NATIONWIDE INFRINGED UPON'
To protect its name and trademark, Nationwide, an international insurance and financial services leader, filed a federal trademark infringement suit against Florida-based Nationwide Insurance Group Inc. and The Nationwide Companies. Nationwide filed for a preliminary injunction in Federal District Court in Columbus to stop the companies from using the Nationwide name and trademark in conjunction with the sale of insurance and other financial services products. The Florida-based companies only recently began offering a variety of financial and insurance services under the Nationwide mark, including via the Internet. In addition to stopping the use of its name, Nationwide is asking that the Florida-based companies surrender all copies of any materials bearing the Nationwide name for destruction; contact all state insurance regulatory bodies and advise them that they are not connected or affiliated with Nationwide; send each of their policyholders a letter advising that they are not connected with Nationwide; pay compensatory and treble damages to Nationwide; and turn over all domain names including the word Nationwide.
ST. PAUL FORMS NEW GROUP
The St. Paul Companies announced the formation of the Global Surety and Construction Group. According to the group's newly appointed President Robert J. Lamendola, the formation of the Global Surety and Construction Group reflects strong growth in The St. Paul's construction insurance business and the continuing global expansion of the company's surety operations. The St. Paul's Surety business now includes operations in 10 countries and affiliations with numerous insurance partners worldwide. The St. Paul's surety business totaled $426 million in annual net written premiums in 2000, accounting for 7 percent of the company's total net written premiums, up 8 percent over 1999. The St. Paul's construction business totaled $488 million in annual net written premiums in 2000, up 10 percent over 1999.
LAAA JOINS NAAA
The National Auto Agents Alliance at its Board meeting in Atlanta, Ga., accepted an application for affiliation from the Latin American Agents Association. The LAAA is a three-year-old organization headquartered in Los Angeles. LAAA president Andre Urena stated: "We have been looking for a national affiliation that would give our members the opportunity to interact with and support fellow agents across the country and get involved in issues affecting agents and brokers across the country. The NAAA with its focus on the specialty auto agent provides an excellent means of doing this." LAAA brings more than 300 California members to the NAAA, increasing its membership to over 2,000.
STATE FARM'S EXIT SLOWED
New Jersey's Department of Banking and Insurance is seeking to prolong the state's largest automobile insurer's presence in order to give State Farm's 800,000-plus customers time to find alternative insurance before the company stops renewing policies. The company's request, filed last June, to withdraw from doing business in New Jersey, could be delayed for as long as five years. State Farm has released figures showing that the losses it continues to experience in New Jersey's auto insurance market are threatening its reserves, which have dropped from $445 million at the end of 1998 to $235 million at the end of June. It currently retains only 28.6 cents in surplus for every $1.00 in premium, and wants out as soon as possible.
CITIGROUP CUTS MORE JOBS
In addition to the previously announced layoffs of 1,200 employees, Citigroup Inc. announced it would let go another 3,000 workers this year due to the economic downturn, according to Reuters. The world's largest bank holding company (in terms of assets) stated in a filing with the U.S. Securities and Exchange Commission that approximately 2,150 of the job cuts will take place in the U.S. The cuts would reportedly take place across major business segments, including emerging markets, consumer, global corporate and investment banking, and insurance. In its second-quarter earnings statement, Citigroup had said that it would take a $133-million after-tax charge for severance costs, but did not provide the number of employees to be let go. Last year, Citigroup laid off 7,400 workers, trimming its global staff to about 250,000. Many of the world's major banks and financial institutions have made similar cuts, following losses on Wall Street combined with a reduced demand for investment services, merger advising and other financial consulting needs.
X.L. AMERICA LAUNCHES NEW UNIT
X.L. America Inc. is consolidating the management of its U.S. specialty insurance programs under one newly formed business unit, XL Programs. XL Programs will partner with insurance program administrators to offer specialized insurance coverages to distinct market segments. Leveraging the program business in Greenwich Insurance Company, XL Programs now manages total insurance premiums in excess of $200 million. These programs provide specialty property and casualty, warranty, workers' compensation, and intellectual property coverages to various industries, including habitational real estate, auto and construction. William Kronenberg III will oversee the unit as CEO, and Rick Callahan will serve as president. The company's current Specialty Workers' Compensation unit will also be incorporated within the XL Programs. X.L. America Inc. is part of XL Capital Ltd., through its wholly owned subsidiaries provides insurance and reinsurance coverages and financial products worldwide.
WALL ST. NEGATIVE ON RE
Neither Standard & Poor's Financial Services Ratings Group nor investment bank Morgan Stanley is bullish on the reinsurance industry these days. S&P issued a report affirming its "negative outlook on the European reinsurance market," and warned that it's likely that some companies' financial strength ratings will be downgraded. Associate Director Stephen Searby noted that despite a "9-percent growth in premium volumes in 2000," rate increases were "patchy" and did not result in an overall improvement in the industry's operating performance. He cited ongoing loses from the December 1999 windstorms, additional long-tail liabilities, and a deterioration in investment performance as the primary reasons for the poor results. Morgan Stanley insurance analyst Espen Nordhaus took an even more pessimistic view, warning that there would be failures in the industry as claims and damage awards continue to increase while capital investments remain stagnant or decline. The problem is particularly acute for small and medium-sized reinsurers, many of whom are "painfully under-reserved" according to Morgan Stanley, and who cannot call on a broad shareholder base to replenish their capital. Another weather event like 1999's storms or a similar series of catastrophe losses could trigger the financial failure of a number of reinsurers.
