AIG EXECS "TAKE THE FIFTH" – AIG fired two top executives after they decided to exercise "their right of silence to prevent self incrimination" during regulatory investigations. The insurer terminated Howard Smith, who had been its chief financial officer, and Christian Milton, a vice president of reinsurance. 

STATE STREET CEO TO HEAD NYSE? - The WSJ is reporting that former State Street CEO Marshall Carter will likely succeed departing Chairman John Reed as the CEO of the New York Stock Exchange. Reed replaced Richard Grass who netted about a quarter of a billion dollars from his "regulatory" position.

TOP FEARS: RUNNING OUT OF MONEY AND MED COSTS – According to a study by the National Association for Variable Annuities (NAVA), the overwhelming majority of Americans – 95% - have financial concerns when it comes to retirement. Moreover, 42% expressed fears that they will run out of money prematurely and 28% of respondents fear that the high cost of healthcare services, such as outpatient care, frequent medical appointments and prescription drugs, can quickly drain irreplaceable retirement savings (they may be right...Fidelity Investments estimates that the average 65-year-old couple retiring today will need $190,000 to cover medical costs over the next 15 to 20 years). Despite the increased attention surrounding Social Security reform, only 16% of respondents are worried about their future Social Security payments. To read more about the study, click here.

SS and MEDICARE REPORTS - The 2005 annual reports on Social Security and Medicare did not reveal any notable changes in the financial condition of either program.  However, both programs face significant underfunding over the next 75 years. The year that Social Security benefits paid exceeds revenues collected has moved from 2018 to 2017, while the year that the trust fund's assets are exhausted has dropped from 2042 to 2041. "Calling for Social Security reform 'sooner rather than later' has been the mantra of the actuarial profession for many years. The hard part is finding the right balance of reforms to make Social Security both solvent and sustainable for future generations, which will require leadership from both the president and Congress." Making Social Security solvent and sustainable will require reductions in benefits, increases in taxes, or a combination. For further information on Social Security and Medicare reform, go to the American Academy of Actuaries' Web site at http://www.actuary.org. 

BEST OF BOTH WORLDS? - A newly published proposal by a Stanford professor to use vouchers to provide universal health-care coverage would cost little or no more than what the nation spends under the current health system. At a time when few policymakers are offering proposals for a sweeping overhaul of the way health care is delivered, this plan presents a viable blueprint for comprehensive, universal health-care coverage in a way that would satisfy concerns of legislators across the political spectrum. On the one hand, it guarantees health-care for all. On the other, it preserves consumer choice and market competition. The press release sure sounds good! For more information, please visit http://mednews.stanford.edu.

SECURITIES ARBITRATION SYSTEM "RIGGED" – The Massachusetts Secretary of the Commonwealth William Galvin told a U.S. congressional panel that investors face a "rigged system" when seeking damages from dishonest brokers under the market's securities arbitration system. The House of Representatives Financial Services Committee is looking into concerns about the nearly mandatory system's ability to fairly resolve investor claims. Most brokerages require investors, when opening accounts, to agree to resolve complaints through arbitration rather than in court. 

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PENSION CONSULTANTS NEXT IN THE BARREL? – Watch for growing problems as government authorities begin investigating the pension consulting business. The SEC is currently probing pension consultants and possible conflicts of interest resulting from taking fees from pension funds and steering these clients to money managers connected to the consultants. 

SOLVENCY GOOD NEWS/BAD NEWS - In an article published in the New England Journal of Medicine, a group of University of Illinois at Chicago researchers says that "obesity could help keep Social Security solvent because people will die younger.  The obese may be inadvertently 'saving' Social Security, but the obese themselves and the healthcare system that cares for them will pay a very heavy price in terms of higher death rates and escalating healthcare costs."  If true, good news for Social Security solvency, bad news for Medicare.

CUSTOMER RESPECT SURVEY - Here is a survey that is sure to catch the eye of some CEOs. The Customer Respect Group, a consulting firm that focuses on how corporations treat their customers online, has released the results of its First Quarter 2005 Online Customer Respect Study of the country's largest insurance firms. Here are the results in order for life and health companies: 1. TIAACREF 2. Farmers 3. MetLife 4. New York Life 5. CUNA Mutual 6. Mass Mutual 7. Guardian 8. Pacific 9. AFLAC 10. Mutual of Omaha 11. Thrivent 12. Principal 13. UnumProvident 14. John Hancock 15. Prudential 16. Lincoln National.

ST. PAUL TRAVELERS, NUVEEN SPILT - St. Paul Travelers will sell its 79% stake in Nuveen Investments. The move will leave Nuveen as a independent company. 

FINES FOR "STEERING" - A total of $21.25 million in fines was levied by the NASD on American Express, Citigroup and J.P. Morgan Chase for improperly steering customers to costlier mutual funds. Citigroup will also have to pay the SEC $20 million because it failed to provide customers with important information about fund shares.

LIPPER'S TOP FUNDS – Lipper, a fund research firm, has named First American as the top manager for large assets and the Principal Financial won the overall award for small managers. The best stock fund group honors went to Nations Funds, part of Bank of America, among the large managers and Numeric Investors for the small managers. Among bond funds, Nuveen Investments was named winner among large managers and The Managers Funds won the award for small managers. 

FEBRUARY'S LIFE INSURANCE ACTIVITY DECLINES 5.5% - MIB reports North American life insurance application activity declined -5.5% in February year-over-year, but jumped +12.6% on a monthly basis compared to this past January, extending a longstanding seasonal trend. The February rebound has been observed for five consecutive years at an average annual increase of +15.2%. North American year-to-date averages were pushed lower based on February declines to -2.5%.

LAW PROFESSORS' FINDINGS BAFFLES MANY - The Texas medical community collectively scratched its head last week as newspaper headlines trumpeted a new study claiming that increases in physicians' medical liability insurance premiums were not the result of skyrocketing claim costs. Many within the healthcare community feel that the study, Stability, Not Crisis, Medical Malpractice Claim Outcomes in Texas, 1998-2002 (Black, et al), is flawed and inaccurate -- flying in the face of proven results exhibited in states that have passed effective medical liability reforms such as California, Colorado, and Texas. Since reforms were passed in 2003, the Lone Star State has seen fewer lawsuits, more physician recruitment, and a decrease in malpractice insurance premiums for most of the state's doctors. 

SURPRISES IN WELL-BEING INDEX - According to the latest Principal Financial Well-Being Index and contrary to existing research and conventional wisdom showing that American workers are unrealistically planning on Social Security to fund the significant portion of their retirement income, Americans appear to "get it" when it comes to Social Security's true place in their retirement. The Index paints a picture of a more knowledgeable set of American workers, with the vast majority of respondents (77%) expecting Social Security to provide 50% or less of their income in retirement.  The question remains, however...how many of those who "get it" are actually saving adequate amounts for retirement? 

NEW LTC FEATURE - Prudential is offering a new long-term care policy, which offers a new cash alternative feature allowing policyholders to elect a monthly cash payment in lieu of reimbursement for services. Proof of actual services is not required for benefits to be paid. 

SHAKEOUT CONTINUES IN INDIVIDUAL LTC – Best reports that the individual long-term care market continues to evolve, although market share is concentrated among a few large players. Currently, the top 10 companies represent nearly 80% of the total business. Long-term-care writers have become more disciplined with respect to the market and have become more aware of industry obstacles. Companies cannot rely on premium increases to correct future pricing mistakes. It will be necessary for writers to carefully manage underwriting and pricing discipline. 

BUILT ON SHAKY GROUND - A Thrivent Financial survey found that, while seven in 10 Americans are confident or optimistic about their retirement finances, most have never estimated how much money they will need for retirement and most also fail to regularly monitor their retirement assets.  This is scary...one in five pre-retirees age 50 to 64 have saved less than $5,000.

HOW DO EXECUTIVES INVEST FOR RETIREMENT? – You might be surprised...the majority of their investments are in so-called "safer" investments, such as fixed-rate, fixed income and large caps. More information is available at www.clarkconsulting.com.

METLIFE OFFERS CRITICAL ILLNESS INSURANCE - MetLife has launched Critical Illness Insurance products designed to meet the changing financial protection needs of consumers and, perhaps, to take advantage of the high rate of returns posted by AFLAC and other specialty carriers. Americans of all ages are surviving serious illnesses at increasing rates due to medical breakthroughs and earlier diagnoses.   However, research has also shown that a majority of individuals are living paycheck-to-paycheck and the increase in expenses created by a serious illness can cause financial hardship. MetLife's new Critical Illness Insurance products cover six prevalent critical illnesses including: cancer, heart attack, stroke, kidney failure, coronary artery bypass graft and major organ transplant and pays a lump sum benefit of up to $100,000. 

FREE LIVING WILL FORM - The Terri Schiavo case reminds us of the importance of putting our intentions in writing. As a public service, FreeAdvice.com is making a Letter of Instructions/Living Will Form available for free on the Internet. The free form, which is designed to enable people in all states to set out their wishes in an informal manner, can be downloaded at http://freeadvice.com/livingwill.  

HOW TO BANK ON YOUR HOME - In a Newsweek article, Jane Bryant Quinn provided insight into current borrowing trends against the value of our homes.  She breaks home equity borrowing into three groups: using home equity as you would an ATM (BAD!), as an investment-bank option (could be dangerous if the real estate "bubble" bursts), or as a piggy bank, storing up money for retirement (not a bad idea!).

SURVEY SUGGESTS TAXPAYERS CONFUSED BY TAX CODE – Now this comes as a real shocker! According to a survey by CCH, when it comes to knowing basic tax rules or the tax consequences of various situations, many taxpayers would not receive a passing grade. In fact, the survey found that more than 2/3 of respondents overall answered survey questions incorrectly when asked about issues that may arise in the course of doing their taxes. Our informal survey suggests that no one understands the Tax Code and if it weren't for computer programs, even CPAs couldn't complete an individual 1040.

MEDICARE TO COVER SMOKING CESSATION COST – Medicare, following the lead of private insurers, will begin covering the cost for tobacco cessation treatment. The move is designed to save lives and money. We are not sure about either. The success rate of many of these programs is questionable, but even if they are cost effective and the folks live longer, Medicare will simply have more people on the rolls longer. Couple this with the fact that the vast majority of medical expenses come in the final stages of life.