CNA FINANCIAL REPORTS 4Q LOSS
CNA Financial Corp. reported a fourth-quarter 2001 net loss of $22 million, compared with net income of $193 million for the same quarter in 2000. According to Chairman and CEO Bernard Hengesbaugh, 2001 was a year when the company stepped up to a series of tough issues. Hengesbaugh said now it's time for the company to deliver, noting it is well positioned to make that happen. The fourth-quarter 2001 net loss included $125 million after-tax restructuring and other related charges; $52 million after-tax Enron related losses, net of anticipated reinsurance recoveries; and $69 million after-tax reserve strengthening, primarily for the current accident year, in CNA's London-based commercial and marine operations. Fourth-quarter 2001 net operating loss included a $160 million after-tax charge to strengthen prior underwriting year loss reserves of its London-based reinsurance operation, CNA Reinsurance Company Limited (CNA Re U.K.). Net realized investment gains for the fourth quarter 2001 included a $160 million after-tax adjustment to reduce the $285 million after-tax estimated impairment loss related to the anticipated sale of CNA Re U.K., which was recorded in the second quarter of 2001. Included in the net operating loss for the year ended Dec. 31, 2001 was a $2.1 billion after-tax charge related to a change in estimate of prior year loss reserves and the related premium accruals recorded in the second quarter 2001; $304 million after-tax losses from the 9/11 World Trade Center attack and related events recorded in the third quarter; and previously noted restructuring and other related charges; Enron-related losses; and reserve strengthening recorded in the fourth quarter.
SAFECO SELECT CHANGES NAME
SAFECO Corp. announced that wholly owned subsidiary SAFECO Select Insurance Services, based in Santa Ana, Calif., has changed its name to SAFECO Financial Institution Solutions to reflect the broader array of property /casualty insurance products and services it now offers financial institutions. The company noted that SAFECO's acquisition last fall of ACE USA's Financial Institution Specialists division brought $80 million of additional premium to the company's book of business, making SAFECO Financial Institution Solutions the second-largest provider of lender-placed hazard insurance outsourcing and tracking, as well as other property and casualty insurance products and services for financial institutions.
CREDIT SCORING CONSIDERED IN 21 STATES
As of Feb. 12, a total of 21 states had introduced bills that would ban or restrict the use of credit-based insurance scoring according to the National Association of Independent Insurers. State legislatures considering various types of bills related to credit scoring and insurance include those of Alaska, Arizona, California, Georgia, Idaho, Illinois, Kentucky, Maryland, Minnesota, Missouri, Oklahoma, Rhode Island, South Carolina, Tennessee and Vermont. In Colorado, two bills, HB1188 (requiring the disclosure of credit information and credit score as calculated by a credit reporting agency and prohibiting the release of credit information without the release from the consumer) and HB 1149 (requiring disclosure of credit information by a creditor utilizing a credit reporting agency to a consumer when adverse action is expected to be taken against the consumer based on the report) were both killed in early February. In Virginia, SB 272, which prohibited an insurer or agent from setting rates for motor vehicle and homeowners' insurance based upon credit scoring died in committee. In South Dakota HB 1117, allowing the director of insurance to promulgate rules and regulations prohibiting the use of credit reports in underwriting, was tabled in committee. However, in Indiana two bills passed in their respective chambers recently; SB409 prohibits credit scoring in underwriting if it violates anti-discrimination provisions of the Unfair and Deceptive Act and Practice, and HB1164 restricts the use of credit scores in underwriting and makes any violation an unfair or deceptive practice. HB 110, prohibiting auto insurers from using credit reports when making underwriting decisions regarding an insured or potential insured, passed the Utah House on Feb. 4. And in Washington, HB 2544, limiting the ability of a carrier to adjust a personal insurance premium based on an individual's credit report and credit history, and SB 6524, which states carriers are to utilize an insured's most favorable credit history when calculating rates, were approved in their respective chambers in early February.
HAWAII WORKERS' COMP RATES INCREASE
Hawaii Insurance Commissioner Wayne Metcalf announced that the National Council on Compensation Insurance (NCCI) has received approval for a 4.6 percent overall increase in workers' comp insurance loss costs in Hawaii. The NCCI originally filed for a 9.1 percent increase, but the Insurance Division's independent analysis determined that the original request would have produced rates that were higher than what was justified by Hawaii workers' comp insurance experience. The loss costs are only a portion of the workers' comp rates, and insurance companies will have to add their operating expenses to the loss costs and file their rates for approval. According to Metcalf, this loss cost revision is in line with the changes in the underlying costs associated with workers' comp insurance coverage since the 8.9 percent decrease that was approved on Jan. 8, 2000. This change follows consecutive decreases in 1996, 1997, and 2000, which totaled more than 41 percent, according to Metcalf.
PIFC TESTIFIES ON SALVAGED VEHICLES
The California Senate Insurance Committee convened a hearing with member companies of the Personal Insurance Federation of California (PIFC) to discuss how auto insurers are complying fully with state vehicle code laws dealing with total loss salvage vehicles. Senator Jackie Speier, chairperson of the committee, called the hearing to gather information from insurers to help committee members decide if the current system of selling salvage vehicles sufficiently protects insureds as well as consumers who ultimately buy the vehicles after they have been repaired. PIFC insurance company members from State Farm Insurance Companies, Farmers Insurance Group and 21st Century Insurance Companies testified that they write insurance on approximately 50 percent of all automobiles in the state and follow the letter of the law when it comes to salvage vehicles. Companies are responsible to report any vehicle deemed a total loss salvage to the Department of Motor Vehicles (DMV) within ten days. Additionally, California Vehicle Code states that any salvaged vehicle must be issued a salvage certificate by the DMV that affirms the vehicle in question has been declared a total loss salvage vehicle. The certificate and all of its pertaining information must be disclosed to any potential buyers of the vehicle.
CDI RELEASES AUTO PREMIUM SURVEY
The California Department of Insurance (CDI) announced the latest edition of the Automobile Insurance Premium Comparison Survey on its Web site at www.insurance.ca.gov. The new survey provides a baseline of premium information as a tool consumers and policyholders can use when shopping for automobile insurance. The survey does not provide rate quotes. In accordance with California Insurance Code Section 12959, the CDI surveys licensed insurers admitted to transact insurance in California and asks them to provide premium comparisons for various lines of personal insurance. The survey is based upon several scenarios or hypothetical risks, which take into account the most common variables used to calculate automobile insurance premiums. The results of these surveys provide a premium comparison for what the consumer may be charged by an insurer in a specific scenario.
