(San Diego Business Journal Staff) – LandAmerica Financial Group, the nation’s third largest title insurer, filed for bankruptcy late last month, but said it hopes to sell its two principal units, Lawyers Title and Commonwealth Land Title Insurance, to Fidelity National Title Insurance by Dec. 31.LandAmerica and Fidelity National signed a stock purchase agreement Nov. 26, under which Fidelity would pay LandAmerica $298 million for the businesses.

The units, which supply title insurance when homes and other properties are sold as well as related escrow services, have suffered from the mortgage meltdown along with the rest of the residential real estate industry.

Lloyd Osgood, spokesman for Richmond, Va.-based LandAmerica, said the pending sale represents 90 percent of its business.

“Clearly the bulk of our business is going to Fidelity,” said Osgood.

Jacksonville, Fla.-based Fidelity is the holding company of a number of well-known title companies, including Chicago Title and Fidelity National Title.

“Fidelity intends to have our underwriters run separately, like they do with Chicago and Fidelity National Title,” said Osgood. He said Fidelity intends to continue to operate the two LandAmerica units under their own nameplates.

“But it is too early to say what is going to happen location by location,” he said.

He would not say if Fidelity plans to close local offices.

Four Of The Top 10

LandAmerica’s title company units have a significant market share in San Diego. Four of the subsidiaries ranked in the top 10 of the San Diego Business Journal’s Title Companies list in 2007, which ranked 20 companies by the dollar value of mortgage transactions for the 12 months ending September 2007.

The largest, Southland Title, came in No. 4 on the list with 14,971 local transactions. The second largest, Commonwealth Land Title, at No. 5 on the list, had 11,712 local transactions. The third largest unit, Lawyers Title, No. 6 on the list, reported 7,958 transactions. United Title, No. 10 on the list, reported 5,056 transactions.

Because of the shake-up in the industry, the Business Journal did not survey title companies this year.

(Kansas Department of Insurance) – The National Association of Insurance Commissioners (NAIC) honored a Kansas Insurance Department official with a national award at the NAIC’s winter meeting this month.

Larry Bruning, chief actuary at department, was one of two insurance department officials who were awarded the Robert Dineen Award in recognition of outstanding achievement in insurance regulation. The award is the highest individual honor bestowed by the NAIC.

“Larry truly represents the ‘best of the best’ in insurance regulation,” said NAIC President and Kansas Insurance Commissioner Sandy Praeger. “His tireless efforts to improve regulatory uniformity and cooperation at the national level through the NAIC — all while maintaining a full workload at the Kansas Insurance Department — have not gone unnoticed.”

Since joining the Kansas Insurance Department in 2003, Bruning has provided leadership, expertise and counsel in a national effort to establish principles-based reserving, which is a new framework for determining life insurers’ required capital and reserves.

Bruning has served as chair of the NAIC’s Life and Health Actuarial Task Force, and chair of the Accident and Health Working Group, among other NAIC committee assignments. He also is an active member with the American Academy of Actuaries, serving on the national organization’s board of directors.

Bruning has 29 years of experience as an actuary. He is a Chartered Life Underwriter and a Fellow in the Society of Actuaries. He has also taught actuarial mathematics and statistics at Washburn University, Topeka.

(NCOIL) – New York State Senator James Seward has been named president of the National Conference of Insurance Legislators (NCOIL).

NCOIL is an organization of state legislators whose main area of public policy interest is insurance legislation and regulation. Most legislators active in NCOIL either chair or are members of the committees responsible for insurance legislation in their respective state houses across the country.

In a statement, Seward said, “There is no question that as we go through the next year, the financial meltdown is overshadowing just about everything in our personal lives, our financial lives, the priorities of NCOIL, and, of course, our state’s… We have to look out for our constituents — the insurance consumers of our various states — as well as our insurance markets and the companies that provide insurance products to our consumers and provide employment for our constituents.”

The election slate also included the following officers for 2009: Kentucky Rep. Robert Damron as president-elect; North Dakota Rep. George Keiser as vice president; New Mexico Sen. Carroll Leavell as secretary; and Indiana Sen. Vi Simpson as treasurer.

In addition, the following committee committee chair appointments were announced:

– Financial Services & Investment Products: Assemblyman Joseph Morelle (NY)
– Retirement Issues: Sen. Ann Cummings (VT)
– International Insurance Issues: Sen. Vi Simpson (IN)
– Life Insurance & Financial Planning: Sen. Ralph Hudgens (GA)
– Natural Disaster Insurance Legislation (Subcommittee): Sen. Joseph Crisco (CT)
– NCOIL-NAIC Liaison: Sen. Neil Breslin (NY)
– Property-Casualty Insurance: Rep. Charles Curtiss (TN)
– State-Federal Relations: Rep. Greg Wren (AL)
– Workers’ Compensation Insurance: Rep. Susan Westrom (KY)

AIG names Peter Eastwood president and chief executive of its unit Lexington Insurance

NEW YORK (AP) – Embattled insurer American International Group Inc. said Tuesday it named Peter Eastwood president and chief executive of a subsidiary, Lexington Insurance Co. Lexington Insurance is a unit of AIG’s commercial insurance business.

Eastwood replaced Kevin Kelley, who left the company. Eastwood has worked at AIG since 1991, most recently serving as executive vice president of Lexington Insurance.

Last month, the government said it would provide a $150 billion financial-rescue package to AIG to help it remain in business amid the worsening credit crisis. That rescue package came just two months after AIG was extended an initial $85 billion loan from the Federal Reserve. The original loan was replaced by the $150 billion package as it became apparent the insurer needed more funds.

Problems at AIG did not come from its traditional insurance subsidiaries, but instead from its financial services operations, and primarily its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn’t make good on its promise to pay back soured debt, investors feared the consequences would pose a threat to the U.S. financial system, which led to the government bailout.

AIG’s traditional insurance subsidiaries have widely been viewed as safe.

Shares of AIG rose 1 cent to $1.94 in late morning trading.

TIRANA, Albania – American Reserve Life Insurance Company has agreed to buy 61 percent of Albania’s state-owned insurance company Insig for euro25 million ($32 million), the country’s Finance Ministry said in a statement Tuesday.

The Dallas-based company won an international tender against nine other bidders and is in the last technical negotiations with Albanian authorities to take over the company.

Insig became Albania‘s state-owned insurance company in 1991 and now ranks second and third in the country’s life and non-life insurance markets.

In 2003 the International Financial Corporation and the European Bank for Reconstruction and Development each took on 19.5 percent stakes in Insig.

With some 210 employees in Albania and branches in Kosovo and Macedonia, Insig has total estimated assets of euro49 million ($63 million).

(Maryland Insurance Administration) – The Maryland Insurance Administration is hosting of two international interns from China through the National Association of Insurance Commissioner (NAIC)’s International Internship Program.

From the China Insurance Regulatory Commission, Yan Dong of the Finance and Accounting Division in Beijing and Jin (Janet) Dai, the assistant director of Property Insurance Division in Chongqing, China are the guests of this agency for the month of November
learning about insurance regulation in the U.S.

Dong conducts financial analysis and administers the Chinese Insurance Security Fund. Dai reviews company licensure and conducts on-site inspections and analysis of company practices.

“Recent economic events have further demonstrated how connected the international financial markets are,” said Ralph S. Tyler, Maryland Insurance Commissioner. “This is a wonderful opportunity to share each others regulatory practices and learn from each other for the security of our financial markets and our citizens.”

The two interns began their journey with other international interns at the end of October in an overview of state-based insurance regulation with the NAIC to launch the Fall 2008 intern class.

Since then, the Chinese visitors have been participating in sessions with specific agency units and staff to learn about how Maryland regulates insurance from financial solvency to market conduct and licensing to consumer outreach.

Their program is to include a local onsite examination of an insurance company and enforcement investigation of a local producer, as well as a tour of certain domestic insurance companies.

(INDYSTAR) – The Indiana Department of Insurance on Monday took control of a troubled Indianapolis-based health insurer and made plans to help policyholders get coverage from another company.

About 6,500 people — a third of them in Indiana — have plans with Medical Savings Insurance Co. and will have the opportunity to switch to comparable high- deductible plans with Golden Rule Insurance Co., an Indianapolis-based unit of health insurance giant UnitedHealth Group.

Medical Savings, headquartered on the city’s Northwestside, was placed in receivership because it no longer was able to maintain the required financial reserves insurers must keep in order to pay claims, according to Jim Atterholt, commissioner of the state Department of Insurance.

Patrick Rooney, a well-known Indianapolis insurance executive who founded and led Medical Savings, had been supporting the company, according to Atterholt. But those payments stopped after Rooney, 80, died in September.

Rooney previously had been chairman and chief executive of Golden Rule before retiring from there in 1996. Golden Rule later was acquired by UnitedHealth.

Medical Savings has about 30 employees, but Atterholt said some of those workers could find employment with Golden Rule.

Marion Circuit Judge Theodore Sosin approved the state’s plan to transfer coverage to Golden Rule.

Greg Thompson, a spokesman for UnitedHealth, said all Medical Savings members are eligible to switch to Golden Rule plans. He added that, in some cases, customers may be offered lower premiums.

“We’re trying to make it happen as quickly as possible,” he said, adding that letters are being sent to Medical Savings members. Thompson said applications from Medical Savings members will be due Dec. 31.

During the transition, Atterholt said it is important for Medical Savings members to keep paying their premiums and for doctors to keep accepting those plans.

American International Group, which has been bailed out by the US government, plans to remove AIG from the name of its US auto insurance unit, aigdirect.com, and rebrand it as 21st Century Insurance in January 2009. The auto unit also plans to cut 6.6% of its workforce.

According to media reports, Nicholas Ashooh, a spokesman for American International Group (AIG), said that the name change is a reversal for AIG, which acquired 21st Century in 2007. The company is expected to launch the new logo and website on January 5, 2009.

Bloomberg reported that the auto insurance unit employed around 5,500 workers by the end of September 2007. Earlier, in a statement to its workers, AIG said that it plans to close offices in 12 cities.

It’s a commonly held truth about free-market capitalism that its potential to destroy some companies creates opportunities for others. While that may be true in the current financial crisis, the credit crunch has made it tough for the survivors to make hay out of such failures.

That may well be the case in the insurance industry, where the massive collapse of American International Group has forced the giant insurer to try to dump many of its still valuable corporate assets onto the trading block at bargain-basement prices. But because the sources of financing have just about dried up in the downturn, only companies with the heftiest balance sheets and the rare ability to raise capital by issuing stock are in a position to be taking advantage of the sale of assets by AIG and other insurers, says David Schieldrop, a managing director with Barclays Capital.

Speaking on mergers and acquisitions yesterday during an Ernst & Young webcast on the credit crisis and the global insurance industry, he said that in there’s “an unprecedented number of properties coming to market while valuations are under sever stress.” That represents “a once in a generation opportunity to obtain” high-quality insurance companies on the cheap, he said.

The price-to-earnings ratios and market capitalization of some of the nation’s most prominent insurance carriers have dropped precipitously over the last year, according to numbers Schieldrop provided from Factset, a provider of financial information. For example, estimated p/e ratio and market cap for the Hartford fell from 9.9 to 0.8 and from $33 billion to $0.8 billion, respectively, between June 1, 2007 and November 20 of this year. The Prudential (12.5 to 1.9 and $47 billion to $6 billion), the Principal Financial Group (14.1 to 2.5 and $16 billion to $2 billion), and Allstate have taken similar falls (8.9 to 3.4 and $38 billion to $10 billion).

But the big story in the industry, noted the Barclay’s merger specialist, is AIG. In October, the company’s chief executive, Ed Liddy, outlined plans to sell off chunks of the company to help pay back the $85 billion or so it has borrowed from the Fed, while holding onto AIG’s domestic property-casualty insurance operations and retaining a stake in its foreign life insurance companies. Liddy said then that he hopes to sell off AIG’s U.S. life insurance, annuity, and pension businesses to a single buyer, while divesting part of its non-U.S. life insurance operations.

No deals have been announced yet. But Reuters reported earlier this month that AIG is expected by the end of the year to reach deals to sell its U.S. personal lines business unit and Hartford Steam Boiler Inspection and Insurance Co.

In addition to AIG, many insurance companies will likely have units on the block either to raise money or to shed non-core assets, according to Schieldrop. But because of the low valuations, “there’s a lot less incentive to sell unless you really need to,” he said. “So the activity you’ll see over the next six to nine months [will involve] AIG and other distressed situations.”

At the same time, it’s become tough for potential buyers to find financing for such deals in the current capital markets, according the Barclay’s executive. Buyers of investment grade debt and convertibles have fled, he noted.

But it’s still possible to raise acquisition money by issuing common stock, albeit at hefty discounts, according to Schieldrop. “The equity market is the only market available to finance these transactions,” he noted.

Brace yourself for the next financial whammy:

It’s open enrollment season for workplace health insurance plans — and many of the 158 million Americans who receive employer-based health insurance can expect to pay more of the costs.

About two-fifths of U.S. firms do not offer employee health benefits. And even at those that do, many health-benefits packages will be a “skimpier and less comprehensive,” said Drew Altman, chief executive of the Henry J. Kaiser Family Foundation.

Kaiser, together with the Health Research & Educational Trust, recently released a 2008 snapshot and 2009 outlook for employee health benefits.

Cost increases for 2009 actually continue a modest cost-containment trend of the last three years — an improvement over double-digit cost increases before 2005.

But the real long-term effect on employers and employees is that premium costs have more than doubled since 1999.

In 1999, total family premiums for employer-sponsored health insurance averaged $5,790, of which workers paid an average of $1,543, according to Kaiser.

This year, premiums for such coverage rose to $12,679, with employees paying an average of $3,354 out of their paychecks to cover their share of the costs, the Kaiser report said.

In 2009 — provided you’re fortunate enough to work where an employer-sponsored plan is offered — you could be asked to pay a bigger share of the premium cost, a higher deductible amount and more out-of-pocket expenses for prescription drug costs and office visit co-pays.

Exactly how much more workers will pay next year will vary widely.

Nationally, cost increases for employers who offer health insurance plans will average between 8 percent and 10 percent, a Mercer survey indicates. A Towers Perrin survey puts the employers’ cost increase as low as 6 percent.

But employers have said in several surveys that they do not intend to shoulder their increases alone.

David Power, with Power Benefits Group, says about one-third of his employer clients in the Kansas City area are saying they cannot afford to live with the cost increases they’re getting from their carriers in this enrollment season.

“But their last resort is to walk away from providing employee health insurance,” Power said. “Employers who provide health benefits want to keep them as a recruiting and retention tool.”

Power says employers are responding to cost increases, in this order:

“The first response is to negotiate with the carrier and try to find the reason for the cost increase. The second response is to look at the plan design and try to mitigate what the company pays, usually by asking employees to pay more out of pocket. The third response is to shop the plan.”

Shopping the plan — trying to find another carrier for less money — is being done fairly reluctantly, area brokers said. It causes disruption in health-care providers for employees, plus time and burdensome paperwork.

The most common response is to shift a larger share of premium costs to employees. Area brokers said a growing number of plan deductibles will exceed $1,000, with some getting kicked up as high as $2,000.

Some co-pay costs for office visits are rising, too. And some employers are shuffling their benefits packages in other ways.

For example, Jim Wolf, senior sales representative for Assurant Employee Benefits, says some employers will continue to offer group dental plans, but only if the employee opts to pay 100 percent of the costs.

“That still may be a better deal than the employee could find individually on the open market,” Wolf said. “And there’s also an access question. With a group plan, the employee is guaranteed access, where he might be refused individually.”

Employers that have self-funded insurance plans might be better able to mitigate cost increases by redesigning or re-insuring their plans.