BUFFETT FORTHCOMING BUT NOT TARGET - Billionaire investor Warren Buffett is talking to federal and state regulators about the dealings his Berkshire Hathaway company had with Greenberg and AIG. His cooperation is probably because Greenberg, and not Buffett, is seen as the target. 

HAPPY WIFE? – "It is an ill wind that blows no good" and Hank Greenberg's problems have resulted in a windfall for his wife. Hank gave his wife Corinne $2.2 billion worth of AIG stock three days before he resigned as CEO.  According to Reuters data, Greenberg owned about 43.55 million shares of AIG prior to the transfer.

MORGAN STANLEY PROBLEMS – Pressure on CEO Philip Purcell is raising questions about the bank's ability to remain as an independent bank. Several of the firm's top executives have resigned in protest of Purcell's leadership, which they feel has resulted in a 50% reduction in stock values over the past 5 years. Most probable "white knight" is English banking giant HSBC Holdings.

MET, TRAVELERS AND CONNECTICUT – The Connecticut governor and attorney general aren't pleased with MetLife's announcement that it plans to cut about 800 Travelers' jobs once its acquisition of Travelers from Citigroup is complete.  MetLife still needs approval from Connecticut regulators in order to complete the deal. The Connecticut attorney general has come out against the deal saying, "this acquisition is against the public interest because it will destroy jobs, damage our economy and disadvantage families."  In other MetLife news, the company has agreed to sell both the MetLife Building (formerly known as the Pan Am Building), a New York landmark that rises above Grand Central Station, as well as its former headquarters building located on Madison Ave.

NEW YORK LIFE MARKS ANNIVERSARY – After 160 years, NYLIC is still going strong and is now the largest mutual life insurer in the United States and, according to Fortune, one of the world's most admired companies.

U.S. SAVING INCENTIVE SYSTEM – In testimony before the Senate Special Committee on Aging, C. Eugene Steuerle, a senior fellow at the Urban Institute claimed that "total personal saving by households is now below the annual revenue cost of subsidizing retirement and pension plans."  Translation: tax breaks are encouraging retirement savings, but individuals are not increasing their true savings by also cutting spending on current consumption.  Instead, while retirement savings are growing, the mountain of private debt being incurred through home equity loans and credit cards is about the same as private savings.  The full testimony is available here. 

FIRST UNDERWRITING PROFIT SINCE 1978 - Benefiting from a rare profit on underwriting and investment gains, the U.S. property/casualty insurance industry's net income after taxes rose 29% to a record $38.7 billion in 2004. Prior to 2004, insurers suffered a net loss on underwriting every year since 1978. "Insurers' net gains on underwriting last year are all the more remarkable in view of the five catastrophic hurricanes that struck in 2004," observed John J. Kollar, ISO's vice president.

BANK INSURANCE INCOME REACHES RECORD LEVEL - U.S. bank holding companies earned a record $37.1 billion in insurance revenue in 2004, including $27.4 billion in insurance underwriting income and $9.6 billion in insurance brokerage fee income. Six bank holding companies with over $10 billion in assets generated all but 2% of insurance underwriting income, led by MetLife and Citigroup, which together earned $24.9 billion or 93.6% of the $27.4 billion. 

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SEC OVERHAULS STOCK MARKET TRADING – Looks like the NYSE will be forced to adopt the SEC's Regulation National Market System, expand its electronic trading capacity and impose other major changes. "Our actions today will, I am certain, irritate a handful of influential interests," said SEC Chairman William Donaldson, adding that his support for the rule was founded on the objective of protecting American investors.  However, some in Congress are opposed to the change and may challenge the decision.  Considering the floor trading revelations below, however, it seems like a pretty good move.

FLOOR TRADERS INDICTED - Federal prosecutors have charged 15 New York Stock Exchange floor traders with criminal securities fraud. Concurrently, the SEC has filed civil actions against 20 former NYSE floor traders and announced a settlement with the NYSE for failing to police specialists. The specialists put "their own interests and the interests of their firms before the interests of the unwitting investors." Over time, these small thefts accumulate into large profits that translate into higher compensation and bonuses for specialists who execute the trades. Just last year the NYSE settled civil charges for a total payment of $247 million. This is almost unbelievable, but what is really unbelievable is that Richard Grasso was paid about one-quarter of a billion dollars while allowing this type of culture to develop.

SPITZER CLAIMS SUCCESS - New York Attorney General Eliot Spitzer claims that his office recovered $1.74 billion in 2003 and $2.38 billion in 2004 for consumers, investors and his state from investigations related to mutual funds, tobacco and other matters. Coincidentally, Spitzer has announced his bid for governor of New York in 2006. There is no doubt that Spitzer has uncovered some serious problems in several businesses, but we question who has really profited by this. Looks to us like Spitzer will get a trip to Albany for his efforts, a bunch of attorneys made a lot of money (with more to come) and a few crooked executives were forced into a lucrative early retirement.  Meanwhile, thousands of rank and file employees were terminated and many small stockholders saw their retirement savings decline. Go figure.

WEISS, LEXISNEXIS AND DATA LEAKS - Weiss Ratings announced that independent investment ratings and analyses will be delivered through the LexisNexis® services. In the meantime, LexisNexis has announced that personal information on 310,000 U.S. citizens may have been stolen from its computer systems, 10 times more than its initial estimate last month.

WACHOVIA TO ACQUIRE INSURANCE BROKERAGE FIRM - Wachovia plans to acquire Georgia-based insurance broker Palmer & Cay. The brokerage firm has about 950 employees with about $150 million in annual revenues. The acquisition will more than double the current Wachovia Insurance Services unit.

EUROPEAN BIAS COSTS $29.2 MILLION - A U.S. jury has ruled that UBS, Europe's largest bank, must pay $29.2 million to a former saleswoman for gender discrimination. 

ASBESTOS BILL IN TROUBLE? – Probably not, even though more than a dozen insurance companies have dropped their support for a $140 billion federal trust fund to pay claims stemming from asbestos-related lawsuits. The insurers believe the fund is too large and would not adequately limit their liability.  In other asbestos news, the president of the U.S. Chamber of Commerce has asked the Justice Department to investigate "compelling evidence of fraud" in asbestos injury claims filed across the country. 

TITLE INSURANCE KICKBACKS – The California Insurance Commissioner has opened investigations into illegal kickbacks allegedly taking place in the title insurance industry. This industry has always been a mystery to us. Have you ever heard of anyone collecting on their title insurance? 

LEGAL FEAR BURNS COMMON SENSE - Legislation pending in Maryland would "require school health officers to make sure students are allowed to wear sunscreen when they go outdoors on sunny days." Is legislation needed to enforce common sense? Apparently so. A survey of 24 Maryland school districts found that "[f]our school systems require a doctor's order for students to apply sunscreen. Eleven require at least a parent's note. Eight systems require students to leave the product with the school health officer."  When the threat of a lawsuit lurks behind everyday decisions, educators don't feel free to use their reasonable judgment. More at http://www.cgood.org.

INDEXED ANNUITIES – The growth of Equity Index Annuities (EIA's) over the last several years has been pretty dramatic...from 3% of the annuity market in 2002 to 10% in 2005. Many are suggesting that the industry stop using "Equity" in the name since it is misleading and is drawing attention from regulators. So let's start calling them Index Annuities.  

CATASTROPHIC HEALTH PROGRAM – The two Senators from Oregon, Ron Wyden, Republican, and Gordon Smith, Democrat, both members of the Senate Finance Committee, are calling for the government to play a role in assuming some of the risk associated with catastrophic health problems. 

ESTATE TAX REPEAL – The House of Representatives has voted again to make repeal of the federal estate tax permanent.  The fate of repeal remains uncertain in the Senate.  A more likely outcome is that the estate tax will be retained, but with a $2.5 million or $3.5 million exemption.  Presumably, that approach would also retain the "step-up in basis" at death. 

IRA ASSETS PROTECTED – In a unanimous decision, the Supreme Court has ruled that IRA assets are normally exempt from seizure by bankruptcy creditors.  Keep in mind, however, that these retirement funds are shielded from creditors only to the extent that the money is "reasonably necessary for the support of the debtor and any dependent." 

HOW LONG DO LTC CLAIMS LAST – A report in the Long-Term Care Insurance Sales Strategies magazine found that only 14.4% of closed long-term care insurance claims lasted longer than 24 months (some 33.2% of open claims last longer than 24 months). The study revealed that only 5.6% of closed claims lasted longer than 36 months (16.2% for open claims). "Too costly is the number one reason many people give for not buying long-term care insurance protection," explains Jesse Slome, Sales Strategies editor. "How much you pay for coverage depends to a large degree on how much protection you get. An individual can reduce the yearly cost of protection by 35-to-40 percent by purchasing a three-year benefit versus an unlimited benefit (also referred to as lifetime). But, is that enough protection?" The study concluded that for a three-year benefit period, only eight in 100 claimants exhausted their policy. For more information, visit http://www.ltcsales.com.

CONSUMERS WANT TO BUY MORE LIFE INSURANCE – Now this is a great report from LIMRA! LIMRA reported that 44% of U.S. households said they need more life insurance and 27% of households said they expect to buy life insurance in the coming year. If all 27% did buy, it would increase total coverage by $4.8 trillion and add an estimated $9 billion to industry revenues, almost double the amount of new premium now written each year. It also means if you call on four households, you should make one sale! 

MORE FROM LIMRA – 78% of consumers have no personal life insurance agent; 73% have no personal financial advisor or planner; 29% of consumers say they have not been approached to buy life insurance; 74% of consumers say they do not buy additional insurance because it costs too much; 52% say they do not know how much insurance to buy; 50% say they procrastinate when it comes to buying more life insurance; 43% say they worry that they won't purchase the right life insurance; 40% say they prefer to put their money into other financial products instead of insurance.

SEC PROPOSAL FAILS THE CONSUMER PROTECTION TEST - The National Association of Insurance and Financial Advisors (NAIFA) and the Association for Advanced Life Underwriting (AALU) urged the Securities and Exchange Commission (SEC) to withdraw a proposed rule that would require additional disclosures of fees and costs associated with the purchase of mutual funds and variable products during the sales process. In a joint letter to the SEC this week, the two insurance agent groups argued that requiring broker-dealers and their sales representatives to provide a one-page disclosure form to consumers duplicates disclosure requirements already in the prospectuses of mutual funds and variable annuities. "The redundancy would do little to protect consumers and, in fact, could cause confusion and misunderstanding, leading to less effective consumer protection," wrote NAIFA and AALU. "The prospectus contains the comprehensive information necessary for consumers to make their investment decisions, and enables them to compare products, not just prices."

HSA/NON-HSA MARRIAGES – IRS Revenue Ruling 2005-25 clarifies that taxpayers who are married to spouses with traditional, low-deductible health coverage still qualify to set up an HSA high-deductible health plan so long as they themselves are not covered by the spouses' low-deductible plan. 

"TRIAL LAWYER SHARK BITES" – Is the theme of a new ad campaign being launched by America's Health Insurance Plans.  The ad campaign is intended to rally support for medical liability reform.  You can view the ads by clicking here. 

TAX BENEFITS OF HSAs - HSAs offer many tax advantages over traditional health insurance arrangements. 1) Reduce your federal income taxes. 2) Reduce your adjusted gross income, helping you to qualify for other lucrative tax breaks tied to overall income. 3) Reduce your state income taxes. 4) Tax-deferred growth. 5) Pay for dental expenses with pre-tax dollars. 6) Pay for vision care with pre-tax dollars. 7) Pay for alternative care with pre-tax dollars. 8) Pay for aspirin, bandages, cold medicine, and other household medical expenses with pre-tax dollars. 9) Pay Medicare expenses with pre-tax dollars, including Medicare premiums, deductibles, copays, and coinsurance. 10) Pay for long-term care insurance with pre-tax dollars. See more at HSA for America. 

BUY IT FOR THE INSURANCE - The first test of an incentive in which an automaker paid the insurance on every new car in the pilot concluded March 31 with a 23% rise in year-to-year sales. Two-thirds of buyers said the insurance package was influential in their purchase decision. The results were announced today by Creative Innovators Associates, LLC, a Long Island consulting and marketing firm that invented and is patenting the incentive program, with information provided by Volkswagen of America, which piloted the unique incentive.

AMERICAN RETIREMENT SAVINGS - Despite repeated warnings that they need to save more - and to start at an earlier age - than their parents, nearly half of young workers and one-third of GenXers haven't even begun to plan or save for retirement, according to a MetLife study. Of particular concern are those nearing retirement - 39% of baby boomers in their 50s and 24% of respondents in their 60s admit they have never calculated how much income they will need in retirement. 

COURT RULING ENDANGERS POPULAR ESTATE PLANNING TOOL - A recent federal district court ruling with far-reaching implications for life insurers and estate planners is discussed in the April 4, 2005 edition of BestWeek. The court found that a life insurance trust, under Maryland law, doesn't have an "insurable interest" in the life of the insured/grantor - because it only stands to financially gain by the insured's death. We are sure to hear more on this soon.