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”.
WASHINGTON -- A little-noticed provision in late drafts of the massive federal spending bill being hammered out by congressional negotiators could, if it becomes law, protect U.S. names of Lloyd's of London against foreign judgments rendered against them in connection with their membership in Lloyd's.
Because the final version of the so-called omnibus budget bill was not available late last week, it remained unknown whether the provision to amend the Securities Act of 1933 and the Securities Act of 1934 survived the final round of negotiations. Several sources said, however, that it had appeared in late versions of the budget bill, and they believed that it had remained.
The provision would prohibit U.S. courts from recognizing or enforcing foreign judgments "where such violation was committed in connection with any previous members or underwriting at Lloyd's of London, or in connection with any Lloyd's of London syndicate related to such membership or underwriting."
A policyholder attorney said that if the provision were to become law, it could work to the detriment of U.S. policyholders.
"The purpose of insurance is to protect policyholders. While we fully sympathize with the plight of American names who have been mistreated by Lloyd's, the simple fact is that 'immunizing' American names can only come at the direct expense of American policyholders," said R. Mark Keenan, a partner in the New York law firm of Anderson Kill & Olick P.C.
Congress is expected to approve the omnibus budget bill this week.
Aon takes stake in Sedgwick
LONDON -- Aon Corp. has made an investment that will enable it to profit from the proposed merger of two if its competitors.
The Chicago-based broker acquired some 9 million shares of U.K. insurance broker Sedgwick Group P.L.C. at a price at least 26 pence (44 cents) less than the 225 pence ($3.84) per share price J&H Marsh & McLennan Inc. has offered to acquire the broker.
J&H M&M extended the acceptance period until Oct. 20 for the merger, which was proposed in August. The Federal Trade Commission has cleared the merger; the deal also must be approved by the European Commission (BI, Oct. 12).
If the merger is approved, the arbitrage deal will net Aon about L2.46 million ($4.2 million) and give it a 1.628% stake in Sedgwick.
The shares were acquired by Aon Advisors, a London investment subsidiary of Aon, for between 197 pence and 199 pence ($3.36 to $3.39) per share in a series of transactions in the past few days.
"It's an investment," confirmed an Aon spokesman in Chicago last week, declining to comment further.
Trial in air crash stayed
ATLANTA -- A federal appeals court has indefinitely stayed the trial in which American Airlines Inc. would have argued that two navigation system contractors were liable for the 1995 crash of a Boeing 757 passenger jet near Cali, Colombia.
The crash in a mountainous area of South America killed all but four of 163 passengers and crew aboard American Flight 965.
The 11th U.S. Circuit Court of Appeals on Oct. 1 stayed the trial, which was scheduled to begin Oct. 26, while the court considers two issues in the litigation.
The court is reviewing the airline's appeal of a September 1997 ruling by a U.S. district court judge in Florida that American was guilty of willful and wanton misconduct in the crash. That ruling means that American would not be able to limit its liability for the crash to $75,000 per passenger. American at the time of the crash had not yet voluntarily waived its Warsaw Convention liability limits, as it and many other major airlines subsequently did.
The appeals court also is reviewing a motion by navigation system contractors Jeppeson-Sanderson Inc. and Honeywell Inc. The contractors argue that because of the willful and wanton misconduct judgment against American, the airline is barred by Florida state law from suing the contractors.
American claims in court papers that the contractors knew their navigation system contained errors. Those errors could lead pilots to steer their aircraft toward unintended points and into mountains, American claims.
The contractors argue that the pilots of Flight 965 did not follow American's own guidelines and incorrectly used the navigation system.
Florida probing withdrawals
TALLAHASSEE, Fla. -- Florida health maintenance organizations are coming under fire for decisions to drop more than 52,000 Medicare beneficiaries in markets they are exiting.
Florida's insurance commissioner and attorney general have issued subpoenas to seven HMOs as part of the officials' attempts to determine whether the plans unfairly dropped the members. The investigation will focus on whether the HMOs engaged in unfair trade practices or antitrust activity as part of the cancellations.
Subpoenas were sent last week to Prudential Health Care Plan, United HealthCare of Florida, CIGNA Healthcare of Florida, Aetna U.S. Healthcare, Humana Medical Plan, AvMed Health Plan and Principal Health Care of Florida.
In a statement, AvMed President Edward Peddie said the HMO tried for two years to communicate to state and federal officials problems related to its Medicare business.
"If the goal of Congress, the Florida attorney general and the Florida insurance commissioner is to demonize HMOs that are trying to increase access, improve quality and moderate the cost of health care, they have taken another large step" by politicizing their investigation by beginning them just weeks before elections, Mr. Peddie said.
High court to take ERISA case
WASHINGTON -- The Supreme Court has agreed to review a disability claim denial case that raises questions about ERISA pre-emption of state regulation.
One of the two major questions in UNUM Life Insurance Co. of America vs. John E. Ward is whether California's notice-prejudice rule is pre-empted by ERISA. The California rule, similar to rules in several states, requires an insurer to prove actual prejudice before denying a claim based on timely notice. At issue is the scope of ERISA's "saving" clause, which saves from federal pre-emption state laws regulating insurance.
The second major question is whether state agency law governs relationships between employers, insurers and plan beneficiaries, or whether application of the laws in such situations also is pre-empted by ERISA.
The underlying case involves Mr. Ward, who was president and chief executive officer of Management Analysis Co. until May 1992. Mr. Ward was diagnosed in December 1992 with diabetic neuropathy, a disabling condition. Mr. Ward said he was unaware of MAC's long-term disability benefit plan until April 1994, when he discovered information about the coverage among his personal belongings and filed a claim with UNUM. UNUM denied the claim, saying his deadline for filing was Nov. 5, 1993.
Mr. Ward sued the MAC employee disability plan and UNUM, and the U.S. District Court for the Southern District of California in August 1995 granted summary judgment in favor of the plan. On appeal, the 9th U.S. Circuit Court of Appeals in February reversed and remanded the case, based on California's notice-prejudice rule.
Bannan, Green & Frank L.L.P. in Los Angeles, the law firm representing UNUM, said in the petition for Supreme Court review that the 9th Circuit ruling, along with a parallel 6th Circuit decision and conflict with other circuit opinions, "will create enormous confusion and difficulty" in plan design and administration nationwide. Plan structures may be overturned and administration and benefit payments may be subject to conflicting state and federal regulation, the petition states.
13 indicted in Florida
ORLANDO, Fla. -- A state grand jury has indicted 13 people, including several insurance agents, on charges that they defrauded Florida investors of $10.9 million in a securities scam backed by a series of offshore insurers.
The indictments revolve around Legend Sports Inc., a now-defunct Orlando, Fla.-area company that sold a total of $16.5 million of promissory notes in 14 states, purportedly to build golf-related recreational centers. State prosecutors charge that Legend was a Ponzi scheme, paying initial investors with money from new investors while large sums were diverted to those involved in the scheme.
The promissory note salesmen included Florida insurance agents, who persuaded mainly retired clients to cash in annuities or individual retirement accounts to invest in Legend notes, state officials charge. The salesmen claimed the notes were risk-free and backed by guarantees -- which later proved worthless -- from offshore insurers that included Tangent Insurance Co. Ltd. and Westwood Insurance Co. Ltd. Both insurers were based in Antigua but were struck from the island's register of companies last year (BI, Feb. 24, 1997; Aug. 12, 1996).
Those named in the indictments include:
* James T. Staples, Legend's former chairman. Mr. Staples was arrested last week and released on $10,000 bond. He will plead not guilty to the charges, said his lawyer.
* John K. McGarrity, a former president of the now-defunct Amberco Brokers Ltd. of Bermuda, who issued the Tangent and Westwood guarantees through Beta Management Ltd., his Nassau, Bahamas, company. Florida officials said Mr. McGarrity's whereabouts is unknown. Beta Management's Bahamas phone is no longer in service.
* Francis O. Clarkson, a disbarred Charlotte, N.C., lawyer who acted as a U.S. representative of Tangent and Westwood, according to court papers. He could not be reached.
* Joseph A. Monaco, a Lake Mary, Fla., insurance agent who is charged with helping organize the scheme, and David E. Trotter, a Windermere, Fla., agent involved in the note sales. Neither could be reached.
These men and eight other defendants are charged with violating a state racketeering law, securities fraud and other charges. No date had been set for arraignments last week.
Another 37 Legend sales agents, including 29 licensed insurance agents, remain under investigation, the Florida Insurance Department said.
Beleaguered Cendant Corp. has backed out of its deal to acquire American Bankers Insurance Group and will pay American Bankers a $400 million breakup fee. Following the news, Standard & Poor's Corp. removed American Bankers from its CreditWatch list and affirmed its A+ financial strength rating. . . .A U.S. District Court judge in San Francisco last week granted United Airlines a preliminary injunction, allowing it to forgo offering unmarried domestic partners family medical and bereavement leave. The preliminary injunction is good until January, when United is scheduled to go to court against the city of San Francisco. The city wants United to comply with its Equal Benefits Ordinance, which requires all companies that conduct business with the city to grant domestic partners of employees the same health, pension and other benefits spouses receive. . . .American Medical Security Group, a Green Bay, Wis.-based insurer, is purchasing CNA Financial Corp.'s small-employer group health care business. CNA will continue to administer accounts until Feb. 1, 1999. Terms were not disclosed.
CNA earlier said it is concentrating its health care focus on larger employers. . . .French reinsurer SCOR S.A. has joined forces with personal lines mutual Mutuelle Assurance des Travailleurs Mutualistes and La Mutualite Francaise, an umbrella organization for French mutuals, to create a new reinsurer, MUTRE. Capitalized at 100 million French francs ($18.4 million), MUTRE will help mutuals develop long-term insurance products.