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Business Archive Site: Insurance
Latest Local Business, Financial and Economics News
- AIG completes preferred stock sale to government
NEW YORK -- American International Group Inc. completed a sale of preferred stock and issued warrants to the Treasury Department as part of a previously announced plan to receive additional financial support from the government, according to a regulatory filing submitted Monday. New York-based AIG said in the Securities and Exchange Commission filing that it sold preferred stock and issued...
NEW YORK -- American International Group Inc. completed a sale of preferred stock and issued warrants to the Treasury Department as part of a previously announced plan to receive additional financial support from the government, according to a regulatory filing submitted Monday.
New York-based AIG said in the Securities and Exchange Commission filing that it sold preferred stock and issued warrants to the government on Friday in exchange for $29.84 billion. The new funds are now immediately available for AIG's use.
The additional funding was announced last month when AIG disclosed a fourth-quarter loss of $61.7 billion, the largest ever quarterly corporate loss in U.S. history.
As part of the deal, AIG must avoid bankruptcy and the government must remain the majority owner of the insurer. The agreement also restricts AIG's ability to repurchase stock and requires limits on corporate expenses, lobbying and executive compensation.
AIG has received four rounds of support from the government since the credit crisis mushroomed in September. AIG initially received loans totaling about $85 billion to help it remain in business. The government has since renegotiated the funding and expanded it. As part of AIG's financial support the government has taken a roughly 80 percent stake in the insurer. AIG has now received a package of loans from the government worth about $180 billion.
Separately, AIG delayed the filing of its proxy statement ahead of its annual shareholders meeting amid a potential reshuffling of its board of directors, according to a Wall Street Journal report citing anonymous sources. AIG is planning to expand and change the composition of its 11-member board, according to the report.
An AIG spokesman declined to comment on any potential changes to the board of directors.
- Nationwide settles suit over insurance charges
Updated at 2:55 p.m. COLUMBUS -- Nationwide Insurance has reached a $6 million settlement in a lawsuit that accused the company of overcharging some customers. The class-action lawsuit accused Columbus-based Nationwide Mutual Insurance Co. of charging as many as 200,000 people too much for certain term life-insurance policies issued between 1990 and 2006. Nationwide spokesman Dan Orzano said both sides...
Updated at 2:55 p.m.
COLUMBUS -- Nationwide Insurance has reached a $6 million settlement in a lawsuit that accused the company of overcharging some customers.
The class-action lawsuit accused Columbus-based Nationwide Mutual Insurance Co. of charging as many as 200,000 people too much for certain term life-insurance policies issued between 1990 and 2006.
Nationwide spokesman Dan Orzano said both sides agreed not to talk about the settlement. According to a court filing, Nationwide maintained it did nothing wrong but agreed to the settlement to avoid the costs of continuing on with the lawsuit.
Michael Carr, of Pawtucket, R.I., filed the suit in 2005, saying that Nationwide charged more than the guaranteed maximum premium on some policies.
The lawsuit estimated damages of $9.3 million. Details of the settlement will be finalized in a Franklin County court hearing June 5.
- Progressive's earnings fell 88 percent in March
Updated at 1:24 p.m. MAYFIELD -- Progressive Corp., the Mayfield-based provider of auto and other insurance, reported that net income for the month of March fell 88 percent to $8.6 million, from $71.3 million in March 2008. Per diluted share, that works out to one penny per share, versus 11 cents per share for the same month last year. On...
Updated at 1:24 p.m.
MAYFIELD -- Progressive Corp., the Mayfield-based provider of auto and other insurance, reported that net income for the month of March fell 88 percent to $8.6 million, from $71.3 million in March 2008.
Per diluted share, that works out to one penny per share, versus 11 cents per share for the same month last year.
On the positive side of the scoreboard, Progressive wrote $1.18 billion in net premiums in March, up 6 percent from the $1.12 billion in net premiums the previous March. The company also earned $1.06 billion in net premiums for the month, up 1 percent over the $1.05 billion last March.
Losses for the month, however, included $87.5 million in net realized losses from its investment portfolio, including $216.5 million in write-downs on securities that had "an other-than-temporary decline in market value."
"Our underwriting results were pretty strong in the (first) quarter," said Patrick Brennan, senior manager of investor relations. "We had a growth in premiums, and we were more profitable from an insurance perspective than we were last year."
Progressive also gained a net of $103.2 million from security sales and $25.8 million in net holding period gains during the month.
First quarter earnings slipped 3 percent to $232.5 million, from $239.4 million in the first quarter of 2008. Income per diluted share remained flat at 35 cents for the quarter, the same as last year.
The company wrote $3.52 billion in net premiums during the first quarter, up 1 percent from last year's $3.49 billion, and earned $3.41 billion in net premiums, essentially flat compared to last year's $3.39 billion.
Shares of Progressive closed Wednesday at $15.80, up $1.35 or 9 percent.
- Insurers rise on report government may extend TARP
Updated at 4:42 p.m. WASHINGTON -- Shares of large U.S. life insurance companies initially surged Wednesday following news they may receive aid from the government's $700 billion financial industry rescue program. But the Treasury Department said only life insurers that own banks or saving and loans qualify for assistance, and that no new programs for the industry were being considered....
Updated at 4:42 p.m.
WASHINGTON -- Shares of large U.S. life insurance companies initially surged Wednesday following news they may receive aid from the government's $700 billion financial industry rescue program. But the Treasury Department said only life insurers that own banks or saving and loans qualify for assistance, and that no new programs for the industry were being considered.
Shares of Hartford Financial Services Group Inc., which spiked 35 percent to $11.40 minutes after the market opened, closed at $9.59, a gain of 13.5 percent.
Hartford and Lincoln National Corp., two of the nation's largest life insurers, and several others applied to become thrift holding companies last fall. Regulators approved applications earlier this year from those two firms, as well as Prudential Financial Inc., Genworth Financial Inc., and Aegon NV, a Dutch company that owns U.S. insurer Transamerica.
Life insurers, which have more than $5 trillion in assets and invest some of the premiums received from customers, play an important part in consumer confidence and security.
"These companies are among the hundreds of financial institutions in the ... pipeline that will be reviewed and funded as appropriate on a rolling basis," Treasury spokesman Andrew Williams said.
Hartford said in January that it expected to be eligible for between $1.1 billion and $3.4 billion in bailout money.
The bailout fund approved by Congress last year, known as the Troubled Asset Relief Program, or TARP, was intended to help banks weather the credit crunch, though it has also been used to make loans to auto companies and insurance giant American International Group Inc.
Shares of insurance companies rose after The Wall Street Journal reported that Treasury would announce a bailout for the sector in the next several days. But only the companies that got in line last fall will be eligible for government money, Williams said. He did not provide a timeline for any aid announcements.
Shares of Lincoln National jumped to $10 earlier Wednesday, but ended at $9.15, a gain of 32.8 percent. Prudential stock climbed as high as $25.30, but closed at $23.81, a 7.7 percent increase.
The government's decision leaves many large companies in the cold, facing deteriorating financial conditions and new competitive challenges.
Life insurers own 18 percent of all corporate bonds so aiding them is consistent with the bailout program's goal of unclogging credit markets, said Frank Keating, president of the American Council of Life Insurers.
Insurers have been under pressure to maintain solid capital positions to avoid damaging downgrades by ratings agencies. Keeping high rating