MORE EXECS PLEAD GUILTY - Two executives from AIG and one from Marsh pleaded guilty to fraud charges stemming from New York Attorney General Eliot Spitzer's sweeping investigation into fraud in the industry. That brings the total to 10 guilty pleas to criminal charges from executives at AIG, Marsh, ACE and Zurich.  Many of these executives have agreed to cooperate with continuing investigations.

WALL STREET AND SOCIAL SECURITY REFORM - In an article titled "Don't Show Us the Money," Newsweek reports why Wall Street is sitting out the "Social Security wars."  The reasons: (1) lower fees than on conventional mutual funds and other investments; (2) managing money for a large number of inexperienced investors could open the financial industry to tremendous liability if markets decline; and (3) fear of a broad-based public-relations backlash if the financial industry actively promotes private accounts.  The article is available by clicking here.

HEALTH CARE SPENDING - An alarming report from the federal Centers for Medicare and Medicaid Services predicts that "U.S. health care spending will outpace overall inflation and wage growth over the next 10 years, making medical care harder for the government, employers, workers and uninsured Americans to afford."  The projections show the government picking up nearly half of total health care spending by 2014 and suggest that Medicare and Medicaid are far more immediate concerns than is Social Security.

AMERUS TO FIGHT CALIFORNIA SUIT - AmerUs has pledged to vigorously defend itself against a $110 million California lawsuit accusing an affiliate of tricking senior citizens into buying annuities they don't need. California regulators accused the AmerUS and other defendants of operating a "living trust mill" that tricked the elderly into using retirement investments to buy inappropriate annuities that generated substantial commissions. 

CLASS ACTION FAIRNESS ACT SIGNED INTO LAW - The Act expands federal jurisdiction for certain multi-state class actions where the class members are seeking more than $5,000,000 in the aggregate. Also, the Act attempts to curb perceived abuses such as awarding attorneys' fees based on the face value of coupons for future purchases or discounts and settlements where the payment of attorneys' fees results in a net loss to the class members. It is believed that the Act will lessen the incentive for filing nationwide class actions in state courts thought to be favorable to plaintiffs.

AIG CHIEF PROBED BY SEC AND SPITZER – AIG's Maurice Greenberg is being investigated by New York's attorney general and the SEC to see if he had a role promoting non-traditional insurance products or income smoothing products to other company heads. In these schemes, rather than borrowing from a bank or selling securities to raise cash, a company borrows money from its insurer and repays the loan in the form of increased premiums for traditional insurance. 

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NORTH CAROLINA ASKS SEC TO PROBE AIG – Signaling yet another problem for AIG, North Carolina has asked the SEC to investigate dealings between insurer AIG and its privately held Starr subsidiaries. Starr produces insurance business for AIG in return for commission payments and pays out long-term bonuses to AIG executives. "Even if everything is above board, you cannot run a publicly traded company and a business on the side because the shareholders will never know whether senior management is skimming profits and stealing from them." 

SOMETHING'S GOT TO GIVE - According to TodaysSeniorsNetwork.com, the FDA recently seized a shipment of Lipitor at Los Angeles Airport.  The shipment, intended for 11 California senior citizens, came from a licensed pharmacy in another country.  The FDA said the reason for the seizure was that the drugs were "misbranded" and "unapproved," although all Lipitor is manufactured at FDA-approved facilities outside the U.S. by Pfizer.  This is the same FDA that recently recommended the continuing sale of known potentially harmful pain-relieving drugs as an "acceptable risk."  You have to wonder if attempting to police the reimportation of prescription drugs by the federal government isn't going down the path of another Prohibition debacle.  More information is available here.

HACKING, IDENTITY THEFT AND LAW SUITS – Despite reports of the security breach at ChoicePoint where criminals apparently managed to acquire the personal records of nearly 150,000 consumers, experts say most such hacking incidents go unreported to police or the public. Probably one reason for the reticence to report such activities is the fear of lawsuits. ChoicePoint is already facing a class action lawsuit for fraud and negligence after criminals gained access to a database of personal records compiled by the company.  A number of U.S. lawmakers are promising action on identity theft.  Sorry for the cynicism, but one is left to ponder if lawmakers' concern might not be heightened by the news from Bank of America that it "lost" computer tapes containing credit card records of U.S. Senators and more than a million U.S. government employees.

TEXAS TORT REFORM PRAISED - Medical Protective, Texas' leading admitted primary medical professional liability insurer, announced that it will not take an overall rate increase in 2005. "While there are many factors that affect the number of reported claims, the recent data begins to suggest a moderating trend. We are optimistic this trend is due in part to the tort reform measures and the constitutional amendment permitting caps on non-economic damages passed in Texas over a year ago."

AVIAN FLU WORLD'S TOP THREAT - The Centers for Disease Control and Prevention believes that Avian flu poses the single biggest threat to world health and health officials may not yet have all the tools they need to fight it. "Vaccine efforts are still focused on garden-variety influenza, which kills 36,000 Americans every year, and it would be impossible, in case of an avian flu epidemic, to switch gears quickly to make a special avian flu vaccine." 

PARE BACK ASBESTOS FUND? - Senate Judiciary Committee Chairman Arlen Specter says he was under pressure from fellow Republicans to pare back a proposed $140 billion privately financed fund to pay asbestos claims. The effort is part of a broad Republican agenda to revamp the civil justice system and end "frivolous asbestos claims" by individuals who are not actually sick from asbestos exposure. The AFL-CIO labor group is "deeply disturbed" by calls from some senators and business interests to reopen parts of a plan to create an asbestos compensation fund

SILICA LITIGATION - Guy Carpenter has released an update to its 2004 report, "Silica - A Litigation Sandstorm." According to the report, two recent developments in silica litigation, although limited in scope, allow some cautious optimism that silica may not be following the asbestos litigation path. "A review of health data, which helps determine the size of the silica issue, suggests that silica-related deaths are declining while a similar review of health data suggests that asbestos deaths remain on the rise."

TSUNAMI DEATHS - The Indian Ocean tsunami, which struck 12 Indian Ocean countries on December 26, took the lives of some 304,200 people, with the most victims in Indonesia.

AMEX ADVISORS PROBLEMS - New Hampshire regulators are seeking a fine and restitution of $17.5 million from the personal finance advisory unit of American Express, accusing it of defrauding investors by giving incentives to its advisers to push select mutual funds over other funds with better performance. 

VARIABLE ANNUITY PROBE TO WIDEN - Massachusetts has subpoenaed a dozen financial institutions concerning the promotion of variable annuities to elderly bank customers. The regulators want the names of all customers aged 75 or older who purchased annuity products since January 2003.

AGENTS, BROKERS AND INSURERS REDEFINED - In the wake of investigations into broker practices in the commercial insurance industry, a redefinition of the roles of broker, agent and insurer may be underway, according to a new study by Conning. "Insurers may view this market situation as an opportunity to get closer to their clients. The clients, on the other hand, will be looking to ensure that the bidding process is more favorable to them." The study also provides discussion of possible impact on personal lines, benefits and life insurance distribution and can be purchased at http://www.conningresearch.com.

"NEW LEAF" AT CITIGROUP? – In response to recent scandals, Citigroup's CEO Chuck Prince has launched new ethics training and independent control programs. The move from the world's largest bank follows trouble with U.S. regulators, a bond-trading debacle in Europe and the loss of its private banking license in Japan.

VARIABLE CONTRACT REGULATIONS - The IRS has issued final regulations that could limit the ability of insurers to include hedge funds and other "nonregistered" investments in variable annuity and variable life insurance contracts.  The rule takes effect today, but insurers will have until the end of this year to adjust life insurance and annuity portfolios to comply.  More information is available at www.treasury.gov.

COMMUNICATIONS AND RETENTION - Watson Wyatt reports how well a company communicates the value of its health benefits can do more to retain top-performing employees than the actual richness of the benefits themselves. Additionally, companies that cannot hold their health care budgets down as a share of total compensation have higher turnover rates for top performers.

NYL WILL DECLARE DIVIDENDS ON LTC POLICIES - New York Life has approved a dividend for its long-term care insurance product, making it the first insurer ever to declare a long-term care insurance dividend. This is good news following the "horror stories" of rate increases on LTC policies with other companies in prior years.

RETIREMENT NEWS - A Prudential Financial survey reveals that many near-retirees are confused about how to create a "retirement paycheck" or steady retirement income with their retirement savings.  More information on the survey is available at http://www.prudential.com.  Over at Merrill Lynch, their researchers are finding that once they reach age 65, 77% of boomers (those born between 1946 and 1964) expect to work full or part-time, start their own businesses or cycle between work and leisure.  While some say they will be working for the money and an even larger percentage for health insurance benefits, 67% said they want to continue working in order to keep mentally active.

JANUARY LIFE APPLICATIONS UP - U.S. applications for life insurance in January were up almost 1% compared to a year ago. Applications among individuals 60 and older rose 6.7%; applications among those 45-59 increased 0.6%, and applications among individuals 0-44 rose 0.2%, according to the MIB Life Index.

BEST SEES CHANGES IN INDIVIDUAL MEDICAL MARKET - According to A.M. Best, the individual indemnity industry was enhanced with the enactment of health savings accounts in 2003 that make the individual major-medical market more attractive to those who would be uninsured otherwise, while also offering a lower-priced alternative for price-conscious consumers. Several insurance companies are either entering or re-entering the marketplace, which will ultimately increase the level of competition in a historically volatile business. These tax-enhanced accounts are intended to encourage individuals to take a greater stake in their medical spending by managing their own health-care expenses. 

NEW SEARCH ENGINE AT THE AMERICAN COLLEGE - The American College has created a new user-friendly online search engine to help consumers find educated, qualified and experienced financial advisors. Consumers can go to The College's homepage at http://www.theamericancollege.edu and click on Find a Financial/Insurance Advisor Here! This section offers interested individuals the ability to locate an advisor in their area using zip code or area code information. A list is displayed with professionals' names, credentials and contact information. The website also includes descriptions of specific credentials so consumers can select a professional with the knowledge and experience needed to address their unique individual financial situation.

NORTHWESTERN MUTUAL AGAIN - Northwestern Mutual has again been recognized as "America's Most Admired" life/health insurance company, in FORTUNE magazine's annual survey of industry professionals. The 2005 survey rankings mark the 22nd year that the company has led its industry since FORTUNE introduced the survey in 1983. 

ARMENIAN CHARITIES PAID BY NYL – New York Life sold life insurance policies to thousands of Armenians living in the Ottoman Empire who were among the 1.5 million Armenians massacred during the 1915 Armenian Genocide. In the ensuing chaos, many of the rightful policy heirs were unable to obtain insurance proceeds while others were unaware that they were entitled to benefits. During litigation, New York Life acknowledged its records indicated an estimated 2,400 policies sold to Armenians before the Genocide may remain unpaid. The settlement will involve payments in excess of $1,000,000 to Armenian charities. The class action is the oldest resolved case in U.S. history — 90 years have passed between the original events and the settlement. 

HURRICANE SAVINGS ACCOUNTS – Florida Chief Financial Officer Tom Gallagher is proposing that the government create "Hurricane Savings Accounts, which could also be named Catastrophe Savings Accounts for more universal usage, would encourage responsibility by saving for future adverse financial impacts associated with hurricanes or other natural disasters. Structured in the same manner as Health Savings Accounts and IRAs, a tax-free savings account could be opened to cover current and future hurricane-related expenses. The money deposited, as well as the interest earned, would be tax-deferred. Unused balances would roll over from year-to-year."