CHECKS AND BALANCES

The chief financial officer of a hospital, who oversaw all workers' comp claims, has been convicted of falsifying documentation on his own workers' comp claim. The 299th Travis County District Court has convicted Donald Rexrode of falsifying documentation and issued a one-year deferred adjudication in which Rexrode must pay full restitution to the Texas Workers' Comp Insurance Fund plus a $1,000 fine. Rexrode, the CFO at Brownfield Regional Medical Center, oversaw all workers' comp cases for the hospital's employees, including his own claim. According to the prosecution, Rexrode falsely reported that he was working reduced hours and receiving reduced wages when in fact, he was working his regularly scheduled hours and receiving his full salary. Consequently, he received partial indemnity benefits for the hours he allegedly was unable to work.

BLOWN OUT OF THE WATER

Texas Insurance Commissioner Jose Montemayor ordered a London-based "foundation" to pay a $500,000 fine and to stop offering boat insurance in Texas without a license or other proper authority from the Texas Department of Insurance. Earlier this month, Montemayor issued a cease-and-desist order and imposed a $200,000 fine on a Panama City, Panama, company involved in the same unauthorized insurance scheme. Montemayor issued the orders against International Marine Safety Foundation (IMSF) of London, and North American General Insurance Co. Ltd. of Panama City. Essentially, IMSF acted as the agent for North American. Neither holds a license or other authority to sell insurance in Texas. IMSF faxed Texas insurance agents and boat dealers offers of "discounted insurance coverage" and "immediate coverage" from North American through a membership in IMSF.

TDI SHUTS DOWN MCIC

Medical Community Insurance Co. (MCIC) of Houston, a physician-owned company that specialized in major medical insurance for small employers in Texas, has been placed in temporary receivership. Judge John Dietz of the 353rd District Court in Austin signed a temporary restraining order and appointed Insurance Commissioner Jose Montemayor as temporary receiver of MCIC. The company did not contest the receivership. MCIC, incorporated in November 1997, operated only in Texas. The company primarily wrote group policies for employers with two to 50 employees, providing health coverage for approximately 10,000 people. MCIC collected $11.9 million in premiums in 1999. Staff of Texas Department of Insurance TDI and the Texas Life, Accident, Health and Hospital Service Guaranty Association negotiated an assumption of MCIC's policies by Heritage National Insurance Co. of Tulsa from September 1, 2000, forward.

BANK PURCHASES S.A. AGENCY

International Bancshares Corp. has completed its entry into the insurance industry with the creation of a wholly owned insurance subsidiary under its lead bank, International Bank of Commerce-Laredo. As part of the formation of the new entity, which is called IBC Insurance Agency Inc., IBC is acquiring the Randol Alexander Insurance Agency of San Antonio. IBC Insurance Agency Inc. replaces Banker's Insurance Agency at IBC Inc., a Texas insurance agency that had been making insurance services and products available through IBC facilities since the beginning of the year.

AON RE EXECS BUY OUT UNIT

Former executives at an Aon Re Inc. unit have broken ties with the reinsurance intermediary to start an independent firm. Axiom Intermediaries began operations in Burlington, N.C. as an independent, privately held reinsurance broker. The company is a full-service treaty reinsurance intermediary, focusing on the placement of property/casualty risks. Meanwhile, Aon will continue area operations through its Atlanta and Dallas offices.

THE DISMANTLING OF RELIANCE

Markel Corp. has reached an agreement in principle with Reliance Group Holdings to acquire the renewal rights to Reliance's Child Care book of business and certain segments of Reliance's Social Services and Healthcare Liability books. In addition, The Hartford Financial Services Group has completed the purchase of the financial products and excess and surplus lines from Reliance Group Holdings. The acquisition, first announced June 19, has cleared all regulatory hurdles. The purchase includes the in force, new and renewal business of Reliance, resulting in approximately $250 million in additional annual gross premium for the company's specialty operation. The former Reliance financial products and E&S staff of approximately 150 underwriting and claim personnel, now employees of Hartford Specialty, will remain in New York.

AMERICAN COLLEGE, LUTC COMBINE

The American College and LUTC Inc. have approved a plan that will combine both organizations into a educational organization serving the financial services industry. The plan will combine the LUTC's life insurance sales training expertise with The American College's academic strengths in the technical subjects of financial services.

Under the consolidated structure, the educational, marketing, student support, and customer service functions will be promptly transferred to The American College's 35-acre campus in Bryn Mawr and LUTC will sell its 20,000 square foot headquarters in Bethesda, Md.

CHUBB GETS CLUBBED:

The law firm of Milberg Weiss Bershard Hynes and Lerach announced that a class action lawsuit was filed on August 31 on behalf of purchasers of The Chubb Corporation common stock during the period between April 27, 1999 and October 15, 1999. Those purchasers include the former shareholders of Executive Risk Inc. who exchanged their Executive Risk shares for Chubb stock in the July 1999 merger.

The action arose out of an alleged scheme to make it appear that serious problems and increasingly large losses in Chubb's standard commercial insurance business, which had badly hurt the company's results in 1997-1998, were being overcome by a combination of rate increases and non-renewal of unprofitable standard commercial insurance business. This allegedly enabled Chubb to report better-than-expected first quarter 1999 earnings per share, thus artificially inflating Chubb's stock in mid-1999. As a result, the lawsuit alleges that Chubb was able to successfully complete its acquisition of Executive Risk, a highly profitable underwriter of directors' and officers' liability insurance. In addition, the plaintiffs charge that the inflation of Chubb's stock price reduced the number of shares Chubb had to issue to acquire Executive Risk, saving Chubb at least $300-$400 million, while enabling the top three insiders of Executive Risk to receive millions in special benefits and payments upon the sale of Executive Risk to Chubb.