EVOLVING RAPIDLY - Senate Banking Committee Chairman Phil Gramm released his proposed financial services legislation and it promptly met with universal opposition from the insurance industry. The original draft did not include a definition of insurance, raising fears that the Comptroller of the Currency could define insurance products as "banking products" and remove them from state regulatory oversight. Last week, however, Senator Gramm won over the insurance companies by agreeing to define which existing financial products are insurance. Banks selling those products would then have to follow the same state laws as insurance companies. Insurance agent groups, however, continue to oppose the Senate legislation, holding out for tighter insurance provisions found in House bills. Don't hold your breath, however...there is still lots of "wheeling and dealing" to take place before any bill is enacted.

CLEARING THE DECKS - In an apparent move to settle outstanding litigation prior to its IPO, the Prudential has agreed to pay approximately $62 million to 124 California policyholders who claimed their policies were "churned." The size of the settlement, however, is causing concern at other mutuals planning an IPO. The fear is that Pru's decision is likely lead to higher settlement costs for other mutual insurers.

M&As...ARE THEY WORKING? - Not according to A.M. Best. In the past four years, there have been 321 mergers and acquisitions totaling $412 billion. According to Best research, the frenzy was driven by a perceived necessity for future success, but while some companies have realized increased value, "strategic and financial benefits have yet to materialize." See the Best Special Report at http://www.bestweek.com/reports/index.html (it's free but requires use of the Acrobat Reader).

MORE "STREAMLINING" - Going public has resulted in a not-too- pretty picture for employees at several of the major mutuals. After significant cutbacks at the Prudential, Mother Met is now "streamlining to eliminate bureaucracy." CEO Robert Benmosche said that "although we will realize cost savings...the primary driver is the acceleration of growth." Significant among the changes is the ascension of James Benson (CEO of New England Financial) to head up all individual sales...about 11,000 agents. (Any bets on the "eliminate bureaucracy" goal?)

JEALOUS? - The Wall Street Journal reports that the New York Stock Exchange is looking for ways to trade some of those high- flying stocks currently on the Nasdaq.

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CITIADVISERS - According to Investment News, "Citigroup is embarking on a bold nationwide campaign to transform its retail banking franchise into a financial services juggernaut." All personal bankers will be licensed to sell mutual funds, annuities and life insurance. Bankers' compensation is also being changed to rely more on sales commissions than on salaries and bonuses. Heading up these changes is Joseph Plumeri, chairman and chief executive of Primerica Financial Services, a Citigroup subsidiary.

DUTCH DEAL - ING, the huge Netherlands-based holding company, has purchased the annuity operation of Penn Corp (primarily United Life and Annuity) for $152 million plus. Penn Corp will focus on its core companies, principally Southwestern Life and American Amicable in Texas.

STANDARD LIFE - Standard Life of Oregon has taken steps to restructure as a mutual holding company. Once completed, Standard intends to go public with an IPO of the stock of the new holding company. Meanwhile, on the other side of the country, a Philadelphia judge, in a first, has issued an injunction blocking Provident Mutual from converting to a mutual holding company. The judge charged that Provident did not fully inform policyholders about all their alternatives.

"DON'T CRY FOR ME...." - After huge layoffs and restructuring in the U.S., Pru is investing $50 million to launch a new life insurance subsidiary in Argentina. Pru International is now in Japan, Korea, Poland, Taiwan, Brazil, Italy and the Philippines. All are apparently doing better than an aborted attempt in Spain.

PROFITS DOWN - According to Weiss Ratings, U.S. life and health insurers reported a $17.8 billion net profit for the first nine months of 1998, down from $18.0 billion for the same period in 1997. This decrease is the first in four years and "is a significant trend change," according to Martin Weiss.

A GOOD GIG - The 2/22/99 edition of Investment News includes a ranking of the highest-paid directors of large mutual funds. Here are the top five:

1. Joseph DiMartino -- $597, 128 -- Dreyfus
2. John Haire -- $406,240 -- Morgan Stanley Dean Witter
3. Charles C. Reilly -- $362,858 -- Merrill Lynch
4. S. Joseph Fortunato -- $361,562 -- Franklin Templeton
5. Harris J. Ashton -- $344,642 -- Franklin Templeton

"Membership on a mutual fund board is a good gig at most every fund company. And it's getting better. Median pay levels for directors are rising - up 12% last year to an estimated $103,000 for large fund companies." The article further points out that "director pay and fund performance often can seem unrelated." The publication is calling for the SEC to require more complete disclosure of mutual fund directors' compensation and ties to the companies.

READER'S DIGEST? - More competition for the over-50 market is coming from an unlikely source. Reader's Digest has announced it will explore offering insurance and other financial products to its subscribers under the Reader's Digest brand.