The Royal & Sun Alliance: A Marriage On The Rocks.

WAILUKU - Faced with paying Maui County as much as $700,000 for the legal costs of a lawsuit filed by the Hale O Kaula Church, the county’s insurance company has paid the church that much to settle the suit, county officials said Thursday.

“It was paid to the church at 3 p.m. today,” said Deputy Corporation Counsel Madelyn D’Enbeau, who said the settlement was based on an agreement that had the dispute going back to the Maui Planning Commission for resolution.

The commission last month voted to approve a five-year special permit to allow the church to build a sanctuary for worship services on its 5.8-acre agricultural-zoned property in Pukalani.

As part of the settlement, the church agreed to drop its demands for its legal fees, estimated to be in excess of $1 million involving three law firms, D’Enbeau said....

The dispute dates back more than 10 years, to when the church members first purchased the farm lot at the end of a private road in a subdivision developed in a former pasture in Pukalani....

An initial request to build a church on the property was denied in 1995 when other landowners along the private road protested that it would create congestion and noise in an agricultural district.

A new request for a special permit for a church was filed in 1999, and, after a lengthy and disputed contested case process, was again denied. After the second denial in 2002, the church filed a suit in federal court, accusing the county of discrimination in rejecting its permit request.

The church was supported in its suit by a national organization, the Becket Fund for Religious Liberty, that sought to make the issue a test case for a new federal law, the Religious Land Use and Institutionalized Persons Act of 2000....

Because of the issues raised by RLUIPA, the case also received attention from the federal government, with the Civil Rights Division of the Department of Justice also filing a suit against the county for an alleged civil rights violation in its handling of the land-use issue....

Although the county’s insurance carrier, Royal & SunAlliance, negotiated the settlement, the county was prepared to carry the case to the U.S. Supreme Court for resolution to protect the local government’s rights over its land-use procedures.

In the case, the church had gone through a contested case hearing but declined to present evidence to the hearings officer assigned to the case [Judith Neustadter Fuqua, Esq.], claiming that she had displayed a bias against the church. When the hearings officer’s recommendation went to the Maul Planning Commission, there was no evidence to support the church’s application and the commission denied the permit.

“Our position was always that you have to go to the planning commission. You have to present evidence. It’s not as though you should be able to decide whether you like the hearings officer or not. You have to use the process just like everyone else does,” D’Enbeau said....

In dealing with the legal complaints, D’Enbeau noted that the county’s policy with Royal & SunAlliance had the insurance carrier paying the county for the legal work of defending itself.

The company already owes the county $200,000 in attorney’s fees, mostly for work performed by D’Enbeau.

Brad K. Heppner is chairman and chief executive officer of The Crossroads Group. Mr. Heppner was previously a senior consultant at Bain & Company, where he advised clients on strategies to improve the profitability and operations of their firms.

Prior to serving at Bain & Company, Mr. Heppner was director of investments with responsibilities for a diversified public and private equity portfolio at the John D. and Catherine T. MacArthur Foundation. Mr. Heppner initiated the foundation’s investment in several segments of the private market, including venture capital funds, buyout partnerships, distressed debt and natural resources.

Early in his career he was employed at Goldman, Sachs & Co. as an investment analyst. In addition to his responsibilities at The Crossroads Group, Mr. Heppner serves on the board of directors for the Greater Dallas Chamber of Commerce and is a past member of its executive committee and prior chairman of the Dallas Business Technology Council....

The following individuals contributed at least $50,000 to federal candidates and parties during one or more election cycles while affiliated with the organization.

Donor Name	Occupation	Date	Amount	Recipient
BROAD, ELI MR	AIG SUNAMERICA INC./CHAIRMAN	06/30/03	$25,000	Democratic Congressional Campaign Cmte
BROAD, EDYTHE	N/A/HOMEMAKER	03/31/04	$20,000	Democratic Congressional Campaign Cmte
BROAD, EDYTHE L MRS	HOMEMAKER	03/24/04	$20,000	DNC Services Corp
BROAD, ELI	SUN AMERICA INC	11/03/00	$20,000	DNC Services Corp
BROAD, EDYTHE	THE RALPH M PARSONS CO	03/30/04	$15,000	Democratic Senatorial Campaign Cmte
BROAD, ELI	SUNAMERICA INC	05/02/03	$11,000	Democratic Senatorial Campaign Cmte
BROAD ELI	SUNAMERICA INC.	10/10/02	$10,000	DCCC/Non-Federal Account 5
BROAD, ELI	SUNAMERICA INC	03/30/04	$10,000	Democratic Senatorial Campaign Cmte
BROAD, ELI	SUNAMERICA INC	05/13/02	$10,000	DSCC/Non-Federal Unicorp Assoc
BROAD, ELI		06/21/01	$10,000	DCCC/Non-Federal Account 7
BROAD, ELI	SUNAMERICA INC	03/28/01	$10,000	DSCC/Non-Federal Unicorp Assoc
BROAD, ELI	SUN AMERICA INC	10/14/99	$10,000	DNC Services Corp
BROAD, ELL	SUNAMERICA INC	03/28/01	$10,000	Democratic Senatorial Campaign Cmte
BROAD, ELL	SUNAMERICA INC	11/09/01	$10,000	Democratic Senatorial Campaign Cmte
BROAD ELI	N/A	06/19/02	$5,000	DCCC/Non-Federal Account 10
BROAD, EDYTHE L	HOMEMAKER	08/15/00	$5,000	DNC Services Corp
BROAD, ELI	SUNAMERICA CORP	02/24/99	$5,000	PAC for a Change
BROAD, ELI	SUNAMERICA INC./CHAIRMAN	02/08/02	$5,000	Responsibility/Opportunity/Community PAC
BROAD, ELI	SUNAMERICA INC./CHAIR	03/31/04	$5,000	Democratic Congressional Campaign Cmte
BROAD, ELI MR	CHAIRMAN RETIREMENT SERVICES INC./C	03/25/04	$5,000	DNC Services Corp
BROAD, EDYTHE L MRS	HOMEMAKER	08/18/04	$2,500	DNC Services Corp
BROAD, EDYTHE	HOMEMAKER	06/28/04	$2,000	Boxer, Barbara
BROAD, EDYTHE	NOT EMPLOYED/HOMEMAKER	09/30/03	$2,000	Clark, Wesley
BROAD, EDYTHE L	N/A	05/29/04	$2,000	Kerry, John
BROAD, EDYTHE L	N/A/HOMEMAKER	02/27/04	$2,000	Kerry, John
BROAD, EDYTHE L	N/A/HOMEMAKER	03/29/04	$2,000	Kerry, John
BROAD, ELI	AIG SUNAMERICA INC/CHAIRMAN	10/13/04	$2,000	Harman, Jane
BROAD, ELI	AIG SUNAMERICA INC/CHAIRMAN	09/30/03	$2,000	Clark, Wesley
BROAD, ELI	AIG SUNAMERICA INC	06/30/03	$2,000	Daschle, Tom
BROAD, ELI	AIG SUNAMERICA INC	06/30/03	$2,000	Daschle, Tom
BROAD, ELI	SUN AMERICA CORPORATION	06/01/03	$2,000	Dodd, Christopher J
BROAD, ELI	KAUFMANN AND BROAD HOME CORPORATIO/	02/27/03	$2,000	Kerry, John
BROAD, ELI	AIG SUNAMERICA INC/CHAIRMAN	01/20/03	$2,000	Lieberman, Joe
BROAD, ELI	SUMAMERICA	11/29/99	$2,000	Lieberman, Joe
BROAD, ELI MR	KAUFMANN AND BROAD HOME CORPORATIO	05/29/04	$2,000	Kerry, John
BROAD, ELI MR	KAUFMANN AND BROAD HOME CORPORATIO/	03/29/04	$2,000	Kerry, John
BROAD, EDYTHE	NOT EMPLOYED/HOMEMAKER	07/28/03	$1,000	Gephardt, Richard A
BROAD, EDYTHE	NOT EMPLOYED/HOMEMAKER	09/20/03	$1,000	Dean, Howard
BROAD, EDYTHE	HOMEMAKER	06/29/99	$1,000	Clinton, Hillary
BROAD, EDYTHE	HOMEMAKER	08/30/00	$1,000	Corzine, Jon S
BROAD, EDYTHE	HOMEMAKER	11/05/99	$1,000	Kerrey, Bob
BROAD, EDYTHE	HOMEMAKER	06/28/00	$1,000	Schiff, Adam
BROAD, EDYTHE	HOMEMAKER	06/12/00	$1,000	Carper, Tom
BROAD, EDYTHE		06/07/00	$1,000	Carnahan, Mel
BROAD, EDYTHE	HOMEMAKER	04/27/00	$1,000	Feinstein, Dianne
BROAD, EDYTHE L MS	NOT EMPLOYED	04/27/99	$1,000	Gore, Al
BROAD, EDYTHE MS	NOT EMPLOYED	04/27/99	$1,000	Gore, Al
BROAD, ELI	SUN AMERICA	06/07/99	$1,000	Conrad, Kent
BROAD, ELI	SUNAMERICA INC	01/27/99	$1,000	Feinstein, Dianne
BROAD, ELI	ELI BROAD CO/EXECUTIVE	03/21/02	$1,000	Hentschel, Noel Irwin
BROAD, ELI	ELI BROAD CO/EXECUTIVE	03/21/02	$1,000	Hentschel, Noel Irwin
BROAD, ELI	SUNAMERICA	02/20/02	$1,000	Boxer, Barbara
BROAD, ELI	SUNAMERICA	02/20/02	$1,000	Boxer, Barbara
BROAD, ELI	SUNAMERICA INC./CHAIRMAN	02/19/02	$1,000	Harman, Jane
BROAD, ELI	SUN AMERICA INC	05/31/02	$1,000	Torricelli, Robert G
BROAD, ELI	SUN AMERICA INC	05/31/02	$1,000	Torricelli, Robert G
BROAD, ELI	SUNAMERICA INC/CHAIRMEN/CEO	05/27/02	$1,000	Shriver, Mark Kennedy
BROAD, ELI	SUN AMERICA INC	05/22/02	$1,000	Feinstein, Dianne
BROAD, ELI	SUN AMERICA INC./CHAIRMAN	04/22/02	$1,000	Roybal-Allard, Lucille
BROAD, ELI	SUNAMERICA INC	09/29/99	$1,000	Carnahan, Mel
BROAD, ELI	BROAD INC	09/16/99	$1,000	Brown, Marta Macias
BROAD, ELI	SUNAMERICA INC./CHAIRMAN	10/15/01	$1,000	Harman, Jane
BROAD, ELI	SUNAMERICA INC	06/30/99	$1,000	Clinton, Hillary
BROAD, ELI	SUN AMERICA/CHAIRMAN	05/04/01	$1,000	Gephardt, Richard A
BROAD, ELI	INVESTMENTS	01/31/02	$1,000	Levin, Carl
BROAD, ELI	INVESTMENTS	01/31/02	$1,000	Levin, Carl
BROAD, ELI	SUN AMERICA	12/31/01	$1,000	Baucus, Max
BROAD, ELI	SUN AMERICA	12/31/01	$1,000	Baucus, Max
BROAD, ELI	SUN AMERICA INC	12/21/01	$1,000	Kerry, John
BROAD, ELI	AIG SUNAMERICA INC/CHAIRMAN	09/20/03	$1,000	Dean, Howard
BROAD, ELI	RETIRED CHAIRMAN	05/29/03	$1,000	Harman, Jane
BROAD, ELI	RETIRED CHAIRMAN	05/14/03	$1,000	Harman, Jane
BROAD, ELI	AIG SUNAMERICA INC./CHAIRMAN	05/06/03	$1,000	Solidarity PAC
BROAD, ELI	SUN AMERICA INC./CHAIRMAN	09/24/02	$1,000	Dingell, John D
BROAD, ELI	SUN AMERICA CORPORATION	04/10/03	$1,000	Dodd, Christopher J
BROAD, ELI	AIG RETIREMENT SERVICES INC./EXECUT	08/24/04	$1,000	Lewis, Jerry
BROAD, ELI	SUNAMERICA INC	04/27/00	$1,000	Feinstein, Dianne
BROAD, ELI	SUN AMERICA CORPORATION	04/25/00	$1,000	Dodd, Christopher J
BROAD, ELI	SUN AMERICA	04/24/00	$1,000	Kennedy, Edward M
BROAD, ELI	SUNAMERICA INC	01/18/00	$1,000	Harman, Jane
BROAD, ELI	SUMAMERICA	12/29/99	$1,000	Lieberman, Joe
BROAD, ELI	SUN AMERICA	12/20/99	$1,000	Kennedy, Edward M
BROAD, ELI	SUNAMERICA INC	12/13/99	$1,000	Roybal-Allard, Lucille
BROAD, ELI	SUNAMERICA INC	12/07/99	$1,000	Clinton, Hillary
BROAD, ELI MR	SUNAMERICA INC.	04/27/99	$1,000	Gore, Al
BROAD, ELI MR	SUNAMERICA INC.	08/31/99	$1,000	McCain, John
BROAD, ELI MR	SUNAMERICA INC.	04/27/99	$1,000	Gore, Al
BROAD, ELL	AIG RETIREMENT SERVICES	12/02/03	$1,000	Specter, Arlen
ELI BROAD	SUN AMERICA/CHAIRMAN	01/15/02	$1,000	Gephardt, Richard A
BROAD, ELI	SUNAMERICA INSURANCE C	12/03/01	$967	Harkin, Tom
BROAD, EDYTHE	HOMEMAKER	11/01/00	$900	Montana Democratic Central Cmte
BROAD, EDYTHE	HOMEMAKER	11/01/00	$900	Kentucky State Dem Central Exec Cmte
BROAD, EDYTHE	HOMEMAKER	11/01/00	$700	Michigan Democratic State Central Cmte
BROAD, EDYTHE	HOMEMAKER	11/01/00	$700	New Jersey Democratic State Cmte
BROAD, EDYTHE	N/A/HOMEMAKER	10/19/02	$500	Roybal-Allard, Lucille
BROAD, ELI	AIG SUNAMERICA INC./CEO	07/07/04	$500	DASHPAC
BROAD, ELI	AMERICAN INTERNATIONAL GROUP/EXECUT	04/08/04	$500	Larson, John B
BROAD, ELI	SUNAMERICA	03/15/99	$500	Lazio, Rick A
BROAD, ELI	SUNAMERICA INC	10/25/00	$500	DCCC/Non-Federal Account 5

LONDON (Reuters) - Britain’s Royal & Sun Alliance Insurance Group Plc asked shareholders for 960 million pounds ($1.5 billion) on Thursday to help cover asbestos and other claims, and said another 1,000 UK jobs would go.

Britain’s second-biggest general insurer, hit in recent years by a slump in stock markets and a shortage of capital, also announced Finance Director Julian Hance would leave the firm early next year, following his former boss out the door. Bob Mendelsohn quit as CEO last year after dismal results and dividend cuts....

Royal & Sun has sold businesses and on Thursday raised its target for job cuts by the end of next year to 6,000 from 5,000.

The company is selling U.S. assets to reduce risk and focus on general insurance in Britain, Scandinavia and Canada, said Chief Executive Andy Haste, who joined Royal & Sun in April.

“(The rights issue) allows us to address the past and (fund) growth in these businesses,” Haste told reporters. In a rights issue, a company raises money by offering shareholders extra shares based on their existing holdings, usually at a major discount to the prevailing market price.

The issue is fully underwritten by investment banks Merrill Lynch, Goldman Sachs and Cazenove, which stand to make up to 35 million pounds in total fees....

Moody’s Investors Service cut its rating on Royal & Sun’s financial strength by one notch in July, citing concern about litigation and liabilities in the United States that threatened the company’s earnings and capital.

The company said on Thursday it was selling renewal rights to its U.S. personal lines business and most of its commercial lines business to Travelers Property Casualty Corp for a maximum of $90 million.

The sale follows the disposal of its U.S. speciality underwriting business in July to Alleghany Insurance Holdings LLC to reduce the U.S. business’s exposure to catastrophes. The insurer may sell further U.S. assets, Haste said....

The potential 800 million pound provision is to cover a 744 million pound reserves deficit, including about 150 million pounds for asbestos and environmental risk in the United States and Britain and about 500 million for other U.S. requirements.

It has been a rough few years for insurers - and, this week, it just got a lot worse. The attack by Eliot Spitzer, New York’s attorney general, on the probity of the United States insurance industry - and its possible ramifications on this side of the Atlantic, with the Financial Services Authority closely monitoring events - has crowned an appalling time for the sector.

The industry-wide jitters triggered by the lawsuit Spitzer has launched have compounded by Prudential’s shock £1 billion call on the stock market on Tuesday, suggesting that finances in the sector are still shaky.

The hoped-for light at the end of the insurance tunnel is now looking a bit more like an oncoming train. Arthur Levitt, the chairman of the US’s powerful Securities and Exchange Commission, said yesterday: “it [the controversy] is really far more pernicious that almost any other scandal if this decade.”...

To recap: tumbling equity markets from 2000 to 2002 ravaged the insurers’ balance sheets. It led the FSA to impose tougher capital requirements for their operations going forward - the so-called realistic accounting regime.

Those more rigorous capital adequacy rules were the pivotal factor in persuading Standard Life controversially to ditch 179 years of mutuality and seek a stock market flotation. Ironically, the poor performance of the club it now wants to join has led Standard to ditch its mortgage endowment promise of helping to make up shortfalls.

Apart from mortgages, there continue to be other major embarrassments for the sector on the mis-selling front, such as pensions and precipice bonds - with fines of the great and good ranging from Royal & Sun Alliance and Lloyds TSB, to Scottish Amicable and Allied Dunbar....

It is against this backdrop that we have had over the past week both the Spitzer bombshell in New York and the Pru’s grenade.

First, Spitzer the Spitfire. The stock value of Marsh & McLennan, the world’s biggest insurance broker, has virtually halved after New York’s attorney general accused it and other companies of rigging business and cheating customers. Spitzer went further, accusing the insurance industry of endemic corruption and anti-competitive practices.

He said scathingly: “The insurance industry needs to take a long, hard look at itself ... there is simply no responsible argument for a system that rigs bids, stifles competition and cheats customers.”

Four other companies in Spitzer’s sights are AIG, ACE, The Hartford and Munich American Risk Partners.

The central allegation of the suit is that Marsh duped clients by steering them to insurers with which it had “lucrative payoff agreements”.

These kickbacks were related to the volume and profitability of business steered by the brokers to insurers, and are known in the trade as “contingent commissions” - commissions paid on top of normal commissions for business.

The scandal has undermined UK insurers because it is pretty certain contingent commissions have been wide used here, as well as in the US.

The British broker Willis Group reacted swiftly on Thursday, saying it would no longer accept the so-called contingent commissions.

Now the scandal has widened out. Spitzer is also examining the practices of life and health insurers as well as property and casualty insurers and brokers.

On the day last week that he went public with his attack, the contagion quickly spread across the Atlantic, with four leading insurers among the top ten FTSE 100 fallers - the Pru, Aviva, Royal & Sun Alliance and Legal & General....

Taken all in all, insurers would surely wish they had taken a policy out against the sort of battering they have taken in the past four years, and which has markedly worsened now.

NEW YORK & TOKYO - (Business Wire) - American International Group, Inc (AIG) has announced that its subsidiaries American Home Assurance Company and AIU Insurance Company will purchase the insurance portfolio of the Royal & SunAlliance (RSA) branch operations in Japan. The purchase price of the book of business is GBP92 million, and AIG expects ongoing annual gross premiums to approximate 11 billion Yen....

The transaction is subject to regulatory approvals and other customary conditions.

American International Group, Inc. is the world’s leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions....

AIG also has one of the largest U.S. retirement services businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate...

And, for some more “birds of a feather” that you’ll also find building nests in this tree...

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