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Liberty Mutual, AIG still vying
for control of Golden Eagle
SAN FRANCISCO-A renewed attempt by Boston-based Liberty Mutual Insurance Co. to acquire Golden Eagle Insurance Co. calls for California Insurance Commissioner Chuck Quackenbush to drop charges against Golden Eagle's deposed owner and chairman, John Mabee.
New York-based American International Group Inc., whose bid for Golden Eagle was approved in April by regulators, has since amended its bid to include the settlement provision (BI, April 14). AIG's original bidfor the troubled workers compensation insurer was still pending court approval, clearing the way for Liberty Mutual to submit a bid to the court. Liberty Mutual has served as a reinsurer of Golden Eagle while in rehabilitation.
Liberty Mutual's proposal was presented last week in San Francisco Superior Court, which is overseeing Golden Eagle's rehabilitation, and to the commissioner.
Under the proposed settlement agreement, Mr. Mabee would forgo his right to hearings contesting the commissioner's Jan. 31 takeover of his company, in exchange for the department dropping any charges against him, according to court observers.
The department seized Golden Eagle Jan. 31, charging that questionable business practices put policyholders, employees and clients at risk. The department also charged that Mr. Mabee, among other things, obtained $69 million in unsecured loans from Mesa Re, Golden Eagle's Turks & Caicos-based reinsurance affiliate.
AIG's rehabilitation bid called for it to put $200 million into a company the insurer is forming that would write new and renewal business, said Roxani Gillespie, former California insurance commissioner and a partner at Buchalter, Nemer, Fields & Younger, a San Francisco firm representing AIG. Golden Eagle would transfer $1.1 billion of its assets into a runoff operation supported by American Home, an AIG unit. AIG would supply additional capital depending on the amount and quality of assets Golden Eagle turns over.
Liberty Mutual's new rehabilitation plan is similar to the one submitted by AIG, according to Karl Rubinstein, deputy conservator and chief executive officer for Golden Eagle. But it added the settlement agreement.
The new proposal prompted Superior Court Judge William Cahill to order AIG to talk with Mr. Mabee about producing a settlement agreement similar to the one proposed by Liberty Mutual.
AIG has done that and added an identical settlement proposal, Ms. Gillespie said.
Such a settlement is intended to speed the rehabilitation process so Golden Eagle will not linger in receivership, Ms. Gillespie explained.
Any settlement would require the commissioner's agreement. The department referred calls to Mr. Rubinstein, who said a decision has not been made.
PBGC chief being considered
WASHINGTON-David M. Strauss, currently deputy chief of staff to Vice President Albert Gore Jr., is under consideration to be the next executive director of the Pension Benefit Guaranty Corp.
Mr. Strauss, who advises the vice president on a wide range of domestic issues, including retirement security and health care, previously was chief of staff to Sen. John Breaux, D-La., and staff director of the Senate Committee on Environment & Public Works.
The appointment could be announced as early as this week. If named, Mr. Strauss would succeed Martin Slate, who died earlier this year of a heart attack.
The appointment does not require Senate confirmation.
AIG promotes Evan Greenberg
NEW YORK-Evan G. Greenberg was named president and chief operating officer of American International Group Inc. last week in a move that strengthens his position as the likely successor to his father, Maurice R. Greenberg, as chairman and chief executive officer.
The younger Mr. Greenberg succeeds Thomas R. Tizzio, who was named senior vice chairman.
The change in position will allow Mr. Tizzio to remain a mentor to Evan Greenberg but step away from day-to-day management responsibilities, said David Seifer, vp at Donaldson, Lufkin & Jenrette Securities Corp. in New York.
Edmund S.W. Tse, executive vp-life insurance, also was made a vice chairman of AIG.
The promotion of Evan Greenberg, 42, clearly marks him as the likely successor to Maurice Greenberg, who is 72, when the elder Mr. Greenberg eventually retires, observers say.
"It is fairly obvious that Evan is the leading candidate to take over the company," said Peter Wade, vp at Lehman Bros. in New York.
Evan Greenberg joined AIG in 1975 and most recently was executive vp-foreign general insurance and president of American International Underwriters. He was elected to the board in 1996.
Prior to 1995, Maurice Greenberg's elder son, Jeffrey W. Greenberg, was thought to be the heir apparent at AIG, but after his unexpected resignation in 1995 the focus shifted to his brother (BI, June 12, 1995).
Other appointments last week include: Martin J. Sullivan, senior vp- foreign general insurance, who was named to the additional post of president of AIU; and Hamilton C. DaSilva, vp-foreign general insurance, who was named to the additional post of executive vp at AIU. AIG also made several vp appointments in its Asian operations.
Death sparks copter safety probe
INDIANAPOLIS-The helicopter accident that killed a Conseco Inc. executive last week could lead to new safety guidelines for companies that provide their executives with helicopter shuttle services, says the federal safety official investigating the incident.
Executive Vp Lawrence Inlow, 46, who was Conseco's general counsel and secretary, was killed at Indianapolis International Airport Wednesday when he walked into the slowly rotating main rotor of a helicopter Conseco leases and operates.
The accident occurred after the pilot had applied the main rotor brake and a steward had assisted Mr. Inlow and another Conseco official from the helicopter, said David Bowling, the National Transportation Safety Board air safety investigator leading the investigation. Both officials began walking away from the helicopter toward a corporate plane. Without explanation, Mr. Inlow then turned parallel to the helicopter. After he began walking toward the front of the craft, he was struck by a blade, Mr. Bowling said.
The NTSB has not found any problems with the helicopter. But, it is investigating how much the main rotor blades flex at slow speeds. Mr. Bowling said he understood they could flex to as low as 8 feet above ground level. Mr. Inlow was 6 feet 2 inches tall.
The NTSB is investigating whether wind gusts of up to 24 mph could have caused additional blade flex. Mr. Bowling doubts that the NTSB will seek helicopter design changes. Instead, the NTSB will analyze Conseco's safety procedures in determining whether the agency should issue safety guidelines to companies operating helicopter shuttles. For example, the agency will look at whether passengers should remain inside helicopters until rotor blades have stopped spinning. Another option could be establishing no-walk zones for passengers.
Connecticut managed care law
HARTFORD, Conn.-The Connecticut Legislature has approved legislation that would establish sweeping managed care regulations, including provisions for enrollees to appeal coverage decisions.
The bill would establish an external appeal process allowing the insurance commissioner to rule on a managed care organization's rejection of an enrollee's request for coverage of care. The commissioner could refer the appeal to an independent board of physicians or other health care experts for their review. External appeals, which would cost $25, could be made only after all internal appeals within the managed care plan have been exhausted.
Among other provisions, the bill would:
Require all managed care companies to establish internal grievance procedures to resolve enrollee complaints over non-coverage of treatment.
Bar gag clauses under which providers are prohibited from disclosing non-covered treatment options to patients.
Require the insurance commissioner to develop an annual "consumer report card" for all managed care organizations beginning in 1999.
Gov. John Rowland is expected to sign the measure.
Congress Re exec indicted
CHATTANOOGA, Tenn.-A federal grand jury has indicted Mohamed K.M. Zayed II on multiple charges stemming from his operation of the allegedly fraudulent Congress Re-Insurance Corp.
The indictment, unsealed last week, charges that Mr. Zayed swindled buyers of Congress Re surety bonds by producing phony financial statements that reported millions of dollars of bogus Congress Re assets. These assets included a phony $80 million Japanese yen bond and purported interests in an Idaho gold mine, a stockpile of uncut rubies and unrefined gold bars, prosecutors say (BI, May 19).
Mr. Zayed also used corporate names intended to mislead potential victims, including Genesis Insurance & Financial Services Inc., Congress Re's publicly traded parent. GIFS is unrelated to a General Re Corp. unit with a similar name, and General Re won an injunction against Mr. Zayed's company for trademark infringement.
The indictment charges Mr. Zayed with 17 counts of wire fraud, money laundering and interstate transportation of fraudulently acquired property. He faces a maximum of 170 years in prison if convicted.
Mr. Zayed's whereabouts last week were unknown, and he was considered a fugitive. A federal investigation of his companies is continuing, prosecutors said.
Louisiana officials will not appeal a unanimous decision by a panel of the 5th U.S. Circuit Court of Appeals that affirmed a ruling striking down a Louisiana law and application procedures that set numerous standards for risk retention groups licensed in other states that want to do business in Louisiana (BI, May 12). . . .Mitsubishi Motor Manufacturing of America Inc. is in mediation with 29 women plaintiffs accusing the company of sexual harassment at its Normal, Ill., plant. . . .Enrollees in health maintenance organizations that operate in Texas will-effective Sept. 1-be able to sue HMOs for malpractice under a bill the state Legislature approved and which become law without the signature of Gov. George W. Bush, who declined to sign or veto the measure (BI, May 19). . . .A Baltimore City Circuit Court judge last week tossed out nine of 13 counts of Maryland's suit against tobacco companies, ruling that the state cannot recover payments on behalf of individual smokers but can continue with consumer protection and antitrust claims. Meanwhile, state attorneys general and tobacco representatives continued settlement talks last week, focusing on the issue of the industry's ultimate liability. . . .The American Law Institute has given final approval to the "Restatement of Torts (Third): Product Liability." The treatise seeks to set clear rules for applying product liability law. . . .Neil D. Levin, has been confirmed by the New York Senate as the state's superintendent of insurance. Mr. Levin, who was formerly the Banking Superintendent, succeeds Edward J. Muhl, who resigned at the end of 1996 (BI, Dec. 16, 1996)