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FATAL COMAIR CRASH ON HEELS OF BAD 1996 AVIATION LOSS PICTURE
CINCINNATI-Commuter airline Comair has $200 million in combined hull and liability insurance to cover losses arising from Thursday's fatal crash of a turboprop plane outside Detroit.
New York-based United States Aviation In-surance Group is the lead underwriter on
coverage for Comair Holdings Inc. placed in March by Willis Corroon Aerospace in Chicago, according to Department of Transportation documents. Other members of the underwriting consortium include the American
Home Assurance Co. in Atlanta; Indemnity Insurance Co. of North America in New York, a unit of CIGNA Corp.; Lloyd's of London; three Paris-based insurers, Assurances Generales de France, GAN Incendie Accidents and La Reunion Aerienne; and Aero Assurance Ltd. in Hamilton, Bermuda, the documents indicate.
A spokesman for USAIG said the company had not yet established a liability reserve.
Although Atlanta-based Delta Air Lines Inc. owns 20% of Comair and Flight 3272 was operating as the Delta Connection, the commuter airline has its own policy and is not covered by Delta's insurance, a Delta spokesman said. Comair was unavailable for comment Friday.
The Emb 120 Brasilia turboprop commuter plane, en route to Detroit from Cincinnati, crashed in a snowstorm 18 miles from Detroit Metropolitan Airport, killing all 26 passengers and all three crew members. There are 318 such aircraft operating, 220 of them in the United States, according to a spokesman for Embraer Aircraft Corp. in Fort Lauderdale, Fla. The current value of the Comair aircraft would be $4.1 million to $4.3 million, the spokesman said.
The National Transportation Safety Board is investigating the cause of the crash, and a spokesman said all possibilities-including ice and mechanical failure-will be explored.
Among those who died in the crash was Roger Bransford, managing director of Watson Wyatt Investment Consulting in Atlanta. Mr. Bransford, 52, joined Watson Wyatt last February and earlier worked for Towers Perrin and William M. Mercer Inc. He is survived by his wife and three sons.
In another air incident, USAir Express Flight 5326 from Bangor, Maine, to Boston crashed shortly after takeoff Friday. The commuter flight, a Beechcraft 1900 twin-engine turboprop owned and operated by Mesa Air Group Inc., reached 400 feet before crashing, injuring two of the nine passengers, a spokeswoman for the Federal Aviation Administration said. Two crew members were unharmed.
NTSB investigators are trying to determine the cause of the crash.
A spokeswoman for the Farmington, N.M.-based Mesa said the two injured passengers were treated and released the same day.
The Comair crash marks the seventh fatal accident of an Embraer 120 in the past 20 years, according to London-based aviation analysts Airclaims Ltd. Six were commercial passenger flights and one a military flight, the last occurring in August 1995, when an Atlantic Southeast Airlines commuter flight plowed into a field in Georgia, killing eight (BI, Aug. 28, 1995).
Meanwhile, 1996 appears to be one of the worst airline-loss years on record, with airline hull and liability losses totaling $1.6 billion, up 25% from 1995, according to Airclaims. A total of 1,306 passengers died in 11 accidents.
EEOC WINS LARGEST-EVER VERDICT
DETROIT-The Equal Employment Opportunity Commission won its largest verdict ever in an Americans with Disabilities Act case last week when a federal court jury in Detroit awarded a former trucker about $5.5 million because his company refused to accommodate him after he developed epilepsy.
However, the total award to Thomas Lewis was reduced to $491,931 after a $300,000 cap mandated by federal law was applied to the $5.3 million awarded for compensatory and punitive damages. The trucker also received $191,931 in back pay.
The Troy, Mich.-based company, now known as Commercial Carriers Inc., plans to appeal, said Fred Batten, an attorney with Clark Hill P.L.C. in Detroit. The company is a subsidiary of Ryder Systems Inc. in Miami.
Mr. Lewis, 45, drove a truck until he suffered a seizure at home in 1989. Because federal transportation rules prohibited him from working as a driver, he asked the company to transfer him to a different job, said David Whitcomb, his EEOC attorney.
Mr. Lewis went on unpaid leave and became eligible in March 1993 for a job loading automobiles onto railroad cars within a confined area. Medical experts hired by Mr. Lewis and the company said he could perform the essential functions of the proposed job safely, but the company refused to give him the job. The company maintains he still poses a direct safety threat to himself and his coworkers, especially because he sometimes would be working 18 feet above ground, Mr. Batten said.
PBGC AIMS TO TERMINATE PLANS
WASHINGTON-The Pension Benefit Guaranty Corp. will go to federal court this week to terminate three pension plans with about $185 million in unfunded liabilities sponsored by Anchor Glass Container Corp., a financially ailing manufacturer in Tampa, Fla.
Anchor Glass, which filed for bankruptcy last year, is selling its assets, which would remove Anchor Glass from the control of its Mexican parent, Vitro S.A. The PBGC says Vitro has not supported Anchor Glass's liquidity needs during bankruptcy, including making required contributions to Anchor's pension plans. The agency has an $18.9 million lien on a Vitro facility in Laredo, Texas, to cover pension contributions Anchor Glass failed to make.
The three plans have a total of 15,600 participants. The termination of the plans would be the largest since the 1993 PBGC takeover of several Sharon Steel Corp. plans, which were underfunded by about $250 million.
LOWNDES IN MERGER TALKS
LONDON-Lowndes Lambert Group Holdings P.L.C. is in merger talks with Fenchurch P.L.C.
The two brokerages announced Friday the "possible merger of the companies" after market speculation Thursday led to a 6 pence (9 cent) rise in Fenchurch stock to 58 pence (98 cents) per share.
"We're in discussions which may lead to a merger," Lowndes Lambert Chief Executive David Margrett said last week. More details are expected in a few weeks.
Stock analysts say the merger is likely to be a takeover of Fenchurch by Lowndes Lambert following Fenchurch's poor performance in its fiscal year ending Sept. 30. Fenchurch's operating profits dropped 22% to 6.3 million pounds ($9.9 million) from 8.2 million pounds ($12.8 million), and pretax profits after exceptional items dropped 43% to 4.8 million pounds ($7.5 million) from 8.4 million pounds ($13.1 million).
Fenchurch's gross revenues including investment income rose 10% to 40.3 million pounds ($63.1 million) from 36.2 million pounds ($56.7 million).
The merged company would have gross revenues this year of 143.4 million pounds, which at average exchange rates could push Lowndes to No. 11 in the Business Insurance ranking of the world's 20 largest brokers, with revenues of about $224.5 million.
That potential ranking takes into account recent merger and acquisition activity.
LLOYD'S ANALYST FORESEES PROFITS
LONDON-Lloyd's of London is on course to earn record profits for the 1994 underwriting year, analyst Chatset Ltd. predicts.
Results for the 1994 account, which closed at year-end 1996 and will be reported in early summer, should exceed the record 1.08 billion pounds ($1.68 billion) profit set in 1993, Chatset says.
The analyst forecasts Lloyd's will post a global profit of 1.18 billion pounds ($1.99 billion) for 1994, a trend that will continue in 1995 and 1996 accounts.
"1994 and 1995 are both excellent years," said Chatset Director Charles Sturge, "and 1996 is surprisingly good."
Chatset is predicting a 1995 profit of 985 million pounds ($1.53 billion) and a 1996 profit of 716 million pounds ($1.21 billion).
But the effect of decreasing insurance rates will be felt in the future because of the increasing use of multi-year contracts, and he warned that 1998 and 1999 could be lean years for Lloyd's earnings.
Now that Equitas Ltd. has assumed a proportion of syndicate reserves, some underwriters may decide that the 1994 profits could be put to use in strengthening their reserves, artificially deflating the profits distributed to members, said Mr. Sturge, particularly long-tail syndicates that rely on investment income.
The U.S. Supreme Court next month will hear oral arguments on whether the Employee Retirement Income Security Act pre-empts a New York law that imposes taxes on revenues received by medical facilities operated by a union health care plan. . . .The Texas Senate this week will begin considering managed care bills, including one that would hold managed care organizations legally responsible when the denial of medically necessary treatment results in injury to a plan enrollee. . . .Sir David Rowland has been re-elected chairman of Lloyd's of London for this year. His deputy chairmen are underwriters John Charman and Ian Agnew. Mr. Agnew replaced John Stace, who completed his term at the end of 1996. . . .Policyholders of the failed Executive Life Insurance Co. who declined to participate in the company's rehabilitation plan will receive 92.5% of their account values-far greater than had been expected. In announcing the final asset distribution of $193.4 million last week, California Insurance Commissioner Chuck Quackenbush said ELIC policyholders who participated in the rehabilitation plan and were fully covered by guaranty associations will receive 100% of their policy values. . . .California's Office of Administrative Law has disapproved the state's controversial new ergonomics standard on the grounds it was disorganized and short on crucial details. The move forces state regulators to revise the standard, which also has been criticized by employers and labor as too vague (BI, Nov. 18, 1996). . . .Maine employers could pay $20 million less for workers compensation insurance this year. The Maine Bureau of Insurance has approved the average 12.5% reduction in advisory loss costs recommended by the National Council on Compensation Insurance. . . .Texaco Inc. was expected to file a definitive agreement last Friday with the U.S. District Court in White Plains, N.Y., to settle its discrimination suit with former African-American employees. The $176.1 million settlement could be effective as early as March. Texaco also will allow the U.S. Equal Employment Opportunity Commission to monitor the company's employment programs and policies for the next five years. . . .Federal legislation, H.R. 109, introduced last week by Rep. William Clay, D-Mo., would extend the Family and Medical Leave Act to employers with 25 or more employees. The 1993 FMLA, which requires employers to offer employees up to 12 weeks of job-protected leave because of various family situations and medical problems, currently only applies to companies with at least 50 employees
. . . .James R. Fisher, senior vp and chief financial officer of American Reinsurance Corp. and president of American Re Financial Products, will resign effective March 31 to pursue other interests. . . .The U.S. Supreme Court last week upheld a decision last spring by the 6th U.S. Circuit Court of Appeals that would allow the court overseeing Dow Corning Corp.'s Chapter 11 bankruptcy case to take control of breast implant litigation against Dow Corning's parent companies, Dow Chemical Co. and Corning Inc. . . .Blue Cross & Blue Shield of Ohio and Columbia/ HCA Healthcare Corp. have put off the deadline for finalizing their merger agreement until March 31. A key variable in completing the deal will be whether the national Blue Cross & Blue Shield Assn. successfully persuades a court to strip the Ohio plan of its Blues trademark, making a merger less desirable.