MOTHER LEGAL LODE - In what surely has to rank as the mother of all class action suits, a small group of HMO subscribers asked a U.S. judge to certify their fraud claims against the nation's largest managed care companies as a class action that could represent in excess of 50 million people. The lawsuits named as defendants Aetna, CIGNA, Prudential Insurance, UnitedHealth and Humana and, if certified as a class action, it will be the largest civil litigation pending in the United States. The only possible result of this kind of foolishness is higher premiums and more money for the attorneys.

BANK SEIZED – The FDIC took Chicago's Superior Bank FSB into receivership last Friday, in what could be one of the costliest bank failures in recent history.  The failure is being blamed on Superior's loans to customers with poor credit histories.

AEGON AND WMA - After acquiring part of the World Marketing Alliance (WMA Securities with about 8,000 registered reps), Aegon has not revealed if it plans to retain or change the WMA multi-level marketing plan structure. The system brought WMA much success, but also much criticism...most aimed at a perceived emphasis on recruiting at the expense of training.
Fortis will become the fourth largest provider of dental benefits in the U.S. with the purchase of  Protective Life's dental business.  The deal is said to be worth about $300 million.
 

TRIPLE DEBT – In the past 10 years, the credit card debt carried by American consumers has nearly tripled from $250 billion in 1991 to $700 billion today.  With consumer spending making up two-thirds of the U.S. economy, analysts and policy makers are concerned that the credit card debt burden will stagnate consumer spending and push the country into a recession.
  
UNITEDHEALTH HEALTHIER - UnitedHealth, the No. 2 U.S. managed care company, reported a 31% increase in second-quarter profits resulting from higher premiums and increased enrollments.

DISABILITY RIGHTS - Californians for Disability Rights, a non-profit disability organization, filed a statewide lawsuit against Bank of America and Provident Insurance for "fraudulent unfair business practices and discrimination against people with disabilities."  BOA mailed 3.8 million customers offering term insurance through Provident. The offer required a good health statement, but attorneys for disabled consumers claimed the "sweeping breadth and arbitrary nature of this exclusionary provision prevents nearly all people with disabilities from participating in the insurance program."

JOBS CUT - The financial sector is certainly not immune to the effects of the slowing U.S. economy. American Express plans to slash an additional 5,000 jobs, or 5.6 percent of staff. The company, which was already in the process of cutting 1,600 jobs, joins peers Merrill Lynch and Morgan Stanley in cutting staff to deal with falling revenues and weak stock market and economic conditions. In addition, SAFECO announced plans to cut 1,200 jobs, about 10% of its P&C business staff, by 2003.
 

ACQUISITIONS – On Monday, reinsurance giant Swiss Re said it will buy the reinsurance arm of Lincoln National (Lincoln Re) for $2 billion.  In other news, Ameritrade announced on Tuesday an agreement to acquire National Discount Brokers Corp. for a reported $154 million in common stock.

TOXIC MOLD - In the wake of several multi-million dollar judgments, some attorneys are comparing toxic mold claims to asbestos and lead paint claims with regard to litigation potential. IIAA has published a white paper that addresses the insurance implications of toxic mold claims. The article is available online at http://206.135.104.240/village/iiavu/RedPL.htm.

GOVERNMENT PAYBACK - The state of New Jersey is requiring Prudential to pay back $25 million to policyholders under its "profit-limiting" law. Average payment will be about $77. Seems kind of "one way" to us...if Pru had lost money, would the policyholders have to pay them for the loss? Doubt it.  In other Pru news, the company has been hit with a second lawsuit related to its demutualization effort.  This one alleges that the approximately 12% of Pru policyholders with nonparticipating policies aren't entitled to compensation under the company's demutualization plan.  

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RECLAIM THE MIDDLE MARKET – So says Maria Thomson, the managing principal of Thomson Management Solutions.  According to Ms. Thomson, the life and health insurance industry must "reclaim the huge middle-income market it's abandoned for the affluent market," a change that will "require nothing less than the transformation of the industry."  The full article was printed in Insurance Times and can be read at http://www.tmsolutionsinc.com/insurancetimes.htm.  

BISYS UPDATE - BISYS has become the brokerage outlet for two more large insurance distribution companies...ING Aetna Financial Services and CNA. The CNA agreement is to support the insurer's national network of producers with complete paperless back-office processing for the appointments, terminations, and other requests required by state insurance departments.

NEW T-BILL – Beginning July 31, the U.S. Treasury will sell a new security that matures in just four weeks, providing a new alternative for investors looking to park their money for a short while in a safe investment.  The new T-bills will be auctioned in $1,000 increments and the interest return will be determined by the weekly auctions.

REATTACHMENT BENEFIT - A.C. Newman announced the development of a new Surgical Reattachment benefit. The benefit enhances a traditional Group Accidental Death & Dismemberment (AD&D) policy and is designed to recognize advances in medical science and micro-surgical techniques, through which a severed limb can now frequently be reattached. A traditional AD&D benefit requires that the loss of limb be permanent in order for a claim to be payable and, therefore, not payable if the limb is successfully reattached.

TAX TABLES – For 2001 income, estate and gift tax tables updated to reflect the 2001 Tax Relief Act, bookmark http://www.fsonline.com/netdir/NETtaxes.shtml. The 2000 tables are also there for comparison.

P&C NEEDS LIFE - Several articles reviewed in the past week point to the need for P&C producers to increase their life sales. LUTC has a solution that is simple and highly effective. Take them up on the 30-day free offer for their Virtual Sales Assistant (http://www.lutc.com) and then check out the Multiline Corner. It describes how to use the Priority Planning Review concept that is guaranteed to create increased life sales for anyone who uses it!
 

BUYER BEWARE - All Merrill Lynch research reports will now carry a front-page disclaimer that the analyst has or may have performed paying work for the company on which an investment opinion is being rendered. This information used to be coded in legalese and viewed only with a magnifying glass.

FINANCED TAX REBATES – The Treasury announced plans on Monday to borrow the $38 billion needed for tax rebates now being mailed to U.S. taxpayers.  The plan to sell Treasury securities to pay the rebates is not a sudden turn of the budget from surplus to deficit, but reflects a "cash-flow squeeze." Hey, we've all had those cash-flow squeezes!

FISH INSURANCE - Fish farmers need no longer flounder in their search for appropriate insurance protection. Hartford Financial Services, a major insurer of livestock, will bail them out with a new insurance program to target the fast-growing fish farming business.  Speaking of "fishy" insurance, it seems that some P&C insurers have been paying claims to medical marijuana users whose pot plants were stolen or commandeered by police in the eight states whose laws allow medical marijuana use. 

MAP OF THE MARKET - For a totally unique way of looking at the market (and Mutual Funds), check out the "maps" at
http://www.smartmoney.com/maps/.

QUOTESMITH - Still advertising "big time," Quotesmith has transferred from the Nasdaq National Market to the Nasdaq SmallCap Market. Nasdaq notified the company that it was not in compliance with one of its maintenance standards, requiring at least $5.0 million value of  "public float," defined as total shares outstanding less any shares held by officers, directors, or beneficial owners of 10 percent or more.

SUPPLY AND DEMAND – The law of supply and demand is at work in the mutual fund industry.  Demand for funds has shrunk and, as a result, so has supply.  Only 46 new funds opened from January through May, the first time since 1991 that the number of new funds didn't reach triple digits during the first five months of the year.

UNLAWFUL HOMICIDE INSURANCE - In an awful "sign of the times," the National Education Association, the nation's largest teachers' union, will offer a special $150,000 benefit for teachers and other school employees slain at work. It is called an "unlawful homicide" benefit. You really have to wonder what "lawful homicide" is.