PORTLAND, Maine-UNUM Corp. is exiting nearly all of its reinsurance businesses-including selling its Duncanson & Holt Group operations worldwide-after taking a $101.1 million first-quarter pretax charge.

The charge includes reserve increases for estimated future losses in Lloyd's of London syndicates and certain reinsurance pools, as well as a write-off of goodwill stemming from UNUM's 1992 acquisition of Duncanson & Holt, an accident and health reinsurance and health reinsurance underwriting manager and reinsurance broker.

UNUM's first-quarter 1999 net income was $15.5 million, including the charge, compared with $93.5 million for the same period a year earlier. First-quarter gross revenues rose 14% to $1.30 billion.

A comprehensive review led UNUM to exit its reinsurance businesses, which included reinsurance pool management operations as well as risk assumption through pool participation, direct reinsurance and syndicate participation.

D&H has "minimal" exposure to the financially troubled reinsurance pool operated by Unicover Managers Inc. (BI, March 15), a UNUM spokeswoman said.

UNUM provides about $350 million capacity to various Lloyd's syndicates, including five managed by its subsidiary, Duncanson & Holt Syndicate Management Ltd. UNUM entered Lloyd's as a corporate capital provider in 1994 and set up its agency operation for the 1996 year of account. About one-third of its 1999 capacity is on non-D&H-managed syndicates, according to agency Managing Director Ralph Sharp. The five D&H syndicates have a total capacity of L147.8 million ($245 million) this year.

James F. Orr III, UNUM's chairman and chief executive officer, said in a statement, "After some considerable experience in the reinsurance market, we have determined that reinsurance is not a business that capitalizes on UNUM's core skills."

UNUM specializes in group long-term disability, group life, short-term disability, long-term care insurance and payroll-deducted voluntary benefits. It also has reinsurance operations in Japan.

Stirling Cooke mulls options

HAMILTON, Bermuda-Stirling Cooke Brown Holdings Ltd. is hiring a financial adviser "to explore alternatives that could enhance shareholder value," including a possible sale of the company.

Stirling Cooke, parent of several brokerage, underwriting and managing general agency units, is facing a number of lawsuits arising from workers compensation reinsurance business it handled. It has seen its stock price fall from a high of $29.50 last year to $4 per share as of last Thursday.

"In light of the recent decline in the market price of our shares, we believe it is prudent to consider all of our alternatives," Chairman and Chief Executive Officer Nicholas Mark Cooke said in a statement.

The company is expected to announce its chosen financial adviser this week.

Stirling Cooke's largest shareholders include its top officers and investment funds managed by Goldman Sachs Group L.P., which also managed Stirling Cooke's 1997 initial public offering.

Stirling Cooke also said it has engaged Arthur Andersen L.L.P. as its auditor, replacing KPMG L.L.P., which withdrew last month. KPMG and Stirling Cooke had no disagreements over accounting or financial disclosure matters, the two companies said.

Separately, Stirling Cooke units last week filed a motion to dismiss a racketeering lawsuit in which Odyssey Re (London) Ltd. charges that it was defrauded by Stirling Cooke and several others in a series of workers comp reinsurance placements (BI, April 5).

The motion argues that Odyssey Re's claims fail to meet pleading requirements of federal racketeering law and fail to show actual damages, complaining only of estimated future losses on the workers comp business. Stirling Cooke also seeks to have the suit, filed in federal court in New York, thrown out on jurisdictional grounds.

Infertility a disability: EEOC

NEW YORK-A publishing company that refused to cover an employee's infertility treatments under a self-insured health benefits plan violated the Americans with Disabilities Act and the 1964 Civil Rights Act, the Equal Employment Opportunity Commission has ruled.

In an April 27 determination letter, the EEOC found that Rochelle Saks, a New York-based employee of Franklin Covey Co. of Salt Lake City, is entitled under the ADA to coverage of medically necessary infertility treatments.

After being diagnosed with a hormonal imbalance, Ms. Saks and her husband tried to conceive through artificial insemination. She later suffered a miscarriage. Franklin Covey's self-insured benefit plan denied all but $3,025 of the resulting $20,220 in medical claims, according to the EEOC ruling.

Franklin Covey, a motivational publishing and training company best known for "The Seven Habits of Highly Effective People," argued that its health plan didn't violate federal law because its exclusions equally affected all employees, male or female and disabled or non-disabled. The company also claimed that it provided "substantial infertility-related benefits," according to the ruling.

The EEOC, however, found that infertility qualifies as a disability under the ADA and that Franklin Covey's plan violates both the ADA and Title VII of the Civil Rights Act. The plan's $3,025 payment also cannot be reasonably described as "substantial," the ruling found.

Under EEOC procedures, the agency will attempt to reach a settlement with Franklin Covey to correct the violations. If no settlement can be reached, the EEOC may sue the company.

"The determination did not surprise us. We feel it is just a restatement of the EEOC's position and a position that has been known for many years," said Tamera Donavon, director of legal services for Franklin Covey. The company has not decided how to respond to the ruling and will discuss it with the EEOC, Ms. Donavon said.

The ruling follows the U.S. Supreme Court's decision last June that an HIV-infected woman should be considered disabled under the ADA because she is unable to bear children. The high court's ruling in that case, Randon Bragdon et al. vs. Sidney Abbott et al., was expected to bolster employee claims that denial of infertility benefits is discriminatory (BI, June 29, 1998).

ALM eyes Lloyd's profitability

LONDON-Lloyd's of London syndicates owned by corporate investors may bear the brunt of the market's future losses, according to a study by the Assn. of Lloyd's members.

The ALM's "Lloyd's Market Results Summary 1999" states that names whose capacity was spread across a portfolio of syndicates had a return of 7.76% on capacity for the 1996 year of account, compared with a 5.22% return for publicly traded corporate investors. Both returns are net of members' personal expenses.

As for return on capital, names are enjoying a 25.9% return for 1996, while corporate investors are receiving a 10.4% return, the ALM says. This gap is so wide because individual names were required to post funds totaling 30% of their underwriting commitment in 1996, while corporate investors generally were required to put up about half of their premium limit.

The ALM expects a wider gap for return on capacity for the 1997 account, which will be reported next year under Lloyd's three-year accounting system. Traditional names will make a 3.32% return on capacity, whereas the corporate investors are looking at a 1.45% return, predicts the ALM.

Corporate investors not using a members agent are showing even worse returns, with a 1.02% loss on capacity for 1996, and a predicted 0.5% loss in 1997.

"The implication is that the move toward (integrated Lloyd's vehicles) may have serious consequences in terms of profitability for their shareholders," said ALM Chairman Michael Deeny.

Integrated Lloyd's vehicles own underwriting agencies and provide all the capacity to their syndicates, effectively operating as Lloyd's- based insurance companies. Mr. Deeny said the lack of spread in ILVs' portfolios, compared with that of traditional names who have capacity on a number of syndicates, means that any losses become concentrated in the ILV.

'97 workplace deaths up slightly

WASHINGTON-More than 6,200 workers died from job-related injuries in 1997, according to a report from the AFL-CIO.

The figure of 6,218 deaths in 1997 is up from 6,202 in 1996, the report said, citing the latest data from the Bureau of Labor Statistics.

The report, "Death on the Job: The Toll of Neglect," also reported that the national injury rate decreased slightly, falling in 1997 to 7.1 per 100,000 workers from 7.4 in 1996. Also, the incidence of disorders associated with repeated trauma dropped-for the third time since 1982-to 275,200 in 1997 from 281,000 in 1996, according to the report, the labor organization's eighth annual report on the status of health and safety protections for workers in the United States.

Alaska, Wyoming and Montana had the highest job fatality rates, while Connecticut, Rhode Island and Massachusetts had the lowest.

In terms of workers compensation benefits for disabling injuries, Iowa, Vermont and New Hampshire provide the highest benefits, while Georgia and New York had the lowest, according to analysis.

Workers met in more than 100 communities last week to observe Workers' Memorial Day and remember colleagues who were killed or injured in job-related accidents.

The workers also emphasized the need for stronger health and safety protections, especially a national ergonomics standard, according to an AFL-CIO statement.

Briefly noted

The Associated Press reported Friday that Antoine Bernheim was fired as chairman of Italian insurer Assicurazioni Generali S.p.A. Mr. Bernheim was fired at a board meeting, the AP said. It said Alfonso Desiata, chairman of life insurer Alleanza Assicurazioni S.p.A., was named his replacement; Generali owns 54% of the life insurer. The news service said Mr. Bernheim's firing was related to the takeover battle for one of Italy's largest banks. . . .The Senate Health, Education, Labor and Pensions Committee approved the SAFE Act, S. 385, sponsored by Sen. Mike Enzi, R-Wyo., last Thursday on a strict party line vote. The measure would allow employers to use third-party auditors to help bring workplaces into compliance with safety standards set by the Occupational Safety and Health Administration. . . .The Indiana Legislature last week approved a commercial lines deregulation measure, and the bill is now before Gov. Frank O'Bannon for his signature. The bill adopts rate and form filing deregulation for policyholders meeting a definition of exempt commercial policyholder. . . .Missouri legislators are continuing to consider a commercial lines deregulation bill. Members of the full House approved it recently, while members of the Senate Insurance Committee approved it last week. . . .Daytona Beach, Fla.-based broker Poe & Brown Inc. officially changed its name to Brown & Brown Inc. at its annual shareholders meeting last week. The change is a return to the original name of the broker that combined with Poe & Associates Inc. in 1993 to form Poe & Brown.

Errors & omissions

* An April 12 Update on Cambridge Integrated Services Group Inc.'s claims services revenues did not reflect all acquisitions made by the TPA in 1999 and was limited to income from services for self-insurers. Including recent acquisitions on a pro forma basis, Cambridge's 1998 revenues would total approximately $185 million.