SUDDEN RESIGNATION - In an unexpected development, Conseco president William Shea has resigned.  The company named William Kirsch, an executive vice president, as its new president and chief executive officer.

ATTACK BACKUP – Recent terrorist threats to financial institutions have brought into question the industry's preparedness for such disasters. Reports vary but most companies appear to have good business continuity plans in effect. The Nasdaq has data centers that are 300 miles apart and tests backup diesel generators weekly. Lehman Brothers still maintains a fully-equipped building in Jersey City that it used as a temporary headquarters after 9/11 and the NYSE has spent roughly $25 million on a back-up trading facility since that attack. "The industry has been working closely with federal, state and local officials since Sept. 11 to coordinate business continuity planning efforts," said Margaret Draper, a spokeswoman for the Securities Industry Association. "The industry has significantly improved since September 11 but I don't think you can ever define where it needs to be."

HEALTH CARE ADDS $1,400 TO VEHICLE COSTS – General Motors reports that providing health care benefits to workers, their dependents and retirees adds $1,400 to the cost of every vehicle they build in the U.S. and health care costs are expected to rise another 8% this year. GM execs are calling for a national solution to the U.S. health system's problems because mushrooming medical costs threaten the survival of the U.S. manufacturing sector.

SAFECO LIFE NOW SYMETRA FINANCIAL – The Berkshire Hathaway owned Safeco Life & Investments will change its name to Symetra Financial effective September 1. "The new name evokes a sense of balance essential for long-term success in the financial services business," said Randy Talbot, president and newly appointed chief executive officer. "By balancing the company's needs with those of our distribution partners, customers, shareholders, employees and the communities where we live and work - by creating symmetry, if you will – we believe we hold the key to creating a shared opportunity for every individual we touch." 

BIG BOARD CHANGING – The New York Stock Exchange (NYSE) announced plans to begin letting large investors trade big blocks of shares electronically on the exchange floor. Direct Plus is designed to fight competition from other exchanges that promise fast trades and anonymity to investors. Insiders say the new program represents a challenge to Big Board floor traders who use the 212-year-old open outcry model. 
 

FEW EUROPEANS ADMIRE THE U.S. HEALTH SYSTEM – A recent survey by Harris Interactive reports that people in the five largest European countries - Britain, France, Germany, Italy and Spain - expressed admiration for their own health care systems, but not much for ours. Details here. 

MARSH MAC CLOSES TRIDENT DEAL - MMC Capital, a wholly owned subsidiary of Marsh & McLennan, has closed the Trident III deal with $1.1 billion of capital commitments. Trident III targets investments in the global insurance, employee benefits and financial services industries. Investments in the fund typically range from $25 million to $150 million. 

SECURITY MUTUAL LIFE NEBRASKA/LINCOLN INSURANCE - The boards of directors of Security Mutual Life Nebraska Holding Co. and Lincoln Insurance Group, both of Lincoln, NE, said they have voted to merge their mutual life insurance holding companies. The new holding company will be called Assurity Security Group.

MEDICAID FRAUD ALLEGED - New York City is suing 44 pharmaceutical companies and their subsidiaries, including such big names as Johnson & Johnson and Glaxosmithkline, claiming that it was overcharged millions of dollars on drugs used for its Medicaid program.  Similar suits have been filed by several states, including Ohio, Texas and Montana, which include big drugmakers of defrauding their Medicaid programs by inflating drug prices.

WACHOVIA'S TURN – The SEC is looking into Wachovia for possible improper trading and stock purchases made ahead of its merger with First Union. 

PENSION PLAN FUNDING REBOUNDS - The funding of large company pension plans improved last year, despite significant increases in pension plan liabilities, according to a recent analysis by Watson Wyatt. In its analysis, Watson Wyatt found that the funded status of large company pension plans improved from an average of 82% 2002 to 88% in 2003. The improvement in the funded status can be attributed to stronger investment returns and the nearly $72 billion the studied employers contributed to their pension plans in 2003. Still, the possible collapse of the United Airlines pension plan could put considerable pressure on the Pension Guaranty Fund. 

UNINSUREDS FLOOD EMERGENCY ROOMS  - The National Association of Community Health Centers Patients, a group representing government-funded clinics, reports that patients lacking health insurance are flooding U.S. emergency rooms...many seeking routine care that they should get elsewhere. In 2002 there were 110.2 million visits to hospital emergency departments, up from 89.8 million in 1998. During this time, many hospital emergency rooms closed and there were 15% fewer than in 1998. An estimated 43 million Americans lack health insurance and either go without health care or rely on nonprofit, community centers. Or they visit emergency rooms, which, by law, must provide basic, needed care. 

ANTHEM SUES CALIFORNIA COMMISSIONER – Anthem has filed a lawsuit against the California Insurance Commissioner to set aside the Commissioner's decision to disapprove Anthem's application to merge with WellPoint. The proposed merger of Anthem and WellPoint has already been reviewed and approved by regulators in Texas, Illinois, Delaware, Virginia, Georgia, Missouri, Oklahoma, West Virginia, Wisconsin and Puerto Rico.

CHARITABLE SCRUTINY – Kiplinger reports that the IRS is giving charities more scrutiny, particularly as related to compensation practices and insider dealing.  Expect legislation in 2005 addressing charitable loopholes and abuses.  Also of interest from Kiplinger...several states are helping the IRS track down business nonfilers.  California, Minnesota and New York now let the IRS review their records of state business income tax returns.  In another form of federal/state cooperation, the IRS is planning a centralized database of all state unemployment agency records, in order to locate firms that aren't filing and paying federal unemployment taxes. 

TERM LIFE TO GET PRICIER - Linda Stern of Reuters reports, "After several years of rate cutting, the life insurance industry is starting to hike its prices, particularly on the plain-vanilla term policies most people buy. Before those price hikes really kick in would be a good time to buy a new policy if you're underinsured, or to replace an old, expensive one."

COLI/BOLI LIMIT - Most life insurers have not become overly dependent on corporate-owned and bank-owned life insurance (COLI/BOLI...sounds like a song to us) for new business growth, according to a new Fitch Ratings report. The report indicates that, for four out of six large insurers participating in a survey, COLI/BOLI has not represented more than about 12% of their total aggregate individual life first-year direct premium over the past six years, and that was in 1999. The trend is a positive from Fitch's perspective, because COLI/BOLI continues to be a favorite target of tax legislators and regulators in search of additional revenue. 

LTC AGENT CERTIFICATION IMPORTANT - The National Underwriter's LTC-Wire, a subscriber based on-line newsletter, reported the results of its recent poll: "All states should require agents to be certified to sell LTC insurance." 67% of respondents said, "Definitely...states should require agents to be certified to sell LTC insurance;" 22% said, "Each state should decide for itself;" and 6% said, "Never require certification." 

UNFAVORABLE VIEW – A national Kaiser Family Foundation survey of people on Medicare found that nearly twice as many people have an unfavorable view of the new Medicare drug law as have a favorable view.  You can find additional information on the survey here.

CFP CERTIFICATION AND REVENUE - A recent Financial Planning Association (FPS) study concludes that CFP certification has a positive effect on firm revenue.  More information on the study is available here.

EMPLOYER-BACKED HEALTH INSURANCE DECLINING - According to a Center for Studying Health System Change survey, the number of Americans with health insurance financed by private employers fell in 2003.  About 63% of Americans under the age of 65 got health coverage through their employers in 2003, down from 67% in 2001. 

HEALTH PREMIUMS RISE - According to a Kaiser Family Foundation study, health insurance premiums rose 13.9% in 2003. Medical care costs are soaring at more than double the rate of overall inflation, with most of the costs borne by big employers and government.

HIGH SURRENDER RATES OF VARIABLE ANNUITIES – Moody's reports that "the recent resurgence and substantial sales of variable annuity (VA) products in the U.S. life insurance industry are masking the high levels of VA surrenders and policy exchanges among companies." Nevertheless, Moody's says that it does not expect this high level of surrender activity to cause rating adjustments to significant VA writers at this time. The rating agency had already factored high levels of expected policy surrenders into its rating analysis of these companies in light of the competitive and commoditized state of the VA marketplace.

NAIFA, AALU OPPOSE NASD's PROPOSED RULE ON VA - The National Association of Insurance and Financial Advisors (NAIFA) and the Association for Advanced Life Underwriting (AALU) urged the NASD not to impose separate suitability and disclosure requirements for variable annuities, calling a proposed rule "duplicative" and "unnecessary." NAIFA and AALU called NASD's proposed rule unnecessary, because NASD rules already contain suitability requirements that apply to all securities transactions, including sales of variable annuities. 

RETIREMENT SECURITY FOR LIFE ACT – NAIFA has played a role in getting the Retirement Security for Life Act introduced in the House. Introduced by Reps. Nancy Johnson (R-CT), Phil English (R-PA), Stephanie Tubbs Jones (D-OH) and John Tanner (D-TN), the Retirement Security for Life Act of 2004 would allow an individual to receive up to $20,000 in annual income from a nonqualified deferred annuity without subjecting that income to federal income tax. As Rep. Johnson explained, for a taxpayer in the 25% tax bracket, that translates into a tax savings of $5,000 per year. The legislation is aimed squarely at middle income taxpayers.

THE AMERICAN COLLEGE NOW IN INDIA - The American College announced that it has entered into an agreement with the International Academy of Insurance and Financial Management Private Limited (IAIFM) in New Delhi, India.  IAIFM will serve as The College's sponsor in India and provide The College's continuum of educational programs for professionals in the life insurance industry. "With a population estimated at over a billion people, India represents an enormous insurance market and educational opportunity for our institution," said Larry Barton, PhD., President and Chief Executive Officer of The American College.  "We look forward to working together with the IAIFM in India and helping to bring financial education to professionals worldwide."