Vampire Bats in the barnS of...
Farmers
Insurance
Sightings from The Catbird Seat
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April 17, 2009
AIG Hawaii sold to Farmers
State's 3rd-largest automobile insurer will change names when deal is done in summer
BY GREG WILES, Advertiser Staff Writer
AIG Hawaii, the state's third-largest automobile insurer, is being sold as part of a $1.9 billion deal as owner American International Group Inc. takes steps to repay some of the billions owed in government bailout money.
The deal announced yesterday involves Los Angeles-based Farmers Group Inc. buying AIG's auto insurance unit, a move that will expand Farmers into Hawai'i for the first time.
Yesterday Farmers Chief Executive Officer Robert Woudstra said that Farmers had no immediate plans to make any changes to AIG Hawaii's 310-person staff or operations.
"It's a good fit," Woudstra said from his Los Angeles office, explaining Farmers does not have any business in the state currently.
He said, however, the AIG Hawaii name will disappear.
"I can't tell you right now what we're going to call it, but the AIG name will have to go away."
AIG Hawaii had been contemplating a name change on its own given the stigma of being associated with its parent company, which had severe financial problems and needed a Federal Reserve-led rescue to avoid collapse last year.
In October, AIG put its auto group on the market as it looked for ways to pay off some of the bailout, which now totals about $182.5 billion.
AIG Hawaii President and Chief Executive Officer Robin Campaniano yesterday called the sale a positive development for the local unit. In 2008 AIG Hawaii's premiums written fell to about $100 million, about $18 million less than a year earlier.
Campaniano said some of the decline may have been due to clients departing because of the parent company's problems. A downturn in the Hawai'i economy contributed also.
"We're delighted that this is happening," said Campaniano.
"We're hopeful and very optimistic that the strength of Zurich and Farmers will greatly add to the presence we have in Hawai'i."
Farmers is owned by Zurich Financial Services Group, a Swiss company that serves customers in 170 countries and has business customers in Hawai'i.
AIG Hawaii insures about 100,000 cars in Hawai'i, along with offering homeowners, life, commercial and other insurance. Only Geico and State Farm insure more cars in the state.
Woudstra said he became familiar with the Hawai'i operations in examining AIG's business and that "it has performed exceedingly well for AIG."
"The only product that they write that we don't is flood (insurance)."
He said he had gotten good reports about Campaniano, with people saying nothing but positive things about his reputation.
The AIG automobile business was operated under a unit known as 21st Century Insurance Group, which owned AIG Hawaii as well as running operations in 28 other states. The sale will require the approval of state insurance commissioners.
Yesterday Hawai'i Insurance Commissioner J.P. Schmidt said he would closely look at the deal because of the role AIG Hawaii plays in the state.
"Farmers and Zurich are both good, solid companies, so that's a good thing," Schmidt said. "But we'll be looking at the details and specifics to ensure that the people of Hawai'i are taken care of in the best possible manner.”
The sale may be completed this summer. Schmidt said he and other insurance commissioners had been working on a uniform application process so that the sale approval can be processed efficiently.
http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=2009904170352
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Catbird Note: More pages related to “good, solid companies,” Farmers and Zurich:
http://www.insurance.ca.gov/0400-news/0100-press-releases/0060-2007/nr091-2007.cfm
http://www.farmersinsurancegroupsucks.com/farmers_insurance_lawsuits.htm
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See also: http://www.voy.com/129276/1328.html
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THE SELLOUT & SELLOFF OF THE GOOD OL’ U.S. OF A.
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March 15, 2009
AIG payments to banks
stoke bailout rage
WASHINGTON/NEW YORK (Reuters) - Goldman Sachs Group Inc and a parade of European banks were the major beneficiaries of $93 billion in payments from AIG -- more than half of the U.S. taxpayer money spent to rescue the massive insurer.
The revelation on Sunday by American International Group Inc was another potential public relations nightmare, coming on the same weekend that the Obama administration expressed outrage over AIG's plan to pay massive bonuses to the people in the very division that destroyed the company by issuing billions of dollars in derivatives insuring risky assets.
The size of the payments also illustrates how seriously a potential collapse of AIG was viewed by the regulatory authorities. U.S. Federal Reserve Chairman Ben Bernanke said in an interview with CBS news magazine "60 Minutes" that the failure of AIG would have brought down the financial system.
AIG, an embattled insurance giant that has received federal bailouts totaling $173 billion and is now paying $165 million in employee bonuses, is at the heart of a global financial crisis that President Barack Obama is trying to address with plans for trillions of dollars in spending.
As part of those efforts, Obama will announce steps on Monday to make it easier for small business owners to borrow money, officials said.
But the revelations that billions of U.S. taxpayer dollars were funneled through AIG to Goldman Sachs -- one of Wall Street's most politically connected firms -- and to European banks including Deutsche Bank, France's Societe Generale and the UK's Barclays could stoke further outrage at the entire U.S. bank bailout.
FINANCIAL SYSTEM AT STAKE?
The fact that billions of dollars given to prop up giant insurer AIG were then transferred to European banks and Wall Street investment houses could raise new doubts about whether the rescue was really economically necessary.
"It doesn't to me seem fair that the American taxpayer has got to bear the 100 percent of the downside," said Campbell Harvey, a finance professor at Duke University.
"A hedge is not a hedge if you did not factor in the counterparty risk. And the U.S. taxpayer should not be obligated to make people whole for hedges that were not properly executed."
Goldman Sachs, formerly led by Henry Paulson who was treasury secretary at the time of the original AIG bailout, said, as it has in the past, that its AIG positions were "collateralized and hedged."
Deutsche Bank and Barclays declined to comment. Societe Generale was not available for comment.
As it seeks to ease the credit crunch that was the original target of the Troubled Assets Relief Program (TARP), the Treasury will also offer more details this week about the workings of proposed public-private partnerships to take toxic assets off banks' books, including a timeframe, a senior department official said on Saturday.
"No taxpayer in these arrangements is going to lose money until the investor who put up the money has lost 100 percent," said Chief White House economic adviser Lawrence Summers.
Treasury officials have said the fund, or funds, would be a vehicle to provide as much as $1 trillion in financing for buying bad assets -- particularly mortgages gone bad as a result of the U.S. housing bust. The Federal Reserve and Federal Deposit Insurance Corp would participate.
STILL INCOMPLETE
As more Americans lose their jobs and homes, Obama's new administration is under heavy pressure to show that the rescue plan for AIG and major banks is working to free up lending and rein in the riskier excesses of Wall Street.
The payments to AIG counterparties include the provision of collateral to back up credit default swaps, a form of financial insurance that AIG's London office was writing; the purchase of the collateralized default obligations, a type of complex debt security that underlay that insurance; and payments to counterparties of a securities lending program.
Through three separate types of transactions, Goldman received an aggregate $12.9 billion. Among European banks, SocGen was the biggest recipient at $11.9 billion, Deutsche got $11.8 billion and Barclays was paid $8.5 billion.
The AIG disclosures are still incomplete in that they do not include payments to the banks since December 31.
The list of counterparties was made public by AIG amid growing pressure on the insurer to come clean about the true beneficiaries of the bailout ahead of a congressional hearing on Wednesday at which AIG chief executive Edward Liddy is slated to testify.
Democratic Congressman Paul Kanjorski, whose committee will quiz Liddy, said the counterparties and bonuses would both be topics for investigation at the hearing.
Summers -- speaking before the payments to banks were made public -- called the AIG bonuses "outrageous" but said contracts must be honored, even though Treasury Secretary Timothy Geithner had "negotiated very forcefully" with AIG and done all that was "legally permissible" to limit the payments.
"We're not a country where contacts just get abrogated willy nilly," Summers, a former treasury secretary, said on CBS's "Face the Nation" program. "What the lesson is, is this: We don't really have a satisfactory regulatory regime in place."
HELP FOR BIG AND SMALL
To help small businesses, officials said Obama intends to provide $730 million from the congressionally approved $787 billion economic stimulus program to cut lending fees, boost loan guarantees and expand other programs.
"We know that small businesses are the engine of growth," Christina Romer, who chairs the White House Council of Economic Advisers, said on NBC's "Meet the Press."
"We absolutely want to do things to help them."
As part of the financial rescue, the Obama administration expects private investors to bolster government funds to help cleanse the banking system of bad assets, said Austan Goolsbee, a member of the Council of Economic Advisers.
"It's better to do this jointly with private capital," Goolsbee told "Fox News Sunday." "I believe there is a reasonable expectation that people will participate."
The idea of offering financing support from the government for private investors willing to buy the toxic assets was first put forward by Geithner in February but the lack of detail has disappointed financial markets.
CHECKING AIG CONTRACTS
AIG's Liddy said in a letter to Geithner the giant insurer was legally obligated to make 2008 employee retention payments but had agreed to revamp its system for future bonuses after the Obama administration objected.
"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Summers said.
Representative Barney Frank, the Democratic chairman of the powerful House of Representatives Financial Services Committee, said the government must see if the bonuses can be recovered, adding that the timing of AIG's commitment was important.
"We can't just violate law, legal obligations," Frank told Fox. "I understand that. But I do want to find out at what point these illegal obligations were incurred."
Mitch McConnell, the Republican minority leader in the Senate, called the AIG situation an "outrage" and said the nature of the contracts needed to be checked.
While the news that AIG bailout money went to foreign banks could further stoke political outrage, some experts said the alternative could have been worse.
"The nationality of the bank should not matter," said Peter Morici, professor at the Smith School of Business, University of Maryland. "We have an inter-related financial system. You do something to mess with that and all bets are off the table."
http://news.moneycentral.msn.com/newscenter/newscenter.aspx
News: 2007 Press Release
For Release: September 5, 2007
Insurance Commissioner Steve Poizner Announces Consumer Victory Through Settlement
Farmers Insurance Policyholders Receive $1.4 Million in Refunds
SACRAMENTO - California Insurance Commissioner Steve Poizner announced today that the Department of Insurance has reached a settlement with Farmers Insurance Group on a noncompliance action. The settlement has resulted in $1.4 million in refunds to Farmers Homeowners Policyholders, and Farmers has agreed to pay an additional $2 million in fines.
The settlement is part of Commissioner Poizner's efforts to ensure that homeowners are not penalized for what is commonly known as "use it and lose it" practices in the industry.
The Foundation for Taxpayer and Consumer Rights, which served as the Intervener in the matter, supports the terms of the settlement and stands by the Department of Insurance's position in the case.
In 2003, after receiving dozens of consumer complaints concerning the Farmers Insurance Group, the Department of Insurance initiated a noncompliance action against Farmers, which stated that Farmers:
• Lacked sufficiently detailed underwriting guidelines to determine whether to renew or non-renew a policyholder based on the number of claims filed by that policyholder;
• Often violated its own Property Experience Rating Plan (ERP) rules by incorrectly surcharging a policyholder for claims that either a) were not claims or b) were otherwise not eligible for surcharge under the Property Experience Rating Plan;
• Unfairly charged some policyholders higher rates by applying the Property Experience Rating Plan in ways which were often inconsistent from one policyholder to another;
• Assigned a default "public protection class code" to some homeowners policies, thereby classifying some homes as a very high fire risk, despite the fact that Farmers knew, or should have known, that the home's fire risk was lower than that assigned under the default procedure. This practice resulted in some homeowners paying much higher premium rates than they should have qualified for.
Farmers customers have received their refunds. Farmers denies that its actions were in violation of law; however, Farmers has agreed to implement the following corrective measures as part of the settlement:
• Farmers has agreed to stop the Property Experience Rating Plan (ERP) practice of charging policyholders for losses without first confirming that the losses in question were ultimately paid for by the company;
• Farmers has agreed to exclude from chargeability under the ERP all claims which are subject to 100% payment through the coverage provided by another insurer
• They will no longer charge policyholders under the ERP for claims, when such claims are potentially subject to payment through coverage by another insurer, except under circumstances related to the policyholder's fault for the claim or unwillingness to cooperate in the investigation of the claim;
• Farmers is implementing additional changes to ERP, such as eliminating charges for policyholders on claims under $500, upgrading their system to prevent claims processing errors, and ensuring proper employee familiarization with the Property Experience Rating Plan;
• They will no longer use default public protection class codes for insured properties because Farmers no longer insures any properties that lack hydrant information;
• Farmers will work with the Department's Field Rating and Underwriting Bureau to develop clear renewal risk eligibility guidelines to consistently determine whether risks will be subjected to non-renewal, due to the number or type of claims a consumer has filed; and
• Farmers will conduct an analysis of their data and develop a policy-level report to ascertain whether any claims without payment have resulted or continue to result in the loss of a claims-free discount under the ERP. This analysis and report will also ascertain whether any policyholder was or continues to be subject to an improper surcharge by treating a single event as two or more events.
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Please visit the Department of Insurance Web site at www.insurance.ca.gov . Non media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Callers from out of state, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.
If you are a member of the public wishing information, please visit our Consumer Services.
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FOR LOTS MORE BLOODSUCKING
INSURANCE VAMPIRES
GO TO
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THE NESTS OF C.B. RICHARD ELLIS
THE DIRTY LITTLE SECRETS OF DOW CHEMICAL
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FARMER’S INSURANCE: IF IT WASN’T BROKEN BEFORE...
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THE BUZZARDS IN THE HALLS OF PUNAHOU
THE IMPEACHMENT OF GEORGE W. BUSH
INDIANA JIM JONES & THE PEOPLE’S TEMPLE OF DOOM
KAJIMA: BLOOD, BRIBES & BRUTALITY
NESTS OF THE INSURANCE VAMPIRES
RON REWALD: FLYING HIGH IN HAWAII
SUKAMTO SIA: THE INDONESIAN CONNECTION
THE SELLOUT & SELLOFF OF THE GOOD OL’ U.S. OF A.
TARP: THE GREAT AMERICAN COVERUP!
THE NATURE CONSERVANCY OF HAWAII
MARSH & McLENNAN: THE MARSH BIRDS
THE SILENCE OF THE WHISTLEBLOWERS
THE EAGLE HOODED: THE 9-11 COVERUPS
TRANSYLVANIA TRAVELERS AT ST. PAUL
VULTURES IN THE NATURE CONSERVANCY
VULTURES OF THE SANDWICH ISLES
> ZEROING IN ON ZURICH FINANCIAL SERVICES <
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Originally posted: June 13, 2009
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