| AXA/MONY
DEAL DONE After an eight-month battle with their suitors, MONY shareholders
have finally approved the $1.5 billion sale to AXA. About 53% of the shareholders
voted for the sale to the giant French insurer. However, about 17% of the
shareholders will take their chances in court to seek more than the $31
per share offered by AXA.
GENWORTH COMPLETES YEAR'S
LARGEST IPO With very little fanfare Genworth Financial, a GE life
and mortgage insurance unit, completed its initial public offering for
$2.83 billion. Earlier estimates had been as high as $3.34 billion. The
much ballyhooed Google deal is only expected to generate about $2.7 billion...but
the insurance business isn't a Google.
MEDICAL LIABILITY REFORM
BILL - The Coalition for Affordable and Reliable Health Care (CARH)
applauded the House for passing a medical malpractice liability reform
package as part of its "Cover the Uninsured Week" activity and challenged
the Senate to override opposition to similar legislation. More at http://www.carh.net
JUST A MATTER OF TIME
- A class action lawsuit has been filed against Mutual Benefits Corp.,
the Florida viatical and life settlement company recently shut down by
the SEC. The suit is "on behalf of all persons who purchased viatical
or life settlement contracts or otherwise invested through Mutual Benefits
Corporation during the period from late 1994 through the present" and "alleges
that since 1994, defendants have operated or aided and abetted a billion
dollar Ponzi scheme and defrauded at least 29,000 investors -- many of
whom are retirees -- by issuing a series of material and misleading omissions
and false statements, breaching escrow agreements and breaching their fiduciary
trust to investors."
MORE SEC/SPITZER NOTICES
More insurance companies have been notified about SEC and New York State
investigations for security violations...some new insurance companies "in
the barrel" include General American, Chubb and Hartford. Also, add Vanguard
and Wellington Management to the fund and investment advisors now under
scrutiny.
TRENDS IN DRUG PRICES
According to a report by the AARP Public Policy Institute, the cost of
the roughly 200 brand name prescription drugs most widely used by Americans
age 50+ increased by an average annual price of 6.0% from 2000 to 2003,
compared to an average annual general inflation rate of 2.5%. More
information is available here.
BANKS WARNED - Federal
regulators have warned big banks and securities firms about engaging in
complex, Enron-type deals that may have specialized legal, tax or accounting
goals. This follows last year's fines of $120 million handed out to Citigroup
and $135 million to J.P. Morgan Chase.
LIFE APPS STEADY IN APRIL
- April applications for life insurance in the U.S. stayed even with applications
submitted during the same period a year ago. Applications among individuals
age 60 and older, however, grew 6.9% while applications among those age
45-59 slipped 0.4%, and applications among individuals age 0-44 dropped
1%.
MORE THAN $15 BILLION
LOST ANNUALLY - According to a report by the Quality Planning Corporation,
about $15 billion in revenues was lost by auto insurance companies in 2003
due to auto premium rating errors. For more on the report, go here.
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BISYS TROUBLES A
Connecticut law firm has begun an investigation into the restatement of
BISYS' results for the years 2001, 2002, 2003 and 2004. Stock in the mega-insurance
brokerage and financial services firm dropped about 10% after it announced
that a write-down of the commissions receivable at its life insurance business
was insufficient. In the meantime, another law firm wasted no time in investigating
and filed a class action lawsuit on behalf of those shareholders who purchased
stock from 2000 to 2004. The complaint charges that BISYS, Lynn J. Mangum,
Russell P. Fradin, James L. Fox and Kevin Dell violated SEC rules by issuing
a series of material misrepresentations to the market about its financial
condition, thereby artificially inflating the price of BISYS stock.
HMO COSTS, TRUTH OR FICTION
According to the Commonwealth Fund, a new law allowing HMOs to bid for
Medicare business will cost the government $2.75 billion more than a fully
government-run program. "If there is a bottom line, it is that there is
$2.7 billion that is being used to benefit roughly 5 million of 40 million
Medicare members," said Brian Biles, professor of health policy at George
Washington University, an author of the study. "It's a question of efficiency
and of equity."
SPITZER SUES GRASSO
After collecting $1.3 million from Frank Ashen, a former NYSE VP who
was a key architect of Richard Grasso's compensation, New York Attorney
General Eliot Spitzer is going after the big fish. The suit asks for the
return of at least $100 million from Grasso's controversial $188.5 million
pay package. Mr. Grasso claims the lawsuit "smacks of politics" and
has said he will file a countersuit for pay still owed him, as well as
seek damages from interim NYSE Chairman John Reed.
LARGEST FINE EVER
- Citigroup has agreed to pay $70 million to settle allegations that it
violated federal fair-lending laws and attempted to mislead bank examiners,
the largest fine ever imposed by the Federal Reserve in a consumer law
compliance case. The settlement also requires Citigroup to pay restitution
to some recipients of home mortgage and subprime personal loans made in
2000 and 2001.
HEALTH INSURANCE FRAUD
The NAIC has proposed a 10-point plan to Congress that would help to
fight health insurance fraud. The recommendations range from increased
regulation to criminal penalties.
AMERICAN EXPRESS, NATIONWIDE
FINED The NASD has fined American Express $175,000 for failure to
supervise after it was discovered that a former representative took $124,900
from a customer's variable annuity account. Nationwide was censured and
fined $475,000 for inadequate record keeping, failure to adequately disclose
information about variable annuities in advertising and sales literature
and allowing representatives to sell variable annuities without obtaining
such "critical" information as ages, incomes, net worth, risk tolerance,
etc. from customers.
WELLS FARGO BUYS STRONG
- Less than a week after Strong Financial and its founder and main owner,
Richard Strong, agreed to a $175 million settlement in a securities fraud
case, Wells Fargo has agreed to buy about $34 billion of Strong's assets.
The deal is said to be worth about $500 million.
UNITEDHEALTH STARTS EUROPEAN
HEALTH COMPANY - UnitedHealth will establish a new European company
to serve European public health systems. The new company's mission is to
support public health systems in their efforts to improve patient care.
Working in partnership with health agencies, clinicians and patients, the
new company will develop innovative tools and services to support the provision
of care. Of note, one of the new company executives is Lois Quam, a UnitedHealth
executive "with an accomplished record in public service, having led public
bodies advocating for universal health care in the United States."
SWISS RE CFO SUES CLUB
- Mitchell Blaser, Chief Financial Officer of the Americas division of
Swiss Re, has sued a New York "gentleman's club" after it charged him $28,000
for a night of partying. Of course, the club says it has signed receipts
for five magnums of 1990 Krug Clos du Mesnil, for $3,200 each, $7,000 for
lap dances and more. Makes you wonder who's "watching the store," doesn't
it?
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