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JEFFERSON CITY, Mo. -- The state judge supervising the Transit Casualty Co. receivership has approved a $60.3 million distribution to Transit creditors, the fifth such payment since Transit collapsed in 1985.
The latest payments will bring the Transit estate's total distributions to creditors to $293.6 million, or 30% of approved claims by commercial policyholders and state guaranty funds. Transit continues to hold $428.9 million for long-tail claims, said Timothy Weissenberger, executive vp and chief financial officer.
The $60.3 million distribution includes $45.1 million to commercial policyholders, which previously had collected 25% of their approved claims; and $12.2 million to guaranty funds, which previously had collected 28% of their approved claims.
Cole County Circuit Judge Byron L. Kinder also approved payments totaling $3 million to numerous individual claimants, who now will have collected 50% on their claims.
With this distribution, the Transit receivership will have paid more to creditors than it has spent administering the estate. Transit's relatively high expenses -- $251.8 million from inception to March 31, including large deferred compensation awards to top receivership officials -- have generated criticism from Missouri insurance regulators and others (BI, May 4).
Partner Re boosts U.S. unit
NEW YORK -- Partner Re Ltd. is injecting an extra $100 million into its U.S. subsidiary and revamping its organization.
SAFR Reinsurance Corp. of the U.S. has been renamed Partner Re U.S., Scott Moore is now its chief executive officer, and the New York-based reinsurer will establish a division for securitization products.
Partner Re has only a small stake in the U.S. multiline reinsurance market and, by increasing the capital of its U.S. unit to about $230 million, it should be able to expand significantly, said Herbert N. Haag, president and chief executive officer of Bermuda-based Partner Re.
Other than its core catastrophe reinsurance business, Partner Re has about $50 million in premium volume in the United States. So even if the current soft market only allows Partner Re to expand its multiline business slightly in terms of market share, it could be a significant increase in premium volume for the reinsurer, Mr. Haag said.
"The companies that buy cat coverage from us want Partner Re to get involved in other business as well because we are a $2 billion group, so we should be able to attract some good quality business," he said.
The changes will move Partner Re into more direct competition with its largest shareholder, Swiss Reinsurance Co., which also is trying to expand in the United States. However, Partner Re U.S. likely will work with brokers, whereas Swiss Re is largely a direct reinsurer, he said.
Mr. Moore formerly was chief financial officer of Partner Re in Bermuda. He takes over as CEO of the U.S. operations from Jean-Pierre Fillebeen, who will remain with the reinsurer as executive vp and work on traditional reinsurance business.
John Adimari has joined Partner Re U.S. as senior vp and chief financial officer. He formerly was a vp at NAC Re Corp. Karen O'Connor Rubsam will succeed Mr. Moore as group CFO in Bermuda. She formerly was senior vp-finance.
Rating agency A.M. Best Co. last week upgraded the U.S. SAFR unit to A from A-, reflecting Partner Re's capital infusion, and affirmed Partner Re's A+ rating.
Product reform support slips
WASHINGTON -- Business support for a limited product liability reform bill has begun to splinter as the Senate prepares to debate and possibly vote on the measure this week.
The Arlington, Va.-based Chemical Manufacturers Assn. announced it would "vigorously oppose" the measure, which President Clinton said he would sign provided that it remained unchanged from the compromise worked out between the White House and Sens. Slade Gorton, R-Wash., and John D. Rockefeller IV, D-W.Va. (BI, June 29; June 15).
In a statement late last month, the CMA said the bill could expose manufacturers to more litigation by supposedly shifting to manufacturers the burden of informing a customer's employees of a product's potential risks and hazards. Supporters of the bill have dismissed the CMA's position as a misreading of the language.
Consumer advocate Ralph Nader, meanwhile, an outspoken opponent of product liability reform, said opposition from the CMA and other trade groups could prove critical in determining whether the bill's supporters in the Senate can gather the 60 votes necessary to invoke cloture, or an end to debate on the measure, paving the way for a vote. The Senate is expected to take up the measure early this week, with a cloture vote possible as early as Wednesday.
Mr. Nader, founder of consumer activist group Public Citizen, said the bill would harm consumers, "subvert" the civil justice system and allow corporations to "escape financial responsibility for the harm and damage they cause innocent citizens."
Mr. Nader said opponents have about 35 sure votes against cloture. Even if the bill won Senate approval this week, however, it would need to pass in the House and be signed by the president.
Although the bill would give much of its liability relief to very small businesses, it also would set a uniform standard for awarding punitive damages, create a defense for manufacturers if plaintiffs misused or altered a product or were under the influence of alcohol or drugs at the time of their injuries, and set a uniform 18-year statute of repose for workplace goods under most circumstances.
Liberty Mutual acquisition
LAKELAND, Fla. -- Liberty Mutual Group is acquiring Summit Holding Southeast Inc., a Lakeland, Fla.-based workers compensation insurer.
The acquisition, subject to approval by Summit's stockholders and state and federal regulators, calls for Boston-based Liberty Mutual to buy about 5.8 million shares of Summit's common stock for about $33 each, for a total of about $191.4 million.
The deal includes all of Summit's operating companies, which provide consulting, claims management, loss control and other services.
Summit provides workers comp products and services to employers and self-insured groups in Florida. Annualized premiums totaled approximately $202 million as of March 31.
Shipping code compliance high
LONDON -- The International Maritime Organization has reported an 87% compliance rate among merchant ships for its International Safety Management Code, which went into effect July 1.
The code requires operators of passenger vessels and most bulk cargo ships of 500 gross tons or more to meet standards for the safe management and operation of their vessels. The code will extend to other ships on July 1, 2002. Shipowners or operators must have a corporate safety policy for protecting the environment and procedures for reporting and responding to emergencies. Shipowners also must obtain a Document of Compliance, which certifies that shore-based management systems comply with the code, and a Safety Management Certificate, which shows that shipboard management systems meet the standards.
About 12,700 vessels were affected by the deadline, and some observers feared compliance would be much lower. Late last year, figures from the International Assn. of Classification Societies, whose members are the leading assessors of ships and their operators for ISM certificates, showed only about 11% of affected ships had then complied.
IMO Secretary General William O'Neil said last week that the high compliance rate reflects combined efforts of all sectors of the shipping industry. Insurers and regulators, in particular, have made it hard for ships to operate without ISM certificates, as non-complying vessels will be detained or refused entry to most major ports and most insurers will deny coverage in the case of a claim on the vessel or its cargo (BI, May 18; Aug. 18, 1997).
The ISM Code was made mandatory as part of the United Nation's International Convention for the Safety of Life at Sea, which has been accepted by 137 countries, whose merchant ships represent 98% of world tonnage.
Paper apologizes to Chiquita
CINCINNATI -- The Cincinnati Enquirer will pay more than $10 million and has published front-page apologies to Chiquita Brands International Inc. to settle claims stemming from a series of May stories that criticized Chiquita.
In the letter of apology, which has appeared in the paper three times, Enquirer Publisher Harry Whipple and Editor Lawrence Beaupre said they "renounce the series of articles" and have pulled them off the paper's World Wide Web site. The newspaper became convinced the articles "created a false and misleading impression of Chiquita's business practices," the apology said. The money will be paid "in exchange for settlement of claims against it by Chiquita," according to a story on the Enquirer's Web site. The nature of the claims was not identified, and no lawsuit had been filed.
The apology did not indicate what factual errors, if any, the stories contained, but it did say the apology was issued because the lead reporter of the series was involved in the theft of voice mail messages of Chiquita employees while researching the series. The reporter has been fired.
Prosecutors are investigating the theft charges.
Cincinnati-based Chiquita is owned by Carl Lindner, who is also chief executive officer of American Financial Corp., a Cincinnati insurance holding company.
Although $10 million settlements have occurred in the past, one without extended litigation is "very rare," said Chad Milton, senior vp for Kansas City, Mo.-based Media/Professional Insurance, a media liability underwriter not involved in the case.
A spokeswoman for Gannett Co. Inc., the Arlington, Va.-based owner of the paper, would not comment on any insurance coverage.
French insurer Groupama Assurances has won the bidding for government-controlled Groupe des Assurances Nationales. Although Groupama, which will hold 87.1% of GAN, offered a marginally lower bid -- 17.25 billion French francs ($2.83 billion) -- than its final rival, Swiss Life Insurance Co., it also required lower levels of guarantees from the French government to cover GAN's future liabilities. Combining the two insurers will create the second-largest non-life insurer in France, with aggregate revenues of 37.2 billion French francs ($6.37 billion). . . .New Hampshire Gov. Jeanne Shaheen has signed a bill deregulating rates and forms for large commercial policyholders. The new law will become effective Aug. 25. . . .Cendant Corp. has extended its $67 per share tender offer for 51% of American Bankers Insurance Group Inc. until Aug.
3. . . .The bankruptcy judge overseeing the Dow Corning Corp. reorganization has imposed a Tuesday deadline for both sides to either accept or reject the latest proposal to settle thousands of claims relating to silicone breast implants. U.S. Bankruptcy Judge Arthur Spector issued the deadline during a conference with the parties' attorneys Wednesday. Terms of the settlement were not revealed, but the company in February agreed to pay claimants $3 billion.