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For more information send an e-mail to tedd@insurancebroadcasting.com, call 888-282-1765 or click here to read the media kit online. www.InsuranceBroadcasting.com Daily Quote: "What really matters is what happens in us, not to us." - - James M Kennedy 1. Health Net ordered to pay $9 mln to cancer patient Fri Feb 22, 2008 7:29pm EST By Gina Keating LOS ANGELES, Feb 22 (Reuters) - A California arbitrator ordered Health Net Inc (HNT.N: ) to pay $9.4 million in damages and expenses for what he described as "reprehensible" conduct in canceling the policy of a cancer patient after she fell ill, according to documents made public on Friday. The award to Patsy Bates, 51, included $8 million in punitive damages and raised concerns about the company's practice of retroactively canceling policies of individuals who make large claims and paying bonuses to underwriters for meeting cancellation targets. Health Net said in a statement that, while it does not agree with some of arbitration judge Sam Cianchetti's conclusions, it will immediately adopt a review process for all policy cancellations. The multimillion-dollar punitive damages award, the first in a so-called recision case, is sure to send a message to other large health insurers who face lawsuits over the practice, said Bates attorney William Shernoff. "Let's see if these other big health carriers will change their practices, then we will have done something," Shernoff told Reuters. "Until this punitive damages award came down, nobody was doing anything." Shernoff has three proposed class actions over retroactive cancellations pending in California courts against Health Net, Blue Cross and Blue Shield, as well as a case involving a newborn boy whose Health Net coverage was canceled after he was born blind and with cerebral palsy. The Bates case brought to light a bonus system in which Health Net set annual policy cancellation targets that it described in terms of numbers of canceled policies and millions of dollars in savings in medical expenses. CHEMOTHERAPY CANCELED Bates had health insurance with another company for several years before a Health Net broker solicited and enrolled her in an individual insurance policy in August of 2003. Bates was diagnosed with breast cancer a month later, and began chemotherapy treatments but had just three of eight planned treatments when Health Net pulled the plug, contending she had lied about her weight and a heart problem on her application. "Can you imagine having Stage 3 cancer and you think you have insurance and you are supposed to have eight sessions of chemo and you have three and they are stopped?" she told Reuters. "If you haven't had to go through trauma that you may live and you may not, you may not understand." A cancer advocate enrolled Bates in a state-funded program to finish her chemotherapy treatments. Her cancer went into remission but she still has no health insurance and was left with about $130,000 in unpaid medical bills. In an opinion issued on Thursday, the arbitrator found that Bates' application had been improperly filled out by the Health Net broker, and inadequately reviewed by its underwriters. "It is difficult to imagine a policy more reprehensible than tying bonuses to encourage the recision of health insurance that helps keep the public alive and well," arbitrator Cianchetti wrote in his opinion. In awarding the $8 million in punitive damages, Cianchetti observed "it is hard to imagine a situation more trying than the one Bates has had to endure." He also warned that Health Net ignored its own guidelines as well as "obvious errors," including at least one error "amounting to criminal conduct." In response, Health Net said it would rescind no policies going forward without a binding external, third-party review process. The company said it planned to clarify its application and underwriting processes to insure it received all necessary information before issuing policies. Health Net also pledged to do a "comprehensive review" of its processes, including broker training and education. "We take this very seriously and are committed to resolving these issues," the company said in a statement. (Editing by Gary Hill) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 2. Two ex-Marsh executives convicted of bid-rigging Fri Feb 22, 2008 5:08pm EST By Edith Honan NEW YORK (Reuters) - Two former executives at Marsh Inc, a unit of Marsh & McLennan Cos Inc (MMC.N: ), were found guilty on a monopoly charge on Friday for participating in an insurance bid-rigging scheme, court officials said. William Gilman, a former executive in Marsh Inc's Global Broking unit, and Edward J. McNenney, a former global placement director, were acquitted of all other charges they faced in the ruling handed down by New York State Supreme Court Judge James Yates. The ruling was confirmed by clerks for the judge. "All of the charges that were thrown out sort of gutted (the government's) case, in my view," said Stephen Neal, a lawyer for McNenney. "We are going to appeal the conviction on the anti-trust count vigorously." "Bill Gilman was really the client's best friend and the insurance carrier's worst enemy," said Gilman's attorney, Robert Cleary. "We look at this as merely round one." The case, first brought in September 2005 by the New York Attorney General's office, was part of a sweeping investigation of insurance industry practices. "We are gratified that the court found the defendants guilty of felony bid rigging," Jeffrey Lerner, the spokesman for Attorney General Andrew Cuomo, said in a statement. "Bid rigging is a serious offense which deprives customers of the benefits of a competitive marketplace and this office will continue to prosecute it vigorously." Eight former Marsh executives, including Gilman and McNenney, were indicted in September 2005 and their 10-month bench trial was the first trial in the case. At the time of the indictments, then-Attorney General Elliot Spitzer said that between November 1998 and September 2004, the defendants colluded with executives at ACE USA (ACE.N: ), American International Group Inc (AIG.N: ), Liberty International Insurance Co, Zurich American Insurance Co (ZURN.VX: ) and others to rig the market for excess casualty insurance. Gilman and McNenney were acquitted of charges of scheming to defraud and 19 counts of grand larceny. Marsh, a unit of the world's largest insurance broker, itself did not face criminal charges. The company agreed to pay $850 million in January 2005 to settle Spitzer's civil lawsuit accusing it of bid rigging. (Editing by Andre Grenon and Braden Reddall) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 3. Marsh & McLennan to pay ex-CEO $7.15 million severance Fri Feb 22, 2008 1:56pm EST NEW YORK (Reuters) - Marsh & McLennan Cos Inc (MMC.N: ) will pay its former chief executive $7.15 million in severance pay, according to a regulatory filing on Friday. MMC, which is one of the largest insurance brokers, said it will pay ex-CEO Michael Cherkasky a lump sum as part of a separation agreement. All unvested equity awards previously granted to Cherkasky -- who was forced out earlier this year after investors grew disgruntled with the company's poor financial performance -- will vest in full. But Cherkasky will not to be paid any bonus for 2007, according to MMC's filing with the U.S. Securities and Exchange Commission. (Reporting by Lilla Zuill) Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 4. Connecting credit dots prolongs crisis Sat Feb 23, 2008 9:36am EST By Neil Shah - Analysis NEW YORK (Reuters) - The global credit downturn is unlikely to end any time soon given how slowly Wall Street banks have moved to connect the dots between themselves, bond insurers, credit indexes and other pieces of the credit puzzle. Banks, including Citigroup (C.N: ) and UBS (UBSN.VX: ), have already absorbed about $150 billion of mortgage and corporate loan-related losses, but that may jump by almost 50 percent, according to brokerage Oppenheimer & Co. in New York. That is because the tottering bond insurance companies some banks used to guarantee their mortgage bets are facing their own troubles and may not deliver on policy claims. If Wall Street banks suffer another wave of write-downs on assets like commercial property loans or repackaged subprime mortgages that were insured, they're likely to pull back even further on extending credit to companies and consumers, helping push the U.S. economy into a recession. Consider banks' failed subprime mortgage investments. Apparently the banks did not realize that their insurers, which guarantee payments on almost $1 trillion of structured finance bonds, made the same mistake they did: Trusting the rose-tinted views of model-driven experts on repackaged mortgage securities called collateralized debt obligations, or CDOs. "The CDO folks, who were cut from the same cloth as CDO professionals all around the Street, who didn't treat bonds as real things but treated them as mathematical abstractions, blew up the bond insurers the same way that the same kinds of guys at Merrill (Lynch) and Citi caused major explosions in their firms," said Mark Adelson, a consultant at Adelson & Jacob Consulting in New York. Bruce Dobish, a buyer of distressed real estate and former staffer at now-wobbling bond insurer FGIC, cast the net wider to include credit-rating services. "These (banks) and the ratings agencies and the monolines (bond insurers) tend to be comprised of a lot of youthful, bright individuals who lack real-world experience," Dobish said. "They're not going to remember back 20 years ago." Rob Haines, senior insurance analyst at CreditSights in New York, said: "They all got it wrong." SUBPRIME CRISIS GOES COMMERCIAL? The fragility of U.S. bond insurers is not Wall Street's only oversight. Some banks may also have to write down the value of their U.S. commercial mortgage holdings, most likely using prices from the little-known CMBX derivatives index, which has tanked recently but was created -- ironically -- to allow players to hedge against commercial mortgage risks. The so-called yield spread premium on the top-rated CMBX-4 index of commercial mortgage-backed securities was relatively flat on Friday at 185 basis points over interest-rate swap rates, according to a market source. That was an improvement over recent levels but still a sign of strong risk aversion. Some analysts and investors say the index is suffering not from massive problems with commercial mortgages but because of the same factor that helped pummel its cousin, the widely watched ABX subprime mortgage index: Speculative bets by hedge funds. With bets against subprime mortgages using derivatives so popular and therefore increasingly expensive, many hedge funds have simply moved their game to the less-known CMBX, pushing this index lower and making the U.S. commercial mortgage market seem less resilient than it may be. "Speculators and hedgers looked for cheaper things to short," said Derrick Wulf, portfolio manager at Dwight Asset Management in Burlington, Vermont, in a recent note. "There may be an excess of complacency on the short side of the credit markets," he said. Already under pressure from their accountants, banks may use CMBX prices to gauge the extent of their commercial mortgage write-downs even though the index's weakness may be exaggerated. That would hammer global markets further. In a way, both this example and the bond insurer case suggest that the unfolding of the credit crisis is less a "contagion" spreading through markets than a gradual discovery by banks and investors that different pieces of credit markets were connected in the first place. "People look at the whole credit crunch as a series of separate issues," said Edward Grebeck, chief executive of Tempus Advisors, a debt strategy firm in Stamford, Connecticut. They "are finally getting around to the point that structured finance, the rating agencies and the bond insurers are all related," he said. (Editing by Dan Grebler) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 5. Buffett rapidly grows his new muni insurance arm Fri Feb 22, 2008 3:57pm EST NEW YORK (Reuters) - One of Warren Buffett's newest businesses -- insuring municipal bonds -- is expanding rapidly into a troubled field as the company backed 112 issues in just the past two days, according to Moody's Investors Service. "I think it's rapid growth. The fact is, he's starting from zero. Whether he's going to be insuring as many on a weekly basis, I don't know," said Lee Epstein, chief executive officer of Money Market One, a San Francisco-based investment dealer. Berkshire Hathaway Inc (BRKa.N: ) only started insuring municipal bonds in late December, and it is one of the few bond insurers that can offer borrowers and investors an unblemished top rating of "AAA." Rating agencies have already cut or warned they may downgrade insurers that guarantee principal and interest on about $1.6 trillion of municipal debt because the companies face billion-dollar claims from insuring subprime mortgage-related securities. A Moody's spokesman on Thursday had no further details about what kinds of muni bonds or how much debt the Buffett's new insurer is backing. "We have rated approximately 112 Berkshire Hathaway Assurance Corp-insured issues between yesterday and today," the spokesman said. A Berkshire Hathaway spokesman was not immediately available. In January, Berkshire Hathaway's insurer backed its first municipal bonds, choosing about $10 million of New York City debt for its debut in the secondary market. Earlier this month, Buffett unveiled an ambitious plan to catapult into the top ranks of municipal bond insurers though it met with little enthusiasm. The billionaire investor, known for his ability to spot a bargain, offered to reinsure $800 billion of muni bonds backed by his embattled rivals. Buffett's plan was limited to his competitors' safest business -- muni bonds whose default rate is less than 1 percent. This would have left the companies saddled with their riskiest and potentially toxic subprime policies. Increasingly, municipal borrowers are skipping the insurance they once relied on because it made their debt easier to sell by sparing investors from having to do in-depth research. However, now bonds backed by rickety insurers are seen as tainted and trade at discounts. Only 15 percent of new muni bonds have been insured this month, according to Merrill Lynch. That was a sharp fall -- for the past 10 years or so about half of all munis were insured. Three of the most troubled insurers -- MBIA Inc (MBI.N: ), Ambac Financial Group (ABK.N: ) and FGIC Corp (BX.N: ) (PMI.N: ) -- have all lost market share to more credit-worthy rivals, financial analyst say. Only two other insurers, Financial Security Assurance and Assured Guaranty Corp., have "AAA" ratings with stable outlooks. They were the only insurers to guarantee new muni deals this month, according to Merrill Lynch. FSA has insured 2,229 muni issues so far this month. Its much smaller competitor, Assured Guaranty, backed about 667 issues, Merrill added. Buying the insurance from Berkshire Hathaway's new insurer lifted the muni credits to a "AAA" rating, Moody's said. Though the credit agency has not yet rated the new insurer, its guarantees are backed with a contingent payment insurance policy provided by AAA-rated and Berkshire-owned National Indemnity Co, Moody's said. That justifies the highest rating on bonds Berkshire insures, the rating agency explained. (Reporting by Anastasija Johnson and Joan Gralla; Editing by Tom Hals) © Reuters 2008 All rights reservedReturn to Headlines - - Print Article / Read Entire Article / E-Mail Article 6. Citigroup provides $500 million credit to hedge funds Fri Feb 22, 2008 8:33pm EST NEW YORK (Reuters) - Citigroup Inc (C.N: ) said on Friday it has provided a $500 million line of credit to support some fixed-income hedge funds, and as a result moved the funds' $10 billion of assets and liabilities onto its balance sheet. The Falcon funds are managed by the largest U.S. bank's alternative investments unit. Citigroup said that by providing the credit facility on February 20, it became the primary beneficiary of the funds, and thus must consolidate them onto its books. On February 15, the Wall Street Journal said Falcon Plus Strategies lost 52 percent in the fourth quarter, its first three months in existence, after making bad bets on mortgage-backed and preferred securities, and trades based on the relative values of municipal bonds and U.S. Treasuries. Last week, Citigroup said it had suspended withdrawals from another fixed-income hedge fund, CSO Partners, following a 10 percent loss in November. The fund's manager, John Pickett, resigned, a bank spokesman said at the time. It is not unusual for hedge fund managers to suspend withdrawals, to avoid a possible fire sale of assets to pay off departing investors. Separately, Citigroup said it ended 2007 with $4.02 billion of direct exposure to monoline bond insurers such as MBIA Inc (MBI.N: ) and Ambac Financial Group Inc (ABK.N: ). That's up from the $3.8 billion it had estimated on January 15. Bond insurers are struggling with losses from covering complex debt tied to subprime mortgages, and are trying to raise capital to preserve their "triple-A" credit ratings. Citigroup, which is based in New York, disclosed the credit facility and bond insurer exposure in its annual report filed with the U.S. Securities and Exchange Commission. The bank lost a record $9.83 billion in the fourth quarter, hurt by write-downs tied to subprime mortgages and an increase in soured loans. Citigroup said further declines in real estate markets could lead to more write-downs for subprime mortgages and leveraged loans, and higher credit losses. The alternative investments unit was briefly headed last year by Vikram Pandit, who in December replaced Charles Prince as the bank's chief executive. Pandit is reviewing Citigroup's operations, and may sell or streamline businesses to boost growth and investor returns. Shares of Citigroup closed Friday up 7 cents at $25.12 on the New York Stock Exchange. They have fallen 53 percent in the last year, nearly twice the 27 percent decline in the 24-member Philadelphia KBW Bank Index .BKX. (Reporting by Jonathan Stempel; Additional reporting by Dan Wilchins; Editing by Tim Dobbyn, Gunna Dickson, Richard Chang) © Reuters 2008 All rights reservedReturn to Headlines - - Print Article / Read Entire Article / E-Mail Article 7. AIG files to try to halt ex-CEO's access to files Fri Feb 22, 2008 11:35am EST NEW YORK, Feb 22 (Reuters) - American International Group Inc (AIG.N: ) on Friday filed a motion for a stay of a court order requiring it to turn over some internal documents to ex-Chief Executive Officer Maurice "Hank" Greenberg. An appeals court ruled earlier this week that Greenberg should have access to the files, reversing a 2006 lower court decision that denied him and former Chief Financial Officer Howard Smith access to the documents. AIG has said it plans to appeal the decision. In a memorandum of law to support the motion, AIG said it was "confident its position will be vindicated on appeal, and absent a stay, (it) would have to disclose its privileged documents to defendants before (its) appeal can be heard." "Any appeal by AIG would be frivolous and filed solely for the purpose of a delay," said Greenberg's lawyer, Nicholas Gravante. AIG's motion was filed in New York Supreme Court. (Reporting by Lilla Zuill; Editing by Lisa Von Ahn and Gerald E. McCormick) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 8. Scottish Re may sell units after losses, downgrades Fri Feb 22, 2008 8:19am EST NEW YORK (Reuters) - Scottish Re Group Ltd (SCT.N: ), a struggling reinsurer, on Friday said it may sell its international life reinsurance and wealth management units, and plans to cut costs to preserve capital after suffering mortgage-related losses and a credit rating downgrade. The Hamilton, Bermuda-based company said it plans to continue focusing on its North American life reinsurance business, perhaps through "strategic alliances." Scottish Re's majority shareholders are private equity firm Cerberus Capital Management LP CBS.UL and MassMutual Capital Partners LLC, an affiliate of MassMutual Financial Group. (Reporting by Jonathan Stempel; Editing by John Wallace) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 9. Increased Hurricane Losses Due To More People, Wealth Along Coastlines, Not Stronger Storms, New Study Says A team of scientists have found that the economic damages from hurricanes have increased in the U.S. over time due to greater population, infrastructure, and wealth on the U.S. coastlines, and not to any spike in the number or intensity of hurricanes. “We found that although some decades were quieter and less damaging in the U.S. and others had more land-falling hurricanes and more damage, the economic costs of land-falling hurricanes have steadily increased over time,” said Chris Landsea, one of the researchers as well as the science and operations officer at NOAA’s National Hurricane Center in Miami. “There is nothing in the U.S. hurricane damage record that indicates global warming has caused a significant increase in destruction along our coasts.” In a newly published paper in Natural Hazards Review, the researchers also found that economic hurricane damage in the U.S. has been doubling every 10 to 15 years. If more people continue to move to the hurricane-prone coastline, future economic hurricane losses may be far greater than previously thought. “Unless action is taken to address the growing concentration of people and property in coastal hurricane areas, the damage will increase by a great deal as more people and infrastructure inhabit these coastal locations,” said Landsea. NOAA National Hurricane Center: http://www.hurricanes.gov Link to paper: http://sciencepolicy.colorado.edu/admin/publication_files/resource-2476-2008.02.pdf Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 10. Willis Capital Markets Acts As Co-Lead Manager In Innovative $150 Million Aggregate Indemnity Catastrophe Bond NEW YORK--(BUSINESS WIRE)--Willis Capital Markets, a business division of Willis Group Holdings Limited (NYSE: WSH), the global insurance broker, has acted as Co-Lead Manager of an offering of $150 million of notes by Newton Re Limited. The notes, which have been issued by Newton Re Limited off its existing unlimited shelf program, collateralize a reinsurance agreement with Catlin Insurance Company Limited, Bermuda and the Catlin Syndicate at Lloyd’s (Syndicate 2003) (together, “Catlin”). The transaction provides Catlin with indemnity based reinsurance protection in respect of losses arising on its property treaty catastrophe excess of loss account, property risk excess of loss account and proportional reinsurance account. Covered perils are windstorms and earthquakes in the USA, windstorms in Europe and typhoons and earthquakes in Japan. Cover is provided on an annual aggregate basis over a three year period. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 11. MBIA Withdraws From AFGI, Says It No Longer Shares Common View With Trade Association ARMONK, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE:MBI) today said that it is immediately withdrawing from the Association of Financial Guaranty Insurers (AFGI) because it no longer shares AFGI’s view as to the direction that the bond insurance industry should take going forward. AFGI is the trade association of the insurers and reinsurers of municipal bonds and asset-backed securities. Jay Brown, Chairman and Chief Executive Officer of MBIA said, “It has become clear that MBIA and the other members of AFGI no longer share a common vision for the industry. For one thing, we believe that the industry must over time separate its business of insuring municipal bonds from the often riskier business of guaranteeing other types of securities, such as those linked to mortgages. Additionally, we disagree with AFGI’s positions on the appropriateness of monoline financial guarantors insuring credit default swaps and the ability of U.S. financial guarantors to reinsure U.S. domestic financial guarantee insurance transactions with foreign affiliates without paying U.S. corporate tax rates.” www.mbia.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 12. Statement From Association Of Financial Guaranty Insurers Regarding MBIA’s Withdrawal From AFGI ALBANY, N.Y.--(BUSINESS WIRE)--Sean W. McCarthy, Chair of the Association of Financial Guaranty Insurers (AFGI) and President and Chief Operating Officer of Financial Security Assurance Holdings Ltd. said: “AFGI members are surprised at the withdrawal of MBIA from AFGI. AFGI is a trade association that serves as a consistent informational source, represents the industry in standardizing financial reporting and disclosure and speaks for the industry on a number of issues. “AFGI has not taken a position on member firms' organizational structures, lines of business or execution formats, such as credit default swaps (CDS) or policy forms. Further, all of the financial guaranty products offered by industry members, including insured CDS, are permitted under applicable insurance law and regulation. “AFGI remains committed to supporting the industry and its members who offer credit enhanced products in the municipal and asset-backed markets.” Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 13. Japan Aioi Insurance Subprime Losses To Hit $857 Million TOKYO, Feb 22 (Reuters) - Aioi Insurance Co (8761.T: ), Japan's fourth-largest non-life insurer, said on Friday that it now expected to suffer 92 billion yen ($857 million) in suprime-related losses in the current business year to March. Aioi said that paper losses on U.S. subprime mortgage investments stood at 67.5 billion yen as of the end of December, up from 25.2 billion yen as of the end of September. Aioi said that its total exposure came to 110.2 billion yen, and that it had factored in 92 billion yen in losses to its full year forecast for the year to March. © Reuters 2008 All rights reservedReturn to Headlines - - Print Article / Read Entire Article / E-Mail Article 14. PAULA Financial Completes Asset Sale To Ascension PASADENA, Calif.--(BUSINESS WIRE)--PAULA Financial (Pink Sheets:PFCO) today announced that it completed the sale of assets to Ascension Insurance, Inc. (“Ascension”), as announced on January 25, 2008. The transaction was approved by more than two-thirds of eligible shares voting at a special meeting of PAULA Financial shareholders held on Wednesday, February 20, 2008 in Los Angeles and closed today. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 15. Ex-Natwest Bankers Sentenced To 37 Months In Prison Fri Feb 22, 2008 12:01pm EST HOUSTON (Reuters) - A U.S. judge sentenced three British bankers, known as the "NatWest 3," to three years and one month each in prison on Friday for their role in an Enron-related fraud case. David Bermingham, Gary Mulgrew and Giles Darby received their sentences from U.S. District Judge Ewing Werlein, Jr. Prosecutors accused the men of conspiring with former Enron Corp Chief Financial Officer Andrew Fastow to defraud NatWest of $19 million, dividing $7 million among themselves. In November, Bermingham, Darby and Mulgrew each pleaded guilty to one count of wire fraud, which carried a maximum penalty of five years in prison. But under a plea agreement with U.S. prosecutors, the former bankers had agreed to serve a sentence of 37 months. "I'm fully prepared to accept the consequences of my actions," Darby told the court, after noting that seven years had passed since the fraud. Bermingham, Darby and Mulgrew, former employees of Greenwich NatWest, a division of National Westminster Bank Plc (NWB_pa.L: ) were indicted in 2002 and arrested in 2004. After losing a lengthy extradition fight, the men were sent to the United States in July 2006 where they have been free on bond and living in the Houston area as ordered by the court. (Editing by Dave Zimmerman) © Reuters 2008 All rights reservedReturn to Headlines - - Print Article / Read Entire Article / E-Mail Article 16. Fitch: Subprime Pressures Increase For U.S. Life Insurers In 2008 CHICAGO--(BUSINESS WIRE)--After updating Fitch Ratings' prior analysis of subprime exposure for U.S. insurers, the agency continues to believe that the U.S. life insurance industry's investment exposure to problematic subprime and Alt-A residential mortgage collateral is manageable. However, Fitch notes that there has been significant deterioration in subprime mortgage performance in the second half of 2007, which has led to a material decline in market valuations, particularly in the fourth quarter of 2007, and increased downgrade activity. Fitch's Special Report, 'Subprime Mortgage Exposure for U.S. Life Insurers - Update and Outlook,' released today, summarizes Fitch's views and provides detailed information on the industry's exposure to the subprime and Alt-A residential mortgage markets and includes stress test results of life insurers' capital based primarily on 2007 and 2006 vintage subprime and Alt-A mortgage holdings at Sept. 30, 2007 and Fitch's stress loss estimates. Fitch estimates unrealized mark-to-market losses on subprime and Alt-A related investments held by U.S. life insurers to be in the $7 billion to $8 billion range, which equates to approximately 13% of exposure and 3% of aggregate industry statutory capital. Further, Fitch expects the industry to report realized losses of between $2 billion and $3 billion (GAAP) in the fourth quarter of 2007. While Fitch expects further deterioration in the performance of subprime residential mortgages, particularly for 2006 and 2007 vintage years, our analysis suggests that the industry is well positioned to withstand current market volatility given its focus on high investment grade securities, relatively stable liability profile and positive cash flow. Despite the significant deterioration of subprime mortgage markets and increased credit risk in other fixed income markets, Fitch views the U.S. life insurance industry as well capitalized. Fitch has taken limited negative rating actions on U.S. life insurers due to subprime-related credit issues in 2007. On an individual company basis, Fitch's most recent stress test of current holdings reveals that most life insurers will not have a credit issue driven by subprime losses. Several companies are being more closely monitored due to either significant CDO exposure or more significant investment in subprime RMBS with 2006 and 2007 vintages or exposures outside the insurance group. The Special Report, 'Subprime Mortgage Exposure for U.S. Life Insurers - Update and Outlook,' is now available under the Financial Institutions then Insurance on www.fitchratings.com. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 17. Allianz sees US life sales recovery this year FRANKFURT, Feb 22 (Reuters) - Allianz (ALVG.DE: ) expects to see life insurance sales pick up in the United States this year after they suffered as a result of a series of lawsuits, Chief Executive Michael Diekmann said on Friday. "The reputational damage in the market from the publicity point of view is pretty high," Diekmann told an analyst conference when asked about the lawsuits which focused on whether Allianz Life's sales of equity-index annuities were appropriate for senior citizen customers. "But it's more and more getting to be an industry-wide issue, because we are not the only ones selling annuities or securities to seniors," he said, adding that it had also become a political issue during the U.S. elections. The hit to Allianz's reputation with consumers was probably limited but it was crimping the company's ability to gain new distribution outlets with banks and wholesalers, Diekmann said. Allianz has settled disputes with insurance regulators in California and Minnesota and the company believed that the remaining three class-action lawsuits would be no big hindrance to reviving distribution and sales this year. "This is not a question that will take us into 2009, no way. We will see sales picking up in 2008," Diekmann said. Earlier this month, California's insurance commissioner announced that Allianz had agreed to pay $10.05 million to settle allegations that it tried to steer thousands of the state's senior citizens into buying unsuitable annuities. Allianz board member Paul Achleitner on Friday said the company was conducting talks to settle one of the remaining lawsuits, known as the "Mooney" case, if terms were appropriate and acceptable. (Reporting by Jonathan Gould; Editing by Quentin Bryar) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 18. Allianz Eyeing Chances To Buy ABS, Leveraged Loans Fri Feb 22, 2008 8:05am EST FRANKFURT (Reuters) - Allianz (ALVG.DE: ) is actively looking to buy leveraged loans and asset backed securities (ABS) whose prices have been driven down by the turmoil in the global credit markets, Allianz board member Paul Achleitner said on Friday. "The current market environment shows excellent buying opportunities if you know what you are doing," Achleitner told an analyst conference monitored on the Internet. "We are looking at those opportunities in terms of leveraged loans as well as ABS to take advantage of that," he said. Allianz and its bond fund management company PIMCO do not rely on assessments from credit rating agencies for their investment decisions but instead do their own bottom-up credit research, Achleitner said. New PIMCO funds aiming to take advantage of the low prices were seeing a lot of investor demand, Achleitner added. Prices for leveraged loans and securities have been driven down by accounting-mandated mark-downs, or by sellers forced to liquidate assets at prices that did not reflect their underlying value, he said. "There are very attractive layers out there today," he said. (Reporting by Jonathan Gould) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 20. INSURANCE NEWSCAST "Pictures Of The Day" -- Sponsored By:
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21. Hanoi Allows Morgan Stanley To Buy Shares In Dollars HANOI, Feb 22 (Reuters) - The Vietnamese government said it has allowed Morgan Stanley (MS.N: ) to use dollars to pay for a stake in unlisted Petrovietnam Finance Corp in a move to help foreign investors hampered by a shortage of the Vietnamese dong. The government, approving a proposal by state oil group Petrovietnam, has also assigned the central bank and finance ministry to work on regulations to allow foreign investors to use foreign currencies to pay for Vietnamese shares, it said in a statement seen on Friday. Last month, Vietnam said it was planning measures to improve its capital markets, after foreign investors and their brokers in Vietnam complained that a shortage of the dong has made it difficult to pay for securities in the country. The Vietnamese government has a tricky balancing act, on one hand tightening monetary policy in an effort to reduce double-digit inflation in the country while trying to maintain foreign investor interest in its stock market. In December, Morgan Stanley agreed to buy a 10 percent stake from Petrovietnam Finance Corp for $217 million, the financial arm for state oil group Petrovietnam said. Morgan Stanley has been stepping up its operations in communist Vietnam, where booming growth and a freeing up of the economy is fuelling strong demand for financial services. The Wall Street investment bank established a joint venture with small Vietnamese brokerage Gateway Securities earlier this month. (Reporting by Ho Binh Minh; Editing by Valerie Lee) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 22. Benfield To Provide Soft Market Panel Presentation At TMPAA Mid Year Meeting The Target Markets Program Administrators Association announced today that the Association's Strategic Partner Benfield Inc. will be conducting a panel presentation, “Strategies for Surviving the Soft Market", at the group’s upcoming Mid Year Meeting. The presentation is designed to provide TMPAA members with information to help maintain profitability in their program operations during the current soft market cycle. “The last prolonged soft market seriously impacted the image of program managers in the market,” stated Greg Thompson, Association President. “The TMPAA intends to do all within its power to keep the image of its members positive throughout all market cycles. Defending the profitability and integrity of the business is paramount.” Benfield’s Executive Vice President, Andrew Bustillo, will be moderating a panel of Program Specialists and Carriers who will provide their insights in this regard. “Benfield recognizes the significant impact a soft market has on the program business segment of the industry,” said Mr. Bustillo. “Benfield is heavily invested in Program Business and the TMPAA, so it is a topic of great importance to us. Providing strategies to survive and thrive in the current market is an activity in which we are very pleased to participate.” Members of the panel currently consist of Rick Weidman, Castlepoint Management, Steve Porcelli, Hudson Insurance Company, Geof McKernan, NSM Programs, John Paulk, Britt Paulk Insurance, and Greg Thompson, THOMCO. The Association along with Benfield Inc. plans to employ audience response technology to gather key facts about the program business operations in the group, and the strategies they currently employ to remain profitable. The 2008 TMPAA Mid Year Meeting is scheduled for April 7-9, 2008 in Atlanta, Georgia. Program Administrators/MGA’s interested in learning more about the TMPAA or the Mid Year Meeting can visit www.targetmarkets.com For additional information, contact Ray Scotto – Executive Director - at (877) 347 - 5700. E-mail address: ray.scotto@targetmkts.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 23. Delphi Financial Announces Expansion Of Share Repurchase Program And New Performance-Contingent Option Grants To Safety National Management Team WILMINGTON, Del.--(BUSINESS WIRE)--Delphi Financial Group, Inc. (NYSE:DFG) announced that its Board of Directors today authorized an expansion of its existing share repurchase program to permit an additional one million shares of the Company’s Class A common stock to be acquired. Under this program, purchases may be made from time to time on the open market or in privately negotiated transactions, subject to market conditions and applicable legal requirements. This expands the Company’s existing share repurchase program of 1.5 million shares authorized on November 7, 2007, which had a remaining authorization of 253,200 shares prior to such expansion. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 24. And The Award For The Hardest-To-Insure Movie Of The Year Goes To… Fireman’s Fund Insurance Company Names Riskiest Film of 2007 NOVATO, Calif.--(BUSINESS WIRE)--What is the riskiest movie of this year’s crop of Oscar®-nominated films? Movie-goers might be surprised. Was it the western crime thriller “No Country for Old Men” or “Michael Clayton” where a burned-out corporate law firm fixer is targeted for assassination? Perhaps “Sweeney Todd” with its murderous barber or the Russian mob flick “Eastern Promises”? If you guessed one of these nominees, you wouldn’t walk away with a golden statuette. That’s because it takes more than a criminal plot to make a film hard to insure. Fireman’s Fund Insurance Company, the entertainment community’s veteran leader in insuring films produced by Hollywood production companies, found that the toughest movie to insure in 2007 was not a period epic, a crime thriller or a light-hearted comedy. According to Fireman’s Fund, the winner of this year’s most risky film is “Into the Wild,” the Sean Penn-directed production about a young man who abandons a normal lifestyle to explore the Alaskan wilderness. The movie was shot in several rugged locations of Utah, Montana, North Dakota, Alaska, Oregon and Arizona – so medical concerns and transit and care of equipment had to be addressed. Several scenes were shot on cliffs and rocky ledges in the mountains and on whitewater rapids, which can prove hazardous not only for actors, but for cameramen and crew. In case of accidents or injuries, medics needed to be on stand-by with access to helicopters for transport to a medical facility. The film also uses bears in several scenes. And, while the bears are specially trained, there is always a risk to cast and crew when using wildlife. In addition, Fireman’s Fund had to consider potential risks regarding transportation of the bears (moved in air-conditioned RVs) and potential illnesses that could be spread by them to humans. Finally, to capture the difference in seasons, the movie took a six-week hiatus in shooting. This could have created potential problems if the lead actors sustained illnesses or injuries – even death – while away from the set. Is there a least risky production among this year’s nominees? Fireman’s Fund finds that “walk/talk” movies, where the actors are shot in simple scenes and don’t engage in activities much beyond dialogue, are the easiest to insure. Of this year’s nominees, “Lars and the Real Girl” and “The Savages” fell into that category. With an over 80-year history of insuring a majority of Hollywood studio films, Fireman’s Fund entertainment division is dedicated to helping producers and studios achieve the artistic results they are seeking, yet also ensuring they are filmed safely, finished on time and on budget. Its 40-member team includes underwriters and loss control experts who each have about 20 years of experience in the entertainment field. www.firemansfund.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 25. Britain Passes Northern Rock Nationalization Law Thu Feb 21, 2008 6:28pm EST LONDON (Reuters) - Britain's parliament passed legislation on Thursday allowing the government to nationalize Northern Rock (NRK.L: ), five months after the bank became a high-profile casualty of the global credit crunch. The Banking (Special Provisions) Act allows orders to be issued for the transfer of all shares in Northern Rock to the government and for an independent auditor to calculate how much money shareholders should receive. Britain's fifth-largest mortgage lender was rescued by loans of about 25 billion pounds from the Bank of England in September and the government also stepped in to guarantee deposits. Prime Minister Gordon Brown's government said the collapse of Northern Rock would have posed risks to the wider financial system and that saving the bank was therefore essential. © Reuters 2008 All rights reservedReturn to Headlines - - Print Article / Read Entire Article / E-Mail Article 26. Singapore GIC Says To Explore China Market Fri Feb 22, 2008 6:42am EST BEIJING, Feb 22 (Reuters) - The Government of Singapore Investment Corp is actively seeking investment opportunities in China, especially in infrastructure and the restructuring of state firms, a senior official of its private equity arm said on Friday. Liu Dong, head of Greater China operations at GIC Special Investments Pte Ltd, said it was also interested in private equity opportunities in China's poorer inland provinces. © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 27. What Should U.S. Children Expect Under Their Pillows? Despite Sluggish Economy, The Tooth Fairy PollSM Exposes Generosity EAGAN, Minn.--(BUSINESS WIRE)--The results are in! The Tooth Fairy PollSM from Securian Dental plans reports an increase in the current average “gift” U.S. children receive from the Tooth Fairy. Children receive an average of $2.09 per tooth, which is up from last year’s gift of $1.71 – a 22 percent increase. Tooth Fairy gift amounts range from a low of five cents to a high of $50 per tooth. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 28. Oklahoma City's AFR Insurance Officially Expands To 24 States CEO Ray L. Wulf: "AFR Now a National Insurance Leader" OKLAHOMA CITY--(BUSINESS WIRE)--Oklahoma City-based American Farmers and Ranchers Insurance (AFR) has officially expanded operations into 24 states, stretching from the Southeastern U.S. through the Midwest and Western two-thirds of the U.S. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 29. Fiserv To Integrate Checkfree Investment Services And Interactive Technologies BROOKFIELD, Wis.--(BUSINESS WIRE)--Fiserv, Inc. (NASDAQ:FISV), a leading provider of technology services to the financial industry, today announced that it will integrate Interactive Technologies, a wholly owned subsidiary of Fiserv, Inc., with CheckFree Investment Services. The more than 70 clients of Interactive Technologies’ Advantage Fee billing system will gain access to CheckFree Investment Services’ industry experience, technology, operations and support. CheckFree’s vast client base, including the global institutional market, can benefit from Interactive Technologies’ Advantage Fee billing and revenue management system. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 30. NAMIC Testifies In Favor Of Flex Rating Bill Before Kansas Legislative Committee INDIANAPOLIS (Feb. 21, 2008) – The National Association of Mutual Insurance Companies (NAMIC) today urged members of a Kansas Senate panel to pass rate modernization legislation. Senate Bill 560 would establish a flex rating system that allows property/casualty insurers to increase or decrease rates within a 12 percent flex band without regulatory approval. SB 560 is based on a model law developed by the National Conference of Insurance Legislators. It allows regulators to review rate filings within the 12 percent flex band, but not reject an increase as excessive as long as the market remains competitive. Eight states currently have flex-rating laws in place. Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 32. Founder Of Japan's Livedoor Fights Fraud Conviction TOKYO, Feb 22 (Reuters) - Disgraced Internet entrepreneur Takafumi Horie, who shook up corporate Japan with his flashy lifestyle and brash takeover attempts, appealed on Friday his conviction on securities fraud. Horie, 35, was sentenced to 2-½ years in prison a year ago for his role in a securities fraud at his former company, Internet company Livedoor -- an unusually harsh punishment for white-collar crime that was seen as a sign of regulators' determination to clamp down on corporate misdeeds. Japanese executives who plead guilty and show remorse often avoid time in jail, but Horie insisted he was innocent, telling the court he knew nothing of the problems that led to his arrest. He blamed other executives at his company but acknowledged he should have been more careful about accounting. Though Horie was not in court, his defiance was conveyed by his lawyers, who implied that the harsh sentence -- which they said was based on "mistakes" -- might have been at least partly due to his flouting of Japanese corporate norms. "There's a proverb in Japan that the nail that sticks out will be hammered in," said Yoshio Okada. Livedoor lost $5 billion in market value following his arrest in 2006, which sparked a share sell-off that crashed the Tokyo Stock Exchange's computer system. The company lost its Tokyo Stock Exchange listing a few months later after its share price sank to just 94 yen. ($1=107.39 Yen) (Editing by Rodney Joyce) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 33. M Financial Group Sets Another Annual Sales Record, Tops $2 Billion Mark For The First Time PORTLAND, OR, FEBRUARY 21, 2008-M Financial Group, one of the nation's leading financial services design and distribution companies, today announced that total sales in 2007 topped $2 billion, the first time the company has surpassed this milestone. This sales total, a 75% increase over 2006, marked the eleventh consecutive year in which M Financial has posted record-breaking sales. www.mfin.com Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 34. AIA Applauds Defeat Of Harmful Legislation In Wyoming And Oklahoma WASHINGTON, DC, February 21, 2008 – The American Insurance Association (AIA), today praised legislators in Oklahoma and Wyoming for voting to defeat onerous insurance-regulatory legislation in those states. In Oklahoma, the state senate struck down SB 2190 in the Appropriations Committee, which would have repealed the state’s current file and use law for both personal and commercial lines of insurance. In Wyoming, House Bill 125 would have prohibited the use of credit scoring as a rating or underwriting factor in determining risk before it was similarly rejected in committee. Oklahoma’s Senate Bill 2190 was introduced by State Senator Charles Laster, and sought to repeal the state’s current file and use law, reverting back to the obsolete prior approval system under the State Board for Property and Casualty Rates. www.aiadc.org Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 35. Turkish Yapi Kredi Says Eyes Insurance Sale ISTANBUL, Feb 22 (Reuters) - Turkish lender Yapi Kredi Bank YKBNK.IS said on Friday it was looking to sell or find a partner for its insurance business, sending shares in Yapi Kredi Sigorta YKSGR.IS up as much as 7 percent. (Reporting by Emma Ross-Thomas; Editing by Louise Ireland) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article 36. China Construction Bank To Buy Life Insurer-Paper BEIJING, Feb 22 (Reuters) - China Construction Bank (0939.HK: ) (601939.SS: ) is considering two domestic acquisitions totalling 3.5 billion yuan ($490 million) to diversify into insurance and other financial service sectors, the 21st Century Business Herald said on Friday. The newspaper said CCB, which has yet to make significant forays overseas, may buy a 51 percent stake in Happy Insurance, a domestic life assurer, for 1.2 billion yuan. Beijing last month authorised banks to buy into life insurance firms, and vice versa, further breaking down barriers between China's segregated financial sectors. An official in the bank's news department said he had no information about either reported deal. ($1=7.1439 yuan) (Reporting by Zhou Xin; Editing by Alan Wheatley) © Reuters 2008 All rights reserved Return to Headlines - - Print Article / Read Entire Article / E-Mail Article
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