AETNA RESIGNATION – Leonard Abramson, who made more than $900 million when he sold U.S. Healthcare to Aetna in 1996, has resigned from Aetna's board amid conflict-of-interest charges.  Mr. Abramson has received $3 million a year to consult for Aetna and his two daughters and son-in-law were also paid millions for doing business with the insurer.  In other Aetna news, reports have ING close to buying Aetna's financial services and international businesses in a deal that could be worth as much as $9 billion. Earlier this year, ING bought ReliaStar for $5.1 billion and said it was looking to expand its insurance operations in the U.S., which already include Southland, Security Life of Denver and others.

INTEREST GROWING – Many major companies have moved from defined benefit pension plans to defined contribution plans and a similar trend is now developing in the health coverage arena. Anxious over their liability in health coverage decisions, many companies want to end their role as the middle-man between their employees and the insurance companies they contract with to provide health benefits. In a defined contribution health plan, employers give employees funds to purchase their own insurance.  According to the National Center for Policy Analysis (http://www.ncpa.org),  "The concept of defined contribution plans is one of the hottest topics in health care financing today."

CLAIM PADDING – An Insurance Research Council (IRC) study reveals that 35% of Americans believe that it is all right to exaggerate insurance claims. IRC has been tracking public tolerance for claims padding for many years.  At least this current survey shows fewer respondents accept this type of insurance fraud than they did in 1997, when the acceptance level surged.

CONSECO SALE – Proving that "consolidators" can quickly become "consolidatees," reports of a Conseco sale, possibly as early as next week, are running rampant.  Rumored purchasers for pieces of the business include several investor groups, Wells Fargo, GMAC, Washington Mutual and even MetLife and John Hancock.  Stay tuned.

RACE-BASED PRICING – The Florida Department of Insurance and the National Association of Insurance Commissioners announced they will investigate life insurers to determine if any are charging black customers more for certain policies, and will seek a nationally-negotiated settlement with guilty insurance companies. Most insurance companies stopped selling discriminatory industrial life policies years ago. But insurance regulators have charged that some insurers did not reduce higher premiums for black policyholders when they eliminated discriminatory pricing on new sales.  American General, which admits to charging about 350,000 African-American policyholders higher race-based premiums, is expected to enter into negotiations with Florida, the outcome of which could serve as the model for a nationwide settlement.

TIP OFF? – Interested in identifying those insurance companies that are likely takeover targets?  According to some analysts, a possible tip off is a steep climb in insider ownership through aggressive option accumulation by a company's executives who, anticipating a takeover, stock up on options they figure will become more valuable after an acquisition.

ANNUITY LAWSUIT – Prudential Securities and the AEGON group of companies have been slapped with a class action lawsuit for selling tax-deferred annuity products to fund tax-qualified plans.  The suit alleges fraud, negligence and misrepresentation because selling "a deferred annuity in an already tax-deferred retirement account represents a completely useless approach which simply increases carrying costs."  Lawsuits filed on these grounds have been predicted and now appear to be coming true.

STATE FARM TO PAY BIG TIME! – Bet you thought this item would be about a lawsuit, didn't you?  Well, it's not. It's just a good mutual insurance company doing what it should be doing...paying dividends to policyholders. State Farm's dividends will exceed $1 billion this year alone.

MEDICARE HMO WOES – Cigna is the latest company to announce that it is phasing out its Medicare HMO coverage.  According to the HIAA, inadequate government funding and expensive red tape are pushing the Medicare HMO program onto "code blue."  The Clinton administration, meanwhile, is offering to reduce paperwork and regulations.  Medicare HMO plans have until July 3 to indicate whether they will participate in the program in 2001, so we could see still more Medicare HMO closures.

RELYING ON LEVERAGE – Reliance Holding Group will sell to Leucadia National for a reported $293 million, far, far below its 1998 market capitalization value of $2.3 billion. According to the Motley Fool, the story of just how $2 billion in market value managed to evaporate into thin air in less than 24 months is a long story, but the major contributor was unwise use of financial leverage to generate profits. "Leverage is a magnifier: it makes good results better and bad results worse." The bad results associated with the Unicover scandal were just too much "bad results" for the company to handle.

INSWEB RESTRUCTURING – Insweb, one of the dot.com innovators in the insurance arena, plans to expand its online insurance agency operations and implement several cost-cutting measures, including a 40% staff reduction. The company's agency operations will apparently replace its lead generating revenue model with a pure e-commerce model.