By Emily Chasan - Analysis

NEW YORK (Reuters) - A new obsession by big investors with veiling their stock trading patterns is rewriting the rules of the stock market, but some are questioning if the trend, for all its secrecy and sophistication, has created as many problems as it has solved.

The stealthy but rapid growth of off-exchange trading venues, known as dark pools of liquidity, may be playing a bigger role in the market than some expected.

Only a few years ago, investors could count on one hand the number of places to trade stocks in, for example, U.S. companies.

But today traders must navigate a virtual ocean of more than 40 venues to find the best prices -- a phenomenon that may be adding to overall volatility and possibly compromising the validity of all stock prices.

In dark pools, where buyers and sellers anonymously match large stock orders keeping details about price and volume concealed, there is no guarantee that even big investors are getting the prices they should.

"My biggest concern with dark pools is that before, when you were using the Big Board as somewhat of a standard, you were trading with some level of information, and now in dark pools you are trading without information," said Bob Koci, a trader with Principal Global Investors, based in Des Moines, Iowa.

Investors have become accustomed to knowing the quoted price on traditional stock exchanges like the New York Stock Exchange, or Big Board, and Nasdaq, is generally fair and the best available at any point in time. But as trades are increasingly fragmented across different venues, making such assumptions in the future could be dicey.

"On one hand, there are trades being executed right now that would not be executed without dark pools," said Robert Iati, a partner at market technology consulting firm The Tabb Group in New York.

"On the other hand, you can say, well it's not visible and that makes it more volatile."

Some investors have always looked for ways to hide their cards, such as slicing a large block trade into smaller pieces, or placing a reserve order that displays a small amount of liquidity while keeping a larger amount hidden. However, recent advances in electronic trading and the 2001 switch to trading stocks in dollars and cents instead of fractions are credited with pushing traders into more secretive venues.

As investors found it increasingly difficult to trade discreetly on open markets, the average size of a stock trade on an exchange fell from close to 1,500 shares per trade a decade ago, to just 250 today, Tabb's Iati noted. That trend developed at the same time hedge funds and institutional investors found it profitable to make riskier, more leveraged bets at faster speeds, he said.

"Indirectly, you have the market structure changing," Iati said. "Now it is much more challenging overall for any investor to make money like they did 10 years ago in the plain-vanilla U.S. markets."

Alternative, off-exchange trading systems, ranging from dark pools to electronic networks were set up rapidly to address demand. Some pools are sponsored by brokers like Goldman Sachs Group Inc's Sigma X, while others such as Liquidnet and BATS Trading were created independently or as joint ventures. Now even the exchanges are setting up their own pools to remain competititive.

In dark pools, traders looking to buy or sell large blocks of stock get something akin to a wholesale discount.

When investors see a large buy order on a public exchange, they often jump in and bid up the price of the stock, assuming a big trader is making a strong bet about its direction. But if the trader who made the order is still trying to fill it, the price for the stock can move against him, adding to costs.

Hiding the bid from the public markets in a dark pool offers traders the ability to fill an order without suffering the impact of other traders changing the price.

 (Reporting by Emily Chasan; Additional reporting by Phil Wahba and Kristina Cooke; Editing by Eddie Evans)

LONDON, April 21 (Reuters) - Legal & General (LGEN.L: ) expects the market for transferring the pension liabilities of British firms to insurers to more than double in 2008 from last year, as momentum builds in the trillion-pound sector.

The buyout market has expanded in the past two years from a handful of players, led by L&G and rival Prudential (PRU.L: ), to include specialist start-ups like Paternoster, with demand led not by insolvent employers but increasingly by solvent companies hoping to cut their exposure to risks they cannot mitigate.

In 2007, a bumper year for the market, the buyout market totalled 2.7 billion pounds ($5.4 billion), up from 1.7 billion a year earlier, but Simon Gadd, managing director of L&G's annuities business, said it will continue to rise despite broader financial market turbulence.

"2008 will easily see a doubling again of the market," Gadd told Reuters on Monday. Deals signed by L&G and rivals including Paternoster, Goldman Sachs' (GS.N: ) Rothesay Life and others so far this year already add up to close to 2007 levels, he said.

Analysts have expressed concerns over the insurer's growing dependence on a business that remains bulky and unpredictable, but Gadd said developments in the business, including the move to tailored deals -- as companies reduce the risk on their balance sheets in several tranches -- would help smooth out revenue.

In individual annuities, L&G has pioneered "postcode" offerings, which provide quotes based on home addresses and help the insurer move into a "light" version of the lucrative enhanced annuity market, which traditionally offers higher income in retirement for those with an illness or lifestyle that could shorten their lives.

Gadd said on Monday the insurer hoped this year to pioneer new types of "postcode" annuities that would add other variables, such as basic health information, height, weight or occupation, to help the insurer further tailor its risk.

(Reporting by Clara Ferreira-Marques, editing by Elizabeth Fullerton)

TALLAHASSEE, Fla. - The Florida Health Insurance Advisory Board (Advisory Board) met today to discuss several bills currently making their way through the legislature, including SB 2534 by Senator Durell Peaden and Co-Sponsored by Senator Don Gaetz.  The bill includes Governor Crist’s Cover Florida Health Access Program and was passed by the Senate yesterday with a vote of 39 – 0.

"The unanimous approval that this bill received is a clear indication of its importance to all Florida consumers,” said Insurance Commissioner Kevin McCarty, who also chairs the Advisory Board. “Because of the leadership of Gov. Crist, Florida residents will have more options to provide health care for their families.”

The Advisory Board endorsed the Senate bill by a super-majority, and urged the House members to pass a similar bill. Board members discussed the differences between the Senate and House bills, specifically noting that the House bill allows unregulated entities to sell products that could potentially destabilize the existing small group market.

The Advisory Board also endorsed another aspect of the Senate bill expanding access to Health Flex Plans, which were established to offer basic, affordable health care services to low-income, uninsured residents.

The study, now in its second year, directly compares the performance of 107 large health plan companies in 17 regions throughout the U.S. based on the total member experience. It focuses on seven key factors: coverage and benefits; choice of doctors, hospitals and pharmacies; information and communication; approval processes; claims processing; insurance statements; and customer service.

Meanwhile, the industry reported an underwriting profit for the second consecutive year, falling short of the $32.0 billion gain in 2006, yet posting a $22.1 billion net. A strong fourth quarter capped a solid 2007 for the industry, but net income fell almost 7% to $66.5 billion from the $71.3 billion recorded in the prior year. The after-tax return on equity slipped to 13.0% from 15.3% posted in 2006.  www.ambest.com

DENVER--(BUSINESS WIRE)--According to InsureMe, 3.5 percent of homeowners nationwide possess either a Chow, Doberman, German Shepherd, Rottweiler or pit bull terrier.

“My guess is that this is a little on the low side, given people’s financial incentive not to report a dangerous breed,” said InsureMe statistician Peter Deusterman, alluding to the fact that insurers typically charge more to owners of those breeds because of their reputation as dangerous dogs. “But I think it gives a general picture. I’d be surprised if it was much larger than that figure.”

InsureMe.com is a web-based service that helps people shopping for insurance, including homeowner's insurance. In the process it collects aggregated consumer information, including whether applicants own the dog breeds listed above.

According to the Insurance Information Institute (III), a lobbying organization for the insurance industry, there are approximately 4.7 million dog bites per year, and in 2005 those bites ended up costing insurers roughly $317.2 million.

“Three-hundred million dollars sounds like a lot, doesn’t it? Actually, it’s not,” said Deusterman. “Compared to all the things insurers pay for, dog-bite liability claims amount to a small fraction.”

According to the III, all bodily injury and property damage liability claims (not just dog-bite-related ones) accounted for just 4.36 percent of all of claims-related losses in 2006. Insurers pay far more for fire, lightning, wind and hail damage. Those four things account for nearly two-thirds of industry losses.

There is no database that lists the breed responsible for each dog bite, but there are records of which breeds have caused the greatest number of fatalities. That explains why, perhaps, certain breeds get singled out. But they may not actually bite people more often.

What’s more, breed-specific underwriting and legislation may have had the unintended effect of clouding the dog-bite issue.

“The focus on death cases may leave the public with the false impression that pit bulls and Rottweilers are responsible for the dog bite epidemic,” says Kenneth Phillips, attorney and author of the influential web site Dogbitelaw.com. “It is a much broader problem than that, involving all dogs and all dog owners. While pit bulls and Rottweilers inflict a disproportionate number of serious and even fatal injuries, the dog bite epidemic involves many different breeds, and results from many different causes. A clear distinction needs to be made between canine homicides… and the dog bite epidemic.”

While they might dispute the notion of a “dog-bite epidemic,” the Humane Society of the United States (HSUS) agrees that there are two separate issues when it comes to dog aggression: “Out of the millions of bites, about 10-20 are fatal each year. While certainly tragic, it represents a very small number statistically and should not be considered as a basis for sweeping legislative action.”

The other reason breed profiling may not work is the fact a dog’s breed is a pretty fluid thing. “[There] are inherent problems in trying to determine a dog's breed, making enforcement of breed-specific legislation difficult at best,” says the HSUS, adding that bans have occasionally made dangerous dogs more appealing to people who desire such a trait.

Still, many contend that fatal attacks should carry a lot of weight despite their infrequency. In other words, the risk is still too great — something must be done.

Merritt Clifton is the founding editor of Animal People, an independent newspaper covering animal protection issues. He believes the numbers support breed-specific underwriting.

“What is relevant is actuarial risk. If almost any other dog has a bad moment, someone may get bitten, but will not be maimed for life or killed, and the actuarial risk is accordingly reasonable. If a pit bull terrier or a Rottweiler has a bad moment, often someone is maimed or killed — and that has now created off-the-chart actuarial risk, for which the dogs as well as their victims are paying the price.”

Ultimately it is risk aversion that motivates insurers, not a hostility toward certain types of dogs, says Deusterman.

“Insurers don’t discriminate — they calculate. They look for easy, empirically sound ways to reduce their underwriting risk. Charging pit bull and Rottweiler owners more is one of them.” www.InsureMe.com

Moody's believes that some firms could face "rising credit losses and/or tighter liquidity if the capital markets continue to deteriorate and if major securities borrowers were to unwind their loan positions."

Ms Bazer emphasizes, however, that Moody's does not expect industry ratings to be significantly affected. "This is because securities lending is largely a side-line activity for most life insurers." she says. "And it is dominated by the industry's largest, financially healthiest players -- firms that benefit from well-diversified business lines, strong earnings, good asset quality and liquidity, and healthy capital levels."  www.moodys.com

The Cleveland-based bank posted a net loss of $171 million, or 27 cents per share, after a loan loss provision of about $1.4 billion, compared with a profit of $319 million, or 50 cents per share, in the year-earlier period.

Its board cut the common dividend to 1 cent per share from 21 cents per share.

The capital raise includes $985 million of private equity capital from Corsair Capital and one other private equity investor. The balance is being purchased by other investors, including several current institutional stockholders.

(Reporting by Paritosh Bansal, editing by Gerald E. McCormick and Dave Zimmerman)

© Thomson Reuters 2008 All rights reserved

By Lynn Adler

NEW YORK, April 18 (Reuters) - Ex-Fannie Mae (FNM.N: ) chief Franklin Raines and two other former executives agreed to pay more than $31 million in a settlement over their roles in a 2004 accounting scandal at America's largest home financing agency, its regulator said on Friday.

The Office of Federal Housing Enterprise Oversight, or OFHEO, in 2006 leveled charges against Raines, the former chairman and chief executive officer; former Chief Financial Officer J. Timothy Howard and ex-Controller Leanne Spencer.

The charges included earnings mismanagement, failure to ensure adequate internal controls and the release of misleading financial reports.

In consent orders, the three former executives agreed to payments which OFHEO estimated at $24.7 million for Raines, $6.4 million for Howard and $275,000 for Spencer.

"OFHEO's mission is to ensure that the enterprises operate in a safe and sound manner," OFHEO Director James Lockhart said in a news release. "That cannot occur without corporate management providing prudent and responsible leadership and setting the appropriate ethical and overall 'tone at the top.'"

Sources familiar with the cases played down the total costs to the former executives, saying required payments to the government would be covered by insurance and that surrendered stock options are without value.

Under the settlement, Raines will pay $2 million to the government, donate proceeds from the sale of Fannie Mae stock valued at $1.8 million, and surrender claims related to stock options valued at $15.6 million when issued.

Those options were issued with strike prices between $77 and $81, but the company's stock now trades below $29, effectively making the options worthless, a source familiar with the case said.

Of Raines' $91 million in compensation between 1998 and 2003, more than $84 million was tied to earnings per share targets and faulty accounting, OFHEO said in 2006.

Raines, in a statement, said he accepted managerial accountability but not legal culpability.

"My agreement to end this dispute ... is consistent with my acceptance of accountability as the leader of Fannie Mae and with my strong denial of the allegations made against me by OFHEO," he said.

Of the $6.4 million in fines and penalties against Howard, the former CFO, $5.2 million comes from surrendering now-worthless options and $750,000 will be paid to the government by insurance. Howard's charitable donation from the sale of Fannie Mae stock would be valued at about $200,000, OFHEO said.

"The settlement is a capitulation by OFHEO, reflecting that its concocted claims never had an ounce of merit," Howard's attorney, Steven Salky, said in a statement.

Spencer's attorney, David Krakoff, said in a news release that the OFHEO reports and allegations had no merit.

In 2006, Fannie Mae paid a $400 million civil fine in a settlement with OFHEO and the Securities and Exchange Commission. (Editing by Jonathan Oatis)

© Thomson Reuters 2008 All rights reserved

ZURICH (Reuters) - Swiss bank UBS AG released on Monday its 'Shareholder Report on UBS Writedowns', a document that might be better named 'How Not to Run a Bank'.

The report is part of a forensic exercise ordered by Swiss banking regulator EBK in the wake of UBS' $37 billion in writedowns on the subprime crisis -- the biggest by any bank.

What it reveals is widespread failure of some of the most basic controls, affecting numerous levels of management and in numerous departments, as UBS pursued a breakneck expansion plan into investment banking in breach of clear warning signs.

(Reporting by Thomas Atkins; Editing by Andrew Callus and Jason Neely)

© Thomson Reuters 2008 All rights reserved

In an interview Friday morning, CFO Gary Crittenden declined comment on terms of the deal. Sources last week said the average price of the loans was expected to be slightly below 90 cents on the dollar.

Sources last week also said the loans were being sold to private equity firms Apollo Group, Blackstone Group (BX.N: ), and TPG, with Citigroup financing most of the purchase price.

(Reporting by Dan Wilchins and Jonathan Stempel, editing by Gerald E. McCormick)

“As directives from the U.S. military and other federal agencies are increasingly outsourcing support-related services such as security, linguistics, commissary services, IT and equipment maintenance, we see this market as a significant growth opportunity,” said Mario Vitale, CEO of Zurich’s Global Corporate in North America (GCiNA) business unit. “Zurich’s global reach easily enables us to deliver coverage and services on a worldwide basis.”

Originally passed by Congress in 1941, the Defense Base Act mandated workers’ compensation coverage for civilians employed at American military bases overseas. Since its inception, the scope has been broadened to protect most private-sector employees working for the U.S. government on federally funded projects overseas. The program is administered by the U.S. Department of Labor. www.zurichna.com

NEW YORK, April 21 /PRNewswire/ -- Bivona & Cohen, P.C., a prestigious law firm serving the insurance industry, announced today that it has filed a preemptive lawsuit in the Supreme Court of the State of New York against an employee of the firm. The basis for the complaint is falsification of an employment application to conceal a previous felony conviction and making false allegations to defame Bivona & Cohen, P.C. and a Senior Partner at the firm.

Marlene Monteleone, Senior Partner, said, "Too often firms are victimized by employees looking to profit from false allegations. As a firm we wanted to take a stand and be proactive in our measures to ensure that the situation was dealt with properly. Bivona & Cohen, P.C. has an exceptional track record providing professional legal services to the insurance industry and we will rigorously defend the reputation of our firm and Senior Partner against these outrageous claims."

Complaint Highlights:

-- Employee lied on job application for a secretary position at Bivona & Cohen, P.C. - employee is a convicted drug felon and took additional steps to conceal the felony conviction from Bivona & Cohen, P.C.

-- Employee alleges rape and sexual harassment against a Senior Partner at Bivona & Cohen, P.C. and now demands $9 million.

-- Bivona & Cohen, P.C. acknowledges a sexual encounter, initiated by the employee, occurred.

-- Employee boasted to co-workers about her behavior, never sought medical help and only alleged rape when an office manager at Bivona & Cohen, P.C. approached her about missed days at work.

-- Bivona & Cohen, P.C. and the Senior Partner are seeking affirmative judicial action and relief, including a declaration that this employee's threatened claims under the "state and local anti-discrimination and human rights laws" have no factual and legal merit.

Founded in 1974, Bivona & Cohen, P.C. is a multi-faceted litigation firm dedicated to providing cost-effective, professional legal services to the insurance industry and commercial marketplace. The firm's practice areas include general defense, insurance coverage litigation, trial practice, product liability, malpractice, property, casualty and surety,  environmental and toxic tort litigation, reinsurance and appellate practice. For more information visit http://www.bivonacohen.com. 

-- More than 1000 tornadoes occur each year.  At least 20 of those will be violent.

-- Tornadoes are most likely to strike between 5-7 p-m.

-- May and June have the most tornado activity, followed by April, July and September. (according to the National Climatic Data Center)

State Farm wants you to take the time to prepare your family and home for the possibility of a tornado or severe storm. The best thing to do is arm yourself with information and develop a plan for when weather turns dangerous.

Tornado Preparedness

-- Learn the warning signals used in your community. If a siren sounds, that means stay inside and take cover.

-- Consider setting up a neighborhood information program through a club, church group or community group. Hold briefings on safety procedures. Set up a system to make sure senior citizens and shut-ins are alerted if there is a tornado warning.

-- Put together an emergency storm kit including a portable radio,  flashlight, batteries, bottled water and simple first-aid items.

-- Conduct drills with your family in the home; make sure each member knows the correct procedures if they are at work or school when a tornado hits.

-- Make a complete inventory of your possessions for insurance purposes.

Tornado Watch simply means that conditions are favorable for tornadoes to develop. In this case you should be alert to changes in the weather and take precautions to protect your family and property.

-- Move cars inside a garage or carport. Keep your car keys, house keys and cell phone with you.

-- Move lawn furniture and yard equipment such as lawnmowers inside if time permits.

-- Account for family members at home.

-- Have your emergency storm kit ready.

-- Keep your radio or TV tuned into the weather reports.

Tornado Warning means that a tornado has actually been sighted. Tornadoes can be deadly and devastating storms, with winds up to 260 miles per hour. If a Tornado Warning is issued for your area, seek shelter immediately! During a tornado the safest place to be is a basement,  preferably under something sturdy like a work bench. If there's no basement or cellar in your home, a small room in the middle of house -- like a bathroom or a closet -- is best. The more walls between you and the outside, the better. 

For more information about tornado and severe weather preparation, and a link to a free home inventory check list, visit http://www.statefarm.com.

The National Association for Business Economics said on Monday that the 109 members who responded to its quarterly survey between March 24 and April 8 were "notably downbeat" about their first-quarter experience and about near-term prospects.

"For the first time in five years, reports of falling profit margins outnumbered reports of rising margins in the first quarter of 2008, while demand at respondents' firms grew more weakly than at any time since the recession of 2001," said Ken Simonson, chief economist for Associated General Contractors of America.

About 30 percent of respondents expected gross domestic product, the broadest measure of national economic activity, to decline in the first half of 2008 and most others thought growth will be below an annual rate of 1 percent.

By contrast, only 10 percent expected the economy to contract in the first half when they were surveyed in January.

A recession is typically defined as two consecutive quarters in which GDP declines. The last U.S. recession ran from March to November 2001.

(Reporting by Glenn Somerville; Editing by Neil Stempleman)

© Thomson Reuters 2008 All rights reserved

"This licence will allow us to compete like a local, home-grown reinsurer," the spokeswoman said.

Hannover Re received a preliminary licence in 2006 and said its venture in Shanghai would benefit from China's high savings rate and growing middle class, which have raised demand for insurance. It declined to give financial forecasts for the unit.

The world's fourth biggest reinsurer has had a representative office in Shanghai since 1997.

(Reporting by Jonathan Gould; Editing by Andrew Hurst)

© Thomson Reuters 2008 All rights reserved

Insurance Hiring System provides assessment solutions for insurance agencies, brokers and companies. iPeople, LLC, headquartered in Washington, DC, provides retained executive search services to insurance agencies, banks and brokers throughout the US and abroad.

iPeople provides a unique approach for insurance organizations looking to hire highly qualified insurance executives by using the latest employee assessment tools and interviewing techniques. Mark Shlien, principal of iPeople, LLC, said, "The ability to use the comprehensive assessment product that IHS provides helps ensure the right individual is being hired for the position."  George Nordhaus, President of Insurance Hiring System, added: "iPeople provides the highest caliber of service and commitment in the retained executive search industry, and we are delighted to be able to provide our assessment product to them."

IHS, headquartered in Santa Fe, NM, provides a complete hiring system, including psychological assessments, interview help, reference checks, and insurance knowledge tests ... all designed for specific job classifications in the insurance industry. Visit the IHS Website at www.insurancehiringsystem.com or call 617-639-0205.

iPeople LLC, headquartered in Washington, D.C., provides retained executive search and recruiting services to insurance professionals, insurance agencies, bank-owned agencies, brokers and insurance carriers.  Visit the iPeople Website at www.theipeople.com or call 202-544-7675

TOKYO, April 21 (Reuters) - The dollar's plunge to a 13-year low against the yen last month and tumbling bond yields overseas have made Japan's top life insurers more cautious about picking up foreign debt for better returns in the new financial year that kicked off this month.

Some insurers told Reuters in a series of interviews that the shake-up in financial markets has created opportunities to buy dollar-denominated bonds cheaply, partly because they expect the U.S. currency to rebound later in the year.

But many of Japan's nine biggest insurers -- which manage about $1.6 trillion in assets, nearly the size of the economy in Italy -- showed limited appetite for foreign bonds on worries about the dollar and euro as the global economy slows.

One insurer even intends to avoid foreign bonds altogether and focus new investments only in yen securities.

For the last decade the insurers have been big buyers of U.S. and European bonds to chase returns unavailable in Japan from the country's low interest rates, making them a force in markets that analysts and traders closely track.

(Additional reporting by Michiko Iwasaki, Hiroyasu Hoshi, Akiko Ishiwata, Koichi Kawaguchi, Shinji Kitamura, Masayuki Kitano, Yoko Matsudaira, Chikako Mogi, Yuka Obayashi, Rika Otsuka, Shiho Tanaka, Takaya Yamaguchi and Takeshi Yoshiike; Editing by Chris Gallagher)

© Thomson Reuters 2008 All rights reserved