NON-PERFORMING LOANS UP, RESERVES DOWN – According to Weiss Ratings, non-performing loans in the banking industry grew by 15% during the first nine months of 2000. Martin Weiss, Ph.D., chairman of Weiss Ratings concludes, "If the economy continues slowing, recession or no recession, we are bound to see an acceleration of the industry's troubles." Further, the banking industry's reserve for possible loan losses reached the lowest level in 14 years. "Soon, many banks will have to boost their loan loss reserves, resulting in a significant hit to earnings and a very unpleasant surprise for shareholders," added Dr. Weiss.

PONZI SCHEME – The SEC just fined Pru Securities $800,000 for failing to supervise a former broker allegedly involved in a Ponzi scheme. The broker apparently provided false information about escrow accounts. The broker agreed to pay back commissions of $36,000, pay a fine of $28,000 and was suspended for one year. The violation took place in 1994-95. Two points: Fines and a suspension seem pretty light for the broker and it sure took a long time to resolve.  In other Prudential legal news, 15 Palm Beach County residents who elected out of the 1997 Prudential national class-action lawsuit settlement filed a $1 billion lawsuit against Pru for deceptive sales practices.  Jury selection in the case is scheduled for today.

$4.3 BILLION – That's the estimated amount P&C insurers paid in claims in 2000, making it the second-least costliest year in a decade.  The industry paid $8.3 billion in claims in 1999 and $10 billion in 1998.

INDUSTRY-WIDE MUTUAL FUND PORTAL – Three mutual fund giants and competitors (Fidelity, Putnam and Franklin Templeton) are joining forces to create a Web portal giving independent advisers a single location that provides information about several fund families. Launch date is set for the third quarter of this year for the portal, which is intended to supply integrated mutual fund information for the industry. More on this as it develops.

COMPLAINTS UP – With the decline in stock prices last year, it's not surprising to learn that investor complaints to the SEC about their brokers hit an all-time high in 2000, rising to 13,599 from 12,463 in 1999.  More info about complaints received by the SEC can be found at http://www.sec.gov/consumer/jdatacom.htm. 
 

LOMA: SALES UP, MERGERS CONTINUE – A LOMA survey predicts sales and profits for the financial services industry to be up slightly in 2001, especially for equity-based products such as variable life products and variable annuities. Further, the trend in mergers and acquisitions is expected to continue. Other key findings: companies need to move away from a product-driven orientation; traditional insurers will tend to be the "acquirees" and "E-commerce will have a 'profound' influence on the industry in the coming years; specifically in the areas of support for distributors, customer/company relationships, and cost savings." (Sounds more like "E-support" rather than E-commerce to us). Check out the entire survey here.  

GUT PUNCH – That's how Investment News describes this latest move by American Express...American Express Financial Advisors franchisees, who already pay $390 monthly in fees, are being asked "to cough up an extra $95 a month for 'technology charges.'"  The new fee is reported to be adding "fuel to an already tense relationship between the advisers and the company."

HEALTH CARE COSTS...AGAIN! – More confirmation that employers are in for a tough year trying to control health benefit costs.  A Tower Perrin survey predicts a 13% increase in health care costs for 2001. This is the highest percentage increase since the survey began over 10 years ago and marks the second consecutive year of double-digit increases. Worse, 90% of those polled expect double-digit increases to continue over the next few years. Major causes: rising costs of prescription drugs (up 20%), with help from carriers keeping a sharper eye on bottom line profitability. Copies of the 2001 Towers Perrin Health Care Cost Survey are available by calling 1-800-525-6741.

DONE DEAL – On Monday, the New York and American Stock Exchanges began trading totally in decimals.  No problems were reported.  The shift to decimals on the Nasdaq Stock Market isn't expected to be complete until early April.

LOUISIANA WOES – Just as suspended Insurance Commissioner Jim Brown is scheduled to be sentenced on two counts of lying to FBI agents about his involvement in an insurance company liquidation sham, the Louisiana legislature is considering a bill that would allow the Commissioner of Insurance access to personal health records. Not sure the citizens of Louisiana will be pleased, since Brown is the state's third straight commissioner to be indicted on various charges. In a related story, former Governor Edwin Edwards, who was acquitted for his part in the insurance scheme, is scheduled to start serving time in a federal prison for his part in a casino gambling fraud. All this and Mardi Gras, too!