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BARBADOS REVAMPS CAPTIVE TAX TO COMPLY WITH CANADIAN RULES
BRIDGETOWN, Barbados-Captive insurers will now be liable for local taxes in Barbados-sort of.
In a move to counter the impact of tax law changes in Canada, the Barbados government has amended its insurance act to make captives liable for local tax.
But the Barbados tax rate to be applied to exempt insurers' profits will be 0% for the first 15 years after the insurer is licensed. For the following 15 years, the tax rate will be 2% of the first $125,000 of profits, or $2,500; at the same time, the government will waive its annual license fee of $2,500, resulting in no increase in any captive's costs.
The new law also makes this 30-year tax arrangement a right of all exempt insurance licensees. Under previous law, a 15-year tax exemption-while never denied to a licensee-was at the discretion of the Ministry of Finance, according to Christopher Towner, president of Towner Management Group and vp with the Barbados Exempt Insurance Management Assn.
The amendments are aimed at countering Canadian tax reforms that went into effect last year and required-among other things-that a Canadian-owned captive be a "resident" of Barbados to escape certain Canadian taxes. To qualify as a "resident," the captive had to be subject to local tax (BI, April 24).
Denis Brown, a partner with Ernst & Young in Toronto, said the new Barbados law should pass muster with Canadian authorities even though it does not raise costs at all for Barbados captives.
Mr. Brown also noted that the amendments do little to benefit Canadian banks and financial institutions whose Barbados credit life and warranty units were hard-hit by the Canadian reforms. Instead, the changes mainly benefit large Canadian multinationals that might have faced additional tax on related non-Canadian business written by their captives.
U.S.-owned captives will also see no increase in payments to the Barbados government and will benefit from the 15-year extension of the government's tax guarantee, observers note.
Meanwhile, the Barbados government also adopted several other amendments to the insurance act, including one allowing Barbados regulators to disclose information about insurers to U.S. regulators.
GEORGIA BLUES GOING FOR-PROFIT
ATLANTA-Blue Cross & Blue Shield of Georgia Inc. will convert to a for-profit company under a plan approved by Georgia Insurance Commissioner John W. Oxendine.
According to the plan, each of the 160,000 BC/BS of Georgia policyholders in the state will receive five free shares of the company's stock. The insurer will be allowed to maintain all of its assets. The new for-profit entity will operate under the Blue Cross & Blue Shield name.
The Georgia Blues plan has annual revenue of more than $1 billion. Private investors put $50 million into the conversion plan, which company officials had said was needed so it could be more competitive with national insurance companies.
The Georgia General Assembly had paved the way for the action last year by passing legislation legalizing such a conversion, with the insurance commissioner directed to oversee the process. The insurer must receive approval of its registration plan from the Securities and Exchange Commission before the conversion can be completed.
SECONDHAND SMOKE RULING MIAMI-The first class-action lawsuit related to secondhand smoke is proceeding after a Florida appeals court last week affirmed certification of a suit by 60,000 current and former flight attendants.
Originally filed in 1991 (BI, Nov. 11, 1991), the suit-Broin vs. Philip Morris Cos. et al.-was certified by a circuit court judge late last year. The tobacco companies appealed, but lost before a three-judge appellate panel. Plaintiffs claim they were exposed to secondhand smoke in the years when smoking was allowed on U.S. flights. They are expected to seek more than $1 billion in damages.
Philip Morris said it will seek a rehearing.
CAMERON-WEBB TOLD TO PAY UP
NEW YORK-Peter Cameron-Webb, an infamous former Lloyd's of London underwriter, was found in contempt of court by a New York state judge late last month and ordered to surrender documents to allow Lloyd's to collect $600,000 that he allegedly holds in Switzerland.
Lloyd's will now try to "find his assets and grab them," said John M. Toriello, a partner at Haight, Gardner, Poor & Havens in New York who represents Lloyd's.
In addition to the Swiss funds, Mr. Cameron-Webb has assets in the United States that Lloyd's will attempt to collect as partial payment of the $8.5 million that he owes Lloyd's, Mr. Toriello said.
Mr. Cameron-Webb claimed that the $600,000 was under the control of two Swiss attorneys. He previously has said that he was unwilling to hand over the money unless Lloyd's agreed to settle its entire complaint against him, according to court papers.
But Judge James Brucia in the Supreme Court of Nassau County, N.Y., ruled that by not helping Lloyd's recover the funds, he was in civil and criminal contempt of a 1993 order by the court.
Mr. Cameron-Webb achieved notoriety at Lloyd's in late 1982, when his managing agency, PCW Underwriting Agencies-from which he had resigned earlier in the year-was engulfed in a scandal involving reinsurance transactions that benefited individuals linked to the agency. By 1985, PCW was being dismantled amid allegations of fraud and its syndicates placed in runoff.
Mr. Cameron-Webb, 72 and suffering from diabetes, claimed to be too ill to attend the contempt hearing. He lives in Los Angeles where he receives $895 a month in Social Security, court documents say.
FAILED INSURER OFFICIALS CHARGED
NEW ORLEANS-Several officials of the now-defunct ANA Insurance Co. are facing criminal charges stemming from the New Orleans-based insurer's 1993 collapse.
Federal prosecutors last week announced the indictment of Sam Presley II and his wife, Barbara McDaniel, who were ANA's owners; Morris Mahana, ANA's Louisiana manager; Robert Barich, a Los Angeles-based managing general agent for the insurer; and Noel J. Bunol III, ANA's former owner.
The indictment charges that Mr. Presley and Ms. McDaniel bought ANA from Mr. Bunol in 1990 for $150,000, its net worth at the time, but that Mr. Bunol filed a false financial statement with Louisiana regulators claiming that ANA had the minimum required capital and surplus of $350,000.
From 1990 to 1992, ANA wrote $25 million in auto premiums in California but reported writing only $2.5 million to avoid Louisiana loss reserve regulations, the indictment alleges. Mr. Presley and Mr. Mahana also included phony assets in ANA's financial statements, including Mississippi property actually owned by Mr. Presley's son.
Mr. Presley and Ms. McDaniel diverted about $7 million of the insurer's money to their own benefit in the form of loans, salaries and expense payments, prosecutors allege.
The indictment charges Mr. Presley and Ms. McDaniel with conspiracy, fraud, racketeering and money laundering. Mr. Mahana and Mr. Barich are charged with conspiracy and Mr. Bunol with concealing his knowledge of a felony.
If convicted, they face sentences ranging from five to 20 years on each of the various charges. All of the defendants have pleaded not guilty. Neither they nor their lawyers could be reached.
OSHA TO PARE REGULATIONS
WASHINGTON-The Occupational Safety and Health Administration is considering a number of initiatives to fulfill the White House's desire to reduce regulations.
In a recent memo, Joseph A. Dear, the assistant secretary of labor who heads OSHA, says the agency wants to eliminate duplication in regulation for construction and shipyards.
Mr. Dear suggests one way to do this would be to publish a single volume regarding health and safety standards applicable to all industries, accompanied by industry-specific regulatory documents.
The agency also plans to consolidate some standards relating to carcinogens and eliminate outdated regulations.
PERSONAL INJURY AWARDS RISE
HORSHAM, Pa.-The national median jury award for overall personal injury claims rose 17% last year to a four-year high of $62,000, new research shows.
Product liability awards went exactly the opposite direction, though. The median jury award in these cases fell to $260,000 in 1995, a 31.5% decrease from the previous year and a 48% decrease since 1993.
Plaintiffs won 53% of personal injury trials, consistent with data from three of the last four years, reported Jury Verdict Research of Horsham, Pa.
Among awards for other types of personal injury claims, the study indicates:
The median jury award in wrongful termination and constructive discharge cases rose 40% to $183,984.
The median medical malpractice award last year rose 40% over 1994, returning to the record setting half-million dollar level of 1993. In addition, juries awarded million dollar awards in 35% of the cases, which is up from 27% in 1994.
Despite the high-dollar awards, 70% of all claims filed against physicians never result in any payment to the plaintiff, according to the Physician Insurers Assn. of America. In addition, 80% of the cases that go to trial are won by the defendant.
Long odds, however, haven't stopped patients from filing suit. Lawsuit filings against physicians are up by 11.4% since 1993, according to the American Medical Assn.
Copies of "1996 Current Award Trends in Personal Injury" are available form LRP Publications for $39.95 plus $4.50 for shipping and handling. Call 800-341-7874 ext. 307.
John D. Vollaro named president and chief operating officer of W.R. Berkley Corp. Mr. Vollaro, formerly president of reinsurer unit Signet Star Holdings Inc., replaces W.R. Berkley as president of the parent company. Separately, the company has increased its ownership of Signet Star to 100% from 60% through completion of the previously announced purchase of stock from General Re Corp. Gen Re and Berkley were joint venture partners in Signet, which was formed in 1993 (BI, Feb. 22, 1993)....Creditors of the KWELM companies, which collapsed in 1990 with liabilities estimated at more than $10 billion, have received a second payment from the scheme of arrangement set up and administered by Coopers & Lybrand. To date, $703 million has been set aside to pay KWELM creditors....Zurich Insurance Group and Insurance Partners L.P. have completed their acquisition of Kemper Corp. for just over $2 billion (BI, April 17, 1995). Zurich now owns 97% of Kemper Financial Services and 80% of the two Kemper life subsidiaries, Kemper Investors Life Insurance Co. and Federal Kemper Life Assurance Co. The two Kemper life companies will be consolidated with Zurich Life of America into Zurich Kemper Life Insurance Group.