The head of the aircraft leasing company owned by the giant financial services company American International Group is reportedly talking about buying a part of the business. The aircraft leasing company has been up for sale for more than a year. The Wall Street Journal reported Saturday that Steven Udvar-Hazy, a co-founder, chairman and CEO of International Lease Finance Corp., is in early discussions to purchase part of the leasing finance unit's portfolio and start a new company. AIG is trying to sell assets to repay billions in federal loans that helped it avoid failing. The leasing company has about 950 planes, making up the world's second largest fleet. AIG representatives could not immediately be reached for comment.
Monday, August 31, 2009
AIG Plane Leasing Executive May Bid for Business
Florida's Tower Hill Insurance Downgraded by A.M. Best; Tower Hill Responds
A.M. Best Co. has downgraded the financial strength ratings (FSR) to D (Poor) from B (Fair) and issuer credit ratings (ICR) to "c" from "bb" of Tower Hill Preferred Insurance Co., Tower Hill Prime Insurance Co. and Omega Insurance Co. -- companies known collectively as Tower Hill. The ratings agency said the outlook for these ratings is negative. All companies are domiciled in Gainesville, Florida. Tower Hill responded to the downgrades, defending its decision to buy private reinsurance rather than rely on the state-backed hurricane fund, a decision it said is the reason for the downgrades. A.M. Best said it has has also withdrawn the ratings and assigned a category NR-4 (Company Request) to the FSRs and an "nr" to the ICRs in response to Tower Hill's management's request to be removed from A.M. Best's interactive rating process. A.M. Best said its rating actions consider the companies' exposure as Florida personal property writers to frequent and severe catastrophic weather events, which A.M. Best said is significant on both a gross and net basis, in relation to their surplus positions. However, the entities' current catastrophe programs rely less on the Florida Hurricane Catastrophe Fund (FHCF), as no reinsurance was purchased from the FHCF's Temporary Increase In Coverage Limits (TICL) layer, as the entities remained skeptical on the ability of the FHCF to fund all obligations associated with a severe hurricane event. In addition, as the companies recently eliminated their quota share programs, combined with modest catastrophe reinsurance coverage in potential multiple event scenarios, A.M. Best said it views their risk-adjusted capital positions as poor, particularly as measured on a catastrophe stress test basis. The uncertainties inherent in the companies' risk-adjusted capital positions and overall catastrophe reinsurance programs are reflected by the negative outlook, A.M. Best said. Partially offsetting these negative rating factors in A.M. Best analysts' view are the companies' efforts in improving their underwriting standards and geographic spread in Florida, as well as the historical financial support from their parent companies and management's long standing presence in the Florida property insurance market. Tower Hill Insurance Group issued a statement saying it is "disappointed" in the donwgrades but expected them after its recent reinsurance transactions. Tower Hill decided not to purchase any of the voluntary reinsurance coverage offered by the FHCF and instead replaced this with reinsurance from the private market. "The net impact of this decision is that Tower Hill and its policyholders are now more secure than ever in the event of a catastrophic loss," the company said. Tower Hill said that Florida's homeowners insurance market has undergone significant chage in the last five years and "standards imposed by international rating firms on Florida-only insurance carriers have increased considerably." The company defended its reinsurance decision: "Tower Hill policyholders can be assured their hurricane claims will be paid in a timely manner and will not have to wait for a bailout, if any, from the federal government before their claim is paid. This decision also reduces the potential assessment impact to all Floridians in a post -hurricane environment. "An unfortunate by-product of our decision is that Tower Hill did not meet the heightened A.M. Best threshold that requires insurers to purchase reinsurance... to be able to survive what they term as two 100-year hurricanes during the same hurricane season. The probability of such a series of events is one in 10,000, or a .01% probability of occurrence. There has not been such an event in recorded history." For the 2009 hurricane season Tower Hill said it purchased $850 million of reinsurance coverage, which it says is enough not only to survive a hurricane more devastating than a 140-year hurricane in a first event but also a 60-year hurricane in a subsequent second event. All Tower Hill homeowners companies hold a Demotech, Inc. financial stability (FSR) of 'A' Exceptional. Founded in 1972 by W. T. Shively, Tower Hill offers homeowners, mobile homeowners, dwelling fire, condominium, renters, and flood coverage. Through its commercial lines department, Tower Hill also provides property, liability, and other miscellaneous commercial coverages for the operations of mobile home parks, mobile home dealers, self-storage facilities, office/retail buildings, residential homeowner associations, and other commercially-owned residential properties.
Friday, August 28, 2009
Tropical Storm Danny Weakens; East Coast Likely Spared Hurricane
Tropical Storm Danny weakened in the Atlantic Ocean Thursday and was no longer expected to become a hurricane, but it edged closer to the U.S. coast on a path that could take it to Canada's Atlantic provinces by Sunday. Storm alerts were issued for the North Carolina coast and residents of the U.S. eastern seaboard from the Carolinas to New England were urged to monitor Danny, the fourth tropical storm of the 2009 Atlantic season. The storm's sustained winds dropped to 50 miles per hour from 60 mph as it wobbled westward at about 2 mph, the U.S. National Hurricane Center said. It was expected to start moving more quickly and turn toward the northwest later on Thursday. At 5 p.m. EDT its center was about 545 miles south-southeast of Cape Hatteras, North Carolina, and a tropical storm watch, alerting residents to possible storm conditions within 36 hours, was issued for the coast from Cape Lookout to the town of Duck. NO HURRICANE THREAT Forecasters no longer expected Danny to become a Category 1 hurricane, the lowest rank on the five-step Saffir-Simpson intensity scale. Its maximum sustained winds were expected to peak at 70 mph, just below hurricane strength. Danny's most likely track would take it just offshore from North Carolina's vulnerable Outer Banks by early Saturday and later that day toward Martha's Vineyard, Massachusetts, where U.S. President Barack Obama is vacationing this week. It could also bring blustery weather to Boston, where Senator Edward Kennedy's funeral is scheduled Saturday. The path would take it over Canada's Atlantic provinces by Sunday. The energy-producing region exports oil, natural gas and refined products to the U.S. Northeast and elsewhere. Tropical storms and hurricanes are tracked closely by energy traders concerned about disruptions to oil and gas production in the Gulf of Mexico and Canada's Atlantic region, and by commodities traders for damage to citrus, cotton and other crops. Pricing of insurance-linked securities, which transfer insurance risks associated with natural disasters to capital markets investors, and can be used to hedge other weather risk exposures, can also be affected by the future path of a storm.
Thursday, August 27, 2009
Tropical Storm Danny, Expected to Become Hurricane, Heads Northeast
The U.S. National Hurricane Center said Tropical Storm Danny was located about 575 miles south-southeast of Cape Hatteras, North Carolina, as of 8 a.m. EDT (Noon GMT) Thursday and packing winds near 60 miles per hour. Danny was headed northwest at 10 mph, with the storm expected to strengthen into the season's second hurricane in a couple of days as it headed more north to northeast on Friday, the NHC said. Tropical storms pack winds in excess of 39 mph and reach hurricane status when maximum sustained winds reach 74 mph. The NHC said interests from the Carolinas northward to New England should monitor the progress of the storm. Several forecast tracks show the storm tracking between the U.S. East Coast and Bermuda, away from Gulf Coast oil and gas production. The NHC was also monitoring a tropical wave over the far eastern Atlantic about 300 miles south-southwest of the Cape Verde Islands with a low chance -- less than 30 percent -- of becoming a tropical cyclone during the next 48 hours. Energy traders keep a close eye on storms that could enter the Gulf of Mexico and disrupt offshore U.S. oil and natural gas production or refinery operations along the coast. Commodities traders likewise watch storms that could damage agriculture crops such as citrus and cotton in Florida and other states along the coast to Texas. Pricing of insurance-linked securities, which transfer insurance risks associated with natural disasters to capital markets investor and can be used to hedge other weather risk exposures, can also be affected by the path of a storm.
Estate Planners Await 'Big Bang' in 2010 From Tax and Retirement Law Changes
People who are nearing or planning for retirement will be hearing from their advisors this fall about changes in federal law that could have a huge impact on their financial plans. From Roth IRA conversions to the estate tax, there is a lot on the horizon to consider for individuals who want to have enough money for retirement, ensure the continuation of a family business, or leave an inheritance to a charity or their heirs. "What happens in the next few months could cause some of the biggest changes we've seen in the trusts and estates field," said Roy Adams, professor emeritus of estate planning and taxation at Northwestern University School of Law where he taught both subjects for 25 years. Adams is going to explain recent and upcoming changes and offer suggestions for dealing with them September 14 in a presentation at the Minneapolis Convention Center. Securian Trust Company and The Salvation Army are co-sponsoring the live event in Minneapolis for estate planning professionals entitled, "Coping with Change - Like It or Not." This is the 17th Annual Estate and Charitable Gift Planning Institute in the Twin Cities and usually draws 700 to 800 tax, estate, and wealth management professionals. At the heart of the pending changes is the estate tax. In 2010 it is scheduled to be repealed for one year. In 2011, it will revert to its 2000 version. Though many believe that is unlikely to happen, there will be changes to estate and gift tax rules and Americans need to prepare for that. The changes could have an impact on family-owned businesses and heirs and also could affect other aspects of financial planning including charitable contributions and gift taxes. To add even more drama, the income limitation on converting regular IRAs, 401(k) accounts, and 403(b) accounts to Roth IRAs will be removed in 2010, opening it up to wealthy individuals. The expectation is that many will want to capitalize on this opportunity. Adams' co-presenter, Christopher Hoyt, is a professor at the University of Missouri - Kansas City School of Law where he teaches courses in federal income taxation and business operations. Hoyt also is the co-chairman of the American Bar Association committee on charitable organizations. "Coping With Change - Like It or Not," will be broadcast live to several locations throughout North Dakota and Minnesota, as well as nationally. The presentation in Minneapolis is free and open to the public: Go to It also will be carried live at locations in other states. Attendance at those showings is by invitation only.
Wednesday, August 26, 2009
Tropical Storm May Form Today
The U.S. National Hurricane Center said an area of disturbed weather centered about 470 miles east of Nassau in the Bahamas could become the season's latest tropical depression, or more likely, tropical storm, later Wednesday. But forecast tracks so far show the system remaining to the east of the United States and away from Gulf Coast oil and gas production. The NHC said the system said a high chance -- greater than 50 percent -- of tropical cyclone formation and interests in the Bahamas should monitor the progress of it as it moved west-northwest during the next 48 hours. Forecaster AccuWeather.com said the system, which if named would become Danny, was expected to move north of the Bahamas on Wednesday and could impact the U.S. East Coast by the weekend, on a similar path of last weekend's first hurricane of the 2009 season, Bill. AccuWeather said wind shear that has been preventing development of the tropical wave has begun to ease and should remain weaker for the next several days, allowing the wave to become better organized while it crosses over very warm water. Energy traders keep a close eye on storms that could enter the Gulf of Mexico and disrupt offshore U.S. oil and natural gas production or refinery operations along the coast. Commodities traders likewise watch storms that could damage agriculture crops such as citrus and cotton in Florida and other states along the coast to Texas.
Total U.S. Workers' Compensation Payments to Injured Workers Slow
U.S. workers' compensation payments for medical care and cash benefits for workers injured on the job increased 2.0 percent to $55.4 billion in 2007. According to a study by the National Academy of Social Insurance (NASI), the modest growth in national spending in 2007 reflects large declines in California cash benefit payments that followed reforms enacted in 2003 and 2004. A 10 percent decline in California's cash payments to injured workers in 2007 followed declines in 2006 and 2005, as well. "The reduced spending for cash benefits reflects the continuing effects of Nationally, workers' compensation payments of $55.4 billion in 2007 include $27.2 billion for medical care (an increase of 3.3 percent over the prior year) and $28.3 billion in wage replacement benefits for injured workers (an increase of 0.8 percent). In 2007, employers paid a total of $85.0 billion nationwide for workers' compensation. A sharp drop in California employers' costs (of 14.3 percent) led to a small drop for the nation (2.7 percent). Outside California, employer costs for workers' compensation were almost unchanged, (up 0.1 percent). The According to John F. Burton, Jr., chair of the panel that oversees the study, "The different trends suggest that retrenchment in one program may cause injured workers to turn to the other program for benefits to replace their lost wages." Workers' Compensation Spending, 2007 United States California United States outside California
Type of spending Billions of dollars Percent change
Total benefits paid $55.4 2.0
Medical payments 27.2 3.3
Cash benefits 28.3 0.8
Employer costs 85.0 -2.7
Total benefits paid $9.9 -2.2
Medical payments 5.4 5.4
Cash benefits 4.5 -10.0
Employer costs 14.6 -14.3
Total benefits paid $45.5 3.0
Medical payments 21.8 2.8
Cash benefits 23.7 3.2
Employer costs 70.4 0.1
Tuesday, August 25, 2009
Private Forecaster Still Sees Quiet Hurricane Season
Private weather forecaster WSI Corp. said on Monday it still sees a quiet 2009 Atlantic hurricane season with conditions not conducive to an active year for violent storms. WSI's updated forecast predicted a season of 10 named storms, five hurricanes and two intense hurricanes of category 3 or greater, unchanged from its July forecast. In July, WSI cut its forecast from 11 named storms to 10. "The forecast numbers continue from July to August because there have been no significant changes in the current El Nino event," said WSI seasonal forecaster Todd Crawford. The number of expected storms is close to the 1950-2008 average, but is much lower than the numbers seen during the past 15 years. Water temperature and wind conditions in the Atlantic have so far made for a relatively quiet hurricane season this year, and while the first hurricane of the season, Bill, skirted eastern North America last week, this year is expected to be quieter than 2008. "Ocean temperatures in the tropical Atlantic have warmed up considerably during the past month, but this warming likely represents only a shallow surface layer and probably isn't indicative of any substantial increase in total available energy," said Crawford. Last year, 16 named storms were generated, disrupting U.S. oil and gas operations and damaging communities along the Gulf Coast. The Atlantic hurricane season runs from June 1 through Nov. 30. WSI's next and last hurricane forecast will be issued on Sept. 23.
New AIG CEO says expects to repay taxpayers
Robert Benmosche, the newly appointed chief executive officer of American International Group Inc (NYSE: Shares rose strongly after the report, rising as much as 31 percent on the New York Stock Exchange. "At the end of the day, we believe we will be able to pay back the government and we hope we will be able to do something for our shareholders as well," Benmosche said in an interview with Bloomberg while on holiday in Croatia. "My first charge is to get the company to operate at the level it used to operate, being the world's best," he said, according to the report. "The fact is we owe the U.S. government a lot of money and we are not going to be able to pay it back just by our profits, so we will sell some of the company off but only at the right time at the right price." An AIG spokeswoman was not immediately available for comment. Benmosche told employees at an August 4 meeting that he planned to rebuild AIG's profitable insurance operations. "I don't liquidate things, I build them," he said at that meeting, according to Bloomberg. The new chief earlier this week halted the auction of an investment advisory unit. Benmosche, 65, took up the CEO post on August 10. He had previously been CEO of MetLife Inc (NYSE: His task at AIG is to repay more than $80 billion in loans from the U.S. Federal Reserve and Treasury while keeping AIG stable. AIG, once the world's biggest insurer, was saved from bankruptcy by a federal bailout last September. The company was on the verge of collapse from massive losses on derivatives linked to the subprime mortgage crisis. SHARE REVIVAL? "I think the CEO's comments mentioned in the Bloomberg story triggered a rally this morning," said Frederic Ruffy, option strategist at Web site WhatsTrading.com. AIG shares were up $7.02 26 percent at $33.66 in late morning trading. Earlier they hit $35.00, their highest level since a one-for-20 reverse stock split on July 1, according to Reuters data. In the options market, traders exchanged about 216,000 contracts or nine times the normal number in the first 90 minutes of trade, according to option analytics firm Trade Alert. Out of that volume, 125,000 call options -- granting the right to buy the shares at a fixed price within a specified time period -- changed hands. "There is heavy trading in August $30 and $35 call strikes which expire at the end of this week, indicating that many investors are looking for today's rally in AIG shares to continue in the short term," Ruffy said. Ruffy also noticed active trading in the September $14 puts where investors, paid a premium of 25 cents per contract and were possibly buying some insurance in case AIG should run into trouble again. As its financial problems set in last year, the value of AIG shares sank dramatically, and the bailout resulted in taxpayers getting a nearly 80 percent stake, heavily diluting shareholders.
Monday, August 24, 2009
Private Health Insurance Competition Weak in Many U.S. Markets
One of the most widely accepted arguments against a government medical plan for the middle class is that it would quash competition -- just what private insurers seem to be doing themselves in many parts of the U.S. Several studies show that in lots of places, one or two companies dominate the market. Critics say monopolistic conditions drive up premiums paid by employers and individuals. For Democrats, the answer is a public plan that would compete with private insurers. Even lawmakers opposed to a government plan have problems with the growing clout of the big private companies. "There is a serious problem with the lack of competition among insurers,'' said Republican Sen. Olympia Snowe of Maine, one of the highest-cost states. "The impact on the consumer is significant.'' Wellpoint Inc. accounted for 71 percent of the Maine market, while runner-up Aetna had a 12 percent share, according to a 2008 report by the American Medical Association.
Proponents of a government plan say it could restore a competitive balance and lead to lower costs. For one thing, it wouldn't have to turn a profit. A study by the Urban Institute public policy center estimated that a public plan could save taxpayers from $224 billion to $400 billion over 10 years by lowering the cost of proposed subsidies for the uninsured, while preserving private coverage for most people. "Right now, there's no incentive for insurers or big hospital groups to negotiate with each other, because they can pass higher payments on through premiums,'' said economist Linda Blumberg, co-author of the report. "A public plan would have the leverage to set lower payment rates and get providers to participate at those rates.'' "The private plans would come back to the providers and say, 'If you don't negotiate with me, you're going to be left with only the public plan.''' Blumberg continued. "Suddenly, you have a very strong economic incentive for them to negotiate.'' Insurers contend their industry is extremely competitive, and a "You can have a very competitive market and still have companies with a high market share,'' said Alissa Fox, a top Washington lobbyist for the Blue Cross Blue Shield Association. Fox points to the federal employee health program, which also covers members of Congress. It offers a total of more than 260 options and 10 nationwide plans. Despite all the choices, about 60 percent of federal workers pick a Blue Cross plan. "Insurers need to be of a significant size to best serve their customers and make sure that people get the best value,'' Fox said. Nonetheless, lawmakers are concerned. Big insurers are getting bigger. Small businesses in particular have fewer and fewer options for getting coverage.
Congressional investigators this year looked at insurers catering to small employers around the country. The Government Accountability Office found that the median -- or midpoint -- market share of the largest carrier increased to 47 percent in 2008 from 33 percent in 2002. There's widespread recognition among lawmakers that a health care overhaul should foster more competition among insurers. The debate is over how far to go. The basic framework lawmakers are looking at would encourage competition, even without a government plan. It calls for setting up a big insurance purchasing pool called an exchange. It would be open, at least initially, to individuals and small businesses. The government would offer subsidies to make premiums more affordable. Consumers would find it much easier to shop for a plan through the exchange. For one thing, they would be able to readily compare benefits and premiums in different plans. Also, participating insurers would have to take all applicants and not charge higher premiums to those in poor health. Offering the option of a public plan would supercharge the competition, supporters say. Blumberg envisions a plan that pays medical providers more than Medicare, but less than private insurance. Her study estimated it could grow to 47 million members, leaving 161 million with private insurance. Even so, that would make the new public plan one of the largest insurers in the country, rivaling Medicare, Medicaid and big private companies such as Wellpoint and UnitedHealthcare. It's a scenario that gives pause even to traditional adversaries of the insurance companies. "The fear and concern is that the public plan could become the market-dominant plan,'' said Dr. James Rohack, president of the American Medical Association. "When you've got the federal government involved, it can infuse money into a plan to keep it solvent even if the premiums are lower than its actual costs.'' Snowe, among the few Republican senators still trying to come up with a bipartisan compromise, wants to hold back on creating a public plan for now and give insurers one last chance to show if they can keep costs in check. That's doesn't go far enough for liberals, who are loath to give the insurance industry tens of millions of new customers supported by taxpayer subsidies. "It would give the industry a windfall without any countervailing force to require them to lower their costs,'' said Richard Kirsch, national campaign manager for the advocacy group Health Care for America Now. "The insurance companies could continue to jack up premiums while getting a whole new market.''
$1 Billion Suit Against AIG Over Workers' Compensation Dismissed
American International Group Inc. won dismissal of a federal lawsuit accusing the troubled insurer of fraudulently shortchanging state workers' compensation pools out of more than $1 billion. However, Thursday's ruling by Judge Robert Gettleman of the U.S. District Court in Chicago does not absolve AIG of potential claims by insurers that take part in such pools. Many are pursuing claims in a separate lawsuit that seeks class-action status and which Gettleman is also overseeing. In Thursday's ruling, the judge said the National Council on Compensation Insurance Inc. lacked standing to sue New York-based AIG on behalf of several hundred insurers in its National Workers Compensation Reinsurance Pool. Many states require firms that sell workers compensation insurance to also fund pools to cover injuries for workers at companies that cannot obtain coverage on the open market, in some cases because their jobs are too risky. The judge, citing a New York state investigation and an internal AIG probe, said the insurer had for several decades understated workers compensation premiums to evade required payments, resulting in at least $60 million of unlawful annual benefits. Gettleman said, though, that while NCCI claimed to rely on AIG's false reports in administrating the pool, it did not allege that the company's actions harmed it or the pool. The judge added, however: "There is no dispute that the pool's members -- the participating companies -- have standing to bring claims separately against AIG." Gettleman previously put the case seeking class-action status on hold, and said he will rule on that request "in due course." AIG spokeswoman Christina Pretto said the insurer was pleased with Thursday's ruling. The company is trying to sell assets to repay the government, which owns a nearly 80 percent stake, after roughly $180 billion of federal bailouts in the last year. Pete Wentz, a spokesman for the board of the National Workers Compensation Reinsurance Pool, said the insurers plan to keep pursuing their claims "to remedy AIG's admitted wrongdoing (and) to obtain a full and fair accounting by AIG." AIG shares were up 6.3 percent at $34.33 in morning New York Stock Exchange trading. The case is National Council on Compensation Insurance Inc. v. American International Group Inc. et al, U.S. District Court, Northern District of Illinois (Chicago), No. 07-2898.
Friday, August 21, 2009
Hurricane Bill to Pass Between Bermuda, U.S. Coast Saturday
Hurricane Bill became less organized Friday as it pursued a path that would take it between Bermuda and the eastern United States, the U.S. National Hurricane Center said. Bill, a Category 3 storm on the Saffir-Simpson scale with steady 120 mph winds, still had the potential to strengthen, the center said. A tropical storm warning and a hurricane watch were issued for Bermuda. At 5 a.m. EST, the hurricane's center was about 425 miles south of Bermuda. Satellite imagery showed that it had become less organized in the past few hours. It was expected to pass between the U.S. East Coast and Bermuda on Saturday. Canada's East Coast oil producers were monitoring Bill's forecast path, which is expected to take it over Nova Scotia and Newfoundland on Sunday and Monday. There was no threat to U.S. oil facilities.
Fatal Work Injuries Dropped 10% in 2008; Down 20% in Construction
A total of 5,071 fatal work injuries were recorded in the U.S. in 2008, down about 10 percent from a total of 5,657 fatal work injuries reported for 2007, according to preliminary government figures. Based on these preliminary counts, the rate of fatal injury for U.S. workers in 2008 was 3.6 fatal work injuries per 100,000 full-time equivalent (FTE) workers, down from the final rate of 4.0 in 2007. This figure represents the smallest annual preliminary total since the Census of Fatal Occupational Injuries (CFOI) program was first conducted in 1992. Final results for 2008 will be released in April 2010. Federal officials said economic factors likely played a role in the fatality decrease. Average hours worked at the national level fell by one percent in 2008, and some industries that have historically accounted for a significant share of worker fatalities, such as construction, experienced larger declines in employment or hours worked. In addition, the researchers suggested that budget constraints at some of the governmental reporting agencies may have delayed the classifying of cases.
- Fatal work injuries in the private construction sector in 2008 declined by 20 percent from the updated 2007 total, twice the all-worker decline of 10 percent.
- Fatal workplace falls, which had risen to a series high in 2007, also declined by 20 percent in 2008.
- Workplace suicides were up 28 percent to a series high of 251 cases in 2008, but workplace homicides declined 18 percent in 2008.
- The number and rate of fatal work injuries among 16 to 17 year-old workers were higher in 2008.
- Fatal occupational injuries involving Hispanic or Latino workers in 2008 were 17 percent lower than in 2007.
- Fatalities among non-Hispanic Black or African American workers were down 16 percent.
- The number of fatal workplace injuries in farming, fishing, and forestry occupations rose 6 percent in 2008 after declining in 2007.
- Transportation incidents, which accounted for approximately two-fifths of all the workplace fatalities in 2008, fell 13 percent from the previous series low of 2,351 cases reported in 2007.
Most types of transportation fatalities saw decreases in 2008 relative to 2007, including highway incidents (down 19 percent); railway incidents (down 31 percent); workers struck by vehicle or mobile equipment (down 7 percent); and nonhighway incidents such as tractor overturns (down 4 percent). Aircraft-related fatalities were higher in 2008 (189 incidents in 2008, up from 174 incidents in 2007), as were water vehicle incidents. The 680 fatal falls in 2008 represent a 20 percent decline from the series high of 847 fatal falls in 2007. Fatal falls to a lower level, which accounted for 85 percent of all falls, were down 23 percent in 2008. Fatal falls from roofs were down 26 percent and falls from ladders decreased by 14 percent. The number of fatal falls on same level (to a floor or walkway or against an object) increased slightly in 2008. Workplace suicides rose from 196 cases in 2007 to 251 cases in 2008, an increase of 28 percent and the highest number ever reported by the fatality census. Suicides among protective service occupations rose from 14 in 2007 to 25 in 2008. Workplace homicides fell by 18 percent in 2008. Overall, the 2008 preliminary workplace homicide count (517 workplace homicides) represents a decline of 52 percent from the high of 1,080 homicides reported in 1994. The number of fatal work injuries involving fires and explosions was up 14 percent in 2008; fatalities involving contact with objects or equipment were also up slightly in 2008. Profile of fatal work injuries by industry Overall, 90 percent of the fatal work injuries involved workers in private industry. Service-providing industries in the private sector recorded 46 percent of all fatal work injuries in 2008, while goods-producing industries recorded 43 percent. Ten percent of the fatal work injury cases in 2008 involved government workers. The number of fatal work injuries in the private sector decreased 11 percent in 2008, and fatalities among government workers, including resident military personnel, decreased 4 percent. Fatality rates were lower in 2008 for both goods-producing industries and service-providing industries, but remained unchanged for civilian government workers. While workers in construction incurred the most fatalities of any industry in the private sector in 2008, the number of fatalities in construction declined 20 percent, from 1,204 cases in 2007 to 969 cases in 2008. Fatalities involving workers in the construction of buildings were down 21 percent from 2007, with most of the decrease occurring in residential building construction (down 28 percent to 93 cases). Heavy and civil engineering construction was down 14 percent, and the subsector with the largest number of fatalities, specialty trade contractors, had 19 percent fewer fatalities in 2008 than in 2007. Fatalities rose by 11 percent among private sector workers in the agriculture, forestry, fishing, and hunting industry sector in 2008 after declining in 2007. Fatalities to workers in crop production led the increase, rising 18 percent, while fatalities to workers in animal production declined 8 percent. Fishing and logging, two of the industries with the highest fatality rates, had higher numbers of fatalities in 2008. Fatalities were also slightly higher in manufacturing (404 in 2008, up from 400 fatalities in 2007). Included in the manufacturing total are the 14 workers who perished in a sugar refinery explosion in Georgia in February 2008. Among service-providing industries, workers in the transportation and warehousing sector incurred 762 fatalities, a 14 percent decrease. Truck transportation, the largest subsector in transportation and warehousing, had a 20 percent decrease in fatalities in 2008. Among other transportation sectors, workers in air and water transportation industries incurred fewer fatalities in 2008, but the number of fatal work injuries in rail transportation increased. Both wholesale and retail trade had fewer fatal work injuries in 2008 than in 2007. Fatalities were down 17 percent in retail trade and 15 percent in wholesale trade in 2008. Other service-providing industry sectors with large declines in 2008 included the information industry (down 43 percent), professional and business services (down 18 percent), the leisure and hospitality industry (down 10 percent), and educational and health services (down 8 percent). Fatalities in the finance and insurance sector were down nearly 50 percent in 2008, from 46 to 24 fatalities. Fatalities among government workers were down 4 percent. While fatalities incurred by federal and local government workers decreased in 2008, fatalities among state government workers were at the highest level since 1998 (115 fatal work injuries in 2008). Profile of fatal work injuries by occupation About one-fourth of all occupational fatalities in 2008 involved workers in transportation and material moving occupations, though fatalities among these workers declined by 12 percent in 2008. Driver/sales workers and truck drivers, the largest occupation group in this sector, led the decline with 16 percent fewer fatal work injuries in 2008 than in 2007. Heavy and tractor-trailer truck driver fatalities were lower by 13 percent. Fatalities in construction and extraction occupations, which accounted for nearly one-fifth of all fatalities in 2008, decreased by 18 percent from the previous year. Construction laborer fatalities were down 31 percent (from 345 in 2007 to 239 in 2008). Carpenters, brick masons, electricians, roofers, pipe layers, plumbers, and extraction workers were among the other groups that saw declines in 2008. First-line supervisors/managers of construction trades and extraction workers, construction equipment operators, and painters/ paperhangers were among the occupational groups in construc tion and extraction that had higher numbers of fatal injuries in 2008. Fatal work injuries among protective service occupations fell by 13 percent in 2008 after rising 22 percent from 2006 to 2007. Fewer fatalities among law enforcement workers (down 15 percent), fire fighting and prevention workers (down 14 percent), and security guards (down 23 percent) led the decline in this occupational group. Among the occupation groups with a higher number of fatalities in 2008 were farming, fishing, and forestry (up 6 percent) and management occupations (up 2 percent). Four occupations with particularly high fatality rates in 2008 were fishers and related fishing workers with a fatality rate of 128.9 per 100,000 FTE's, logging workers (115.7), aircraft pilots and flight engineers (72.4), and structural iron and steel workers (46.4). Thirty-five states and the District of Columbia reported lower numbers of fatal work injuries in 2008 than in 2007, 14 states reported higher numbers, and one state was unchanged.
Thursday, August 20, 2009
Survey Says Employers Preserving Benefits
The annual Transamerica Retirement Survey reports that while nearly half of the U.S. employers surveyed have undertaken cost-cutting measures such as lay-offs and salary freezes, relatively few have reduced or eliminated retirement benefits during this current economic downturn. The survey was conducted with a nationally-representative sample of 596 employers, between January and February of 2009. When asked what cost-cutting measures their company had implemented in the past 12 months, only 10 percent of employers surveyed indicated they reduced or eliminated retirement benefits. This pales in comparison to 39 percent that had implemented layoffs or downsizing, 23 percent that reported frozen salaries, and 20 percent that eliminated bonuses. The reluctance of employers to reduce retirement benefits is supported by additional findings that most employers (81 percent) agree that their employees view a 401(k) or similar plan as an important benefit, and that most employers (79 percent) who offer a 401(k) or similar employee-funded retirement plan also believe that it is important for attracting and retaining employees. "With so many employers having to take the unfortunate step of layoffs as a cost-cutting measure, it is encouraging that so many are still committed to preserving current levels of retirement benefits for the employees they are able to retain," said Catherine Collinson, president of the Transamerica Center for Retirement Studies. "Our survey findings underscore the importance of employer-sponsored retirement plans in the workplace from both the worker and employer perspectives." The overall percentage of employers that made any change to their retirement plans in the last 12 months (24 percent) remained consistent with past surveys. The most notable difference from the previous survey, conducted between October and November of 2007, was a decline in the percentage of employers making changes to their investment lineup (9 percent in 2009 vs. 14 percent in 2007). The percentage of employers offering a match fell slightly from 80 percent to 76 percent, with the most pronounced decline among large companies with 500 or more employees (78 percent in 2009 vs. 87 percent in 2007). This year's survey found that fewer than 5 percent of employers decreased their company match in the last 12 months compared to 2 percent who reported doing so in the 2007 survey. Only 21 percent of the employers surveyed offer a company-funded defined benefit pension plan. Among them, 85 percent are not considering any changes to it within the next 12 months and 9 percent are not sure. Looking into the future, relatively few employers indicate they are considering making changes to their retirement plans in the next 12 months. Eighty-three percent of employers now say they are not planning any changes in the next year, while 11 percent indicate they are considering some form of change. The vast majority (95 percent) of employers that offer a 401(k) or similar plan agreed that they are satisfied with their retirement plan provider. The Transamerica Center for Retirement Studies is a non-profit foundation supported by the Transamerica Life Insurance Co. and its affiliates.
Wednesday, August 19, 2009
Hurricane Bill Expected to Spare U.S. The Worst of Its Force
Hurricane Bill, the first of the 2009 Atlantic season, gathered strength and grew into a dangerous Category 4 storm with sustained winds of up to 135 mph (215 kph) on Wednesday, the U.S. National Hurricane Center said. Bill posed no threat to oil installations in the Gulf of Mexico but authorities in Bermuda, a British territory and reinsurance capital, warned residents to be prepared. Energy markets watch storms in the Gulf of Mexico closely because the region produces a quarter of U.S. oil and 15 percent of its natural gas. With winds extending outward 45 miles (72 km), Bill was expected to push well past the Leeward Islands late Wednesday and early Thursday but hurricane center officials still urged islanders to be on the alert. At 5 a.m. EST (0900 GMT), Bill's center was about 460 miles (740km) east of the Leeward Islands and moving west-northwest at 16 mph (26 kmh). "The core of this dangerous hurricane will be passing well to the northeast of the northern Leeward Islands late today and early Thursday," the hurricane center advisory said. The storm had the potential to grow in the next 24 hours and turn toward the northwest, the advisory said. Hurricanes of Category 3 or higher on the five-step Saffir-Simpson intensity scale are considered "major" and are the most destructive type. WATCH ON ANA Energy traders were keeping an eye on the remnants of Tropical Storm Ana, which was producing thunderstorms over Haiti, Cuba and the Bahamas. The NHC forecast the storm front had a low chance -- less than 30 percent -- of becoming a tropical cyclone again over the next 48 hours. One forecaster, AccuWeather.com, said it was unlikely but possible the system could regenerate over the eastern Gulf later in the week. Some forecasters noted Ana had already regenerated once. Hurricane expert Jeff Masters, founder of the Weather Underground website, said he expected Hurricane Bill to move between Bermuda and the U.S. East Coast toward Canada's Maritime Provinces. "I think the likely main impact (on the U.S. coast) is going to be beach erosion and coastal waves," he said. "Direct impacts are unlikely." Bill will encounter energy-sapping cool water when it reaches North Carolina but could still be a Category 1 hurricane near Nova Scotia and Newfoundland, Masters said. The U.S. National Hurricane Center sent a plane to probe the cyclone's swirling cloud mass Tuesday, then forecasted that Bill could strengthen to a Category 4 hurricane in the next 24 hours, which it did. The hurricane center notes that long-range track forecasts -- from three to five days in advance -- have average errors of several hundred miles
Tuesday, August 18, 2009
New AIG CEO Benmosche to Be Paid $7 Million
American International Group Inc., the insurer that received billions of dollars in a U.S. bailout, said on Monday that it will pay newly-appointed Chief Executive Robert Benmosche an annual salary of $7 million. In a filing with the U.S. Securities and Exchange Commission, AIG said the salary would consist of $3 million in cash and $4 million in fully-vested common stock. He will also be eligible for a performance bonus of up to $3.5 million. The pay has been approved in principle by Washington's new pay czar Kenneth Feinberg, said AIG. AIG, as one of the largest recipients of U.S. aid, has to comply with new pay regulations imposed on companies that have received the largest loans under the U.S. Treasury's Troubled Asset Relief Program. Benmosche, 65, who officially started his new job on Aug. 10, will be eligible to receive a prorated bonus for 2009, the company said. He will not receive any severance pay if his employment is terminated, in contrast to the healthy exit packages awarded to CEOs of the insurer in the days before AIG's financial troubles. Once the world's largest insurer, AIG was saved last September by a taxpayer bailout that has grown to as much as $180 billion. The company had teetered on the brink of collapse from losses on credit default swaps, a type of derivative that sank in value as the credit crisis grew worse. AIG shares were down 3.5 percent to $23.52 in Monday afternoon trade on the New York Stock Exchange.
Monday, August 17, 2009
Obama Signals Compromise on Public Health Option
The government-run health insurance option favored by President Barack Obama is not essential to a healthcare overhaul as long as the final measure boosts competition, a top U.S. health official said Sunday. Health and Human Services Secretary Kathleen Sebelius said a public insurance option was "not the essential element" of any overhaul, and non-profit cooperatives being considered by a Senate panel could also fulfill the White House goal of creating more competition on insurance. "I think what's important is choice and competition, and I'm convinced that at the end of the day the plan will have both of those -- but that is not the essential element," she said of the "The president is just continuing to say let's not have this be the only focus of the conversation," Sebelius said. Democratic proposals in Congress for a government-run insurance option have sparked intense The government option has become a key focus of Six members of the Senate Finance Committee -- three from each party -- have been "I think there will be a competitor to private insurers," Sebelius said. "That's really the essential part, is you don't turn over the whole new marketplace to private insurance companies and trust them to do the right thing." 'BOTTOM LINE' CONCERNS White House spokesman Robert Gibbs avoided a direct response when asked if the exclusion of a government-run option would be a deal-breaker for Obama. "The president believes the option of a government plan is the best way to provide competition," he said on CBS's "Face the Nation," but he added the White House looked forward to the Finance Committee's ideas. "The bottom line again is do individuals looking for health insurance in the private market have choice and competition?" Gibbs said. "If we have that the president will be satisfied." Obama has pushed a healthcare overhaul that he says would rein in costs, improve care and extend coverage to most of the 46 million uninsured Americans, but the measure has run into stiff opposition from Republican and conservative groups and some elements of the healthcare industry. Lawmakers at home for the August recess have faced vocal and sometimes disruptive critics at healthcare information sessions. The controversy has driven down Obama's approval ratings and possibly jeopardized passage of the healthcare legislation when Congress returns in September. Obama has intensified his public lobbying for the measure, and held three public "town hall" meetings on healthcare last week to counter the criticism. In a New York Times opinion piece on Sunday, Obama said "for all the scare tactics out there, what's truly scary -- truly risky -- is the prospect of doing nothing." Republican Senator Richard Shelby, a sharp critic of the administration's healthcare reform effort, said a public cooperative option would be "a step in the right direction." "I think the Democratic administration -- President Obama and his Cabinet -- have read the tea leaves of America right now," he said on "Fox News Sunday." Democratic Senator Kent Conrad, a member of the so-called "Gang of Six" negotiators on the Finance Committee, said the cooperative model could attract Republican support. Conrad has argued Democrats do not have enough votes to pass a healthcare overhaul without Republican support, even though Democrats control Congress. "Co-ops are very prevalent in our society. They have been a very successful business model," Conrad said. "It is the only plan that has bipartisan support in the United States Senate."
Friday, August 14, 2009
Report Card: Best, Worst States for Workers' Compensation
Iowa, Kansas, Minnesota, Utah and Virginia do the best job handling workers' compensation injuries, while Louisiana, New Jersey, New York, Oklahoma, Rhode Island, Texas and Wyoming perform the worst.
That's according to the latest report card from the California-based Work Loss Data Institute (WLDI). The report, 2009 State Report Cards for Workers' Comp, is meant to help employers, insurers, third party administrators, state governments and consultants answer, "Who is doing well and why?"
WLDI's State Report Cards are based on data from OSHA that covers recordable injuries and illnesses. The 2009 release adds four more years worth of data (2003-2006), which makes for a total of seven years of data since it includes statistics collected in the last publication, which was released in 2004.
With seven years worth of data, WLDI was able to track trends and not only give states a grade based on most current performance, but also to give them a tier ranking" based on how they performed on average over the seven years, and whether they have an upward, downward or stable trend. There is data available for 43 states, plus Puerto Rico, Guam and the Virgin Islands.
Similar to past reports, the 2009 State Report Cards compare states on five different outcome measures for each year: incidence rates; cases missing work; median disability durations; delayed recovery rate; and key conditions: low back strain.
Iowa performed the best of all the states for 2006 and Minnesota came in a close second. Both states received a grade of "A+" based on an average of their 2006 scores in the five categories above.
Illinois came in last, with Wyoming, Rhode Island and New York very close to the bottom. In total, nine of the 43 states received a grade of "F" in 2006. WLDI prepared a summary of each grade for all states.
In terms of the tier ranking system, the Tier I states are Iowa, Kansas, Minnesota, Utah and Virginia. Tier I means that the state had an average grade of "B+" or better, and a trend going up or level. Those five states were doing great and continuing to improve.
Eight states fell into the opposite category (Tier VI), which means they had an average grade of "D-" or worse, and a trend going down or level. The worst performers for the years 2000-2006 were: Illinois, Louisiana, New Jersey, New York, Oklahoma, Rhode Island, Texas and Wyoming. The report includes a summary of tier rankings for all states.
The full report is available for purchase from WLDI in both electronic and hardcopy formats
Work Loss Data Institute is an independent database development company focused on workplace health and productivity based in Encinitas, California.
How Past Atlantic Hurricane Activity Compares to Recent Numbers
Reconstructions of past hurricane activity in the Atlantic Ocean indicate that the most active hurricane period in the past was during the "Medieval Climate Anomaly" about a thousand years ago when climate conditions created a "perfect storm" of La Niña-like conditions combined with warm tropical Atlantic waters. "La Niña conditions are favorable for hurricanes because they lead to less wind shear in the tropical Atlantic," said Michael E. Mann, professor of meteorology, Penn State. "When combined with warm tropical Atlantic ocean temperatures, a requirement for hurricanes to form, conditions become ideal for high levels of activity." During an El Niño, the more familiar half of the El Niño Southern Oscillation (ENSO), there is more wind shear in the Caribbean and fewer hurricanes. The low Atlantic hurricane activity so far during this current season is likely related to the mitigating effects of an emerging El Niño event. "Hurricane activity since the mid-1990s is the highest in the historical record, but that only goes back a little more than a century and is most accurate since the advent of air travel and satellites in recent decades," said Mann. "It is therefore difficult to assess if the recent increase in hurricane activity is in fact unusual." Mann, working with Jonathan D. Woodruff, assistant professor of geosciences, University of Massachusetts; Jeffrey P. Donnelly, associate scientist, Woods Hole Oceanographic Institution, and Zhihua Zhang, postdoctoral assistant, Penn State, reconstructed the past 1,500 years of hurricanes using two independent methods. They report their results in the Aug. 13 issue of Nature. One estimate of hurricane numbers is based on sediment deposited during landfall hurricanes. The researchers looked for coastal areas where water breached the normal boundaries of the beaches and overwashed into protected basins. Samples from Puerto Rico, the U.S. Gulf coast, the Southern U.S. coast, the mid-Atlantic coast and the southeastern New England coast were radiocarbon dated and combined to form a history of landfall hurricanes. The other method used a previously developed statistical model for predicting hurricane activity based on climate variables. They applied the model to paleoclimate reconstructions of tropical Atlantic sea surface temperature, the history of ENSO and another climate pattern called the North Atlantic Oscillation (NAO), which is related to the year-to-year fluctuations of the jet stream. Warm waters are necessary for hurricane development, ENSO influences the wind shear and the NAO controls the path of storms, determining whether or not they encounter favorable conditions for development. The researchers compared the results of both hurricane estimates, taking into account that the sediment measurements only record landfall hurricanes, but that the relationship between landfall hurricanes and storms that form and dissipate without ever hitting land can be estimated. Both hurricane reconstructions indicate similar overall patterns and both indicate a high period of hurricane activity during the Medieval Climate Anomaly around AD 900 to 1100. "We are at levels now that are about as high as anything we have seen in the past 1,000 years," said Mann. The two estimates of hurricane numbers do not match identically. The researchers note that they do not know the exact force of a storm that will breach the beach area and deposit sediments. They are also aware that the relationship between landfalling hurricanes and those that remain at sea is not uniform through all time periods. However, they believe that key features like the medieval peak and subsequent lull are real and help to validate our current understanding of the factors governing long-term changes in Atlantic hurricane activity. One thing the estimates show is that long periods of warm Atlantic ocean conditions produce greater Atlantic hurricane activity. "It seems that the paleodata support the contention that greenhouse warming may increase the frequency of Atlantic tropical storms," said Mann. "It may not be just that the storms are stronger, but that there are there may be more of them as well." The National Science Foundation and the Bermuda Institute for Ocean Sciences supported this work.
Wednesday, August 12, 2009
Older Drivers Unaware of Risks from Driving and Medications
Most older drivers are unaware of the potential impact on driving performance associated with taking medications, according to new research from the Center for Injury Sciences at the The findings, released by the AAA Foundation for Traffic Safety, indicate that 95 percent of those age 55 and older have one or more medical conditions, 78 percent take one or more medications, and only 28 percent have an awareness of the risks those medications might have on driving ability. The researchers surveyed 630 drivers ages 56 to 93. Only 18 percent reported receiving a warning from a health-care professional about potential driver-impairing (PDI) medications such as ACE inhibitors, sedatives and beta-blockers. The study found that such warnings do not increase with increasing numbers of medications used or increasing numbers of medical conditions. "These findings indicate that health-care professionals need to take a more active role in educating their patients about the risks of PDI medications," said Paul MacLennan, Ph.D., assistant professor of surgery at UAB and the study's lead author. "Society needs to understand that PDI medications are a driving-safety issue, and there is a need for increased education geared at older drivers, their families and health professionals." Studies have shown that certain medications are known to be associated with an "Increased knowledge and awareness by health professionals will enable them to offer suggestion on how older drivers can modify their behavior to reduce risks, such as reducing driving or increasing self-monitoring of PDI side-effects," said MacLennan. "Increased patient education by pharmacists also is a key component to addressing PDI medications and has been shown effective in increasing patient knowledge of medications
Atlantic Could See Hurricane Season's First Named Storm Today: Ana
The Atlantic could get its first named storm of the hurricane season later Wednesday, according to the U.S. National Hurricane Center. The basin's second tropical depression is remaining just below tropical storm strength, the NHC said in its latest report Wednesday morning. Most weather models forecast the depression will move west-northwest to just north of the Virgin Islands during the next five days toward the Bahamas, the U.S. East Coast and possibly the oil-rich Gulf of Mexico. Energy traders said it was too soon to say where the system might make landfall, if at all. The center of the depression was located about 630 miles (1,015 km) west of the Cape Verde Islands, which are off the West Coast of Africa, the NHC said. The system was moving westward over the open ocean at nearly 13 miles per hour with maximum sustained winds near 35 mph (56 km per hour). The NHC expected the depression to strengthen into the first tropical storm of the Atlantic season with winds of 39 to 73 miles per hour within 12 hours. If the system does reach storm status, it would be named Ana. The NHC however does not expect the system to strengthen much after becoming a tropical storm -- at least not during the next several days. It should not become a hurricane during the next five days. MARKET EYES NEW WAVE With the depression not expected to strengthen much, energy traders started to turn their attention to a tropical wave off the West Coast of Africa behind the depression that some say had the potential for significant development as it moves across the Atlantic during the next two weeks. By this time last year, there were already five named storms in the Atlantic basin. The NHC was watching three tropical waves in addition to the tropical depression - one over the southeastern Caribbean Sea off the coast of Venezuela, one over the Atlantic Ocean about 420 miles east of the Lesser Antilles and the one near the West Coast of Africa that traders are watching closely. All three systems have a small chance - less than 30 percent - of developing into tropical storms during the next 48 hours. Energy traders watch for storms that could enter the Gulf of Mexico and threaten U.S. oil and natural gas platforms and refineries along the coast. Commodities traders likewise watch storms that could hit agriculture crops such as citrus and cotton in Florida and other states along the coast to Texas.
Tuesday, August 11, 2009
AIG Swings to Profit But Bleeds Premium
In the unveiling of its second-quarter numbers on Friday, New York-based The company's general insurance net premiums, reported Friday at $7.9 billion, were down 19.2 percent from the second quarter of 2008. The company's commercial insurance unit reported net premiums written of $5 billion in the second quarter, an 18.2 percent reduction from the second quarter of 2008. In an unusual move, AIG executives declined to host a conference call with analysts and investors on Friday. Had they been on the call, analysts might have wanted to discuss AIG's retention rates in commercial insurance. But in its discussion of those rates in its news release, the company was vague. "General Insurance continues to retain the vast majority of its customers. Business retention was down moderately in the second quarter of 2009 compared to the prior year period," the release stated. FOREIGN OPS HIT HARD The company's operations were particularly hard hit in its Foreign General Insurance division, which reported $3 billion in net premiums written in the second quarter of 2009, a reduction of more than 20 percent compared to the second quarter of 2008. The company attributed 14 percent of that to the impact of foreign exchange rates and the 2008 sale of its Brazilian operations. As AIG works its way through a government-supported restructuring, it is continuing to work on rebranding its commercial insurance operations. Those operations, which were renamed HOORAY, HOWEVER The good news for the company was that it recorded a $1.8 billion profit, compared with a loss of $5.35 billion in the second quarter of 2008. It was the first profit the company reported after six straight losing quarters and helped to cap off a stirring run in the company's stock price for the week of Aug. 3. AIG's stock started the week trading at $13.22 per share on the New York Stock Exchange. By mid-afternoon on Friday, August 7, the company's stock stood close to $29 per share, a rise of much better than 100 percent. In a press release, outgoing AIG Chairman and CEO Edward Liddy characterized the company's second-quarter gains as resulting from reductions in net realized capital losses, improved market conditions, an improved profile for its Federal Bank of New York credit facility and reductions in the exposures of its AIG Financial Products portfolio. The company kept its name in headlines all week with other good news as well. At the beginning of the week, it announced that Robert Benmosche would be named the new president and CEO of AIG and would replace the retiring Liddy on Monday, Aug. 10. AIG ended the week by making three more major announcements. The company announced that Robert Gifford, a 22-year veteran of Boston-based AEW Capital Management, will become the president and CEO of AIG Global Real Estate. The company also announced that William Glasgow, former chief operating officer of the real estate private-equity firm Scanlan, Kemper, Bard Co's. LLC will become the chief restructuring officer for AIG Global Real Estate. Harvey Golub was announced as its new nonexecutive chairman, also succeeding Liddy on Monday, Aug. 10. By DAN REYNOLDS
Monday, August 10, 2009
Berkshire Hathway Q2 Profit Up, Insurance Underwriting Down
Warren Buffett's Berkshire Hathaway Inc. posted its best quarter in nearly two years, as recovering stock markets boosted the value of its equity investments and derivatives bets. Operating earnings for the second quarter nevertheless fell short of forecasts, reflecting lower underwriting gains, including from the Geico Corp. auto insurance unit, and the impact of the recession on Berkshire's more economically sensitive manufacturing and service units. "Warren hasn't been able to defy the laws of gravity," said Thomas Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania, which invests more than $3 billion and owns Berkshire shares. "Berkshire's operating companies are not trying to compromise their long-term results. They are taking the hits that come with an economic contraction." Net income for Omaha, Nebraska-based Berkshire rose 14 percent to $3.3 billion, or $2,123 per Class A share, from $2.88 billion, or $1,859, a year earlier. Earnings had previously fallen for six straight quarters. Excluding investments, operating profit fell 22 percent to $1.78 billion, or $1,147 per share, from $2.27 billion, or $1,465. On that basis, analysts expected profit of $1,238 per share, according to Reuters Estimates. Revenue fell 2 percent to $29.61 billion. Berkshire has close to 80 operating units that provide such products as insurance, carpeting, electricity and natural gas, ice cream, paint and underwear. Results included $1.53 billion of derivatives gains. These were tied mainly to the performance of four market indexes in the United States, Europe and Japan, which rose between 8 percent and 23 percent in the quarter. The derivatives are a major reason earnings had fallen in recent quarters. Accounting rules require Berkshire to report changes in their value with earnings. Berkshire said the bets will continue to generate "extreme volatility" in earnings. Book value increased 11 percent from the first quarter and on a per-share basis rose to $73,806 from $66,248. Net income was the highest since the third quarter of 2007 and came on the heels of a first-quarter loss, Berkshire's first quarterly deficit since 2001, Reuters data show. EQUITY HOLDINGS REBOUND Berkshire's common stock holdings increased 22 percent from the first quarter to $45.79 billion, reflecting price changes as well the purchase of $350 million of stock. The company is the largest shareholder of American Express Co. and Wells Fargo & Co., whose shares rose a respective 71 percent and 70 percent in the quarter. Berkshire also ended June with $30.37 billion of "other" investments, including in Dow Chemical Co., General Electric Co., Goldman Sachs Group Inc., Swiss Re and Wm. Wrigley Jr. Co. Buffett has become something of a white-knight investor in the financial crisis. Berkshire ended June with $24.51 billion in cash, down from $25.55 billion at the end of March. "The magnitude of the investments he has been able to make is because of his past discipline, and his credibility," Russo said. "He had to weather a lot of criticism for not making the easy and early bets, but waiting for the big fat pitch." Berkshire did sell some stock, and said its sales of oil company ConocoPhillips shares continued in July. While Berkshire on June 30 had $8.23 billion of paper losses on the stock index derivatives, that was down from $10.19 billion at the end of March. Berkshire said it modified six of the derivative contracts during the quarter, reducing potential losses. These derivative contracts now mature between 2018 and 2028, and Buffett has said he expects them to be profitable. Meanwhile, liabilities on contracts tied to the default rates on junk bonds fell to $2.51 billion from $3.67 billion. Buffett has said these contracts may lose money. INSURANCE UNDERWRITING, MANUFACTURING WEAKEN While insurance investment income rose 31 percent to $1.16 billion, underwriting profit fell 77 percent to $83 million. Berkshire said the decline came in part because customers of Geico had higher claims losses, and the weak economy caused them to raise deductibles and reduce coverage to save money. Though premiums increased, Berkshire now expects underwriting gains at Geico to fall in 2009 from 2008. Operating profit in noninsurance businesses fell 47 percent to $574 million, despite a 22 percent increase from utilities and energy operations. Profit fell by two-thirds in manufacturing, servicing and retailing businesses such as industrial conglomerate Marmon Holdings, the carpet maker Shaw, and several jewelry and home furnishings businesses. Berkshire said each manufacturing business "has taken actions to reduce costs, slow production and reduce or delay capital spending until the economy improves." The NetJets Inc unit, which provides private jet services to executives, lost $253 million before taxes. Its longtime chief executive Richard Santulli stepped down last week and was replaced by David Sokol, who chairs Berkshire's MidAmerican Energy unit. Many analysts view Sokol a potential successor to Buffett as Berkshire's chief executive. In Friday trading, Berkshire Class A shares closed up $1,150, or 1.1 percent, at $108,100, while its Class B shares rose $22.69, or 0.65 percent, to $3,540. Both remain more than one-fourth below their record highs set in December 2007.
Shares of AIG Soar
Shares of battered financial companies including insurer American International Group Inc. and lender CIT Group soared on Wednesday, as investors rushed to buy shares to cover short positions in the companies. AIG shares closed up 62.7 percent on the New York Stock Exchange, ahead of its quarterly earnings report due on Friday and as a new chief executive prepares to take up his position on Monday. CIT shares climbed as much as 55 percent to an Intraday high of $1.56 from a close of $1.01 on Tuesday. The lender to small and medium-sized companies has been battling losses and recently secured a $3 billion loan facility from bondholders. The stock closed at $1.39. "It seems like the short sellers were hoping that these financial institutions would show some signs of insolvency," said Joseph Cusick, senior market analyst at online brokerage optionsXpress in Chicago. "Over the last couple of days we have seen money flow into these stocks because of the perception of their cheap valuation ... now we are seeing shorts being squeezed and potentially covering their positions," he said. Shares in mortgage finance companies Fannie Mae and Freddie Mac also climbed on Wednesday, Cusick noted. Fannie shares closed up 29.8 percent at 74 cents, while Freddie shares were up 31 percent at 80 cents. Shares in Ambac Financial, another company that has been hurt by losses, soared to close up 34 percent at $1.22. Dick Bove, a bank analyst with Rochdale Securities, said AIG and CIT Group were also benefiting from a growing appetite for risk. "Money is now pouring into the junk bonds, the high grades, commercial paper and everything financial," Bove said. The broader KBW Banks index rose 3.54 percent. EYEING AIG Shares in AIG rose as analysts forecast operating earnings could stabilize after five-straight quarterly losses. Analysts have predicted it could benefit from unrealized investment gains, partly reversing write-downs in earlier quarters. There was also optimism surrounding appointment of new CEO Robert Benmosche, who next Monday will become the fourth person in the last 14 months to assume the insurer's leadership. "With the potential of good news looming in AIG, investors who are short AIG are being forced to cover their positions today. That has created a short-covering rally," said William Lefkowitz, options strategist at brokerage firm vFinance Investments. In all, option traders had exchanged about 380,000 contracts in AIG, five times the average daily volume, according to option analytics firm Trade Alert. The turnover was dominated by 228,000 calls, which grant investors the right to buy AIG shares at a fixed price and time. AIG is seen on average reporting second-quarter operating earnings of $1.31 a share, according to a Reuters poll of analysts.
Friday, August 7, 2009
AIG Posts First Profit Since 2007
American International Group, Inc. (AIG) reported its first quarterly profit since the third quarter of 2007, reflecting stabilization in some of its businesses and positive valuation changes. AIG, which received $180 billion of federal bailouts, said it also achieved several important milestones in its restructuring program. For the second quarter ended June 30, 2009, AIG reported net income of $1.8 billion, compared to a net loss of $5.4 billion orin the second quarter of 2008. Second quarter 2009 adjusted netincome was $2.0 billion, compared to an adjusted net loss of $1.3 billion in the second quarter of 2008. "While our insurance companies' operating results remain challenged, largely driven by weak economic conditions and the lingering effect of negative AIG events earlier in the year, performance trends stabilized from the first quarter," said CEO Edward Liddy. Liddy, who is stepping down next week as CEO to be replaced by former MetLife executive Robert Benmosche, said AIG expects there will be "continued volatility in reported results in the coming quarters, due in part to accounting charges related to ongoing restructuring activities." GENERAL INSURANCE General Insurance results in the second quarter 2009 included operating income before net realized capital gains of $1.0 billion, compared to $1.7 billion in the second quarter of 2008. AIG said the second quarter's results reflect a decline in underwriting profit as thecombined ratio increased 6 points to 98.2. However, for the first six months of 2009, the current accident year combined ratio was 95.0. Net investment income in the second quarter declined $81 million from the comparable prior year period due to lower yields and lowerpartnership income. The Commercial Insurance combined ratio was 99.8 in the second quarter 2009, an increase of 5.9 from the comparable prior year period. The loss ratio for accident year 2009 recorded in the second quarter was 3.2 points higher than the loss ratio for the accident year2008 recorded in the second quarter of 2008, reflecting the rate environment and increased loss trends in the quarter. The Foreign General Insurance combined ratio was 95.5 in the second quarter 2009, an increase of 6.1 from the comparable prior year period. The increase is primarily attributable to the expense ratio, which increased 4.9 points due to an increase in separation costs, restructuring charges, bad debt expenses, and decreased earned premium. AIG said that underwriting results in Europe and Far East regions held up well with strong underwriting profits in the current quarter. General Insurance net premiums written were $7.9 billion in the second quarter 2009, a 19.2 percent decline compared to last year's second quarter. Commercial Insurance reported net premiums written in the second quarter 2009 of $5.0 billion, a decrease of 18.2 percent compared to the second quarter 2008. AIG said the change was primarily driven by the "economy's continued effect on construction, real estate and transportation-related business, the unit's strategic decision to maintain price discipline across its business lines, including inworkers' compensation, as well as returned premiums related to loss sensitive business." These items represented approximately half of the decline in premiums, while the remainder of the decrease stemmed from the overall effect of the weak economy, its underwriting discipline, and the effect of AIG's challenges on the business across the entire portfolio, the insurer maintained.
Foreign General Insurance reported $3.0 billion in net premiums written in the second quarter 2009, a decline of 20.7 percent compared to the second quarter 2008. The effect of foreign exchange and the sale in 2008 of its Brazilian operations contributed 14 percent of the decline in premiums. Its General Insurance companies "continue to retain the vast majority" of their customers, the company said. It said business retention was down moderately in the second quarter 2009 compared to the prior year period. Despite what it termed "challenging economic conditions," second quarter 2009 new business writings exceeded $1 billion. In General Insurance, underwriting discipline resulted in continued rate improvement in the second quarter 2009 as the Commercial Insurance unit's rate change was approximately 2.0 percent positive. At June 30, 2009, General Insurance net loss and loss adjustment reserves totaled $60.0 billion, an increase of $604 million from March 31, 2009. At June 30, 2009, overall net loss and loss adjustment reserves including non-core insurance businesses totaled $65.8 billion, a decrease of $6.7 billion from March 31, 2009. The decrease is primarily attributable to the deconsolidation of Transatlantic in the second quarter of 2009. AIG provided a summary of recent activity. Dispositions:
- AIG Credit Corp. and A.I. Credit Consumer Discount Co. sold a majority of their U.S. life insurance premium finance business for approximately $680 million, closed on July 28, 2009.
- 21st Century Insurance Group sold for aggregate proceeds of approximately $1.9 billion, closed on July 1, 2009.
- Transatlantic Holdings, Inc. public offering of 29.9 million common shares owned by AIG for aggregate proceeds of $1.1 billion, closed on June 10, 2009.
- Prime real estate holding in the Otemachi District in Tokyo sold for approximately $1.2 billion, closed on May 28, 2009. The Otemachi transaction did not qualify as a sale under generally accepted accounting principles due to AIG's continued involvement as a lessee. As a result, the sale is accounted for as a financing arrangement with a $1.0 billion gain deferred until the expiration of AIG's leases in early 2011.
Status of Government Support:
- At June 30, 2009, AIG's total balance outstanding from the Federal Reserve Bank of New York credit facility was $44.8 billion, including $40 billion of net borrowings and $4.8 billion of accrued compounding interest and fees.
- As of June 30, 2009, AIG had drawn down $1.2 billion from the $29.8 billion available under Series F Preferred Stock Treasury commitment to help fund a total of $2.2 billion in capital contributions in 2009 to the Domestic Life Insurance & Retirement Services operations, which enabled them to maintain solid Risk-Based Capital ratios.
- As of June 30, 2009, AIG had outstanding $41.6 billion of Series E Preferred Stock pursuant to an agreement with the U.S. Department of Treasury under the Troubled Asset Relief Program (TARP).
Status of Unwinding AIG Financial Products Corp:
- Since December 31, 2008, the notional amount on AIGFP's derivative portfolio has been reduced by 17 percent from approximately $1.6 trillion at December 31, 2008, to approximately $1.3 trillion at June 30, 2009. During the second quarter of 2009, the derivative portfolio was reduced 13 percent from approximately $1.5 trillion at March 31, 2009.
- AIGFP reduced the number of trade positions in its portfolio by 36 percent from approximately 35,000 at December 31, 2008, to approximately 22,500 at June 30, 2009. During the second quarter, the number of trade positions was reduced 20 percent from approximately 28,000 at March 31, 2009.
Thursday, August 6, 2009
U.S., Colorado Forecasters Trim Atlantic Hurricane Forecasts Again
The Colorado State University storm research team cut its 2009 Atlantic hurricane season forecast Tuesday, predicting that El Nino would trim the tally to 10 tropical storms, with four becoming hurricanes. The noted forecasting team founded by pioneering storm researcher William Gray had predicted on June 2 that the season would see 11 tropical storms, including five hurricanes. Tuesday's forecast from Colorado said two of the hurricanes would reach "major" status of Category 3 or higher, with sustained winds of more than 110 miles per hour. The U.S. government climate agency also cut its 2009 Atlantic hurricane season forecast. It is now predicting there will be between seven and 11 tropical storms, with three to six becoming hurricanes. In May, the U.S. National Oceanic and Atmospheric Administration had forecast nine to 14 tropical storms, with four to seven becoming hurricanes. Colorado State's change in forecast marked the third time it has been reduced in the tropical Atlantic Ocean, due mainly to the development of El Nino conditions in the eastern Pacific. El Nino is a periodic warming of sea waters that can dampen Atlantic hurricane activity by increasing wind shear, a difference in wind speeds at different altitudes that can tear apart nascent cyclones. The National Oceanic and Atmospheric Administration, the U.S. government climate agency, said in early July that the eastern Pacific had demonstrated El Nino conditions. The Colorado State team said those conditions, combined with other factors, "will likely lead to a fairly quiet season." While several well-known forecasters have recently cut their predictions for this season, London-based Tropical Storm Risk bucked the trend Tuesday and raised its forecast to 12.6 tropical storms, with 6.5 strengthening into hurricanes and 2.8 of those becoming major hurricanes. That was up from TSR's July 6 forecast of 11.4 tropical storms, 5.6 hurricanes and 2.4 major hurricanes. TSR said sea surface temperatures in the Atlantic region where storms most often develop are expected to be warmer than previously thought, making this a near-average season. Its forecasters gave greater weight to the storm-nurturing effects of warmer sea surface temperatures than to the suppressing effects of the wind shear. Meteorologists have had varied success in predicting seasonal hurricane activity, coming close some years but falling widely off the mark in others. None had predicted the record-setting 2005 season would bring 28 storms. Forecasters compare a broad range of atmospheric and oceanic conditions with those of past years and try to draw correlations with busy or quiet seasons. "The Atlantic basin has the largest year-to-year variability of any of the global tropical cyclone basins," the Colorado State researchers said. "These seasonal forecasts are based on statistical schemes which, owing to their intrinsically probabilistic nature, will fail in some years." The first two months of the Atlantic season, June and July, did not produce any tropical storms or hurricanes. The season runs through Nov. 30. Forecasters warned not to read much into the slow start, since the busiest part of the season is typically from late August to mid-October and is still ahead. In 2005, Hurricanes Katrina and Rita temporarily knocked out a substantial part of U.S. crude and fuel production, toppling offshore platforms, wrecking undersea pipelines, flooding coastal refineries and sending energy prices soaring. Storms can also damage crops in the Gulf of Mexico and Caribbean regions, affecting the prices of such commodities as orange juice, sugar, coffee and cotton.
Wednesday, August 5, 2009
Consumer Reports: 73% Happy with Current Home Insurance Carrier
A new Consumer Reports' survey of homeowner insurance customers found some good news, especially for people with decent credit and claims history. Lots of consumers are finding lower prices. More than half (53 percent) of the respondents who switched companies in the past few years, said they had found a better premium with their new carrier. Also respondents are reasonably content. Overall, 73 percent are highly satisfied with their current carrier. That compares with a satisfaction rate of 77 percent in 2003, the last time Consumer Reports published ratings of homeowners insurance. Only 5 percent indicated their claims were rejected, and 11 percent said they received too little payment for their claims. The remaining 84 percent got what they expected with the settlement of their claims. The Consumer Reports' survey asked 10,700 readers about their satisfaction with their homeowners insurance claims service in the last few years. Respondents rated Amica Mutual Group, USAA Group, and the Chubb Group of Insurance Cos. higher for claims satisfaction than most other insurers. USAA homeowners insurance is available only to those with a connection to the U.S. military, while Chubb markets itself as a high-end insurer, with premiums to match. Amica says it has moved away from its tradition of selling only to those referred by policyholders, the survey said. Consumer Reports' survey did find some claims problems with some large insurers. Thirty-five percent of Allstate Insurance Group clients reported having problems with that carrier, the nation's second-largest. That contrasts with 14 percent who reported problems with highly-rated Amica. Allstate and Travelers Insurance Cos., another large insurance group, were also among the lower-rated groups overall. Delayed payments are common. Twenty-one percent of respondents said they faced delays having claims paid. Amica and USAA got better marks than most. The Consumer Reports National Research Center surveyed readers about their experience with homeowners insurance claims in the last few years. Insurance companies were rated on respondents reports of overall satisfaction and claims of reported problems, including dissatisfaction with claim pay out amounts, and payment delays. Consumer Reports' home insurance group survey is part of a larger report that found that insurers are scaling back coverage, imposing high deductibles on claims for damage from windstorms in many places, and cutting coverage for mold and dog bites. The survey reports that some companies are using credit-based insurance scores to reject prospective clients and to raise premiums of current ones. In some areas, insurers have abandoned homeowners coverage entirely. The survey is featured in the September issue of Consumer Reports, available August 4. The complete report is also available
Monday, August 3, 2009
The Hartford Posts Net Loss of $15M in Q2; P/C Combined Ratio at 90.4%
The Hartford reported a second quarter 2009 net loss of $15 million compared with second quarter 2008 net income of $543 million. Even so, Ramani Ayer, chairman and chief executive officer of The Hartford, said the insurer is seeing a number of important indicators that show the company is on the right track. "In property and casualty's small commercial segment, new business growth improved monthly throughout the second quarter, and is up 21 percent month-to-date in July as compared with last July," Ayer said. The second quarter was also marked by significant improvements in global credit and equity markets, he added. "With investors returning to the markets, our mutual fund deposits exceeded $3 billion for the first time since the third quarter of 2008. In addition, our unrealized loss position declined as a result of credit spread tightening, which contributed to a 33 percent increase in book value per share to $32.20 since the end of the first quarter of 2009," saidAyer. Second quarter 2009 results benefited from a deferred acquisition cost (DAC) unlock gain of $360 million, after tax, from the impact of rising global equity markets in the second quarter on the company's quarterly revision of its estimates of future gross profits in its life operations. Estimates of future gross profits are used in the determination of certain asset and liability balances, including DAC and benefits, loss and loss adjustment expenses for insurance contracts. The net realized capital loss for the second quarter of 2009 was $649 million, after tax, primarily due to impairments of $207 million and an approximately $300 million charge related to the company's obligations to Allianz arising from the June 2009 closing of the company's investment agreement with the U.S. Treasury. Second quarter 2008 results included a net realized capital loss of $156 million, after tax. Property and Casualty Operations Ayer said The Hartford's profitability remains strong in ongoing property/casualty operations. "We continue to win our share of new business in this competitive environment," Ayer said. "The relationships we have fostered over the years with our agents and customers, as well as our continued investments in product, service and technology have allowed us to take advantage of the increased insurance shopping in the industry." Written premiums for The Hartford's property/casualty operations in the second quarter were $2.5 billion, down 5 percent from the second quarter of 2008. This decline was largely due to the effects of weaker economic conditions, including lower payrolls and business closings, as well as the effects of exiting the Florida agency homeowners market and the sale of First State Management Group in March 2009. Net income from ongoing operations was $222 million for the second quarter of 2009, including the effect of a $43 million net realized capital loss. Net income from ongoing operations in the second quarter of 2008 was $246 million, including the effect of a $34 million net realized capital loss. The second quarter 2009 decrease in net income was primarily driven by lower net investment income, as a result of losses from limited partnerships and other alternative investments and lower yields and reduced asset levels on fixed maturities. During the second quarter of 2009, the company conducted its annual ground-up review of its asbestos liabilities. The company reported a net loss of $49 million in other operations, primarily due to a net asbestos reserve increase of $90 million, after-tax. The company experienced increases in claim severity, expense and costs associated with litigating asbestos coverage matters. Increases in severity and expense were most prevalent among smaller insureds. The current accident year combined ratio for ongoing operations in the second quarter of 2009, excluding catastrophes, was 90.4 percent, compared with 90.7 percent in the prior-year period. The second quarter of 2009 also benefited from favorable prior accident year net reserve development of $59 million, or 2.4 points, primarily related to general liability and professional liability claims. In addition, current accident year catastrophe losses were $142 million, or 5.8 points, due in part to June windstorms. Personal Lines Personal lines written premiums for the second quarter of 2009 grew 2 percent over the prior-year period to $1.0 billion. Written premiums in the company's AARP business rose 3 percent in the second quarter. New business premium increased 44 percent over the second quarter of 2008, with the number of policies in force up 1 percent. The second quarter 2009 current accident year combined ratio, excluding catastrophes, was 89.8 percent, compared to 88.3 percent in the prior-year period. The second quarter of 2009 also included 11.2 points of current accident year catastrophes, due in part to June windstorms. Small Commercial Written premiums for small commercial were $643 million for the second quarter of 2009, a 5 percent decline from the year-ago period. The decline in written premium was driven by weaker economic conditions that have resulted in business closings and a decline in average renewal premium due to a reduction in policy endorsements and lower payrolls. Policies in-force at the end of the quarter were up slightly over the end of the second quarter of 2008. The second quarter 2009 current accident year combined ratio, excluding catastrophes, was 83.4 percent as compared to 84.9 percent in the second quarter of 2008. The second quarter of 2009 also included 3.6 points of current accident year catastrophes and 1.5 points of net unfavorable prior year development. Middle Market Written premiums for middle market were $482 million for the second quarter of 2009, a decline of 9 percent compared with the year-ago period. Workers' compensation new business was up 41 percent in the second quarter of 2009 on a year-over-year basis. The second quarter 2009 current accident year combined ratio, excluding catastrophes, was 92.1 percent, compared with 97.4 percent in the prior-year period. The second quarter of 2009 also included 1.6 points of current accident year catastrophes and 4.2 points of net favorable prior year development, primarily related to general liability claims. Specialty Commercial In specialty commercial, written premiums for the second quarter of 2009 were $292 million, down 16 percent from the prior-year period. The decline was largely due to disciplined pricing in a competitive environment, as well as the impact of ratings downgrades on sales of the company's professional liability, fidelity and surety products. In addition, the year-over-year comparison was negatively affected by the company's sale of First State Management Group in the first quarter of 2009. The second quarter 2009 current accident year combined ratio, excluding catastrophes, was 103.4 percent as compared with 97.9 percent in the second quarter of 2008, primarily due to a $23 million increase in taxes, licenses and fees due to a $17 million reserve strengthening for other state funds and taxes and a $6 million increase in the assessment for a second injury fund. The second quarter of 2009 also included 0.3 points of current accident year catastrophes and 15.0 points of net favorable prior year development, primarily due to improving D&O claim severity for the 2003 to 2007 accident years.
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