J.P. MORGAN SETTLES SURETY CASES WITH ALL 11 COMPANIES
J.P. Morgan Chase & Co. has now settled its dispute with all 11 insurance companies that had issued Enron-related surety bonds and will receive approximately 60 percent of the principal amount of $965 million. In connection with this agreement, and one additional case that is still pending related to a prepaid contract that was backed by a letter of credit, the firm will take a pre-tax charge of approximately $400 million ($260 million after-tax) in its fourth-quarter 2002 earnings. The firm also announced that it is establishing a reserve of $900 million ($600 million after-tax) related to other litigation and regulatory matters. William McDavid, general counsel of the firm, noted, "We strongly believe our firm acted appropriately in all of the transactions involving the insurance companies. Nevertheless, given the uncertainty of jury verdicts in complex matters, we believe it was prudent to accept this settlement. We were also pleased that, prior to the settlement, the judge dismissed a separate claim that J. P. Morgan Chase aided a financial fraud on the insurance companies by Enron." Under the settlement agreement, the insurance companies have the option of satisfying up to $85 million of their settlement obligations by assigning claims they have against Enron entities relating to the bonds, with such claims being valued for this purpose at 13 percent of their principal amount, reflecting current market values. The $900 million reserve established represents anticipated costs associated with the various private litigation and regulatory inquiries involving Enron and the other material legal actions, proceedings and investigations in which the firm is involved. This reserve represents management's best estimate, after consultation with counsel, of the current probable aggregate costs associated with these matters. This amount includes $80 million with respect to the settlement with regulators related to equity research. The establishment of this reserve will result in an after-tax charge to 2002 fourth-quarter earnings of approximately $.30 per share.
NEW BILLS GO LIVE IN CALIF
California Gov. Gray Davis and the Democratic-controlled state Legislature came to agreement on 1,168 bills during the last session, making it the most bills Davis has signed in a single year since taking office in 1999. A couple of insurance-related new laws began earlier this month. They include: Family leave—Establishes new state insurance fund to provide up to 12 weeks of wage-replacement benefits for those caring for a seriously ill child, spouse, parent or domestic partner, or to bond with a new child (SB 1661). Workers' compensation—Ratchets up benefits to injured workers. The maximum weekly benefit paid to injured workers will climb from $490 to $602 in 2003 and to $840 in 2005 (SB 749).
IIABA's 27th ANNUAL NATIONAL LEGISLATIVE CONF. SET FOR WASHINGTON, D.C.
The Independent Insurance Agents & Brokers of America's (IIABA's) 27th Annual National Legislative Conference will be held April 2-4 at The Capital Hilton in downtown Washington, D.C. The event will bring hundreds of independent agents and brokers to the nation's capital during the critical early months of the much-anticipated 108th Congress. Lawmakers will be debating numerous issues shaping the future of the independent agency system and the insurance industry as a whole, including insurance regulatory modernization, tort reform and privacy issues. Highlights of the National Legislative Conference will include an in-depth issues briefing session; the annual IIABA Congressional Reception; appearances by numerous high-profile political speakers discussing important insurance and national issues confronting lawmakers and agents in Washington, D.C.; and hundreds of meetings on Capitol Hill between IIABA agents and brokers and their elected representatives. Past National Legislative Conference speakers include the previous three presidents—Bill Clinton, George Bush and Ronald Reagan—and the last three Speakers of the House—current Speaker Dennis Hastert (R-Ill.), and former Speakers Newt Gingrich (R-Ga.) and Tom Foley (D-Wash.). This year's National Legislative Conference speakers will be announced as confirmations are received.
AIA WELCOMES NEW COLO. INS. COMMISSIONER
The American Insurance Association (AIA) welcomed former Speaker of the House Doug Dean as commissioner of the Colorado Department of Insurance. "AIA and its member companies look forward to working with Speaker Dean in his new role as Insurance Commissioner," Ronald Cobb, AIA vice president, Southwest region, said. "There will be several major issues facing the insurance industry this year in Colorado. We welcome the opportunity to work with the new commissioner as he gets up to speed on insurance issues and know his experience in the legislature will be of great value." Dean replaces William Kirven III, who resigned last year to pursue other interests.
A.M. BEST ADDS UTAH TO STATE RATE FILINGS
A.M. Best Co. will add the state of Utah to its monthly publication of Best's State Rate Filings. The publication helps professionals track and monitor insurance company rate-filing activity in key markets. Each month state-specific information for each commercial and personal line of insurance, including data on the overall impact of state rate filings, is added to A.M. Best's online database. Filings are listed by state, company, major line and program name, along with effective date and insurance department filing numbers. This product is available in print, online and PDF versions. Currently, A.M. Best offers rate-filing information on 35 states, covering nearly 90 percent of all direct premiums written nationwide.
$1.2 MILLION FOR DAMAGED REMBRANDT
Moscow's Pushkin Museum of Art will receive $1.2 million in compensation from insurers for damages suffered by a Rembrandt painting on the way to an exhibition in Houston. The painting "Portrait of an Old Woman," suffered a tear of approximately six inches in the lower right corner, which was subsequently repaired. The compensation is based on the diminished value of the work of art, and is the highest known award of its kind.
RMS EXPANDS WEATHER DATABASE IN U.S., EUROPE
Risk Management Solutions (RMS), a provider of products and services for managing natural hazard risks, has expanded the weather databases in its ClimetrixTM weather derivatives trading and risk management system to include new temperature data for France, Sweden, Norway, and the U.S. The new data will be added to the Climetrix system for the main trading hub in each country—Paris, Stockholm and Oslo, enabling users to "access official data for these locations for use in pricing, portfolio risk management, and final settlement of weather derivative contracts." RMS said it has also added "a supplemental database of cleaned historical data" for 200 stations in the U.S.
