"RUNAWAY LITIGATION" – This term really sums up the legal mess we are creating. 

MARSH TO CUT 3,000 JOBS – Add the loss of 3,000 jobs (5% of the Marsh work force) to a 40% drop in stock value and it pretty much says it all. Sure a few executives were "ousted," but the real hit is being taken by stockholders and "little" employees.

BETTER THAN EXPECTED - Conseco, which emerged from bankruptcy in September 2003, reported better-than-expected third quarter profits...$57.9 million or 36 cents per share.

SUN LIFE REORGANIZES - Sun Life will separate its insurance operations from its principal asset management business. Pushing the decision are new Canadian capital rules for life holding companies.

$21.3 BILLION IN P&C LOSSES - According to preliminary estimates by ISO, U.S. property/casualty insurers suffered a record $21.3 billion in insured property loss claims from eight catastrophes in the third quarter...the industry's worst third quarter ever. The following is a five-year comparison of third-quarter property losses from catastrophes and (event frequency): 2000 $315 million (3), 2001 $19.15 billion (4), 2002 $715 million (6), 2003 $3.72 billion (7), 2004 $21.3 billion (8).

"THE INSIDERS" - If you're interested in an inside look at the pharmaceutical industry, click here and check out this article in the AARP Bulletin.

FORD PRIORITIES - In an address to the U.S. Chamber of Commerce, Ford Motor Co. chairman Bill Ford Jr. listed the top legislative priorities of the automobile industry:  health care reform and tax incentives for alternative fueled vehicles.  On health care, Ford said that soaring health care premiums cannot be sustained and called for medical liability reform and catastrophic health insurance reform.  On a more personal note, Mr. Ford called for corporate heads to aggressively confront the broad public distrust of big business that has been fueled by recent high-profile corporate scandals.
 

SPITZER TO FILE AGAINST AON – AON, second only to Marsh & McLennan in brokered insurance business, will be charged with "tying"...that is, demanding that insurers hand over reinsurance business in return for placing premiums with the insurer. 

CALIFORNIA EYEING SPITZER – California Attorney General Bill Lockyer, taking a cue from New York Attorney Eliot Spitzer, launched his own insurance probe in the state. While initially focusing on alleged carrier bid-rigging, price-fixing and other antitrust violations, Lockyer has been consulting with California Insurance Commissioner John Garamendi on his investigation into broker contingency fees, although no brokers have been subpoenaed. "Businesses cannot conspire to give themselves an unfair advantage over competitors or harm consumers by keeping prices artificially inflated," Lockyer said in a statement. "Any insurance company or broker violating these laws will be held accountable." 

MARSH SAYS CONTINGENT FEES WILL GO TO RESTITUTION - Marsh & McLennan is planning to collect about $230 million in controversial contingent commissions owed to the company by insurers and will use the money for any restitution agreement it reaches with NY Attorney General Spitzer. This whole deal is very confusing to us. If it were illegal for Marsh to accept these commissions, you'd think it would also be illegal for the companies to pay them. However, Reuters and industry experts report that fees owed by insurance companies to Marsh & McLennan may be unethical and illegal according to regulators, but insurance companies will still have to pay them. 

OHIO EYEING CHUBB - The Ohio state attorney general has requested documents from Chubb regarding possible violations of antitrust laws. 

PRUDENTIAL AND BROKERS - Prudential is being quizzed by "several" regulators (reportedly NY Attorney General Spitzer, the SEC, the Connecticut AG's office and the U.S. Department of Labor) about how it conducts business with insurance brokers. According to Reuters, Prudential has joined the list of insurance companies and brokers swept up in a rapidly widening probe into decades-old business practices that regulators say inflate insurance costs for consumers. 

UK PROBE – Over half of major UK companies want Britain to launch an investigation into insurance brokers, similar to the one conducted by NY Attorney General Eliot Spitzer.  Britain's financial watchdog, the Financial Services Authority (FSA), which takes over regulation of insurance brokers in January 2005, has declined to comment on whether it will investigate contingent commissions.  The FSA, however, did take the unusual step of announcing that it has "provisionally authorized major insurance brokers, March, Aon and Willis to operate in the UK, to allay market concerns." 

SEC, SPITZER PROBING INSURANCE PRODUCTS – With nothing else to do, the SEC and New York will begin probing products sold by insurance companies that help customers enhance their financial statements. The investigation will center on whether insurance companies may have helped customers "improperly smooth their earnings by selling them financial-engineering products designed to look like insurance but in actuality are loans in disguise." Traditional insurance is not a target of the investigation.

ANOTHER PROBE, SEC & BROKER TRADE PRICES - The New York Times reports that several brokerage firms are being investigated for failing to obtain the best price for stocks traded for customers. Companies include Morgan Stanley, Merrill Lynch, Ameritrade Holdings, Charles Schwab and E*Trade. And, predictably, the stock prices of all these firms promptly declined.

ST. PAUL TRAVELERS SERVED - St. Paul Travelers reports that attorneys general in New York, Connecticut, North Carolina and Minnesota have subpoenaed the company in connection with an investigation into how insurance brokers sell their products. 

CONNECTICUT SUBPOENAS ALLSTATE - Allstate is being questioned by the Connecticut Attorney General about how the firm sets prices for its insurance products. Another state is investigating "whether any person engaged in activities for the purpose of price fixing, market allocation, or bid rigging." Aegon has also received a request for information from the Connecticut Attorney General.

ENRON FRAUD AT H&R BLOCK – The NASD has charged H&R Block Financial Advisors with fraud related to the sale of over $16 million worth of Enron bonds to more than 800 customers immediately preceding Enron's bankruptcy in 2001. 

SETTLEMENT APPROVED – A federal judge has approved Citigroup's $2.6 billion settlement with WorldCom investors, who lost billions when an accounting scandal plunged the company into bankruptcy.  Citigroup, which had set aside reserves for the settlement, admitted no wrongdoing. 

HURRICANE LITIGATION POUNDING - Hurricane season may be coming to a close, but it is open season on insurance companies. The aftermath of Ivan and other hurricanes has created a completely new kind of storm surge -- hurricane claim litigation. And one Pensacola attorney, Samuel Bearman, is setting the stage for a battle of mammoth proportions. "A lot of insurance companies are basically abandoning their customers by refusing to pay out reasonable amounts on hurricane damage claims," says Bearman, leading attorney in hurricane claim litigation. 

CLASS ACTION RECAP – AON on behalf of purchasers of the securities of Aon Corporation; Lehman Brothers, Banc of America Securities J.J.B Hilliard and W.L. Lyons relating to the purchase of GE Global Insurance Notes Corporate Backed Trust Certificates; two law firms are after MetLife for violated the federal securities laws by issuing materially false and misleading statements and failing to disclose material facts regarding the company's financial performance that had the effect of artificially inflating the market price of the company's securities; AON on behalf of participants and beneficiaries of its 401(k) that fiduciaries knew or should have known, that the Company was paying illegal and concealed contingent commissions pursuant to illegal contingent commission agreements, that violated applicable principles of fiduciary law, subjecting the Company to enormous fines and penalties; AXIS Capital Holdings on behalf of all securities purchasers. 

TREE SWING GETS THE AX – This from Common Good, the legal reform group. "For several decades, a tree in the Belair cul-de-sac was the anchor for two rope swings much loved by two generations of neighborhood children." But now the swings--illegal under the city code--have been cut down, sparking "bitter cries of protest by both children and their parents. ... While City Council members said they sympathized with the parents and children," they were unable to "come up with a solution that would protect the city from liability should a child be injured while playing in the cul-de-sac."
 

CALIFORNIA APPROVES ANTHEM-WELLPOINT DEAL - California's insurance commissioner has put his approval on Anthem's $16.5 billion acquisition of WellPoint after Anthem agreed to fund state health projects, including $50 million to fund clinics and to train nurses and an increase in its investment in a state program for the poor to $200 million from $100 million over a 20-year period. 

HEARINGS PROBE WAL-MART, HEALTH CARE - California lawmakers plan on opening hearings to see if Wal-Mart leaves the state with an unfair portion of the retailer's employee health-care costs. Critics claim Wal-Mart's health plan is inadequate, thereby forcing workers to use state-funded health programs such as emergency rooms at public hospitals.

P&C PRODUCER COMPENSATION - The National Alliance Research Academy has released the third edition of their P&C producer study, "Producer Profile: Compensation, Production and Responsibilities."  The study, which deals with both commercial and personal lines producers, is designed as a guide for agency owners and sales managers.  The study can be purchased at their website (http://www.thenationalalliance.com/).

RETIREE WARNING, SAVE NOW – USA Today reports that people who entered retirement in the past two to six years have not saved enough to live comfortably. The lesson is clear...younger workers need to start saving now.

MONEY DOESN'T BUY HAPPINESS - A Putnam Investments study of new retirees reveals a money-worried, cash-strapped group, dependent on Social Security. Still, that hasn't stopped them from being satisfied, showing there's more to happiness than money.  Their biggest regret, however, "was not saving earlier in life and saving more along the way."  If you work in the retirement planning market, you'll want to review this study at http://www.putnam.com/survey/.

LIVING TRUST SALES SCHEME – Pennsylvania has filed a civil lawsuit accusing 16 defendants, including two attorneys, of engaging in an elaborate statewide living trust sales scheme that deceived older Pennsylvanians into purchasing Revocable Living Trusts, long-term annuities or charitable gift annuities that were costly, not in their best interest and/or unnecessary. The alleged victims documented approximate losses that range between $1,800 and $80,000. To encourage the sale of living trusts, the suit claims that the defendants used scare tactics and deceived consumers by falsely claiming that living trusts are superior to wills and presented Qualified Charitable Gift Annuities as tax shelters or investments. 

FED RATE UP 1/4% - The Federal Reserve raised U.S. interest rates for the fourth time this year, bringing the rate up to 2%. The measured increases were predicted by the Fed and the improving job market probably means more increases lie ahead.

BAD CLIENT TO MESS WITH – MetLife says the SEC is investigating sales practices by a former representative in a sale to the Sheriff's Department of Fulton County, Georgia. 

MANDATORY COMMISSION DISCLOSURE REJECTED - The National Association of Insurance and Financial Advisors (NAIFA) has rejected calls for life insurance agents to disclose to consumers the commissions they receive. 

COLLEGE EXPECTATIONS - According to a Genworth Center for Financial Learning study, there is a big gap in education funding expectations between teens and their parents, with teens having high expectations of their parents' ability to pay for their college educations.  In contrast, almost half of the parents surveyed expect primary funding for college to come from scholarships and financial aid.  More information on the study can be found by clicking here.

LIKE YOUR JOB? – According to the 2004 Allstate "Retirement Reality Check" survey, the majority of people still working expect to continue working for pay after they retire.  The study presents an interesting contrast between people who are currently retired and those still working.  More information is available here. 

THE 8th HABIT – That is the title of Stephen Covey's latest book. And what is the 8th Habit?..."Find your voice, and inspire others to find theirs."