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LONDON -- A London Court of Appeal Friday turned down an application by more than 500 members of Lloyd's of London seeking to appeal a High Court order to pay more than L150 million ($245.5 million) to cover their share of insurance claims against the Lloyd's market.
All those individual Lloyd's members, known as names, who had sought leave to appeal, had rejected Lloyd's 1996 settlement offer, made under its L3.2 billion ($5.24 billion) reconstruction and renewal program, which had been accepted by the majority of names.
The names were seeking to appeal against a ruling in Lloyd's favor in March that they must pay their share of the claims due under the settlement offer. In that ruling, the judge had refused the names leave to appeal to the Appeal Court; it was their direct application to the court for leave to appeal that was refused Friday.
Giving his ruling, Lord Justice Hobhouse said the application was refused because "the proposed appeals would have been bound to fail, as would have the defenses they were seeking to raise."
Lloyd's welcomed Friday's ruling, saying it means it can now enforce the earlier High Court judgment for the recovery of the L150 million.
GE Capital to buy Kemper Re
STAMFORD, Conn. -- In a deal between two very recent combatants, GE Capital Corp. is buying Kemper Reinsurance Co. for an undisclosed price.
Both companies insist the deal has no connection with the June settlement of their two-year legal battle over the insolvent Electric Mutual Liability Insurance Co.
"The business terms of the EMLICO settlement were agreed before any discussions" regarding the purchase of Kemper Re, a GE Capital spokeswoman said.
Kemper Re, which GE Capital is buying from Kemper Insurance Cos. of Long Grove, Ill., will add a broker market reinsurer to GE Capital's stable of reinsurers, which is dominated by Employers Reinsurance Corp., the Overland Park, Kan.-based direct reinsurer.
"The acquisition of Kemper Re establishes GE Global as a major participant in the broker segment of the U.S. reinsurance market and bolsters its participation in the global reinsurance arena," Kaj Ahlman, chairman and chief executive officer of ERC, said in a statement.
GE also owns broker market reinsurer First Excess Reinsurance.
Kemper Re had 1997 policyholder surplus of $529.6 million, net premiums of $807 million and profits of $52.8 million.
The deal is yet another example of the consolidation in the reinsurance industry, said Michael Lewis, an analyst at SBC Warburg Dillon Read & Co. in New York (see story, page 2).
However, GE may have to tread carefully with some brokers that may be wary of placing business with a reinsurer that is so closely linked with a direct reinsurer, he said.
"GE has obviously considered this, and they must think that they can smooth out any problems," Mr. Lewis said.
The deal comes less than two months after Kemper Re and General Electric Co., parent of GE Capital, settled a prolonged legal dispute over the redomestication to Bermuda of EMLICO, whose sole policyholder was GE. Kemper had alleged that the redomistication was made so that GE might benefit, at the expense of its reinsurers, under Bermuda's liquidation laws. Terms of the settlement were not disclosed (BI, June 22).
Patient bill put on hold
WASHINGTON -- Senate Republican and Democratic leaders agreed last week to put off consideration of patient protection legislation until after Congress returns in September from its summer recess.
The delay occurred after the two sides could not agree on rules to debate the legislation. Without an agreement, the issue could be endlessly debated.
Republican and Democratic patient protection bills before the Senate share certain common elements, including giving patients direct access to certain specialists, expedited reviews of disputed claims and greater assurance that emergency room care treatment would be covered.
A key difference in the two bills is that the Democratic bill would open up group plans and employers to state damage awards in coverage dispute suits, while the Republican bill would not.
Meanwhile, trying to find a center ground, Sen. John Chafee, R-R.I., last week unveiled a so-called centrist patient protection bill that would amend the Employee Retirement Income Security Act to allow health care plan enrollees to recover compensatory damages. ERISA now limits awards to actual losses.
Sen. Chafee said that if Congress wants to pass a patient protection bill, "here it is," referring to his measure, which so far has been backed by four other senators.
The House of Representatives earlier passed patient protection legislation, which also doesn't allow state damage awards in coverage suits (BI, July 27).
Indiana to appeal ruling
INDIANAPOLIS -- Indiana's attorney general will appeal last week's dismissal of the state's lawsuit against the tobacco industry.
State Court Judge Gerald Zore wrote in his ruling that the state lacks the authority to bring the claim and "cannot recover damages allegedly caused by the defendants because the injuries are derivative and too remote."
The state sued tobacco makers to recover the costs of treating smoking-related illnesses.
The basis of the state's appeal will be formed in the coming weeks, said a spokesman for Indiana Attorney General Jeffrey A. Modisett.
U.K. drafts regulatory reform
LONDON -- Insurers and risk managers in Britain are studying a draft bill published late last week that would bring U.K. insurers, Lloyd's of London and other financial services companies under the purview of the Financial Services Authority.
The Assn. of British Insurers and the Assn. of Insurance & Risk Managers have reserved judgment on the proposal as they assess its implications for their members.
Lloyd's welcomed the bill. It said FSA's proposed oversight of Lloyd's would be in line with the market's expectations.
The draft Financial Services and Markets Bill would make the FSA one of the most powerful regulators in Britain, with broad powers to investigate and punish offenses by banks, insurers and securities traders. Currently, these powers are dispersed, with insurance companies coming under the control of the Treasury.
Although the FSA would supervise the conduct of financial services companies, it would not regulate their products.
Birth control bill passes Senate
WASHINGTON -- The U.S. Senate voted last week to join the House in expanding drug benefits for federal employees by requiring that their health plans cover prescription contraceptives or devices.
The measure is designed to end the unfair treatment of women, who now pay "68% more for out-of-pocket health care costs then men, largely because of costs surrounding reproductive health care," said Sen. Harry Reid, D-Nev., who co-sponsored the provision in a Treasury Department bill.
Of the approximately 375 health plans covering federal employees, 81% do not cover all five leading reversible methods of contraception, and 10% have no coverage of contraception, his staff said.
Nationally, surveys show that prescription benefit coverage for oral contraceptives varies, according to Lincolnshire, Ill.-based Hewitt Associates L.L.C. About 85% to 90% of fully insured plans, such as HMOs, provide some coverage for oral contraceptives. However, only 50% to 55% of less-insured plans, such as PPOs and indemnity plans sponsored by self-insuring employers, provide some coverage of oral contraceptives.
However, "it's too soon to tell whether employers with self-insured plans will decide to follow the government's lead," said Bridget Eber, a pharmacist and consultant with Hewitt.
The willingness of health plans generally to provide coverage for Viagra, a life-enhancing drug for men with impotence problems, underscored the inequities faced by women using contraceptives, Sen. Reid said in a statement.
A unit of Stamford, Conn.-based GE Capital Corp. is investing $6 million in claims manager Ward North America Inc. in return for a 35% interest in the company. In addition, Hartford, Conn.-based Conning & Co. has made a $1 million investment, increasing its interest in Ward North America to 25%. . . .American International Group Inc. is investing $1.35 billion in The Blackstone Group, a New York investment firm. Of the money, $150 million will buy AIG 7% of the company, and the remaining $1.2 billion will be used to invest in funds managed by Blackstone. . . .Support is growing for a moratorium on state legislative changes as a way to help insurers face unexpected Year 2000 computer glitches. The National Conference of State Legislatures recently approved such a respite from programming system changes between July 1, 1999, and June 30, 2000, as proposed by the National Assn. of Independent Insurers. The National Conference of Insurance Legislators recently approved a similar measure, and the National Assn. of Insurance Commissioners is considering one (BI, July 6). . . .Santa Monica, Calif.-based Fremont General Corp. has agreed to buy UNICARE Specialty Services Inc., the workers compensation insurance subsidiary of Woodland Hills, Calif.-based WellPoint Health Networks Inc., for about $100 million in cash. . . .Underwriters Reinsurance Co. is buying Venton Holdings Ltd. for $313 million in cash and letter of credit assumptions from a group of investors that includes Trident Partnership L.P., X.L. Insurance Co. Ltd. and Risk Capital Reinsurance Co. Venton has operations in Bermuda and London, where it owns a Lloyd's underwriting agency. . . .The House and Senate have passed a bill providing protection from liability for suppliers of raw materials used for medical implants. The bill's sponsor in the House, Rep. George Gekas, R-Pa., said the law is necessary as the number of raw material suppliers has dwindled in the past few years over fears of product liability suits. President Clinton has expressed support for the bill. . . .The Pension Benefit Guaranty Corp. is taking over a pension plan sponsored by Ernst Home Center Inc., a Seattle-based chain of hardware and home improvement stores in bankruptcy liquidation. The plan has about 3,000 participants and $6 million in unfunded benefits. . . .The California state appellate court in San Francisco has upheld a $1.3 million jury award, including $800,000 in punitive damages, against San Francisco-based Bechtel Corp. in an age discrimination suit in Keiffer vs. Bechtel. . . .Cendant Corp. has extended its $67 per share tender offer for 51% of American Bankers Insurance Group Inc. until Sept. 1 from today. Executive changes last week at Cendant will not affect its plans to make the acquisition. . . .The stock-for-stock merger of Boston-based child care facility designer Bright Horizons and work/life consultant CorporateFamily Solutions of Nashville, Tenn., has been completed. The combined entity, known as Bright Horizons Family Solutions, has operations in 35 states.
Errors & omissions
* Due to an editing error, a liftout quote in the July 27 issue was incorrectly attributed. David Gamble, executive director of the Assn. of Insurance & Risk Managers, said, "Managers of small companies, once they understand risk, are among the best risk managers."
* The July 20 directory of agents and brokers contained several inaccuracies, corrected as follows: Morris & Mackenzie Inc. derived 8% of revenues in 1997 from employee benefit business, not 87%; the full title for John F. Kelly of Frenkel & Co. Inc. is executive vp and chief operations officer; Brown-Hiller-Clark & Associates Inc. is based on Fort Smith, Ark.