INSURER HOLDING COMPANY REPLACES TOP TWO EXECUTIVESPosted On: Sep. 13, 1998 12:00 AM CST
NEW YORK -- NYMAGIC Inc., a property and casualty insurance holding company, announced the removal of its chairman and the resignation of its president and chief executive officer last week.
NYMAGIC's board of directors voted to remove John N. Blackman, Jr. effective immediately and accepted Mark W. Blackman's resignation because of "concern that 'irreconcilable differences' between the two executives over the strategic direction of the company had begun to create an environment in which the company could not operate effectively," according to a NYMAGIC news release.
Messrs. Blackman and Blackman are brothers and together own about 40% of NYMAGIC's shares. Their mother serves on the board and owns approximately 20% of the shares.
Until a replacement is found, the Blackman brothers' positions will be taken on an interim basis by two board members. Sergio B. Tobia will serve as interim chairman and CEO, and Jean H. Goulding was named interim president.
Mr. Tobia said the changes in the executive ranks were "a highly unusual development," but "as directors, our duty is to preserve the integrity of the company for all shareholders and we have acted with the utmost seriousness," according to the release.
NYMAGIC's subsidiaries specialize in ocean marine, inland marine, aircraft and non-marine liability insurance.
P/C profits down in first half
The U.S. property/casualty insurance industry's aftertax net income fell 14.9% in the first half of 1998 compared with the same period in 1997, according to figures released jointly by Insurance Services Office Inc. and the National Assn. of Independent Insurers.
ISO reported that insurers posted $15.9 billion in net income, down from $18.7 billion for the first half of 1997. This decline is generally attributed to a huge increase in catastrophe losses in 1998, with losses totaling $4.6 billion vs. $1.8 billion in the year-earlier period.
"The $2.8 billion increase in catastrophe losses matches the $2.8 billion decline in net income after tax," John Kollar, ISO's vp for actuarial services and research, said in a statement announcing the results.
Also, operating income declined 31% to $13.3 billion from $19.2 billion in first-half 1997.
Because of the high cat losses, the industry's combined ratio deteriorated to 103.6% this year from 100.7% in first-half 1997.
But comparisons with 1997 might be misleading, ISO noted, as cat losses and combined ratios for 1997 were exceptionally low.
Satellite losses insured
NEW YORK -- Globalstar Communications Ltd. is fully insured for 12 communication satellites lost when a Zenit 2 rocket carrying them exploded shortly after launch last week.
Details of the insurance program were not released.
The Ukrainian-made rocket failed shortly after launch from Kazakhstan, destroying the satellites, which were valued at $190 million. The cause of the failure still was under investigation last week.
The company, a limited partnership of international telecommunication manufacturers, said it will continue with its plan of putting 48 satellites in orbit before the end of 1999 for its wireless communication network. But, the start of service will be delayed a few months, said a spokesman for Loral Space & Communications Ltd., whose 42% stake in Globalstar is the largest of all the participants.
This is the latest in a spate of recent launch failures. In August, a Titan IVA rocket carrying a spy satellite exploded 40 seconds after takeoff. Also in August, a Delta 3 rocket exploded in midair, destroying a $250 million PanAmSat communications satellite (BI, Aug. 31).
NCQA releases HEDIS 1999
The National Committee for Quality Assurance unveiled its final specifications of HEDIS 1999.
The Washington-based non-profit group's update of its Health Plan Employer Data & Information Set finalizes changes first announced in April (BI, April 27).
The final version contains the measurements added in the draft version for behavioral health, cardiac care and a new consumer survey. In addition, a new set of measurements for diabetes care has been added to the draft version.
"With HEDIS 1999, we're turning up the lights in the health plan marketplace to show consumers and employers just what they're getting," said NCQA President Margaret E. O'Kane in a written statement. "Strong plans will look strong, weak plans will look weak, and they'll all work hard to get better."
Employers, consumers and health plans use HEDIS measurements to evaluate the quality of health plans.
Mitsubishi settles ADA action
NORMAL, Ill. -- Mitsubishi Motor Manufacturing of America agreed last week to pay $3 million to settle claims brought by the Equal Employment Opportunity Commission on behalf of 87 applicants who alleged Mitsubishi violated the Americans with Disabilities Act.
The accord, reached amicably last week, is the largest out-of-court settlement for an ADA case since the ADA's inception in 1992, according to the EEOC.
The 87 applicants, who will share the $3 million award, sued the manufacturing giant, alleging they were denied employment at Mitsubishi's Normal, Ill., plant due to their disabilities, which ranged from diabetes to carpal tunnel syndrome to back and hearing impairments.
Under the settlement, Mitsubishi agreed to revise its hiring policies and procedures and will submit them for EEOC approval to ensure that qualified individuals with disabilities are offered positions on a non-discriminatory basis. MMMA agreed to not hire any new entry-level employees until those changes meet EEOC approval.
"We believed that we were in compliance with the Americans with Disabilities Act. Where we were not, we have agreed to work with the EEOC to ensure we fully comply," a Mitsubishi spokeswoman said, reading a prepared statement.
"With this agreement, we will be setting in place an appropriate revision of our policies, procedures and training related to hiring associates, further building on our ongoing effort to develop best practices in the workplace," according to the Mitsubishi statement.
The ADA settlement comes three months after Mitsubishi agreed to pay $34 million to settle the largest sexual harassment class-action case in the EEOC's history (BI, June 15).
Merrill Lynch buys consultant
NEW YORK -- Merrill Lynch & Co. Inc. is buying New York-based benefit consultant Howard Johnson & Co., a purchase giving the huge financial services firm a much bigger presence in the benefits consulting industry.
With its purchase of Howard Johnson, Merrill Lynch will be able to offer clients a wider range of benefit consulting services, such as benefit design work and complete benefit outsourcing, a Merrill Lynch spokeswoman said. Merrill Lynch's position in the benefits market now is largely that of a pension plan administrator.
Founded in 1965, Howard Johnson reported $35 million in benefit consulting revenues last year, with about 80% of revenues generated from retirement plan-related work. The company has 360 employees in 12 offices in the United States, including New York, Los Angeles and Seattle.
Terms of the purchase were not disclosed. The acquisition is expected to be completed by mid-October.
HMO seeks to exit Calif. county
WOODLAND HILLS, Calif. -- Health Net is seeking approval to withdraw its health maintenance organization products from California's Monterey County, affecting 11,000 enrolled members, the health insurer announced.
Health Net will continue to serve existing HMO members in Monterey County, but they are expected to move to other plans during open enrollment periods beginning Jan. 1, 1999.
The cost of providing HMO benefits in Monterey County exceeds the level of HMO premiums in the market, said a spokesman for the Woodland Hills, Calif.-based company. Health Net provides coverage for 2.3 million members throughout California, but providing doctor networks in rural areas such as Monterey County remains difficult, the spokesman said. Health Net's average cost per day is $4,000 at one of the two Monterey-area hospitals, compared with a statewide average of $1,300 per day.
The California Department of Corporations must approve the withdrawal.
Oxford, doctors resume fight
NEW YORK -- After six months of negotiations failed to produce a settlement, the New York County Medical Society broke off talks with Oxford Health Care Plans Inc. and will press its legal claims for $140 million in unpaid fees to more than 25,000 physicians.
Expressing disappointment that Oxford's new management was unable to settle the claims, Medical Society President Elizabeth Almeyda said the society had "no alternative but to return to litigation."
The action was brought in February by the New York County Medical Society and joined by 13 other societies demanding payment for services. In addition, another suit seeks to reform the standards by which Oxford processes claims and authorizes health care services (BI, Feb. 9).
The non-payment claims are being heard before an arbitration panel.
Health reform not key concern
WASHINGTON -- Voters don't view health insurance reform or health maintenance organization reform as issues that require immediate congressional attention, according to a survey released Friday.
Respondents to the survey, undertaken for the Blue Cross & Blue Shield Assn. by Alexandria, Va.-based American Viewpoint Inc., ranked health insurance reform fourth and HMO reform last on a list of nine national issues ranked according to their importance in determining how the respondents will vote in the November congressional elections.
In addition, 57% of the respondents said Congress should determine the "true impact" of any proposed health care reforms rather than try to pass them before the elections.
American Viewpoint polled 1,000 voters late last month for the national managed care reform survey. For more information on the survey results, contact Bill Pierce, director-public affairs, Blue Cross & Blue Shield Assn., 1310 G St. N.W., Washington, D.C. 20005; 202-626-4818.
Citing difficulty with obtaining good contracts with providers, Blue Shield of California will stop actively marketing its Medicare Risk HMO product outside of Southern California. The existing 5,500 enrollees will be able to keep coverage. Marketing will continue in Los Angeles, Ventura, Orange, Riverside and San Bernardino counties, where Blue Shield has 55,000 Medicare risk HMO enrollees. . . .Volkswagen A.G. announced last week that it is allocating 20 million deutsche marks ($11.9 million) to create a new relief fund for Holocaust-era slave laborers. The auto manufacturer said it previously made more than 25 million deutsche marks ($14.8 million) available for related humanitarian and educational projects (BI, Sept. 7). . . .Maurice R. "Hank" Greenberg, chairman of American International Group Inc., was named chairman of the board of 20th Century Industries, a Woodland Hills, Calif.-based insurance holding company specializing in personal automobile insurance, 20th Century said. The company's board was increased to 13 members from 11, with AIG now providing three additional, or a total of seven, members. AIG bought a 42% stake in 20th Century in 1994 and now holds 54.1%.