If you are not yet a member, please visit our website at www.workplacebenefits.org. The fees to become a member of The Workplace Benefits Association are waived for one year. If a member decides to renew at the end of one year, the membership fee is only $29.00 per year, however there is no obligation to renew a membership, and no payment information is collected until a member does decide to renew. www.workplacebenefits.org The Members of the Workplace Benefits Association strive to bring an integrated solution through a master plan that involves a standardized employer guide and checklist. This procedure ensures that no important area is overlooked while providing the flexibility for each employer and employee to create an individual solution to their benefits and financial planning. (Proviso - The Workplace Benefits Association does not sell workplace benefits and is not in the business of offering advice) Daily Quote: "A promise made is a debt unpaid." - - Robert W. Service 1. UnitedHealth, others to extend Medicare drug date Thu Dec 28, 2006 4:29pm ET - Herb Kuhn, acting deputy administrator of the Centers for Medicare and Medicaid Services, said the enrollment deadline would be extended until February 15 for an estimated 250,000 people covered by Medicare Part D drug plans. The Part D program, which allows health insurers to offer drug coverage under Medicare oversight, was launched in 2006 but allows participants to enroll or change plans once a year. Advocates say the plans help make prescription drugs more affordable for the elderly, but critics have charged the program was designed to help companies to maximize profits. UnitedHealth is the biggest provider of Medicare drug plans with 5.75 million people enrolled as of September 30. The company previously said it expected to add as many as 750,000 people during the open enrollment period scheduled to end January 1. However, because UnitedHealth and some other providers failed to mail timely information to current enrollees so they could compare the cost and coverage of plans for 2007, those enrollees will get 45 more days to make a decision, Kuhn told reporters. "We're still looking to make sure we have the right list of the others and hope to get that information out next week," Kuhn said, referring to other companies that also did not send current enrollees timely information. The government drug program has received more than 5 million telephone calls about Part D drug plans since November 15, he added. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 2. Power Corp. to buy Putnam for $3.9 bln - WSJ NEW YORK, Dec 29 (Reuters) - Financial services firm Marsh & McLennan Cos. Inc. (MMC.N: ) has agreed in principle to sell its Putnam Investments unit for $3.9 billion to Montreal-based holding company Power Corp. of Canada (POW.TO: ), The Wall Street Journal reported on its Web site on Friday. Citing people familiar with the matter, the WSJ said the price to be paid by Power Corp. is at the higher end of most estimates and could be good news for Marsh's battered shareholders. While the companies have reached agreement, the deal still needs the approval of Putnam employees who own shares in the company, Putnam mutual-fund shareholders and the board that oversees the funds, the WSJ reported. If the fund board and employees approve, a deal is expected to be announced early next year pending fund-shareholder approval, the WSJ reported, citing people familiar with the matter. MMC put its money-manager, Putnam, on the block in September, and MMC's chief executive, Michael Cherkasky, said earlier this month that he would decide whether to sell the unit by early 2007. Last month, the Wall Street Journal reported that bidders for Putnam included Power Corp, Italian bank UniCredito Italiano SpA (CRDI.MI: ) and London-based fund manager Amvescap Plc (AVZ.L: ), Aim Trimark's parent company. No one at MMC or Power Corp. was immediately available to comment. Power Corp. holds the controlling interest in Power Financial Corp., which controls Great-West Lifeco Inc. (GWO.TO: ) and IGM Financial Inc., according to the company's Web site. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 3. NYSE to close Jan 2 to mark President Ford's death Fri Dec 29, 2006 9:51am ET - NEW YORK (Reuters) - NYSE Group Inc. said on Friday the New York Stock Exchange will be closed on January 2 to mark the death of former U.S. President Gerald Ford. On Thursday, President George W. Bush declared January 2 a national day of mourning for Ford, who died this week, with all federal offices to be closed on Tuesday. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 4. Three attorneys general sue Acordia NEW YORK, Dec 19 (Reuters) - Attorneys general for three U.S. states said on Tuesday they had filed suit against an insurance broker unit of Wells Fargo & Co. (WFC.N: ) for allegedly receiving payments to steer clients to insurers. The company, Acordia, received about $200 million in undisclosed payments known as contingent commissions from 2000 through 2005, the Connecticut attorney general's office said. Connecticut, New York and Illinois are seeking restitution, penalties, and a change in the way Acordia does business. "This lawsuit brings us closer to ending the insurance industry's hidden pay-to-play game," Connecticut Attorney General Richard Blumenthal said in a statement. Illinois Attorney General Lisa Madigan said the commissions raised insurance prices. Insurance brokers link up companies looking for coverage with insurers willing to provide it. Companies seeking insurance pay the broker, but brokers can also receive contingent commissions from insurers for sending business their way. A spokeswoman for Wells Fargo said Acordia intends to defend itself vigorously. "Contingent commissions have been a longstanding and well-established practice in the insurance industry," she said. Acordia said in a statement that it properly disclosed all contingent compensation agreements. Critics of contingent commissions say they amount to kickbacks, and prosecutors have been trying for several years to end the practice. In 2004, New York Attorney General Eliot Spitzer began suing insurance brokers for receiving the commissions, starting with Marsh & McLennan Cos. (MMC.N: ) Acordia allegedly signed secret agreements with units of Atlantic Mutual, Chubb Corp. (CB.N: ) Hartford Financial Services Group Inc. (HIG.N: ), St. Paul Travelers Cos., (STA.N: ) and Royal & SunAlliance, (RSA.L: ) the Connecticut attorney general said. Acordia is the fifth-largest insurance broker in the world, according to its Web site. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 5. Allstate says to drop Carolina coast home coverage NEW YORK, Dec 20 (Reuters) - Allstate Corp. (ALL.N: ), the No. 2 U.S. home and auto insurer, said on Wednesday that it was dropping coverage for some 16,000 homeowners on the coast of North and South Carolina in its latest bid to cut hurricane risk. Allstate also said it would stop writing new policies in coastal areas of Maryland and Virginia, although it would not cancel coverage for those who already held policies in those states. The moves are Allstate's latest to reduce exposure tohurricane-prone areas as it seeks to avoid a repeat of 2005, when it suffered about $3.1 billion in catastrophic losses from Hurricane Katrina and other Gulf Coast storms. Earlier this month, Allstate said it would stop writing new homeowners' policies in Connecticut and New Jersey. Allstate said the only Carolina customers affected were those who only had homeowners' coverage and did not also have auto or other Allstate insurance policies. "Allstate has taken incremental steps to manage its exposure to catastrophes, including the purchase of reinsurance and underwriting changes," the insurer said in statements issued to media in both states. "These actions are a part of our catastrophe-management strategy," it said. Some 12,000 customers will receive the "nonrenewal" letters in South Carolina, and another 4,000 in North Carolina, Allstate said. South Carolina asked Allstate to delay any moves to drop coverage until after hurricane season to give customers time to seek other coverage, the insurer said, adding that homeowners who were losing coverage should contact their agents to discuss potential alternatives. The move to stop writing new policies in certain areas of Virginia will take effect on January 1 and affect 19 counties in the state, while in Maryland it will take effect on February 13 and affect all or part of 11 counties there, said spokeswoman Debbie Pickford. Allstate agents will keep writing homeowners policies, but through a third-party carrier, she said. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 6. John Garamendi Details His Top Insurance Issues For 2007- Prepares For Transition To Lieutenant Governor Fighting for consumers, Garamendi forced insurers to slash auto and homeowner rates by $1.5 billion during recent term; Lt. Governor-elect also focuses spotlight on top four crucial insurance issues that must be addressed in 2007 SACRAMENTO – John Garamendi held his final Capitol news conference as Insurance Commissioner Thursday, taking the opportunity not only to look back, but forward as well. Garamendi reviewed his significant contributions as California’s first elected Insurance Commissioner and then turned his attention toward 2007, highlighting his specific priorities as California’s next Lieutenant Governor and what he sees as the top three insurance issues for the coming year. Garamendi will become California’s Lieutenant Governor on Sunday, January 7, when he takes his oath of office at a 2:00 p.m. ceremony in the Senate Chambers of the State Capitol. “As Insurance Commissioner for eight years, I have worked diligently to make sure this industry remains healthy and competitive in California,” said Garamendi. “As its regulator, I have upheld the law that requires that insurance company profits not be excessive. I was determined to fulfill my responsibility, ensuring that premiums paid by California consumers do not exceed what is necessary for insurers to pay claims and earn a reasonable profit.” As Garamendi closes out his second term in office, he announced the results of one of the centerpieces of his administration: rate reductions that will bring at least $1.5 billion in savings to approximately one million California insurance policyholders. The rate reductions by auto insurers have followed Garamendi’s Good Driver Reforms, which requires insurers to base premiums more on a driver’s record than where they live; and major homeowner insurers have reduced rates in response to his “Order” requiring them to justify apparent excessive premiums. Looking to the future, Garamendi talked about four issues he says are critical to the well being of Californians and our economy; health insurance, job creation, workers’ compensation insurance and national catastrophe insurance. A long-time proponent of health care reform, Garamendi said the absolute need to reform the health care system remains critical, including reform of benefits packages. “We can and will pursue policies that will expand access to health care in California,” said Garamendi. “We must choose polices that emphasize primary care, prevention and disease management as first dollar coverage.” In 2003 when Garamendi took office, the California workers’ compensation insurance industry was in crisis: premiums were escalating exponentially, claims costs were rising at nearly eight times the rate of inflation and injured workers were unable to obtain the care to which they were entitled because of inefficiencies in the system. “The dysfunction in the system threatened to cripple business and rob the state of its economic vitality,” said Commissioner Garamendi. “But today it’s a different landscape. We’ve made much progress; the State Compensation Insurance Fund has lowered its rates and reduced its share of the insured market from over 50% in 2003 to less than 40% in 2006. This reduction in market share has enabled increased competition and a healthier market going forward. But there is much room for improvement, and I look forward to seeing what the Department will accomplish in the years ahead.” Garamendi noted that Californians will likely face another natural disaster in the near future. Even before Hurricane Katrina ravaged Louisiana and other parts of the country, Commissioner Garamendi was instrumental in planning, and later hosting, a two-day summit on the need for national catastrophe insurance. Top regulators and insurance executives from several states joined Garamendi in formulating an outline for National Catastrophe Insurance, which was submitted to The National Association of Insurance Commissioners in 2006. “California is not prepared for the financial consequences of a major disaster," said Garamendi. "Many homeowners and businesses do not carry insurance for specific catastrophes such as flooding and earthquakes. The cost of rebuilding from a natural catastrophic event would be enormous and perhaps crippling." Commissioner Garamendi says he will continue to urge a national solution, to assist consumers in all parts of the country to recover from disasters, without total reliance on the federal government’s emergency response. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 7. Absence Of Hurricane Losses Drove Improvement In Property/Casualty Insurers’ Results Through Nine Months JERSEY CITY, N.J., Dec. 27, 2006 — Driven by a sharp decline in catastrophe losses from hurricanes and other natural disasters in 2006, the U.S. property/casualty industry posted a $24.4 billion net gain on underwriting through nine months. The net gain on underwriting through nine-months 2006 stands in stark contrast to the $2.5 billion net loss on underwriting through nine-months 2005. The industry’s positive underwriting results contributed to an increase in its net income after taxes to $44.9 billion in nine-months 2006 from $29.7 billion in nine-months 2005. Reflecting the increase in net income after taxes, the industry’s annualized rate of return on average policyholders’ surplus (net worth) rose to 13.4 percent in nine-months 2006 from 9.8 percent in nine-months 2005, according to ISO and the Property Casualty Insurers Association of America (PCI). The figures are consolidated estimates for all private property/casualty insurers based on reports accounting for at least 96 percent of all business written by private U.S. property/casualty insurers. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 8. Spanish insurer Mapfre eyes new foreign buys MADRID, Dec 29 (Reuters) - Spanish insurer Mapfre (MAP.MC: ) wants to keep growing abroad via acquisitions following a deal to start insuring cars with Italy's Cattolica Assicurazione (CASS.MI: ), Chairman Jose Manuel Martinez said on Friday. "We have our eyes on Europe, the United States and some Asian markets," Martinez told a shareholders meeting, adding that Mapfre wanted to be a major player in the international insurance sector. He said the group had its own funds and a huge ability to raise debt to finance any foreign acquisitions. Earlier this month, Mapfre signed a memorandum of understanding with Cattolica Assicurazione to develop a joint motor insurance business in Italy. Mapfre will buy a 50 percent stake of the new business for 473 million euros. Mapfre is Spain's biggest insurer with a 20 percent market share and is also a major player in Latin America. It is currently merging all its units into its listed branch Mapfre Corporacion. The new group will have a market capitalisation of about 7.8 billion euros once a share issue is finalised at the beginning of next year. Martinez said Fundacion Mapfre, the body which will own more than 70 percent of the newly merged group, wanted to lower its stake gradually but would keep control of the insurer. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 9. Sterling Financial to sell 3 insurance-related businesses Dec 27 (Reuters) - Financial holding company Sterling Financial Corp. (SLFI.O: ) said it will sell its three insurance-related businesses as "they never became meaningful contributors to the bottom line."The company said Corporate Healthcare Strategies LLC, an employee benefits insurance broker, and Professional Services Group, a human resources consulting business, are being bought by David Stoudt, its current president. In a statement, the company said it is selling the property and casualty insurance accounts of the Lancaster Insurance Group LLC to Murray Insurance Associates Inc. (Reporting by Sankalp Saini in Bangalore) © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 10. China Life raises $3.6 bln in heavily bought IPO By Andrew Torchia - SHANGHAI, Dec 27 (Reuter) - China Life Insurance Co. (2628.HK: ) (LFC.N: ) said on Wednesday it had raised 28.32 billion yuan ($3.6 billion) in the country's second-largest domestic IPO, which was heavily oversubscribed. China's biggest life insurer sold 1.5 billion new local currency A-shares, equivalent to 5.3 percent of its expanded share capital, at 18.88 yuan per share, the top of an 18.16-18.88 yuan range set at the start of this week's initial public offer. The company, which has assets totalling over 600 billion yuan and about half of China's life insurance market in terms of premiums, has said it will use funds raised in the IPO to strengthen its capital base. Foreign investors are generally prohibited from buying China's A-shares outside a tight quota system, so they were largely excluded from the domestic IPO, prompting some to buy China Life's H-shares frantically in Hong Kong this month. ($1 = 7.81 Yuan) © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 11. Reinsurance rates to rise 50 pct in storm-prone U.S. NEW YORK, Dec 20 (Reuters) - Reinsurance rates - the prices insurers pay for their own insurance - will rise by as much as 50 percent in storm-prone coastal areas of the United States in 2007, according to chief executives of reinsurers. These reinsurance costs which will be paid by property casualty carriers such as St. Paul Travelers Cos. Inc. (STA.N: ), Allstate Corp. (ALL.N: ) and Hartford Financial Services Group Inc. (HIG.N: ) will be passed along to homeowners in higher rates next year. Despite the light 2006 storm season, analysts, forecasters and hurricane modelers say the United States can expect more rugged years like 2005, when Hurricanes Katrina, Rita and Wilma ravaged the Gulf Coast and caused $68 billion in insured losses. "2006 was a lucky year, not a common year," said Cliff Gallant, an analyst with Keefe, Bruyette & Woods. Reinsurers, often based in Bermuda, expect record profits in 2006, according to insurance broker Benfield. Total earnings for the Bermuda reinsurers in the first three quarters were $7.1 billion, or six times last year's, Benfield said. Jay Cohen, an analyst with Merrill Lynch Co., said in a report that he recommends Bermuda reinsurers Ace Ltd. (ACE.N: ) , Axis Capital Holdings Ltd. (AXS.N: ) and Platinum Underwriters Holdings Ltd. (PTP.N: ). He raised earnings estimates on other reinsurers. "For catastrophe-prone areas, demand (for reinsurance) continues to outstrip supply," said Patrick Thiele, chief executive of Partner Re Ltd., also in Bermuda. Three factors are keeping the supply of reinsurance tight: expectations for more frequent, stronger storms; population growth and higher reserves being demanded by rating agencies. Hurricane forecasters continue to expect a busy tropical storm season in 2007. The season runs from June 1 through November 30. British hurricane forecaster Tropical Storm Risk anticipates 9 hurricanes, while Colorado State University's center predicts seven, including three "intense" storms. While not all hurricanes will hit the United States, those that do are apt to cause more damage as population density increases. For example, Florida's population is growing by 2 percent a year, and its loss potential doubles every 20 years, according to Tom Larsen, a vice president with Eqecat Inc., which models future insurance losses. Rating agencies such as Standard & Poor's have raised the amount of money reinsurers must keep in reserve by 50 percent to 100 percent, according to Adam Klauber, an analyst with Cochran, Caronia & Co. In 2005, when reinsurers paid out more than $20 billion in claims, several went out of business. Rating agencies have warned that reinsurers that do not reserve for another bad year will have their ratings cut. "It's the perfect storm: the modelers, the raters and the weather," said Rod Fox, chief executive of Praetorian Financial Group, which was recently acquired by Australian insurer QBE Insurance Group Ltd. for US$800 million. But Praetorian has begun insuring commercial properties and building projects in the Southeast. "We think Florida is attractive," Fox said. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 12. Criteria Article Outlines Updated Method Of Assessing Long-Term Care Insurers' Capitalization NEW YORK Dec. 26, 2006--Long-term care insurance (LTCI) has long been touted as a product of the future, with still substantial potential yet to be realized. However, market growth has been slowing since the end of the 1990s. From 1998 to 2003, premium grew at a compound annual rate of 16%, according to an article published today by Standard & Poor's Ratings Services. The article, which is titled "Capital Assessment For Long-Term Care Insurers Updated As Market And Products Evolve," says that as measured by new annual policy premium volume, increased pricing in 2004 resulted in industry-wide sales dropping by 25%. Notwithstanding the slowing growth, the demographics of the market continue to be compelling, as by 2030, the U.S. will have a population of more than 70 million men and women over the age of 65. The product itself has been evolving along with the growing population needing long-term care. If an insurer can develop the right LTCI product and price it appropriately for the right market segment, it will be well rewarded financially. For now, though, LTCI continues to pose risks to the insurers that underwrite and sell it, and those risks start right at the beginning, when the product is brought to market. Risk also continues after the sale because claim activity emerges very slowly, with the typical incurred loss ratio for an LTCI block not reaching 50% for about 10 years. In addition to these risks, long-term care's long policy duration and annuity-like benefits pressure an insurer's asset/liability management capabilities and mean that appropriately measuring risks on which to base capital strength is important. Given the challenges to writing LTCI, Standard & Poor's has made revisions to the capital model's formula used to calculate both the C-2 (underwriting and pricing risk) and C-3 (interest rate risk) charges for insurance companies that underwrite the product. Standard & Poor's has taken the well-thought-out chassis for capital charges on LTCI, which is both widely understood and well-regarded, and built out an enhanced capital model adjusted for some of the more problematic risks in LTCI. Although no additional changes are expected soon, Standard & Poor's will continue to monitor the risks of the product as it evolves and, when necessary, incorporate changes to our capital model. www.ratingsdirect.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 13. NEW EXPERT COMMENTARY FROM IRMI.COM There are now over 800 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles. THE STRAIN TO RETAIN - Larry Schiffer discusses the symbiotic relationship between the reinsured and the reinsurer. http://www.irmi.com/Expert/Articles/2006/Schiffer12.aspx DETERMINING THE OPTIMAL COMBINATION OF RISK RETENTION AND RISK TRANSFER - In his Risk Finance column, Don Riggin provides a financial metric for comparing any combination of retention and transfer. http://www.irmi.com/Expert/Articles/2006/Riggin12.aspx PUTIN'S RUSSIA IN 2007: WALKING A TIGHTROPE - As we head into the new year, Daniel Wagner updates his article written in 2000 discussing the political climate and need for political risk insurance in Russia. http://www.irmi.com/Expert/Articles/2006/Wagner12.aspx Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 14. Aon Re Study: Global 2006 Hurricane Season Normal -- Despite Light Atlantic Landfalling Activity Warmer Central-Pacific Waters Shift Natural Catastrophes From Atlantic to Pacific, Proactive Catastrophe Management Still Vital CHICAGO, Dec. 28 /PRNewswire-FirstCall/ -- In a year remembered for no landfalling Atlantic hurricanes -- following heavy landfalling hurricane activity in 2004 and 2005 -- global tropical activity was normal, according to a report issued by Impact Forecasting, LLC, a unit of Aon Corporation (NYSE: AOC). The combined number of tropical cyclones for the Northern Hemisphere was 31 in 2006, equal to the long-term average. However, more intense tropical cyclones (categories 3, 4 and 5) exceeded historical levels by 45 percent. Less intense tropical cyclones were below the long-term average by 33 percent. While significant attention has been devoted to the fact that no hurricanes made landfall in the United States in 2006, hurricane activity in the Atlantic Basin lagged historical norms by only 1.2 events. Consistent with expectations for periods with above-average sea surface temperatures, more intense hurricanes (categories 3, 4 and 5) were above average by 0.9 events (81 percent), and less intense hurricanes (categories 1 and 2) were below average by 2.1 events (41 percent). Using historical hurricane landfall data for the United States when higher sea surface temperatures were present, the likelihood that no hurricanes would make landfall (similar to what occurred in 2006) is 25 percent. Activity in the eastern Pacific Ocean was greater year-over-year, with 18 named storms, up from 15 in 2005. The eastern Pacific experienced six intense hurricanes (categories 3, 4 and 5) in 2006 versus a long-term average of 2.5 per year with Hurricane Ioke reaching Category 5 status in August. The activity in the western Pacific was down slightly with 15 typhoons versus the long-term average of 17.4. However, the number of intense storms was above average with 11 storms versus a long-term average of 9.5. "As evidenced by the recent El Nino patterns in the Pacific and resulting effects to the Atlantic basin, continued vigilance is required on a global basis. This study reinforces the need for catastrophe modeling, and the focus needs to remain on the big picture, rather than on activity in a single year or a single region," said Steve Jakubowski, executive vice president and chief operating officer with Aon Re's Impact Forecasting unit. The full report is available at http://www.aon.com and at http://www.impactforecasting.com. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 15. Benefits Changes to Continue in 2007, Watson Wyatt Says Regulations, Focus on Cost Control Will Drive Change WASHINGTON, Dec. 28 /PRNewswire-FirstCall/ -- Employees will continue to pick up more responsibility for choosing and financing their benefits in 2007 as companies address new regulations and focus on controlling costs, Watson Wyatt Worldwide, a leading global consulting firm, predicts. Health care benefit trends that Watson Wyatt foresees in 2007 include:
"The move to consumer-oriented health care programs will continue, and it will evolve to include more than just high-deductible health plans and health savings accounts," said Ted Nussbaum, director of group and health care consulting at Watson Wyatt. "Employers will take these efforts to the next level by targeting strategies at specific segments of health-care users and using data on provider quality to help employees effectively control health care costs." Watson Wyatt also anticipates the following retirement plan trends:
"There's good news for pensions as the number of pension plan freezes slows and funding continues to improve," said Alan Glickstein, senior retirement consultant at Watson Wyatt. "After years of regulatory uncertainty and high volatility, plan sponsors are once again offering their employees a much more predictable future. And with the new plan design and investment options available, we can expect employers to continue assessing how to best match their plans with the company's long-term goals." www.watsonwyatt.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 16. The Commerce Group, Inc. To Enter New York and New Jersey Markets Acquires State-Wide Insurance Company WEBSTER, Mass.--(BUSINESS WIRE)--The Commerce Group, Inc. (NYSE:CGI) today announced that it has entered into an agreement through which it expects to enter the New York personal lines insurance market in 2007. Under the terms of the agreement, ACIC Holding Company, Inc., a subsidiary of Commerce which is jointly owned by Commerce and AAA Southern New England, will acquire SWICO Enterprises, Ltd., the holding company for Hempstead, New York-based property and casualty insurer State-Wide Insurance Company, in a transaction valued at $52 million. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 17. AssuranceAmerica Corporation Announces Writing of First Louisiana Policy ATLANTA--(BUSINESS WIRE)--ASSURANCEAMERICA CORPORATION (OTCBB: ASAM), an Atlanta based insurance holding company with operations in Georgia, Florida, South Carolina, Alabama and Texas announced today that it wrote its first auto insurance policy in the state of Louisiana. AssuranceAmerica focuses on the specialty automobile insurance marketplace, primarily in Alabama, Florida, Georgia, South Carolina, Texas, and Louisiana. Its principal operating subsidiaries are TrustWay Insurance Agencies, LLC ("Agency"), which sells personal automobile insurance policies through its 45 retail agencies, AssuranceAmerica Managing General Agency LLC ("MGA"), which markets the company’s insurance products through over 1,200 participating independent agencies, and AssuranceAmerica Insurance Company ("Carrier"). www.aainsco.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 18. MetLife Signs Lease at 1095 Avenue of the Americas in Manhattan NEW YORK--(BUSINESS WIRE)--MetLife, Inc. (NYSE: MET) and Equity Office (NYSE: EOP) announced today that MetLife has signed a 21-year lease at 1095 Avenue of the Americas in Midtown Manhattan. MetLife will occupy 12 floors in the building or approximately 410,000 square feet. The company expects to begin moving certain operations, including a portion of its employees currently based in MetLife’s Long Island City (LIC), Queens office, into the building, which is owned and is being redeveloped by Equity Office, in the fourth quarter of 2008. www.metlife.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 19. Goldman Sachs Closes First Infrastructure Fund with More Than $6.5 Billion NEW YORK--(BUSINESS WIRE)--The Goldman Sachs Group, Inc. (NYSE: GS) today announced it has raised its first GS Infrastructure Partners fund with more than $6.5 billion in committed capital. This is Goldman Sachs’ first fund dedicated to making infrastructure investments and will make such investments globally. Goldman Sachs has committed approximately $750 million of the Fund’s total capital. Other institutional investors in GS Infrastructure Partners include pension funds, insurance companies and banks. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 20. INSURANCE NEWSCAST "Pictures Of The Day" -- Sponsored By:
View INSURANCE NEWSCAST "Sports Pictures Of The Day" View INSURANCE NEWSCAST "Entertainment Pictures Of The Day" Sponsored By:
21. Jimcor Agencies Acquires Federico & Associates Montvale, NJ - Jimcor Agencies announced an acquisition on Monday of Federico & Associates, a regional wholesaler based out of Lansdowne, Pennsylvania. “This transaction further develops our already solid brokerage and binding authority capabilities,” explained James Mastowski, CEO of Jimcor. www.jimcor.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 22. NAIC President To Host Natural Disaster Symposium In Miami KANSAS CITY, Mo. (Dec. 28, 2006) — The National Association of Insurance Commissioners (NAIC) will hold its President’s Symposium Jan. 18–19, 2007 at the Conrad Miami Hotel in Miami, Fla. NAIC President and Alabama Insurance Commissioner Walter Bell will host the event, entitled Natural Disasters in the U.S. – Preparing, Responding, Recovering. This symposium will focus on catastrophe and disaster planning in the United States. It is directed toward regulators from state and international insurance departments, as well as government and insurance industry representatives. www.naic.org Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 23. Katrina insurance suit moved to state court Wed Dec 27, 2006 2:22pm ET - NEW YORK
(Reuters) - A federal judge has sent a lawsuit demanding that insurers
pay flood damages to thousands of Hurricane Katrina victims back to
Mississippi state court, increasing the chances of a ruling against the
companies. The insurers, led by Allstate Corp. (ALL.N:
), State Farm Mutual Automobile Insurance Co. and Nationwide Mutual
Insurance Co., claimed that flood damages were excluded from their
policies and were covered under federal flood insurance. Nationwide
Mutual is the parent of Nationwide Financial Services Inc. (NFS.N: ). "Insurers will be unhappy about this
ruling," Robert Hartwig, chief economist at the Insurance Information
Institute, told Reuters. He noted, however, that federal judges had
already ruled that flood damages are not covered by regular insurance,
"and in the world of courts, precedent is everything." State courts
would be inclined to follow federal rulings, he said. In his news conference, Hood said he was ready to take the case to court but urged the insurers to negotiate a settlement with him and Mississippi residents. Hartwig said that would be a mistake for all involved. Not only could it cost insurers billions of dollars, but ultimately the companies would likely withdraw from the market, leaving Mississippi to fund its own homeowner policies, he said. Allstate has already exited coastal markets as far north as Connecticut. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 24. UnitedHealth says SEC launches formal options probe NEW YORK, Dec 26 (Reuters) - UnitedHealth Group Inc. (UNH.N: ), which has shaken up its executive ranks over questions about how stock options were awarded, said on Tuesday that U.S. securities regulators had launched a formal investigation into its options practices. The insurer received a "formal order of investigation" from the SEC staff on Dec. 19 following an informal inquiry in April, it said in a regulatory filing. UnitedHealth said it has cooperated "and will continue to cooperate" with the SEC. The company appointed a new chief executive, Stephen Hemsley, in October after former chairman and CEO William McGuire announced his retirement in the wake of an internal report that concluded many of McGuire's options awards were likely backdated. Stock options represent the right to buy shares at a set price, which typically is the stock's closing or average price on the date of the award. Backdating grant dates to days when the share price was lower gives the recipient the chance to collect extra profits. More than 160 companies have launched internal investigations or are the subject of SEC probes to determine if the dates of stock options were manipulated. The Justice Department and IRS also are examining possible wrongdoing at some companies. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 25. Cardinal Health in $11 mln settlement with Spitzer By Jonathan Stempel NEW YORK, Dec 26 (Reuters) - Cardinal Health Inc. (CAH.N: ), one of the largest U.S. prescription drug distributors, said on Tuesday it will pay $11 million to settle a probe by New York State Attorney General Eliot Spitzer into improper secondary market trading of pharmaceuticals. The settlement is the first in the attorney general's probe into trading practices in the market in which wholesalers trade drugs among themselves after they are sold by manufacturers, but before they are bought by pharmacies and hospitals. Spitzer said in a statement that such trading is not necessarily illegal, but can cause unreliable or counterfeit drugs to enter the marketplace, or cause drugs to be diverted outside their intended distribution channels. The probe began in April 2005. Dublin, Ohio-based Cardinal will pay $7 million to the nonprofit Health Research Inc., $3 million to the state, and $1 million to cover the investigation's costs. The company will also adopt standards to ensure the safe trading of drugs. Cardinal cooperated with the probe, shut its pharmaceutical trading company in the summer of 2005, and stopped buying drugs in the secondary market last December, Spitzer said. Jim Mazzola, a Cardinal spokesman, said: "The safety and security of the nation's pharmaceutical supply is one of Cardinal Health's top priorities, and certainly a responsibility we take very seriously." Cardinal said it previously set aside $11 million for the settlement. The company ranks 19th on the Fortune 500 list of the biggest U.S. companies by revenue. Spitzer in April 2005 subpoenaed the three largest U.S. drug wholesalers -- Cardinal, AmerisourceBergen Corp. (ABC.N: ) and McKesson Corp. (MCK.N: ) -- in connection with the probe. AmerisourceBergen spokesman Michael Kilpatric said: "We have been cooperating with the attorney general's office and responded to its requests months ago. We have not been advised of any misconduct and believe we are not engaged in any wrongdoing." Representatives of McKesson did not immediately return calls seeking comment. According to Spitzer, Cardinal bought drugs from some "alternate" source vendors, despite the risks, to take advantage of higher profit margins. The company also repeatedly sold drugs to some customers it knew or should have known were illegally diverting the drugs, he said. In some cases, according to settlement documents, Cardinal sold drugs to wholesalers on its "excluded vendor list," or that its compliance officers wanted added to that list. Spitzer will become New York's governor next month, and be replaced as attorney general by Andrew Cuomo, a son of former governor Mario Cuomo. © Reuters 2006. All Rights Reserved. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 26. Ernst & Young LLP Issues 2007 U.S. Industry Outlook for Life Insurance Industry NEW YORK, Dec 20, 2006 (BUSINESS WIRE) -- In 2007 the life insurance industry is looking forward to a year of continued good performance, opportunity and tough competition for the loyalty of a new generation of retiring consumers, according to Ernst & Young's Global Insurance Center. "With an aging population and an increasing number of retirees, we anticipate good sector performance in 2007 with solid fees, dependent on stock market performance and premiums across product categeories," said Pete Porrino, Insurance Leader, Ernst & Young LLP and the Global Director of Insurance, Ernst & Young Global Insurance Center. "For global companies, the weakening dollar will be good for earnings growth." Six key issues will shape 2007 for the life insurance market: 1. Economic and industry fundamentals: Long-term consolidation will likely continue among both stock and mutual companies and weaker competitors will be squeezed out of the market. In the U.S., general unease about long-term economic security and concerns about social security, Medicare/Medicaid and reduced employer-paid health and retirement benefits, will compel interest among consumers in self-funding and insuring their retirements. 2. Organic growth: There is an opportunity for growth in the "middle wealth" retirement market, the middle two-thirds who are less than truly wealthy but also far from impoverished. Life insurance companies have the opportunity to introduce both new forms of advisory services and innovative income-generating protection products. 3. Risk management: Insurers will continue to improve their risk management frameworks, governance, risk measurements and reporting. Solvency II developments in Europe will likely impact many of the larger insurers in the United States and International Financial Reporting Standards (IFRS) Phase II exposure draft is likely to be released soon. Specific areas of importance in 2007 will be: economic capital, suitability and market conduct and hedging. 4. Capital management: Capital management discipline will continue to be integral to business and acquisistion strategies. Life insurance companies will continue to seek securititzation and other market solutions, while facing continued pressure to retain more of the risks on their balance sheets. When principles-based statutory reserving approaches are adopted in the United States, capital management strategies will be re-examined and adjusted accordingly. 5. Finance transformation: Internal finance and actuarial organizations need to do more with less, better support strategic and tactical decision-making and manage under multiple reporting regimes. Infrastructure and cost-cutting are still a high priority and off-shoring may come of age in a year or two. 6. Regulatory and compliance: Companies will place a greater emphasis on compliance and ethics practices including assessing and documenting compliance risk and related controls. In the U.S., the federal charter is still an open issue. "In 2007, changing demographics will offer the greatest opportunity for growth. An aging population will be looking for a full-spectrum of retirement services from helping fund longevity to providing financial protection to loved ones in the event of death," said Porrino. "To fully leverage this trend, life insurance companies will need to develop innovative services to compete against financial services companies and to win customer loyalty in this lucrative market segment." Further information about Ernst & Young and its approach to a variety of business issues can be found at www.ey.com/perspectives. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 27. Chubb Settles with New York, Connecticut and Illinois AGs: No Finding of Chubb Participation in Illegal Bid-Rigging No Fine or Penalty Assessed Chubb to Contribute $15 Million to Excess Casualty Compensation Fund Chubb to Replace Contingent Commissions with Supplemental Commissions in All U.S. Insurance Lines WARREN, N.J., Dec 21, 2006 /PRNewswire-FirstCall via COMTEX/ -- The Chubb Corporation (NYSE: CB) announced today that it has entered into a settlement agreement with the Attorneys General of New York, Connecticut and Illinois, resolving all issues arising out of those officials' investigations of property-casualty insurance market practices. Chubb has cooperated fully in the investigations, which have been led by the New York Attorney General's Office. Chubb is pleased that these investigations -- which were augmented by an independent inquiry commissioned by the company -- did not conclude that Chubb participated in a pattern or practice of illegal bid-rigging in the excess casualty insurance market. A summary of the final report of that independent inquiry, conducted by Stier Anderson LLC, is available on Chubb's website at www.chubb.com. Chubb was not assessed any fine or penalty in connection with this settlement. Chubb acknowledged that it appears to have unknowingly benefited from the bid-rigging activities of others in the excess casualty market, which may have provided Chubb with an advantage in retaining certain renewal business. Accordingly, Chubb has agreed to contribute $15 million to a settlement fund established for the benefit of these customers. Chubb has also agreed to pay $2 million to help defray the costs of the investigation by the Attorneys General. Chubb also announced it will discontinue paying contingent commissions on all insurance lines in the United States beginning in 2007, replacing them with a supplemental compensation program that will reward Chubb's agents and brokers for superior performance in a manner consistent with evolving marketplace standards and reforms urged by the Attorneys General. "We are pleased that Chubb has resolved these investigations on a basis which recognizes that our company did not knowingly participate in bid- rigging," said John D. Finnegan, Chairman and CEO of Chubb. "The Attorneys General are to be commended for raising important questions regarding a number of insurance industry practices. Chubb has voluntarily undertaken substantial business reforms over the past two years, culminating with today's announcement of a new producer compensation model that recognizes the important services provided by independent agents and brokers. Chubb is proud to take the lead in instituting reforms that will benefit our producers and our insureds. "Over the last 124 years," said Mr. Finnegan, "Chubb has earned a unique reputation for integrity and fairness in paying policyholder claims, and we are committed to maintaining the highest ethical standards in all aspects of our business." Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 28. Acordia Inc. Disputes Attorneys' General Charges SAN FRANCISCO, Dec. 19 /PRNewswire-FirstCall/ -- Acordia Inc., the fifth largest insurance brokerage in the nation and owned by Wells Fargo & Company (NYSE: WFC), said it will vigorously defend against allegations brought by the attorneys' general of New York, Connecticut and Illinois. "Contingent compensation agreements have been a long-standing and well-known practice in the insurance industry, and these commissions continue to be paid by insurers to hundreds of insurance agents and brokers throughout the country, including New York," said Dave Zuercher, Acordia Inc. President and CEO. "These agreements have been held by courts to be legal and enforceable." Acordia discloses its contingent compensation agreements to its customers in a manner consistent with guidelines approved by the National Association of Insurance Commissioners. "Acordia is confident that contingent compensation agreements, properly administered, are consistent with the responsibility of its brokers to its customer," said Zuercher. Acordia Inc. is the largest bank-owned insurance brokerage in the U.S., with over 150 offices in 38 states. Its 4,500 insurance professionals place in excess of $8.5 billion of risk premiums with expertise in property, casualty, benefits, international, personal lines and life products. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 29. Milliman Survey Confirms Continued Dominance of Guarantees in Variable Annuity Retirement Income Products SEATTLE, Dec. 20 /PRNewswire/ -- Results from Milliman's second annual Guaranteed Living Benefits (GLBs) survey of leading variable annuity (VA) carriers indicate that GLBs continue to drive variable annuity sales. Total sales of VAs that offered a GLB during calendar year 2005 averaged 87% of total VA sales, stable relative to 2004 results. This figure increased to 89% during the first half of 2006, demonstrating the continued popularity of such benefits. The election of GLBs by policyholders also continued to increase from 2005 to the first half of 2006. On average, during calendar year 2005, the election rate of GLBs was 68% of total VAs that offer any GLB, up from 56% in 2004. The comparable figure for the first half of 2006 is 72%. www.milliman.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 30. Audit Integrity Cites Pension Practices as a Developing Area of Corporate Risk Identifies 61 At-risk Companies NEW YORK & LOS ANGELES--(BUSINESS WIRE)--Audit Integrity, LLC, a financial research firm specializing in corporate accounting and governance issues, is warning investors and other corporate stakeholders that pension reforms adopted this year are generating a new set of risks that could surpass, at least in the financials involved, the recent highly publicized options backdating scandals. The firm has identified 61 corporations as fitting a “high-risk profile” characterized by aggressive approaches both in their accounting and corporate governance practices, and in the actuarial assumptions underlying their pension valuations. Chairman James A. Kaplan noted, “By combining a company’s AGR® rating with a close examination of management’s actuarial assumptions for pensions, we are able to provide stakeholders with a strong, reliable indicator of pension-driven accounting risk and related problems.” The list of 61 high-risk companies identified to date is available online at www.auditintegrity.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 31. BIG “I” OPPOSES A.G. INTERVENTION IN INCENTIVE COMPENSATION But encouraged by Chubb Guaranteed Supplemental Compensation Program ALEXANDRIA, Va., Dec. 21, 2006—The Independent Insurance Agents & Brokers of America (the Big “I”) is disappointed to see another settlement out of New York Attorney General Eliot Spitzer’s office that bans the payment of contingent compensation that is entirely legal. The settlement is with Chubb Corp. and was joined by the attorneys general of Connecticut and Illinois. Chubb’s settlement announced today marks an end to the company’s offering of contingent compensation calculated retrospectively at the end of a production year in all lines of insurance, and the start of a new system of supplemental compensation in 2007. Chubb’s new Guaranteed Supplemental Compensation (GSC) program will provide agents with supplemental compensation based on their past performance and results with the company, which Chubb expects overall to be “substantially equivalent” to past contingent compensation it paid. “It is well known that we strongly disagree with the actions of regulators and attorneys general to ban payment to agents of any legal form of compensation,” says Big “I” CEO Robert A. Rusbuldt. “Incentive compensation is a perfectly legal way to compensate salespeople in virtually all industries across America, and to eliminate the right of any business to determine how to lawfully reward its sales force punishes an entire industry for the improper actions of a few. However, Chubb has provided a clear plan about how it will compensate agents and brokers in the future, and we commend Chubb for providing this information and letting agents know what the future holds for them.” “Chubb’s announcement today explaining the parameters of its plan for the future to reward sales excellence via a Guaranteed Supplemental Compensation program provides some certainty in an evolving and unpredictable business environment, and agents value this type of communication about what the future holds for them,” says Big “I” President Alex Soto. The Big “I” continues to defend and support incentive compensation as a legal, legitimate form of compensation that is employed in all sales-based industries. Any compensation system can be abused, but the problem lies with those few who abuse it, not the system itself. “Certainly, it is true that a few bad actors in the commercial lines sector abused the incentive compensation system, and anyone who breaks the law should face the consequences,” says Debra Perkins, Big “I” executive vice president and general counsel. “However, state attorneys general should not be determining through settlement agreements business practices for companies that are already complying with the law.” “Chubb has taken a bold step by the development and announcement of its Guaranteed Supplemental Compensation program. The Big ‘I’ will continue its dialogue with individual companies as well as its other work in the industry to preserve the right of carriers to fairly compensate agents,” says Rusbuldt. www.independentagent.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article
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