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BOCA RATON, Fla. -- Combined ratios for workers compensation insurance in 1997 show accident year results deteriorated to 115% from 110% while calendar year results improved to 101% from 103%, according to a National Council on Compensation Insurance update.

"Our analysis shows a sharp deterioration in the accident year combined ratio and a widening gap to calendar year results," said Nick Lannutti, NCCI senior vp and corporate actuary.

Accident year results show the performance of current workers comp business because they include only loss payments and reserves for accidents occurring in a particular accident year.

"The upturn in accident year results reflects a reduction in the premiums charged for workers compensation coverage as well as a rise in expenses as a percentage of premium," the NCCI said in a statement.

However, calendar year results include loss transactions regardless of accident year. They typically have been lower because of insurers' substantial reserve releases on earlier accident years, especially after cost- cutting reforms were implemented.

The new figures are based on the actual premiums charged by insurers as reported in their annual financial statements. The data updates the NCCI's preliminary estimates, which were made in April.

WellPoint buys Georgia Blues

WOODLAND HILLS, Calif. -- As part of its continuing strategy to grow outside California, WellPoint Health Networks Inc. announced it is buying Cerulean Cos. Inc., Georgia's largest health insurer, for about $500 million in stock and cash.

Cerulean, the Atlanta-based parent of Blue Cross & Blue Shield of Georgia, has about 1.7 million members and reported 1997 revenue of $806 million. WellPoint, the parent of Blue Cross of California, has 6.7 million members and reported 1997 revenue of $5.8 billion.

Buying Cerulean will enable WellPoint to become a larger player in the Georgia market, Leonard Schaeffer, chairman and chief executive officer of WellPoint, said in a news release. WellPoint already has about 100,000 members in Georgia through its UNICARE national operating unit.

"The growth strategy for the combined companies includes the introduction of innovative medical and specialty products," Mr. Schaeffer said in the statement.

"We believe our members will benefit from this merger with WellPoint through the availability of additional resources in the areas of information technology, specialty products, medical cost management and product design," said Richard D. Shirk, president and CEO of the Atlanta-based Blue Cross & Blue Shield organization.

In related news, Blue Cross & Blue Shield of Georgia also announced last week that it has resolved pending litigation over its conversion to for-profit status. The Georgia Department of Insurance approved the conversion in December 1995. The proposed settlement with Let's Get Together Inc., a plaintiffs organization representing people with disabilities, was announced last week and includes the establishment of an $80 million Georgia-based independent charitable foundation that will receive cash, and, as a result of the merger, WellPoint common stock.

Completion of the deal is contingent upon approval by federal and state regulators, court approval of the Cerulean settlement with Let's Get Together Inc., and shareholder approval. The companies said they expect the transaction to close in the fourth quarter.

CNA to reorganize unit

CHICAGO -- CNA Financial Corp. is reorganizing its commercial insurance unit and also will review the operations in its 27 other strategic business units over the next year and a half.

Michael McGavick, president and chief operating officer of the Commercial Insurance unit, said of the other units: "Some will be growing, some are shifting their products and some will be addressing cost issues."

No details on the other units have been released, a spokesman said.

The CNA Commercial Insurance strategic business unit, which works with businesses that generate $1 million or less in annual premium, will continue to have 40 branch offices nationwide, said another spokesman.

But policy transactions will be centralized in Orlando, Fla., while claims handling will be centralized into eight different offices, down from the 24 that have handled both these functions until now.

The second spokesman said the change is intended to improve service, move decision-making closer to the customer, increase revenues, reduce expenses and "emphasize the creation and delivery of new products." He said CNA plans to lay off 1,100 workers, or about 20% of the workforce in the Commercial Insurance unit, over the next 18 months.

Man wins $28 million bias award

LOS ANGELES -- A jury returned a $28 million verdict, including $26 million in punitive damages, against McDonnell Douglas Corp. last week in a case that charged the company with retaliating against an African-American employee who had filed a discrimination complaint.

A spokesman for Seattle-based Boeing Co., which merged with McDonnell Douglas in 1997, said no decision has been made yet whether to appeal the verdict. He declined to comment on insurance coverage.

The case involved Gerald Verdine, a 58-year-old man who had worked for the company for 30 years, according to his attorney, Larry Feldman of Fogel, Feldman, Ostrov, Ringler & Klevens in Santa Monica, Calif.

After Mr. Verdine was laid off in 1992, he filed a complaint with the Equal Employment Opportunity Commission claiming he had lost his job because of his age and race. The company reinstated him, but he lost his job again four years later in a one-man layoff, according to Mr. Feldman.

In addition to the $26 million in punitive damages, the $28 million verdict reflects $500,000 in lost wages and $1.5 million for emotional distress based on a finding of retaliation and breach of contract. The jury, however, did not find McDonnell Douglas guilty of race or age discrimination.

Unions ratify AT&T pact

NEW YORK -- Members of the Communications Workers of America and the International Brotherhood of Electrical Workers last week ratified a four-year contract with AT&T Corp. that will boost pay and benefits for the roughly 50,000 workers represented by the unions.

The contract, which covers about 48,000 CWA and 2,000 IBEW members, calls for a new cash balance pension plan. The plan, to be established next year, is believed to be the largest cash balance plan ever to cover union members. AT&T already has a cash balance plan for management employees.

Employees with AT&T for at least 15 years can stay with the company's traditional pension program and will receive an immediate 7% benefit increase and additional increases totalling 8% by the year 2000, said George Fromme, AT&T vp of human resources.

Health care benefit changes include lower generic drug copayments, financial incentives for some retirees to join Medicare risk health maintenance organizations, and allowing same-sex partners to apply for health and other benefits.

Child and elder care programs will be expanded under the agreement, and adoption reimbursements and scholarships for children of union members will be continued, Mr. Fromme said.

New health measure in Hawaii

HONOLULU -- Under patients' bill of rights legislation that will take effect in Hawaii this month, state residents will be able to appeal managed care companies' treatment decisions to a new review panel.

The three-member review panel will be selected by state Insurance Commissioner Rey Graulty and composed of a representative from a health plan not involved in the dispute, a medical provider, and the commissioner or his designee. The legislation also will prohibit managed care plans from discouraging doctors from discussing treatment options with patients. Additionally, it requires plans to provide a reasonable choice of qualified providers of women's health services, such as gynecologists and certified nurse-midwives.

If Gov. Benjamin Cayetano signs the measure as expected this week, it would take effect immediately. If he doesn't sign it, it will automatically become law July 21.

Am-Re Global Services forms

PRINCETON, N.J. -- American Re-Insurance Co. has consolidated American Re and Munich Re's reinsurance and retail brokerage, captive and risk management, and insurance and reinsurance consulting services into a new subsidiary, Am-Re Global Services Inc.

Mahmoud Abdallah will become chairman and chief executive officer of the new subsidiary, which officially began operations last week, according to a spokeswoman. It includes Becher & Carlson Cos., which provides retail brokerage, risk management consulting, captive management and captive rental services; reinsurance intermediary Am-Re Brokers Inc., which will merge its operations with Munich Re intermediary International Insurance Consultants; ARB International Inc., a Lloyd's brokerage house; and insurance and reinsurance consultants Am-Re Consultants Inc. Except for International Insurance, all the units will retain their names.

2 more plans deny Viagra cover

CHICAGO -- Two large health care organizations will not provide coverage for the male impotence drug Viagra.

Roseland, N.J.-based Prudential HealthCare and Louisville, Ky.- based Humana Inc. independently announced their decisions last week. Both HMOs cited concern about reports of deaths and serious side effects possibly associated with use of the medication, which is manufactured by Pfizer Inc.

Humana is particularly concerned that the U.S. Food and Drug administration did not require clinical trials involving men with diabetes, hypertension and vascular disease before giving its approval of Viagra, a Humana spokeswoman said. A relatively small number of self-insured employers that use Humana as a third-party administrator can decide for themselves if they want to pay for Viagra, she said.

Oakland, Calif.-based Kaiser Permanente also recently said it would not pay for Viagra due to the high cost. Minnetonka, Minn.-based United HealthCare, which is acquiring Humana, said last week it would continue to approve coverage of eight pills a month for most patients. About one-third of its enrollees, who are subject to a closed drug formulary, however, might be denied the pills and would have to file a request for a medical exception, a spokesman said.

Briefly noted

ACE UK Ltd. has acquired LIMIT (No. 9) Ltd., a unit of LIMIT P.L.C., one of the largest corporate investors in Lloyd's of London. For the 1998 year of account, LIMIT (No. 9) has underwriting capacity of oe55 million ($90.8 million) on syndicates managed by ACE. . . .EXEL Ltd. has bought a majority stake in Reeve Court Insurance Ltd. in Bermuda for $100 million. Reeve Court offers investment and estate planning products to trusts and wealthy individuals. . . .The boards of the World Insurance Network, London Insurance Market Network, and Reinsurance and Insurance Network have established a steering committee to explore and evaluate a merger to create a single global organization for international electronic communications. . . .Boxing promoter Don King was acquitted of charges that he defrauded Lloyd's of London underwriters of $350,000 through a bogus insurance claim. The federal jury in New York found that Mr. King did not defraud the insurers when he filed the claim after the cancellation of a bout involving Julio Cesar Chavez in 1991 (BI, July 19, 1994). . . .The Occupational Safety and Health Administration has proposed fining Kansas City, Mo.-based Interstate Brands Corp. $910,000 for alleged violations of safety regulations during asbestos removal at its Schiller Park, Ill., plant earlier this year.