COURT RULES FOR ACE
The Superior Court of the State of California recently made a ruling favorable to ACE Ltd. in a lawsuit brought about by subsidiaries of AIG and Chubb. The lawsuit focused on a restructuring plan implemented in 1996 by INA Financial Corp., which was subsequently acquired by ACE Ltd. in July 1999. The purchase was part of ACE's acquisition of CIGNA's domestic and international p/c operations. The Court found that the validity of the restructuring plan, which was approved by the Pennsylvania and California insurance departments, to be a matter for the regulatory authorities and that the complaint did not state a cause of action under California law.
FRONTIER TO SELL REGENCY
Frontier Insurance Group has entered into a definitive agreement to sell Regency Insurance Company to Tomoka Re Holdings Inc., an affiliate of Tower Hill Insurance Group. Located in Charlotte, N.C., Regency underwrites specialty personal lines and markets nonstandard auto and homeowners. Harry W. Rhulen, Frontier's president and CEO, said the sale is part of the company's "Corrective Action Plan." Frontier Insurance Group Inc. announced a net loss of $13.6 million for its first quarter 2000 unaudited results, compared to net income of $13.1 million for the first quarter of 1999.
WATCHDOG BILL ON HOLD
Assembly Bill 1738, the bill that would form a consumer "watchdog" association for the insurance industry, didn't get far in the California Senate Appropriations Committee. The bill was placed in the "suspense file" on May 15 for further examination of its potential fiscal impact. AB 1738 calls for a special consumer association to participate in insurance regulatory hearings and advocate public policy positions. Insurers would be required to send a membership application to policyholders in all mailings of applications, notices of coverage and billing statements. Industry groups such as the National Association of Independent Insurers (NAII) oppose AB 1738, calling it "unnecessary" and "costly to implement."
NAII FIGHTS EQ BILL
A new earthquake bill would invite an avalanche of claims, according to the National Association of Independent Insurers (NAII). Senate Bill 1899 lifts the statute of limitations that would otherwise bar plaintiffs from filing claims resulting from the 1994 Northridge Earthquake. Sam Sorich, vice president and western regional manager for NAII, testified before the Senate Judiciary Committee that "the bill is an invitation for fraud." Sorich said the costs of the bill's "unfairness and uncertainty would be borne by all insurance consumers."
BREAKTHROUGH IN WTO
On May 19, the European Union and China announced that they had reached a compromise on the terms of a trade agreement that would lead to China's entry into the World Trade Organization (WTO). At issue was EU demands for a lowering of agricultural tariff barriers, and the right to acquire majority interests in telecommunications, automobile and insurance ventures with China. According to a BBC report, the EU agreed to drop its demands concerning telecommunications in exchange for a more rapid opening of Chinese markets. China has campaigned for 14 years to join the WTO.
