.

Yesterday, WellPoint acknowledged in an SEC filing that it will write off its holdings of preferred shares in the two mortgage-security entities -- shares that are now worthless following their nationalization earlier this week. WellPoint estimated that its holdings had a cost basis of $243 million, but also that those securities have declined in value by $211 million as of Sept. 8.

None of this is exactly surprising -- health-insurance companies, after all, are basically claims-paying machines sitting on huge piles of cash (and investments), most of which sloshes back and forth from policyholder to beneficiary like unbaled water in a leaky rowboat. So it's highly likely that WellPoint won't be the last health plan to make such an abashed disclosure.

(Hat tip: Indianapolis Star)