JOHN HANCOCK - Joining MetLife and Prudential, John Hancock Mutual will demutualize in the first quarter of 2000. Policyholders will receive information on the demutualization soon (information is also available on the company's Web site at http://www.jhancock.com). We have heard that in other such conversions, some policyholders have received "buyouts" of up to 25% of their contracts' cash value.

NABBED - Martin Frankel, accused of embezzling at least $218 million from several insurance companies, was arrested in Hamburg, Germany following a four-month international manhunt. Since Frankel is contesting his extradition, it could be many months before he's returned to the U.S. Meanwhile, state regulators are expected to recover less than 40 cents on the dollar, unless investigators locate a hidden cash supply or Frankel agrees to cooperate with authorities.

THE FIVE "C's" - Nearly four years ago, we gave a talk to a LOMA group in Atlanta about the real value of the Internet to insurers.the 5 "C's": Communications, Content delivery, Compliance, Convenience and Cost savings. Today, while there are still major efforts in the e-commerce arena, we continue to believe the Internet business will only capture the "shoppers." The "shoppers" may become more common in the years to come, but they will never represent the best business for insurance companies. The best customers will be those sold and serviced by planners and agents. Insurance companies may finally be catching on. Ivans reports nearly a triple-fold increase in companies providing electronic forms and e-mail service to their customers in just the last six months! Also, 70% of the sites they surveyed have agent locators.

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B2B - The business-to-business electronic markets now being established on the Internet are expected to far surpass business-to-consumer markets, such as Amazon.com, in the near future. These "business webs" or online industry- specific trading communities are predicted to increase from $109 billion in 1999 to $1.3 trillion in e-commerce by 2003, accounting for 9.4% of total U.S. business sales and generating substantial cost savings. For example, Chemdex.com has reduced pharmaceutical and biotech industry sales and distribution costs by 20% (more than $4 billion) since 1997. If you're interested in Internet investments, you may want to take a closer look at emerging B2B companies.

THE CASE AGAINST C.O.D APPLICATIONS - Equitable just won a lawsuit in which the plaintiff claimed the insurer was negligent in not paying death benefits on a policy that was issued prior to her husband's death, but before her first premium payment. The $1 million policy was issued just prior to the insured's death, but because the premium was not paid prior to insured's death, Equitable was not obligated to pay. Agents owe it to their clients to do all possible to get their clients to "prepay" and, with the "10 day free- look" clause, there is very little reason to not do so.

NOT AN IRA - PaineWebber is being sued by investors who claim they were misled into buying life insurance policies rather than individual retirement products. PaineWebber may have hidden the fact the "Provider" product was actually life insurance. If so, PaineWebber could face charges under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act.

NAILBA ADOPTS ELECTRONIC DOCUMENT eXchange - Electronic Document eXchange (EDX) is an open standard designed to package electronic documents and their associated metadata for e-commerce. With an open standard exchange, applications will begin to emerge, targeting the paper- intense application process currently in place throughout the industry. "EDX has set the stage for us to move away from paper to a more efficient exchange methodology," said Tony Cravitz, CLU, of NAILBA.

NY INSURANCE DEPARTMENT IN CHARGE OF GUN CONTROL - In a good editorial in National Underwriter, Debra Straus.tongue-in- cheek.proposes that the New York State Insurance Department be put in charge of gun control. Why? "According to the recently passed bill in the U.S. Senate, the waiting period for purchasing a gun at a trade show is three business days (which the House wants to change to three calendar days). According to New York State Regulation 60, the waiting period before replacing an existing life insurance policy with a new one can be up to 20 business days." As Ms. Straus says, "The department has made it so difficult to purchase a life insurance policy, just imagine what it could do with guns!"

TAX CUTS - With the $792 billion Republican tax legislation facing a Presidential veto, the chances for significant tax relief this year have dimmed. The Republican leadership may prefer to use the tax legislation veto as a political weapon in next year's election, rather than compromise with the Clinton administration on a more modest tax cut package. A limited tax measure must pass Congress this year, however, if certain already-expired tax credits are to be renewed, including the research-and-development credit and the exemption of personal credits from the AMT. There always remains the possibility that other, broader tax cuts may be attached to this legislation.

MUTUAL FUND COST CALCULATOR - If you buy or sell mutual funds, go to http://www.personalfund.com. Andrew Tobias has launched this site that calculates the true cost of owning a mutual fund. The cost analysis also compares the mutual fund of interest to several others in the same investment category. The experience can be an eye opener. Take a look at this site before your clients do.

NEW CSO TABLES COMING SOON? - Lawmakers (including Tom Foley, chair of the Life & Health Technical Task Force) are beginning to ask questions about the delay in delivery of a new CSO table. Some in the NAIC believe that many insurers have been reluctant to share information for the industry table due to competition, confidentiality and possible adverse tax law consequences.

AMEN - According to John Unipan, the CEO of Starnex, in a recent National Underwriter article, the Internet should not replace or bypass brokers and agents, which would cause the loss of expert advice and personal interaction. The Internet is good for selling commodities, but life insurance sold on the Internet as a commodity will be useful in the short-term only and will cause many long-term problems.specifically, we feel, a lack of customer loyalty, i.e., poor retention. See the "5 C's" above for the real value of the Net to insurers.

IN THE DRIVER'S SEAT - The Hartford has signed a multi-year deal with Ford Motor Company to offer a Ford-endorsed insurance program to Ford, Lincoln and Mercury owners and lessees, as well as to Ford Credit customers. The "Ford Motor Company Vehicle Insurance Program" will offer auto and other personal insurance, including homeowners and personal liability. Reader's Digest hasn't been idle, either, having just announced a partnership with Torchmark to market insurance products to Reader's Digest customers in the U.S. and Canada, and another partnership with AIG to market insurance products to Reader's Digest customers in international markets.

CASH-BALANCE PLANS UNDER FIRE - Cash-balance pension plans, which have proven to be popular with larger companies (more than 300 companies have converted to them from defined benefit plans so far), are coming under increasing criticism. These plans can reduce costs by cutting future benefits to middle-aged employees, while allowing younger employees to take a larger payout if they leave before retirement. An IRS district memo has been released which questions whether these plans violate age discrimination laws. In addition, 40 members of Congress have called on the EEOC and Labor Department to investigate the use of cash-balance plans.

FEW NEW CUSTOMERS - The mutual fund industry has to be troubled by a study detailed in Investment News reporting that "sales to new customers now account for just 5% of an average fund company's growth, down from 21% five years ago." The real concern is how fund companies will fare if the stock market should fall into a prolonged slump. According to another study, however, money managers can cry all the way to the bank."senior stock mutual fund managers saw their total pay soar 77% to an average $1.63 million, vs. $920,700 in 1997."

MORE ON INTERNET SALES - This reported in Life Insurance Selling. At the MDRT meeting, agents were asked by James M. Benson, CEO of New England Financial, whether they thought insurance sales would benefit from the Internet. Benson agreed with the producers' outlook that insurance industry sales would not profit from the Internet, but the Net could be a competitive threat. "A computer cannot be programmed to cultivate relationships, and a computer cannot persuade people to take action in their own best interest." According to Benson, selling is an activity that goes on between two people who have developed a trust and rapport. Amen, again.