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ESG Re Ltd. plans IPO to raise about $160 million
NEW YORK -- ESG Re Ltd., a new specialty reinsurer, is launching an initial public offering that could increase its capital to $210 million.
ESG Re, sponsored by Head & Co. L.L.C. in New York, will write accident, health, life, credit life and disability, and non-appear-ance sports and entertainment risks (BI, Sept. 22).
In the IPO, 8 million shares will be offered at $20 each. ESG Re already has raised $50 million through the placement of 2.7 million shares with private and institutional investors.
After the IPO, expected in December, ESG Re will be listed on the National Assn. of Securities Dealers exchange.
ESG Re is being formed out of European Specialty Group, a Hamburg, Germany-based reinsurance underwriting manager. It will have other offices in London; Miami; Moscow; Hong Kong; Dublin, Ireland; and Toronto.
Head & Co. was formed by John C. Head and has specialized in taking over troubled insurers, such as Sphere Drake P.L.C. Mr. Head also helped launch Bermuda catastrophe reinsurer Partner Re Ltd. in 1993.
Mr. Head will be non-executive chairman of ESG Re, and the chief executive officer will be Steven Debrovner, the former chief marketing officer for non-life business at CIGNA International.
Lloyd's plans Asian hub
LONDON -- Lloyd's of London will increase its Asia/Pacific region presence in 1998, opening a contact office in Australia at the beginning of the year and a full underwriting operation in Singapore in November 1998.
Lloyd's has been in talks with the Singapore authorities for about 18 months and has helped create a legal and regulatory framework that can accommodate Lloyd's capital structure, said Frank Speight, head of development and operations for Africa/Australasia/Asia in Lloyd's business development unit.
The Singapore office, preliminarily named Lloyd's Asia, will be the regional hub and will be "a microcosm" of the Lloyd's market, said Mr. Speight. Lloyd's underwriters will be able to write risks and issue policies from the office, he added.
In total, 32 agencies representing 107 syndicates have indicated they may help financially support Lloyd's establishing a physical presence in Singapore, though not all are planning to underwrite in the country. So far, about 10 managing agencies have indicated they would like to have underwriters in the Singapore office, said Mr. Speight, and they will be have the option of joining or leaving the operation.
Although Lloyd's already has a representative office in Hong Kong, Singapore was chosen for the underwriting operation because of its "competitive advantage" in costs, broker market, political stability and excellent infrastructure, said Mr. Speight. In addition, it is closer than Hong Kong to target countries such as Malaysia, Thailand and Vietnam.
Lloyd's new Sydney, Australia, office will be headed by Steve Boucher. Lloyd's already has a general counsel in Sydney, but setting up an office will enable it to get closer to the Australian market, said Mr. Speight. There are no current plans to make this a full underwriting operation.
Lloyd's also has a satellite operation in the region, Tokyo-based Lloyd's Japan Inc., set up by a group of agencies last year. Lloyd's Japan focuses solely on Japanese business and at present is not open to syndicates other than the ones that set it up.
Blues plan to pay rehab claims
ALBANY, N.Y. -- Blue Cross & Blue Shield of Central New York has agreed to establish a $700,000 fund to pay for certain claims involving drug and alcohol rehabilitation that the insurer previously rejected.
In the agreement reached with New York Attorney General Dennis Vacco, the Syracuse, N.Y.-based Blues will pay more than $100,000 for all outstanding outpatient substance abuse treatment claims it rejected between Aug. 15, 1996, and June 24 of this year. In addition, BC/BS has agreed to a review by Troy, N.Y.-based Value Behavioral Health of inpatient claims rejected during the same time frame. BC/BS will pay those claims approved by Value Behavioral Health from the fund.
"This agreement is a home run for Blue Cross & Blue Shield subscribers who I believe were illegally denied benefits that should have been paid for by their health care plan," Mr. Vacco said in a written statement.
The rejected claims came to the attorney general's attention after complaints were raised by providers and plan participants in a June public forum. On Oct. 2, Mr. Vacco's office threatened to sue the insurer.
Faced with the threatened suit, "we felt it was better to settle with the attorney general, and that's what we did," said a BC/BS spokesman. The spokesman said the company has established a task force to address its medical necessity criteria. The task force is expected to be submit a report to the New York attorney general next February.
Explosion, fire damage train
ELSTERWERDA, Germany -- Total damage is estimated at several million deutsche marks from an explosion and fire last week on a freight train hauling gasoline and heating oil.
Deutsche Bahn A.G., a privatized national train company, is insured for liability losses and self-insured for its own property damage. A consortium led by Cologne, Germany-based Colonia A.G. said it would take at least a week to determine the exact amount of losses. Deutsche Bahn's liability policy has a 1 million deutsche mark ($575,000) deductible, though information on limits was unavailable.
Insured losses will include damage to train cars and 20 destroyed automobiles parked at the station, which will remain closed pending repairs. About 120 people living near the station were evacuated.
Gasoline that spilled into water drains caused no environmental damage, State Interior Minister Alwin Ziel said. Firefighters were able to avert danger of a sewer explosion.
The 22-car train was en route from Schwedt to Nossen when it derailed outside a small train station in Elsterwerda, about 70 miles south of Berlin.
The blaze, which killed one firefighter and injured nine other people, occurred when flying sparks ignited one of the 15 derailed gasoline tank cars. Flames spread to the roof and over the tracks, igniting a second car. A wall at the burning station collapsed from the explosion. The early-morning fire occurred 20 minutes before commuters normally catch a scheduled passenger train, but the platform was empty when the explosion occurred.
Firefighters cooled other cars to avoid another explosion, and seven cars were pulled out of danger.
Clinton endorses quality effort
WASHINGTON -- While championing the need for consumers to have greater assurance of receiving quality health care, the Clinton administration has not yet decided to seek federal legislation to implement a set of quality standards proposed by a presidential panel.
The 34-member panel last week endorsed a modest "Consumer Bill of Rights and Responsibilities." The recommendations include requiring health plans to provide more information to enrollees about covered benefits, experience of professional staff and procedures for resolving complaints.
Other recommendations include giving enrollees access to emergency services 24 hours a day, providing direct access to specialists for patients with complex or serious conditions and allowing physicians to provide information on all treatment options to patients. In addition, the panel recommended that identifiable health care information be kept confidential. However, such information could be used without written consent for payment of health care claims, health promotion and peer review.
President Clinton said he would direct every federal agency that administers or manages health plans to adopt the commission's recommendations.
The panel's bill of rights will be used as a framework to examine legislative proposals, Health and Human Services Secretary Donna Shalala said.
Subway losses self-insured
NEW YORK -- The Metropolitan Transit Authority is self-insured for physical damage and any potential liabilities from a crash of two subway trains last week.
The crash shortly before 9 a.m. Thursday involved two crowded subway trains. One subway train bound for the borough of Queens rear-ended a stopped Queens-bound train after pulling out of the Steinway Street station in Astoria, Queens.
A spokeswoman for New York Transit, the MTA subsidiary that runs the subway system, estimated the two trains held more than 1,000 passengers.
A fire department spokesman said 95 people were hurt; 87 required treatment at hospitals. None of the injuries was life-threatening or considered serious, the spokesman said.
Passengers were evacuated from the trains either through the station or through emergency exits in the tunnels.
The two trains sustained little damage, the spokeswoman said, but no damage estimates have been made.
An MTA spokesman said any losses would be self-insured.
The MTA and the National Transportation Safety Board are investigating the cause of the crash.
Switch to arbitration disallowed
LOS ANGELES -- Employers can pursue litigation or arbitration but not both, concludes a state appellate court decision that found Continental Airlines Inc. waived the right to compel arbitration by first conducting extensive discovery in a sexual harassment case.
The decision in Alsenia Davis vs. Continental Airlines Inc. involved a skycap who had sued the airline, charging sexual harassment by her supervisor. The decision by the second appellate district court said that before petitioning to compel arbitration, Continental through discovery had obtained more than 1,600 pages of documentation plus a two-day videotaped deposition from her.
"The vice involved here. . .is that defendants used the discovery processes of the court to gain information about plaintiff's case which defendants could not have gained in arbitration," said the appellate court decision in ruling against Continental and upholding a trial court ruling.
"After obtaining discovery from plaintiff by court processes, defendants then belatedly sought to change the game to arbitration, where plaintiff would not have equivalent discovery rights."
Continental is seeking a rehearing of the case.
Newsletter publisher David Schiff has offered to buy Sarasota, Fla.-based workers compensation insurer FCCI Mutual Insurance Co. for stock in a newly formed holding company, Schiff FCCI Acquisition Co. The stock would be distributed to FCCI's policyholders. In a statement Friday, FCCI said it will review the offer but "sees no reason to delay" current plans to reorganize as a mutual insurance holding company. . . . Jack Byrne said last week he is retiring as chairman of Financial Security Assurance Holdings Ltd., holding company for financial guarantee insurer Financial Security Assurance Inc. in New York, though he will remain with the company as vice chairman. Robert P. Cochran, who has been president and chief executive officer, was named chairman and CEO of FSA Holdings and FSA.