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NEW YORK-PharMed, a proposed product liability catastrophe insurance program marketed by J&H Marsh & McLennan Inc., has been abandoned due to lack of interest.
The withdrawal of the product follows the demise of two similar facilities for the pharmaceutical industry, which also failed to obtain sufficient policyholders (BI, June 9).
"We could not get the critical mass we needed, and we decided to put it on the shelf until such time as market conditions change," said Robert Redmond, a managing director at J&H Marsh & McLennan in New York. The program was developed before M&M's merger with Johnson & Higgins.
The same problem that beset the two earlier products caused PharMed to fail: plentiful, cheap capacity in the traditional insurance markets, he said.
Currently, pharmaceutical companies can purchase more than $800 million in product liability limits, and most companies think that is sufficient protection, Mr. Redmond said.
When the programs were launched in 1995 and 1996, about $600 million to $650 million in capacity was available in the world market.
PharMed-along with a facility launched by Capital Risk Strategies and one by the former J&H-offered significantly higher limits but at a price most risk managers were unwilling to pay.
Each program was structured differently, but they shared the goal of offering large-capacity, multiyear product liability coverage. PharMed, the smallest program, offered $500 million excess of $500 million; Swiss Reinsurance Co. would have led the coverage.
Forbes to buy Nelson Hurst
LONDON-Forbes Group Ltd. will become the world's eighth- largest broker if its offer last week to buy London broker Nelson Hurst P.L.C. is approved.
Johannesburg, South Africa-based Forbes, which ranked 15th in Business Insurance's 1996 ranking of the world's 20 largest brokers, already holds about 10%of Nelson Hurst's stock. Forbes was not ranked in this year's issue as a result of the change to rank the top 10, rather than top 20. In addition, the rankings reflect acquisitions closed before the issue date; this deal is expected to close in August.
Forbes already owns almost 50%of Nelson Hurst U.K. Holdings Ltd., a joint venture with Nelson Hurst P.L.C.
For the year ending March 31, 1997, Forbes reported gross revenues of 807.6 million rand ($179.3 million). Nelson Hurst, whose fiscal year ends Dec. 31, reported 55.9 million pounds ($87.2 million). Combining the two brokerages would have revenues of $266.5 million, placing Forbes Group ahead of C.E. Heath P.L.C. and bumping Lambert Fenchurch Group P.L.C. from its spot as the 10th- largest broker.
This is Forbes' first international brokerage acquisition, though Forbes has established a high profile in South Africa through aggressive acquisitions of both brokers and benefit consultants.
Nelson Hurst's network of offices across Europe, Asia and Latin America will allow Forbes to expand its international operations. "The proposed acquisition of Nelson Hurst will accelerate the achievement of Forbes' strategic objectives," said Forbes Group Managing Director Paul Heinamann. "We aim to remain competitive in our increasingly globalized industry sector, to build up the international network required to service our existing clients who are expanding abroad and those who are already effectively multinational, and to focus our activities in the emerging markets, where there is a significant opportunity for organic growth and greater added value."
Mistrial reversed in implant suit
NEW ORLEANS-A Louisiana Civil District Court judge's reversal of herself last week a day after declaring a mistrial only makes it more difficult for Dow Chemical Co. to get a fair trial in the country's first silicone breast implant class-action trial, the company claims.
Judge Yada T. Magee granted Midland, Mich.-based Dow Chemical's request for a mistrial after ruling that while neither plaintiffs nor counsel should be penalized for a plaintiffs attorney's "natural charisma," certain "gestures" and "non-verbal communications" the lawyer made to jurors prejudiced the defendant. After interviewing the jurors Thursday, however, the judge decided a fair trial still was possible and reversed herself.
Dow Chemical has complained repeatedly that the eye-rolling, laughing and hand gestures of attorney Tom Pirtle of O'Quinn & Laminack in Houston constitute prejudicial misconduct. While ultimately ruling against a mistrial last week, the judge did fine Mr. Pirtle and his partner Richard Laminack $2,500 each, even while commending Mr. Pirtle for his job in the case. Judge Magee also included him in the group for whom she said she "wept" while rethinking her original ruling.
The trial was to resume today, pending the results of Dow Chemical's request for relief from the Louisiana Circuit Court of Appeals in New Orleans. "Suffice it to say that we will be pretty aggressively pursuing that appeal of the reversal," the Dow spokesman said.
The class of women suing Dow Chemical are seeking damages from the company for allegedly failing to properly test silicone for use in the human body and concealing its dangers. Dow Chemical has denied the allegations.
Siding settlement reached
MOBILE, Ala.-International Paper Co. of Purchase, N.Y., and its Chicago-based subsidiary Masonite Corp. are still in discussions with their insurers over coverage for an estimated $197.5 million settlement of a class-action suit.
An agreement reached last week in state court in Mobile, Ala., could put $150 million in the pockets of thousands of homeowners to replace defective Masonite exterior hardboard siding.
An estimated $47.5 million would go to their lawyers, according to the defendants.
Plaintiffs attorneys, however, think the final settlement ultimately could cost the defendants far more.
International Paper and Masonite in April 1996 sued their insurers in California Superior Court in San Francisco for coverage of the Masonite hardboard siding claims, said Masonite's general counsel, Sharon Ryan. The nearly 30 insurers include Travelers Group, Kemper Insurance Cos. and Employers Insurance of Wausau.
"We are in the discussion stage with carriers," said International Paper's counsel, Robert H. Shulman of the Washington-based law firm Howrey & Simon. International Paper's insurers are "digesting the settlement," he added.
In anticipation of the settlement, Masonite two weeks ago set aside a $150 million reserve against second-quarter earnings, a spokesman for International Paper said.
The settlement is subject to court approval, and it will take two to three months for two retired judges acting as mediators to determine the process for plaintiffs to file claims, the spokesman and defense lawyers added.
Plaintiffs lawyers, led by the Mobile firm of McRight, Jackson, Dorman, Myrick & Moore, have hired R.S. Means, a construction and building management consultant based in Kingston, Mass., to make siding replacement estimates. Each replacement could be as high as $7,000, said Phillip Waier, principal engineer for R.S. Means.
Plaintiffs attorneys estimate that the hardboard siding has been used on 4 million homes since 1980.
The International Paper spokesman said less than 1%of Masonite's sales of exterior hardboard siding is subject to warranty claims each year.
Miller to appeal judgment
MILWAUKEE-The Miller Brewing Co. will appeal a jury's award last week of more than $26.6 million to a former employee who alleged he was improperly fired after describing an episode of "Seinfeld" to a female co-worker.
The suit, filed in late 1994 in state court in Milwaukee County by Jerold Mackenzie, alleged wrongful termination and sought $9 million from Miller, the co-worker whose complaint allegedly led to his dismissal in March 1993 and his former supervisor.
Miller attributed the termination to a change in his job classification, inadequate performance and an "inappropriate pattern of behavior," which included the "Seinfeld" incident, according to a company statement.
Mr. Mackenzie's attorney said Mr. Mackenzie lost his job after a female co-worker, Patricia Best, complained of sexual harassment stemming from the discussion of an episode of the NBC sitcom "Seinfeld."
Miller now has employment practices liability insurance but did not have coverage when the suit was filed. Therefore, Miller will be responsible for any award.
The jury award to the plaintiff includes $24.5 million against Miller, $1.5 million against Ms. Best and $601,500 against Miller executive Robert Smith, who was Mr. Mackenzie's supervisor when he was fired. The Miller spokeswoman did not know whether the company would cover the awards against Ms. Best and Mr. Smith.
In the "Seinfeld" episode cited, Jerry Seinfeld's character could not remember his new girlfriend's name except that it rhymed with a female body part.
New York Insurance Superintendent Neil Levin has approved an 8.4% reduction in workers compensation rates. The reduction follows last year's overhaul of New York's workers comp system and a record reduction in 1996 of 18% . . .The National Council on Compensation Insurance has filed for a 1.5% decrease in Virginia workers compensation voluntary loss cost/base rates and a 2.9% decrease in assigned risk rates. . . .The U.S. Senate voted 91-8 last week to reauthorize for two years the Overseas Private Investment Corp., which underwrites political risk insurance for U.S. companies doing business in selected developing countries. The provision was contained in the foreign operations appropriations bill. A House bill cleared a subcommittee and now must be considered by the International Relations Committee before going to the House floor. . . .Home Depot Inc. will appeal $1.2 million in punitive damages and $500,000 in compensatory damages awarded to a former employee of its Oakland, Calif., store who alleged company managers discriminated against, sexually harassed and wrongfully terminated her. The federal jury in Oakland last week acquitted the Atlanta-based home improvement store chain on those allegations but found it guilty of breach of covenant of good faith and fair dealing . . . .Travelers Insurance Co.'s rating from A.M. Best Co. was upgraded to A+ from A. The rating agency based its increase on the strong performance of Travelers, saying it believes it "is sustainable for the foreseeable future.". . .A.M. Best also upgraded the rating of CNA Reinsurance Co. Ltd. to A from A-. The rating agency boosted the rating of the CNA Insurance Cos. unit because of its "growing presence in the London market as a leader of many lines of business.". . . .The California Nurses Assn. staged a two-day strike against 47 Kaiser Permanente hospitals and medical clinics in Northern California last Thursday and Friday in a contract negotiation dispute. Patient care was provided by Kaiser physicians and other nursing staff who are not union members.