OPEN DOOR POLICY - It is now official. The former American Society of CLU/ChFC, now the Society of Financial Service Professionals, will allow CFPs, CPAs and JDs to become members. The move is obviously designed to broaden the FSP's base and help increase its sagging membership...now about 32,000, down from a high of 36,000.

ANOTHER DISTRIBUTION ACQUISITION - Allmerica has agreed to purchase Advantage Insurance Network, representing more than 4,000 insurance agents nationwide. The move is another in insurers' attempts to have more control over their distribution channels.

SELF-POLICING CONCERNS - The fabric of traditional securities regulation is under increasing strain, with established stock markets developing plans to go public and electronic communications networks (ECNs), or electronic "quasi-exchanges," popping up right and left. The concerns include how a publicly- traded, for-profit exchange can continue as a self-regulatory organization and yet avoid the potential conflicts of interest that would inevitably arise in operating as a for-profit business, as well as how to create a level regulatory playing field between full-fledged exchanges and the quasi-exchange ECNs. It's a complicated world we live in!

NEW DISTRIBUTION MODEL? - Ten of the nation's top 65 accounting firms have joined to create a new company to provide investment and insurance programs for their clients. Called Capital Professional Advisors, the founding member firms have 520 partners and 3,200 in professional staff. A strategic partner...Allmerica again, with a 15% stake in the deal.

RUMOR MILL - Merrill Lynch has been the subject of merger speculation for awhile. That speculation heated up again last week when the Wall Street Journal's "Heard on the Street" column listed Chase Manhattan or AIG as rumored potential merger partners with Merrill Lynch.

CFP LITE DARKENS - After intense opposition to the proposed Associate CFP designation, the CFP Board of Standards has decided to revisit how, and perhaps if, the designation will be awarded. As Dale Carnegie said, "When you make a mistake, admit it quickly and emphatically"...that's our advice.

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REGULATORS SLAM DAY-TRADING FIRMS - A study by the North American Securities Administrators Association (NASSA) paints a negative picture of day-trading firms. The seven-month investigation concludes that problems at day-trading firms include "misleading marketing, poor screening of customers, questionable loan schemes and widespread losses by day-traders." The report also calls for increased regulation and oversight of day-trading services.

HMO LOSSES - Weiss Ratings, Inc. reports HMO losses of nearly $500 million in 1998, coming on the heels of over $750 million in losses for 1997. This is, of course, creating higher rates for most HMOs in 1999 and Weiss predicts more HMOs dropping Medicare patients or "going under." Meanwhile, House GOP leaders have agreed to back new patient rights to sue HMOs.

IT'S OFFICIAL - With New Jersey's approval, Aetna's purchase of Prudential HealthCare is now complete. Some analysts, however, are describing the sale as a "virtual giveaway" by Prudential, which is preparing for an IPO. While it's being termed a "billion-dollar deal" by Aetna, half of the purchase price is being financed by a $500 million loan from Pru, Aetna will inherit more than $600 million in cash that Prucare had set aside to pay future claims and Pru has agreed to subsidize expected operating losses for the first 18 months.

PLAYING THE NUMBERS - According to a study by the American Psychological Association (not sure why they conducted this study...perhaps a little paranoid?), both insurance and managed care companies could make $280 million dollars by denying just 1% of all claims and keeping the interest earned for the 377 days allowed for the new independent review process.

NEW LIMRA TEST - Recognizing the changing character of its client companies, LIMRA has created a new selection test. Called the Financial Services Career Profile, it claims to help managers reject candidates who are not likely to succeed in the new, more complex financial services arena. 

COMPANY TO CUT 1,500 JOBS - Liberty Mutual has announced it will cut expenses by more than $150 million by the first quarter, 2000 as it realigns its commercial insurance operation. The reorganization will create a single account business unit from the recently-acquired Wausau Insurance. The new unit will operate under the Liberty name. Hate to see those "Wausau Depot" ads leave the scene.

QUOTESMITH IPO - Things did not work out too well for Bob Bland's Quotesmith IPO. The $55 million IPO was offered at $11 per share, but closed at $9-11/16...a "broken IPO." FYI: In 1998, Quotesmith lost $196,000 on revenue of $5.6 million. In the first half of 1999, it lost $3.2 million on revenue of $3.1 million. Not a good trend. 

The AnnuityMasters
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