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NEW YORK -- A British building materials company has purchased the largest pollution insurance policy ever, which was assembled to cover the cost of cleaning up some 200 sites throughout the United States.
Units of broker Sedgwick Group P.L.C.
assembled the $800 million in environmental remediation and designated product liability coverage on behalf of London-based Hanson P.L.C. The coverage, which cost $275 million, is underwritten by Hanson North America's Bermuda-based captive insurer. It is reinsured by Centre Solutions, a member of the Zurich Group; and European Re, a member of Swiss Re Group.
The policy is a 50-50 combination of pure risk transfer and finite risk insurance, according to Timothy Cuddihy, associate director in Swiss Re New Markets' Financial Solutions Group. The reinsurers are not ceding any of the risk to retrocessionaires, he added.
The policy will provide an unlimited amount of coverage to pay for any cost overruns associated with the cleanup of some 200 sites nationwide, including several state and federal Superfund sites, Mr. Cuddihy said. The policy also will cover changes in government regulations and any third-party property damage claims. However, the policy will not respond to bodily injury claims, he said.
Hanson will maintain claims management and cleanup oversight throughout the project, which is expected to take 15 to 20 years, Mr. Cuddihy said.
Reinsurer negotiating MBO
LONDON -- Zurich Re (London) Ltd.'s management is negotiating to buy the company from its parent, Zurich Insurance Group.
Dennis Purkiss, chief executive of Zurich Re (London), is heading the group proposing to purchase the property and casualty reinsurer. A lead equity partner in the proposed management buyout is Candover Investments, a venture capital group that was involved in last year's MBO of London-based broker C.E. Heath P.L.C. (BI, June 9, 1997).
The purchase negotiations follow rumors in June -- which Switzerland-based Zurich Group refused to comment on at that time -- that Zurich Group was planning to sell its London reinsurance unit ahead of the planned merger by October of its global financial service operations with those of London-based B.A.T Industries P.L.C.
The sale of Zurich Re (London) would throw into doubt the future of Eagle Star Reinsurance Co. Ltd., the reinsurance unit of B.A.T, which was expected to merge with Zurich Re (London). Details published at the time of the merger announcement had said: "How these operations will participate in the group's worldwide reinsurance business is currently under active consideration."
A spokesman for B.A.T declined to comment on Eagle Star Re or the proposed MBO, saying their future is still under consideration.
At year-end 1997, Zurich Re (London) had net assets of L208 million ($340.2 million) and premium income of L380 million ($621.6 million).
Humana faces Viagra lawsuit
HILLSBOROUGH, Fla. -- A suit filed by a Florida man against Humana Inc. seeks class-action status for all Humana health plan members denied coverage for Viagra prescriptions.
Because the suit was brought on behalf of an individual participant in Humana's "Gold Plus" plan, it was filed in Florida circuit court, unlike other recent Viagra coverage claims to be filed in federal courts.
"The other ones were brought under ERISA because they were group plans," said Steven Cooper, a partner with the Anderson, Kill & Olick P.C. law firm in New York who is representing the plaintiff.
The federal Viagra coverage suits ultimately might be consolidated, Mr. Cooper said, though for now such claims are likely to continue on a company-by-company basis because of differences in plan policy language. And, Mr. Cooper said, because the Humana case was filed in state court, it would be difficult to consolidate it with those filed in federal courts.
Total damages sought in the Humana suit are consistent with those in the other cases, the attorney said. "In excess of $1 million. It could be considerably higher than that; it could not reach it. It's just an estimate right now," Mr. Cooper said.
The real purpose of the Humana suit, he said, is to force the health care plan to cover the cost of Viagra, an impotence-fighting drug.
A spokeswoman for Louisville, Ky.-based Humana had no comment on the case, citing a company policy against commenting on pending litigation.
Lloyd's syndicates rated
LONDON -- Duff & Phelps Credit Rating Co. has launched a new rating product to assess the financial viability of Lloyd's of London syndicates.
The voluntary product, available for a fee to all Lloyd's syndicates, is called the "Syndicate Continuity Score." It uses an assessment scale similar to the ratings Duff & Phelps now uses to rank the ability of insurance companies to pay claims, but ratings appear in lower-case letters -- for example, "aaa" or "aa."
Larissa Knepper, associate director of Duff & Phelps' London-based insurance ratings group, says SCS will be more forward-looking than other rating agencies' assessments of Lloyd's syndicates.
Duff & Phelps will conduct onsite assessments of Lloyd's syndicates and managing agents. Areas assessed will include a syndicate's quality of underwriting and the health of its book of business; its financial controls, such as loss reserve and reinsurance programs; its brand name recognition; its products and services; and its management quality, including its strategic vision and risk appetite.
Harassment plaintiff protection
GREENBELT, Md. -- A U.S. District Court last week ordered Townsend Culinary Inc. to emphasize to its workers that it will not allow harassment of employees participating in a lawsuit alleging sexual harassment of primarily Hispanic women at a food processing facility in Laurel, Md.
The judge told the company to clearly articulate this policy in a statement to its approximately 300 employees. However, he refused a request by the U.S. Equal Employment Opportunity Commission for a temporary restraining order, said Dana Hutter, an EEOC trial attorney.
The EEOC had sought the order because some employees complained of harassment through the circulation of a petition stating that defamation charges should be brought against two current women workers who complained of sexual harassment on a local television show. Those women alleged that some women were sleeping with their bosses.
David Major, Townsend's vp-human resources in Wilmington, Del., said sexual harassment problems predated Townsend's purchase of the plant in March 1996 and were resolved, after a company investigation, by firings and other disciplinary actions. He said the sexual harassment complaint was "directly related" to a dispute with Local 400 of the United Food & Commercial Workers Union. Townsend withdrew recognition of the union in November 1997, at workers' request, he said.
However, the National Labor Relations Board staff is recommending, after an extensive investigation, that an administrative law judge require Townsend to reinstate the union and take other actions to curb unfair labor practices, said Louis D'Amico, director of the NLRB's regional office in Baltimore.
Blues in talks with state
ST. LOUIS -- A proposed settlement between Blue Cross & Blue Shield of Missouri and state officials is still on track, despite a Missouri Court of Appeals decision last week that the non-profit Blue Cross & Blue Shield of Missouri had illegally converted to for-profit status.
On Aug. 4, the appeals court affirmed the decision of Cole County Circuit Court Judge Thomas Brown III that BC/BS of Missouri "had continued to exceed or abuse the authority conferred upon it by law." The decision concerns a dispute that began in April 1994, when BC/BS of Missouri proposed to the Insurance Department that the company transfer part of its business to a new, for-profit subsidiary. The department "later alleged that BCBSMO transferred substantially more business than it proposed, that it changed its purposes to reflect for-profit goals rather than non-profit goals and that it failed to disclose those changes," as required by law, according to a department statement.
In May of 1996, BC/BS of Missouri sued the department and the attorney general, alleging it was acting within the law. However, state officials argued that the company had exceeded its authority as a non- profit corporation by acting as a for-profit company.
Nevertheless, the parties are developing a settlement to propose to Judge Brown. The parties have agreed that the appellate decision will have no effect on the settlement agreement, which is expected to be signed by Sept. 15, according to a BC/BS of Missouri statement.
Insurance Director Jay Angoff said in a statement that the decision did not reflect badly on the current management of BC/BS of Missouri, or on its for-profit subsidiary, RightCHOICE Managed Care Inc.
"The people who got Blue Cross into this mess are gone. The new management team is working diligently to get this episode behind them, and we are very pleased with the progress we are making in resolving this issue," he said.
RightCHOICE is the state's largest provider of managed health care services.
Chicago-based CNA Financial Corp. plans to reduce its current work force by a total of about 10%, or 2,400 employees, and to close several facilities as part of a previously announced reorganization (BI, July 20). The insurer also reported $210 million in net income for the second quarter, down 10.6% from $235 million for the comparable quarter a year ago. . . .Ellen R. Dunkin has been named general counsel for the Risk & Insurance Management Society Inc. Ms. Dunkin has worked as a corporate associate at Willkie Farr & Gallagher in New York and as a senior attorney at Marsh & McLennan Cos. Inc. . . .Sovereign Risk Insurance Ltd., a political risk insurer in Bermuda, has doubled its per-project limits to $100 million and increased its country limits to $250 million from $100 million. Sovereign has also started offering contract frustration insurance in addition to its existing coverage for investments. . . .Shareholders of both companies have approved the $2.2 billion purchase of Mid Ocean Ltd. by EXEL Ltd. The transaction closed Friday. . . .Long Grove, Ill.-based Kemper Insurance Cos. said last week it had completed its acquisition of Seattle-based workers compensation underwriter Eagle Insurance Group, comprised of Eagle Pacific Insurance Co. and Pacific Eagle Insurance Co. The group had 1997 net written premiums of $49.8 million and assets of $191 million, Kemper said in a statement. . . .The American Bar Assn.'s House of Delegates adopted a resolution at the association's annual meeting last week stating that "the American Bar Assn. urges employers to address workplace violence by adopting policies and practices to help them better prevent and manage on-site violence and threats.". . .Jay M. Gellert has been appointed president and chief executive officer of Woodland Hills, Calif.-based Foundation Health Systems Inc., the company said. Mr. Gellert, who had been president and chief operating officer, will replace the retiring Dr. Malik M. Hasan, who will remain non-executive chairman but will resign from that post sometime in 1999, FHS said. . . .Timothy J. Mahoney Sr., an executive vp at J&H Marsh & McLennan Inc., died last Thursday in Los Angeles after suffering a brain aneurysm. Prior to joining Marsh & McLennan in 1985, Mr. Mahoney, who was 60, had been chief executive officer of Fred S. James New York.