BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe



NEW YORK -- American International Group Inc.'s acquisition of SunAmerica Inc. will expand AIG's reach into one of the world's fastest growing businesses: retirement savings.

According to Myron M. Picoult, director and senior insurance analyst at Wasserstein Perella Securities Inc. in New York, the $18 billion deal is a long-term strategic move for AIG, rather than a knee-jerk reaction to a soft property/casualty market, downturns in Asian economies or other current business factors.

SunAmerica specializes in retirement savings and investment products and services. "Clearly in terms of AIG this adds to the diversity of its businesses," Mr. Picoult said. "AIG picks up a national consumer retail franchise with a brand name. It's something they've never had before. And it picks up another platform for AIG products distribution."

Meanwhile, "SunAmerica picked up a partner that clearly opens some very wide doors for it," Mr. Picoult said.

Discussing the transaction last week with analysts, AIG Chairman and Chief Executive Officer Maurice R. Greenberg said, "Retirement savings will be in our view the growth market not only in this country but worldwide. It's a strategic move by AIG into the retirement asset accumulation business, not just in the United States but globally."

Under the definitive agreement announced last Thursday, AIG will acquire 100% of SunAmerica's outstanding common stock, with SunAmerica shareholders receiving 0.855 shares of AIG common stock for each SunAmerica share. SunAmerica will continue to operate under its own name and current management and maintain its Los Angeles headquarters. Two of SunAmerica's top officers -- Chairman and CEO Eli Broad and Vice Chairman Jay S. Wintrob -- are expected to join AIG's board of directors.

The merger, approved by the boards of both companies, must be approved by the shareholders of both insurers as well as regulators.

Thiele leaves The St. Paul

ST. PAUL, Minn. -- Patrick A. Thiele, executive vp of The St. Paul Cos. Inc. and president and chief executive officer of The St. Paul's worldwide insurance operations, resigned from the company last week.

Mr. Thiele, 47, was responsible for St. Paul's international and domestic underwriting and was instrumental in establishing a platform for the integration of St. Paul and USF&G Corp.

A spokeswoman for St. Paul said Mr. Thiele's decision to leave the company was entirely his own and surprised executives at the company.

Chairman Douglas W. Leatherdale promoted several executives and announced new reporting relationships.

Stephen Lilienthal, formerly USF&G's executive vp and chief underwriting officer, was promoted to executive vp of St. Paul Fire & Marine Insurance Co. and will assume responsibility of general commercial, small commercial and major markets.

Paul Liska, executive vp and chief financial officer of St. Paul Fire & Marine, will assume additional responsibility for information systems, personal insurance, surety, non-standard auto and ceded reinsurance.

Joe Nardi, executive vp of St. Paul Fire & Marine, will continue to oversee custom markets, professional markets and medical services.

Messrs. Lilienthal, Liska and Nardi will report to Mr. Leatherdale, who is assuming Mr. Thiele's responsibilities for international underwriting.

Mark Pabst continues his role as president and chief operating officer of international underwriting but will now report to Mr. Leatherdale.

Generali settles Holocaust suit

NEW YORK -- A $100 million settlement of Holocaust-era insurance claims proposed last week by Assicurazioni Generali S.p.A. is likely to put pressure on other major European insurers to settle the lawsuit.

Trieste, Italy-based Generali's proposed settlement, which calls for paying $10 million immediately and $90 million after court approval, is the first reached among the 16 insurers named in the March 1997 class-action lawsuit filed by relatives of Holocaust victims in U.S. District Court for the Southern District of New York.

Under the proposed settlement, Generali also will open its records for a "forensic examination" by plaintiffs' lawyers and will assist them in pursuing claims against Eastern European governments and companies.

"The legal obligation to pay outstanding World War II-era insurance claims rests with the Central and Eastern European governments, whose insurance monopolies seized all of Generali's assets which were meant to pay claimants. Many of these companies are still operating in Europe," the insurer said in a statement.

Separately, Generali has pledged to help resolve the insurance claims of non-litigants by participating in a "memorandum of understanding" proposed by the National Assn. of Insurance Commissioners and Sen. Alfonse D'Amato, R-N.Y. (BI, Aug. 10). Zurich Insurance Group earlier this month became the first insurer to sign the memorandum (BI, Aug. 17).

The proposed settlement also requires Generali to use settlement monies to establish a $15 million memorial fund on behalf of heirless claimants. Generali also will establish related committees to oversee distribution of the settlement funds through the World Jewish Restitution Organization.

Generali's action, which its board of directors will review on Aug. 28, also is subject to the approval of the court and the NAIC.

Broker regulation causing rift

LONDON -- Government proposals to allow U.K. brokers to self-regulate are causing a rift among broker trade groups as they try to determine who will take on the task.

Under recent U.K. government legislative proposals, brokers would no longer be under the control of the Insurance Brokers Registration Council. Last month, the government signaled its intention to disband the IBRC and replace it with a system of self-governance as part of financial services reform legislation (BI, Aug. 3). Government sources expect Parliament to enact the bill by early 2000, though the IBRC is planning to cease operations Oct. 31, leaving a regulatory void for insurance brokers. A spokeswoman for the U.K. Treasury said officials will meet with the IBRC to discuss its decision.

The Institute of Insurance Brokers, composed mainly of small independent brokers, last week held an extraordinary general meeting, during which its members voted to extend its services to include broker regulation from the date the IBRC is wound down.

The move puts the IIB in conflict with the British Insurance & Investment Brokers Assn., whose members include large brokerage firms. BIIBA has been working in a consortium with the Lloyd's Insurance Brokers Committee, the Assn. of British Insurers, the London International Insurance & Reinsurance Market Assn., the Institute of London Underwriters, Chartered Insurance Institute and Lloyd's of London to draft a framework for a new self-regulatory body. BIIBA widened its membership criteria at the end of last month to include IBRC-registered brokers.

Anthony Howland-Jackson, chairman of the LIBC, criticized the IIB's move to set itself up as a regulator.

By competing with BIIBA as the interim regulator, the IIB is harming the brokerage industry's image in the eyes of government, which "wants to see the industry responding as one," he said.

Insurers win cleanup ruling

SAN FRANCISCO -- Policyholders must prove pollution was "sudden and accidental" to obtain coverage for cleanup costs in California, the state Supreme Court has ruled.

The pro-insurer decision in Aydin Corp. vs. First State Insurance Co. released last week will make it harder for policyholders to overcome the pollution exclusion, according to Thomas W. Brunner, a partner in the Washington law firm of Wiley, Rein & Fielding, which serves as counsel to the Insurance Environmental Litigation Assn. "This decision demonstrates, contrary to policyholder predictions, that the California Supreme Court will enforce policy provisions as written and will not expand coverage beyond a policy's plain meaning."

He added that "the court's decision to shift the burden of proof to the policyholder makes sense because the policyholder is in possession of the facts about its activities, and therefore is in the better position to demonstrate what happened."

Aydin Corp. sued its insurers when they refused to pay for a state-ordered cleanup of the company's Palo Alto, Calif.-based research and manufacturing complex. Aydin fabricated, assembled and repaired electrical transformers from 1969 until 1984, using a variety of noxious chemicals, oils, solvents and waste materials.

A jury had ordered Aydin's insurers to pay the cleanup costs, but an appellate court overturned the award. In affirming the appellate court decision, the Supreme Court said all five state high courts that so far have ruled on the issue have placed the burden of proof on the policyholder.

Court disallows random sampling

NEW ORLEANS -- A federal appeals court ruling in an asbestos case strikes down another attempt by plaintiffs attorneys to use random sampling to extrapolate damages for a class.

The 5th U.S. Circuit Court of Appeals in New Orleans last week ruled invalid the plan that would have allowed lawyers to determine damages for thousands of personal injury and wrongful death claimaints against asbestos-products makers based on the claims of a sampling of plaintiffs.

"The vast majority of the 2,000 cases are remanded back to the trial court" in the so-called Cimino case, said attorney Rikard Bridges of the Athens, Ga., law firm Blasingame, Burch, Garrard, Bryant & Ashley. The firm represented defendant Pittsburgh Corning Corp.

The case is a consolidation of personal injury and wrongful death claims filed on behalf of Claude Cimino and a class of insulation and construction workers, their survivors and others against asbestos-products manufacturers and some of their suppliers.

Mr. Bridges said while it was unusual that the sampling method for determining damages was authorized by a trial judge, the appeals court decision is similar to other recent decisions. "It's significant in that the appellate court said what we thought all along: that it's simply not permitted."

CNA exiting some business

CHICAGO -- CNA Financial Corp. is ending its operations in the traditional health care indemnity and administrative-services-only business for employers with fewer than 500 lives in their group plans.

Jae Wittlich, president and chief operating officer of CNA Group Operations in Chicago, said the company is concentrating its health care focus on larger employers. CNA will continue to sell stop-loss insurance to smaller employers, however.

Insured and ASO business for small employers generated about $575 million in premiums and premium equivalents. Options under consideration include selling off the business, Mr. Wittlich said.

Briefly noted

New York-based insurance holding company PennCorp Financial Group Inc. said last week that talks with an investor group led by Risk Capital Holdings Inc. and Securitas L.L.C. about the sale of up to $75 million in newly issued common shares had ended. PennCorp explained in a release that it had received two proposals to buy offers for its career sales division. Keith Maib, PennCorp's chief operating officer, said the corporation was committed to selling all non-core assets. He also said Penn

Corp would close its offices in New York and Bethesda, Md., and consolidate management operations in Dallas. . . .The California Workers Compensation Insurance Rating Bureau has recommended a 3.6% increase in pure premium rates next year. While the recommendation is advisory only, the suggested hike may be a sign that rates are firming after more than three years of declines since open rating began in 1995. . . .The U.S. Chamber of Commerce will not publish this year its annual survey of employers' benefit costs as the trade association revamps the survey. The next survey will be released in late 1999, said Martin Lefkowitz, the Chamber's director of special projects.