A new survey conducted by the Kellogg School of Management in Chicago suggests that more than a quarter of mortgage defaults are strategic, especially when negative equity exceeds 15 percent... ...researchers believe 17 percent of current homeowners would voluntarily walk away (even if they could afford the mortgage) if negative equity exceeded 50 percent of the home value.

“Housing policy under the current administration has focused on reducing households’ cash flow problems in response to the housing crisis, but no one has addressed the negative equity issue as part of public policy regarding housing,” said researcher Paola Sapienza

“We’re in a completely different economic environment today, where for the first time since the Great Depression millions of Americans have mortgage loans that exceed the value of their home...”

TTAM: More Than a Quarter of Mortgage Defaults Strategic

* Life insurance premiums seen subdued or negative in 2009

* Non-life, real premiums seen remaining flat in 2009

* Demand should increase in 2010 along with economy

The global insurance market is likely to remain subdued in 2009 with a recovery only coming in 2010, Swiss Re (RUKN.VX), the world's second-biggest reinsurer, said in a study published on Tuesday.

Swiss Re economists said they expected growth in life insurance premiums to remain subdued in 2009 or even turn negative as turbulent stock markets and gloomy employment prospects hit sales of unit-linked savings products...

Reuters: Swiss Re study sees subdued life insurance premiums

A nationwide study conducted by ING and Ipsos found that Hispanics are significantly less likely than the general population to have life insurance (39% vs. 71%). However, Hispanics are more likely than the general population to say that they would need various things taken care of should something happen to them and worry about leaving enough to take care of their families. In fact, 89% of Hispanics said that someone in their situation should have life insurance and a majority of respondents said they would not do without it...

Juan Tornoe: Survey Shows Most Hispanics Lack Life Insurance

Embattled insurer American International Group Inc. disclosed in a regulatory filing that it could face additional losses on credit default swaps remaining on its books.

As of March 31, AIG had about $192.6 billion outstanding of the swaps, which were primarily written for European financial institutions. Continued declines in the value of the contracts could have a "material adverse effect" on the insurer's financial results...

Forbes: AIG says swaps exposure could lead to more losses

Home prices in 20 major U.S. metropolitan areas fell in April at a slower pace than forecast, a sign the plunge in real-estate values is abating.

The S&P/Case-Shiller home-price index decreased 18.1 percent from a year earlier following an 18.7 percent drop in March. The measure declined 19 percent in January, the most since the data began in 2001...

Bloomberg: Home-Price Declines in 20 U.S. Cities Eased in April

In response to Gov. Arnold Schwarzenegger's proposal to sell off a $1 billion portion of California's State Compensation Insurance Fund, Insurance Commissioner Steve Poizner issued a 16-point response -- a lengthy list of questions for lawmakers to consider before partially privatizing the fund.

"A hasty or ill-considered sale could wreak havoc on the already volatile workers' compensation market," Poizner said in a statement. "State Fund has a unique role as both an insurer that provides competitive rates and one that insures much of California's small businesses and others who cannot find insurance in the private market. ... Any sale would have ramifications throughout California's business community, affecting the availability and cost of workers' compensation insurance for all California's employers..."

INN: CA: Commissioner Poizner Questions Governor's Plan to Sell Part of Insurance Fund

North Carolina legislators continue to look for ways to fix the beach insurance plan for coastal homeowners before another hurricane season passes.

The House Insurance Committee meets Tuesday to discuss possible changes to the plan. Solutions include cutting the beach plan’s coverage and raising its prices. The bill also calls for capping insurers’ risks from a catastrophe and shifting remaining rebuilding costs to all North Carolina policy holders...

News 14: Beach insurance plan still causing headaches in N.C. House

California is preparing to issue IOUs to its creditors this week as it grapples with an unprecedented cash crunch and prepares to begin its new fiscal year deep in the red.

Once the US’s richest state, California now has the dubious distinction of having the worst credit rating in the country...

FT: Deficit forces California to issue IOUs

Industrial Giant Becomes Top Recipient in Debt-Guarantee Program

General Electric, the world's largest industrial company, has quietly become the biggest beneficiary of one of the government's key rescue programs for banks.

At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government.

The company did not initially qualify for the program, under which the government sought to unfreeze credit markets by guaranteeing debt sold by banking firms. But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.

As a result, GE has joined major banks collectively saving billions of dollars by raising money for their operations at lower interest rates. Public records show that GE Capital, the company's massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP...

WaPo: How a Loophole Benefits GE in Bank Rescue

The U.K. economy shrank more than previously estimated in the first quarter in the biggest contraction since 1958 as the recession choked industries from construction to services.

Gross domestic product fell 2.4 percent from the final three months of 2008, compared with the prior measurement of a 1.9 percent drop, the Office for National Statistics said today in London. The median prediction in a Bloomberg survey of 28 economists was for a 2.1 percent decline. Construction activity plunged almost three times as much as originally estimated.

Bank of England Governor Mervyn King said last week that Britain’s recovery from recession may turn out to be “a long, hard slog...”

Bloomberg: U.K. First-Quarter GDP Drops 2.4%, Most Since 1958

As we take in the 150-year prison sentence of disgraced financier Bernie Madoff, many questions remain regarding the up-to-$65 billion Ponzi scheme he masterminded. For investors, however, the episode raises one question that supersedes all others: How do I avoid investing my money with a fraudster?

For example, imagine that a friend of yours tells you that he has money invested with a bright young money manager who is doing very well for him. He suggests you consider putting some money with this fledgling star. Intrigued, you make some inquiries and you're able to glean the following information...

Fool: How to Tell a Madoff From a Buffett

A new survey of independent registered investment advisors (RIAs) released today by TD AMERITRADE Institutional, a division of TD AMERITRADE Holding Corporation, shows RIAs surveyed continue to report strong growth as investors move their money from wirehouses to independent advisors. More than 80 percent of RIAs surveyed report new client numbers are up or remained steady over the last six months as the RIA model continues to build momentum. Half of the RIAs surveyed reported an increase in new clients; many say clients are looking for an alternative to full service brokerages.

Top three reasons new clients chose the RIA model based on the RIAs’ survey responses:
* Dissatisfaction with service, advice, performance or fees at full-service brokerage firms (34 percent)
* RIAs are required to offer advice that is in the best interest of clients (21 percent)
* RIAs offer more personalized service and competitive fee structure (17 percent)

“The survey indicates investors may be looking for a better option for their wealth management needs as they reevaluate their financial situations and start to reenter the market,” said Tom Bradley, president TD AMERITRADE Institutional...

BusinessWire: TD AMERITRADE Institutional Survey: Independent Registered Investment Advisors Continue to Gain New Clients from Full-Service Brokers

Fiduciary requirement could force them to choose advice or transactions

Broker defections, a loss of market share and spinoffs could be on the horizon for insurance-affiliated broker-dealers if the Obama administration's proposed regulatory reforms force them to act as fiduciaries.

If the proposal to require broker-dealers that offer investment advice to act as fiduciaries is enacted, it will likely upend the insurance broker-dealer business model and force carriers and their registered representatives to decide whether they belong in the advice arena or in the transactional realm, industry experts said...

Investment News: Insurance-affiliated brokers face major changes under Obama plan

The financial services sector can count on plenty of merger and acquisition activity in the near future, as insurance companies and retail banks try to turn themselves into financial supermarkets, according to a Tiburon Strategic Advisors report on mergers and acquisitions in the financial services industry that was released on Friday.

Financial Services M&A to Continue Despite Credit Meltdown, Says Tiburon Study
Source: Financial-Planning.com

The window might be quickly closing on consumers' opportunity to refinance at great rates — not their home mortgages, but their term life insurance, experts say.

For the first time in a long time, premiums are on the rise.

Good Time to Refinance Term Life Insurance
Source: Hartford Courant

The impaired risk life market has changed significantly in the past 12 months. While some companies have become more aggressive across the board, others are tightening underwriting standards and targeting their underwriting to focus on particular risks. We are currently seeing several major carriers making very aggressive offers. Someone who is truly uninsurable will always be uninsurable, but some carriers are “sharpening the pencil” when necessary to place a case.

Impaired Risk Trends in Life Insurance
Source: Life Insurance Selling

Publicly traded life and annuity companies are feeling wide ranging impacts from volatile equity, fixed-income and housing markets, affecting not only financial statements but business strategies. Executive teams are rethinking investment allocations and evaluating impairments while retooling their product portfolios and operating plans.

A.M. Best Best Special Report: Life/Annuity Companies Adjust to Volatile Health
Source: Insurance News Net

Mary Schapiro, chairman of the Securities and Exchange Commission, is correct: Fiduciary standards for all who give investment advice won't be sufficient to deter fraud.

High standards are never enough. Consider that every state and municipality has traffic laws and speed limits that are posted and widely known. Yet the same jurisdictions also have police forces to enforce the laws and a jail to house those who violate them.

In most fields of endeavor, there are a few people who violate or try to game the rules and regulations for their own advantage. The investment advisory field is no exception, as the Madoff scandal and other recent cases of fraud have reminded us.

In fact, as reported in InvestmentNews last week, about a third of the 26 actions that the SEC has brought against Ponzi-type schemes since January involved investment advisory firms subject to fiduciary standards.

Simply declaring that all who provide investment advice must adhere to a fiduciary standard and act in the best interests of the client won't make them do so...

Investment News: We need financial cops - and speed limits

The global financial crisis has caused the assets of the world's high-net-worth individuals to fall by an unprecedented 19.5% to $32.8 trillion.

Everyone knows 2008 was an extremely tough year, with the global financial crisis shaving off hundreds of billions of dollars in global wealth. The latest World Wealth Report attempts to measure those losses, at least for the world's richer population which bore the brunt of the impact of the crisis.

The wealth of the world's high-net-worth individuals (HNWIs) fell by 19.5% to $32.8 trillion in 2008 from $40.7 trillion in 2007. That's an unprecedented decline in HNWI assets in the 13 years that Merrill Lynch and consulting firm Capgemini have collaborated on this report...

Business Week: The World's Rich Part with $7.9 Trillion in Assets

Three financial representatives who worked for Northwestern Mutual Life Insurance Co. have filed a $200 million lawsuit against the company for failing to pay them overtime wages under California and federal law.

The suit was filed on Thursday in federal court in San Diego on behalf of all sales and financial representatives at Northwestern Mutual who allegedly were denied overtime compensation. Lint v. Northwestern Mutual Life Insurance Co., No. 09-cv-1373 (S.D. Calif.).

"They've got a system of white-collar peonage here. The class members are tightly controlled. They work huge hours and they earn very little money, ridiculously low sums," said Jeremy Heisler, a partner at Washington, D.C.-based Sanford Wittels & Heisler...

Law.com: $200 Million Wage-and-Hour Suit Filed Against Northwestern Mutual

Perhaps the poster child for the Wall Street bailout, American International Group Inc. is making an attempt to pay for its over-leveraged sins.

The company has agreed to pay back $25 billion in loans received from the Federal Reserve Bank of New York, by launching an initial public offering for two of its international life insurance businesses. AIG will convert its equity in both American International Assurance Co. [AIA] and American Life Insurance Co. [ALICO] into “special purpose vehicles,” in an attempt to raise capital to pay back its debts, according to a release from the company.

The New York Fed will get $25 billion in preferred interests of the two companies--$9 billion in preferred interests in ALICO, and $16 billion in preferred interests in AIA, which will be listed on an Asian exchange, according to a report in the Wall Street Journal. AIG will still hold the common interests in the two spinoffs...

FoxBusiness: AIG to Pay Back $25 Billion in Debt Through IPOs

Although financial advisers have been leery of life insurance with long term care benefits, the products appear to be generating interest among consumers trying to insure against multiple risks and search for a place to store assets, according to a new study.

Buyers of asset-based LTC insurance — life insurance with an LTC rider — are shelling out more for their coverage, with average single premiums for these policies hitting $70,975 last year...

Investment News: Asset-based LTC insurance attracts buyers

Life insurers are raising variable annuity prices and cutting back on benefits even as customers reduce their investments in what insurers hope is a temporary pullback.

"Everyone will be watching to see how well it sells or doesn't sell" as insurers pitch the new versions, Terence B. Martin, vice president of insurance research at Conning Research and Consulting Inc., said in an interview. If insurers find consumers are takers despite less attractive terms, some "may raise fees more," or cut guarantee provisions on the annuities even further...

WSJ: Insurers Tinker With Variable Annuities As Customers Pull Back (Subscription required)

Complete collapse in foreign interest for GSE debt: North American holdings of the latter have increased from 50% to 80% of total notional in one year!



Primary Dealers are selling corporates in droves in order to purchase Treasuries and MBS under the Fed's gun. Primary Dealers now have a record $368 billion in Corporate, Agency, MBS and Treasury inventory. And the vast bulk of PD holdings of agency debt has less than a 3 year maturity...

Zero Hedge: The Collapse Of The Non-Backstopped Agency Market

...First, equity index annuity providers and marketers became panicky when the former NASD, now the Financial Industry Regulatory Authority Inc. of New York and Washington, started to push for broker-dealer oversight on the sale of these complex products. Then the Securities and Exchange Commission was forced to consider classifying and regulating these products as a security.

Fear gripped the distribution channels that didn't want to get another license or be conformed to suitability standards...

Investment News: NAIC suitability provision for annuities a ruse

Americans looking to figure out just where they stand financially don’t necessarily need to hire a pricey financial planner -- not when there are a slew of no-cost financial planning software models that give you the financial equivalent of a health check-up and a prescription for what to do next.

A caveat though … we're simply talking the basics here. For any complicated personal financial planning moves, like crafting an estate plan, allocating investment assets, or handling an inheritance, using a savvy financial professional is still the best way to go.

But to give yourself a financial check-up and to see where you are on the path to your long-term financial goals, there’s a fairly abundant menu of online, financial planning software options that can get the job done for free.

Sites like CNN Money, Financial Engines, or eFinPLAN all offer free financial health “check-ups”(the latter costs $98 per year, but you can do the financial check-up and then cancel the subscription)...

Main Street: How to Check Your Financial Health for Free

This weekend's NHL draft will determine the professional fate of 211 young men, but without proper planning the money won't last a lifetime

This weekend's NHL draft will determine the professional fate of 211 young men and although budding hockey stars like John Tavares and Victor Hedman will likely earn millions, there is no guarantee that their financial future is secure.

Coming into a considerable amount of wealth at a young age brings with it many challenges, including the temptation to blow it all on a fancy sports car, a huge new house or an extravagant lifestyle. But as is the case with many other professional athletes – including basketball, baseball, soccer, football – the career span of a hockey player is a short one...

Globe: 10 financial planning tips for pro athletes

In 2008, high-net-worth individuals (HNWIs) spread their assets among more wealth management firms, and said they would be less likely to do business with registered independent advisory firms in the near future, according to “World Wealth Report 2009,” a study released by Merrill Lynch Wealth Management Wednesday morning. The finding has generated interest—and debate—among wealth management professionals who say that independents are still holding their own when it comes to attracting and retaining clients.

Wealthy clients’ use of independent advisors will drop by 8% in 2009 and beyond, according to the study. The revelation of several fraud-related scandals, and the need for tighter internal controls at wealth management firms have pushed clients to diversify the types of companies that manage their money, said researchers. Twenty-seven percent of wealthy clients surveyed for the study said they withdrew assets from their primary advisory firm in 2008. “Clients are saying, ‘I need a firm that has risk management and due diligence to ensure that where I am investing my money is solid’,” said Ileana van der Linde, a principal in the wealth management practice for Capgemini Financial Services USA, the company that partnered with Merrill Lynch for the study...

BIC: Merrill/Capgemini Versus Independents: Where Is the Money Going?

American International Group Inc. said Thursday it will reduce outstanding federal loans by $25 billion by giving the government a preferred stake in two units that will be spun off from the insurance giant.

AIG is placing two life insurance subsidiaries — American International Assurance Co. and American Life Insurance Co. — into special purpose vehicles ahead of planned initial public offerings. SPVs are entities sometimes set up ahead of the spinoff or sale of a unit to separate its operations from the parent company.

AIG Takes Steps to Spin Off 2 Life Insurance Units, Will Reduce Government Debt by $25 Million
Source: Hartford Courant

Insurer and investment manager Lincoln National Corp. said Thursday a Federal District Court in Iowa validated an earlier jury decision in favor of its subsidiary, Lincoln National Life Insurance Co., in a patent infringement lawsuit.

Lincoln National Says Judge Upholds Patent Verdict
Source: Yahoo! Finance

Three former employees of Northwestern Mutual Life Insurance Company today filed a suit alleging longstanding federal and state wage and hour violations by the company in US District Court for the Southern District of California (San Diego). The complaint asserts the plaintiffs and other employees of the company in similar sales and financial representative positions were denied the minimum pay and overtime compensation to which they were entitled.

$200 Million Class Action Filed Against Northwestern Mutual
Source: PR Newswire

U.S. life insurers have experienced a significant deterioration in investment results in 2008, negatively affecting industry earnings and capital, as discussed in a Fitch Ratings report.

Fitch Report: Statutory Capital Declines for Most U.S. Life Insurers
Source: Business Wire

Great American Life Insurance Company®, a subsidiary of Great American Financial Resources®, Inc., is pleased to introduce Safe ReturnSM, a new single premium fixed-indexed annu­ity product designed for those who desire wealth protection and growth potential. Safe Return is unique to the Great American Life® product lineup in that it offers clients the security of a bailout cap and return of premium feature...

MSN MoneyCentral: Great American Life Insurance Offers Single Premium Annuity Product Featuring Bailout Cap and Return of Premium

A Federal District Court judge in Iowa has affirmed a $13.1 million patent- infringement award to Lincoln National Corp. (LNC) regarding a computerized method of administering variable annuities... A jury in February decided in favor of Lincoln National in its lawsuit against fellow insurer Transamerica, owned by Aegon NV (AEG).

Variable annuities have been a key worry for life insurers as they guarantee minimum returns. But the stock-market rout, which ended in March for now, raised concerns about annuity sellers' ability to cover promised payments...

CNN Money: US Judge Affirms $13.1 Million Patent Decision Against Transamerica

Slum-dweller Krustin bin Juri lost everything when floodwaters swept through his home and shop on the banks of Jakarta's filthy Ciliwung river two years ago.

But when the next flood hits, and it will because Jakarta sees frequent floods in the rainy season, bin Juri may have a modicum of protection thanks to a low-cost insurance policy that he purchased this month.

He is among millions of the world's poor who are covered for natural disasters by cheap insurance, or microinsurance, as commercial firms recognise that insuring the poor is not just good public relations but also profitable...

I&T: Microinsurance Industry Sees Profits From the Poor

Hartford Financial Services Group Inc. said it has completed its acquisition of Federal Trust Corp. for $10 million in cash.

Federal Trust is a unitary thrift holding company and is the parent company of Federal Trust Bank, a federally-chartered, FDIC-insured savings bank. It has 11 full-service offices in Florida in Seminole, Orange, Volusia, Lake and Flagler Counties. The company is based in Sanford, Fla.

Hartford Completes Federal Trust Buy
Source: Financial-Planning.com

John Hancock Funds has launched a new, web-based tool called "Portfolio Insight" that allows financial advisers to create detailed analyses of client portfolios and to prepare high-quality, customized reports quickly and efficiently. The result is a comprehensive, transparent view of a client's mutual fund holdings that can help build client confidence by advancing an understanding of their investments and asset allocation.

John Hancock Offers Flexible, Web Based 'Portfolio Insight' Tool for Financial Advisers
Source: Yahoo! Finance

If the economic downturn has forced you to rethink your plans for retirement, it's a good idea to discuss your concerns with your spouse or partner. Before you have this conversation though, you might want to clear the room of sharp objects. That way, nobody gets hurt.

80% of Couples Aren't on the Same Page About Retirement Planning
Source: Insurance News Net

The official AARP provider of choice for auto and home insurance represents itself as a pillar of the community. It also symbolizes how offering guaranteed minimum payments on variable annuities can come back to bite you. How can the insurer demonstrate stability?

Is It Safe? The Hartford's Lost Years
Source: The Street

Recent changes to the way the U.S. Treasury tallies demand at its bond auctions may be artificially inflating "indirect bids," a category used by investors as a loose proxy for foreign demand.

Foreign investors own more than a quarter of the Treasury market, making their continued interest in U.S. bonds of paramount importance to the market.

At the very least, the Treasury's shift, made earlier this month, is confusing traders, prompting some to second-guess the apparent strong interest in recent auctions...

Reuters: US Treasury auction changes may overstate indirect bid

American General Life Cos., part of AIG, is closing its operations center in the Walker's Point neighborhood, resulting in the loss of more than 250 jobs... American General Life Cos. will lay off 291 employees in Milwaukee and 124 Houston employees as part of a major work force reduction nationwide.

The Midwest Operations Center at 750 W. Virginia St. in Milwaukee's Walker's Point neighborhood, which had a total of 312 employees, will be shut down. AIG laid off 254 of those employees and retained 58, who will move to a marketing and operations center at 1200 N. Mayfair Road in Wauwatosa or possibly work from home. The company also eliminated 37 jobs at the Mayfair Road office.

The Milwaukee employees who were laid off worked for the health, contracts and licensing, underwriting, new business and operations development departments...

BizJournals: AIG to close Milwaukee center, lay off 291

It absolutely amazes me how sanguine the Fed, Treasury and Administration are about the prospects for subdued inflation. What they and many economists like to point to as the source of their optimism is the high rate of unemployment, which is currently 9.4%.

But the truth is that inflation actually causes higher rates of unemployment, while it is false to believe that inflation can be prevented by a labor slack in the economy...

Delta Global Advisors: Higher Rates of Unemployment Correlate to Higher Rates of Inflation

After turning over nearly $400,000 to buy what they thought was an ERISA employee welfare benefit plan, two Virginia doctors believe they were the victims of an elaborate nationwide theft ring and are suing to get their money back... The doctors allege the insurance plans have conned at least 500 people out of more than $300 million.

...The defendants named in the suit are Glenn Arons, The Millennium Multiple Employer Welfare Benefit Plan, Millennium Marketing Group LLC, Innovus Financial Solutions Inc., Norman H. Bevan, Jonathan Cocks, Scott Ridge, Republic Bank and Trust, Secureplan Administrators LLC, Milliman Inc., American General Life Insurance Company and The Guardian Life Insurance Company of America...

Record: Doctors allege insurance plan is part of nationwide theft and fraud ring

As talk simmers of a possible economic recovery, experts are betting that insurance firms with a wide geographical reach are likely to rise above sector rivals in the new financial era.

Among potential winners, analysts single out large insurers with life and non-life operations that wield a strong presence in Europe and still fast-growing regions such as Asia.

Among the top picks are capital-strong firms such as Allianz SE (AZ) of Germany and Switzerland's Zurich Financial Services AG (ZURN.VX) and pure life insurance firms such as U.K.'s Aviva PLC (AV.LN)...

WSJ: Insurers With Global Reach Set To Be In Driver's Seat (Subscription required)

Consumer Financial Protection Agency will not meet the public’s needs, say critics

Life insurers and banks bashed the administration’s proposal for a Consumer Financial Protection Agency today at a House Financial Services Committee hearing.

“We do not believe … that the interests of life insurance consumers would be well-served by subjecting life insurance products to the additional jurisdiction of the CFPA,” Gary Hughes, vice president and general counsel of American Council of Life Insurers Executive of Washington, said in prepared testimony...

Investment News: Insurers, banks criticize Obama's proposed consumer watchdog agency

In a live interview on CNBC today, Warren Buffett said there has been little progress over the past few months in the "economic war" being fought by the country. "We haven't got the economy moving yet," he told Becky Quick... Buffett says he's not concerned about deflation, but thinks inflation will be a problem in coming years...

While the economy is a "shambles" and likely to stay that way for some time, he remains optimistic there will eventually be a recovery over a period of years... Despite his negative view on the economy, Buffett still believes the stock market is attractive "over the next 10 years" when compared to alternatives like Treasury bonds.

Buffett repeated his criticism of "cap and trade" as a method to control pollution, saying it would be a huge, regressive tax...

CNBC: Warren Buffett to CNBC: U.S. Economy In "Shambles" .. No Signs of Recovery Yet

The European Central Bank pumped a record €442 billion ($622 billion) into euro-zone money markets Wednesday in its first-ever offer of one-year funds as it battles the Continent's recession.

Euro-zone banks borrowed the one-year funds, the largest amount the central bank has ever dispersed in a single shot, at the ECB's current key rate of 1%. Much of the total likely substituted for amounts banks had been borrowing from the ECB for shorter periods, so the net stimulus to the economy is less than it appears at first sight...

CNBC: ECB Lends Record $622 Billion in Bid to Ease Crisis

Germany's Munich Re AG (MUV2.XE), one of the largest reinsurers worldwide by premium income, doesn't yet perceive any hit from the global recession on contracts due for renewal in July, Chief Financial Officer Joerg Schneider said Wednesday...

WSJ: Munich Re: No Recession Hit Yet On July Renewal Volumes: Subscription required

American International Group on Thursday said it's received approval from the Federal Reserve Bank of New York to proceed with initial public offerings of two of its international divisions, a deal that will see taxpayers recoup $25 billion of the money poured into the troubled insurer.

Depending on market conditions, AIG said it will prepare American International Assurance Co. and American Life Insurance Co. for IPOs...

MarketWatch: AIG gets Fed clearance for international life IPOs

This year may be weak, but the sector will bounce back by 2011, Conning predicts

Life insurance companies are struggling to emerge from the shadows of 2008’s losses, but in the long run they will prosper, according to a study from Conning & Co.

The Hartford, Conn.-based research firm estimated that the industry had a statutory net loss of $51 billion. Although realized and unrealized capital losses will continue to hobble carriers at least through this year, Conning predicted growth for the industry between 2009 and 2011, stimulated by estate planning and consumers’ need for stable investment alternatives...

Investment News: Life insurance companies to thrive in the long term, study suggests

If the budget crisis is not solved, county agencies, vendors and tax-refund recipients will receive warrants instead of checks, Controller John Chiang warns.

Reporting from Sacramento -- The state controller announced this morning that he will have to begin issuing IOUs next week if California lawmakers and Gov. Arnold Schwarzenegger don't settle on a solution to the $24-billion deficit.

As lawmakers in both houses began debating proposals for balancing the budget, Controller John Chiang said he would have to issue warrants starting July 2 because of the state's precarious cash position...

Los Angeles Times: State will have to begin issuing IOUs next week, controller says

The board of trustees for the Fidelity Charitable Gift Fund has voted to lower the minimum asset requirement for its Charitable Investment Advisor Program (CIAP) to $250,000 from $1 million.

The CIAP, established in 2006, allows investment advisors to develop and implement investment strategies for the donors’ Giving Account at the Gift Fund as long the donors meet the minimum asset requirements. By lowering the minimum asset requirement, the board of trustees has made CIAP accessible to more donors...

Banking Investment Consultant: Fidelity Lowers Minimum Asset Terms for Gift Fund

Out of 50 indexed annuity (IA) insurers, 12 have either left the annuity business or gone into rehabilitation since 2008, according to a survey by the National Association of Insurance Commissioners (NAIC). The study also found total premiums for the IAs among the 50 companies dipped to $21.5 billion in 2007 from $22.2 billion in 2006 and $23.4 billion in 2005.

NAIC Surveys Reveal Drop In Indexed Annuity Carriers, Premium Source: Insurance News Net

Stuart H. Reese, who was named MassMutual's CEO in June 2005 after scandal engulfed the company's previous chief, will step down at the end of this year and become nonexecutive chairman of the board.

MassMutual CEO Reese to Step Down
Source: Hartford Courant

The housing market may have experienced some ups and downs this year, but the spirits of potential first-time homebuyers across Canada remain strong. According to Genworth Financial Canada's First-Time Homebuyer's Monitor released today, 84 per cent of those surveyed said that owning a home goes beyond its financial value and feel that homeownership pays off in more ways than one.

Genworth Study Reveals There's No Place Like Home
Source: Yahoo! Finance

About six months ago this tax column ran a long two-part article titled: “Slash premium costs, yet increase life insurance benefits.” Never in our wildest fantasy could we have anticipated the flood of interest from you, our readers. Got faxes. Phone calls. Even e-mails...

Marco News: Tax Secrets of the Wealthy: A big breakthrough - Reader-insurance-analysis test yields hard to believe positive results

712 top-tier bank holding companies reported BOLI assets, up from 696 in 2007

Bank-owned life insurance assets ballooned to $126.1 billion last year, up 5% from $120.1 billion in 2007, according to recent research from Michael White Associates LLC.

The Radnor, Pa.-based firm surveyed yearend 2008 data from 880 top-tier bank holding companies with more than $500 million in assets and 7,495 commercial and savings banks supervised by the Federal Deposit Insurance Corp...

Investment News: Survey: Bank-owned life insurance assets hit $126B in ’08

The seniors group AARP sharply criticized Gov. Rick Perry on Tuesday for vetoing a bill – backed by consumers and the insurance industry – that would have established new safeguards for buying annuities.

The House and Senate passed the measure unanimously, but Perry rejected it Friday, saying it could allow "frivolous litigation..."

Dallas News: AARP blasts Texas Gov. Rick Perry's veto of new safeguards on annuity sales

Extended Stay Hits Snags as Creditors Cry Foul; Lichtenstein as 'Bad Boy'?

David Lichtenstein is facing challenges to the plan that took his Extended Stay Hotels chain into bankruptcy protection. At stake for the real-estate investor: Whether the filing could trigger $100 million of personal liability that he has tried to avoid.

The controversy over the bankruptcy filing and Mr. Lichtenstein's potential liability has thrown the commercial-property world into an uproar, because the filing also is laying bare many of the technical features of commercial mortgage-backed securities, or CMBS, that have never before been tested on a large scale. As the Extended Stay case is showing, the protections for investors may be less solid than expected, according to CMBS lawyers and bankers...

WSJ: CMBS: Behind a Bankruptcy Brouhaha

Citigroup Inc., the U.S. bank that got $45 billion of government funds, will raise base salaries by as much as 50 percent to help compensate for a reduction in annual bonuses, a person familiar with the plan said.

The biggest increases will go to investment bankers and traders, said the person who declined to be identified. Workers in consumer banking, credit cards, legal and risk management will see smaller salary adjustments. The New York-based company also plans to award stock options to try to keep employees after Citigroup’s market value plummeted 84 percent in the past year.

Bloomberg: Citigroup Plans to Raise Salaries by as Much as 50%

Bill would provide exclusion on annual income from investments up to $20,000

Two senators have reintroduced legislation that would provide tax breaks to those with non-qualified lifetime annuities.

Sens. Kent Conrad, D-N.D., and Pat Roberts, R-Kan., have proposed the Retirement Security for Life Act, or S 1297, which would provide a 50% tax exclusion on the annual income from a non-qualified lifetime annuity, up to $20,000...

Investment News: Tax break sought for non-qualified lifetime annuities

Sun Life Financial Inc. has added new leadership to its U.S. annuities division to increase variable annuity sales, but analysts say the Toronto company has to overcome larger competitors as well as wary advisors and consumers.

Terry Mullen, the president of the division, Sun Life Financial Distribution in Wellesley, Mass., who was hired from Lincoln Financial Group last year, said Sun Life has "aggressively topgraded" its wholesalers over the past fives months to boost distribution.

It has the same number of wholesalers it did at the end of 2008, but added 30 from competitors, Mullen said...

Financial Planning: Sun Life Beams About Variable Annuities but Barriers Remain

Longer term trends are favorable for industry

The life-annuity industry is still struggling to shake off the impact of the financial crisis of 2008 and the resulting significant decreases in assets and surplus, according to a new report by Conning Research and Consulting.

"Preliminary results for 2008 indicate that the life insurance industry had a statutory net loss of $51 billion, and that ending surplus plus AVR dropped 13 percent to $273 billion," said Terence Martin, analyst at Conning Research & Consulting. "Our latest forecast for the life-annuity industry projects net operating gain to recover, but realized and unrealized capital losses will continue to challenge the industry at least through 2009. While the industry will show a net statutory operating gain in 2009, it will be far below the robust levels of 2003 through 2007."

Conning's semi-annual "Life-Annuity Forecast & Analysis by Line of Business" offers the most comprehensive and up-to-date industry forecast and commentary for key lines of business and the industry as a whole...

PR Newswire: Conning Research: Short Term Challenges Still the Focus for Life Insurers After $51 Billion Loss in 2008

Bear markets have often been times when investors swear off stocks. But this time around, online discount brokerages are reporting sizable jumps in clientele during one of the steepest sell-offs in decades. Scotiabank’s discount broker, for example, racked up 60% growth in accounts over the past year. Other major online brokerages were not far behind.

Some observers have speculated that this trend represents a shift to do-it-yourself investing. Disenchanted with the losses they were incurring, investors are “firing” their advisers and venturing out on their own. Or they are dumping mutual funds with their high fees for exchange-traded funds and stocks. But a survey of 65,000 investors earlier this year by J.D. Power & Associates (for its Full Service Investor study to be released June 24) found a different explanation...

Seeking Alpha: Why Are Online Broker Accounts Growing?

Fixed income manager is latest to leave endowment

Harvard University, whose mammoth endowment has been slammed by the market downturn, is losing another one of its top investors.

Marc Seidner, who oversees investments in US fixed income securities at Harvard Management Co., plans to resign at the end of the month, according to a person familiar with the matter. Seidner couldn’t be reached for comment. A Harvard spokesman declined to comment.

In addition, Michael Llodra, another member of the fixed income team, plans to leave the investment group in the next few weeks, the person said...

Boston Globe: Harvard University loses another top investor

The U.S. Justice Department may drop a legal case aimed at forcing UBS AG to reveal the names of 52,000 wealthy American clients suspected of offshore tax evasion, the New York Times reported on Tuesday.

Following is a summary of major events leading up to the settlement...

Reuters: UBS pressured by U.S. tax probe

When a health reform bill finally lands on President Obama's desk—this fall, or perhaps even later—it will contain far-reaching changes of major interest to older consumers. And it will reflect what's likely to be a brutal political and legislative process in coming weeks as detailed proposals emerge from the Senate and, later, the House. As the drama unfolds, here's what you should be looking for:

Boomers ages 45 to 54. People in this group are experiencing rising healthcare costs, but they're too young to qualify for Medicare. And they've been hit hard by the recession. According to David Certner, AARP's legislative policy director, access to affordable coverage would be a major victory for this group. He says that there are as many as 7 million uninsured people in this age group and that the numbers of uninsured people jumped 36 percent from 2000 to 2007—and that's before the economy began its nose dive...

USN&WR: Health Reform Bill Includes Major Changes for Seniors

Irving H. Picard, the court-appointed trustee in charge of liquidating the investment firm of Bernard L. Madoff today filed a suit against New York-based broker dealer, Cohmad Securities Corp. to recover what he alleged were decades worth of "ill gotten gains" received as a result of the firm's "symbiotic relationship" with Bernard L. Madoff Investment Securities LLC.

Cohmad, formed by Mr. Madoff's friend and former neighbor, Maurice "Sonny" Cohn, had "little other business or purpose," than to steer customers to Mr. Madoff's investment firm, Mr. Picard alleged in Picard v. Cohmad Securities Corp., 09-AP 1305, filed in Southern District U.S. Bankrupty Court. Mr. Picard claims that as much as 90 percent of Cohmad's reported income came from referrals to Mr. Madoff.

Cohmad, Mr. Cohn, his daughter, Marcia, who acted as the company's chief operating officer, and other Cohmad principals comprised part of Mr. Madoff's "inner circle" and had "unique access " to his investment advisory "business," Mr Picard's complaint states. He claims that the defendants profited from Madoff's Ponzi scheme "to the tune of several hundred million dollars through conduct that they knew or should have known was inconsistent with legitimate or credible securities or broker-dealer business activities."

Meanwhile, the Securities and Exchange Commission today filed suits in the Southern District charging Cohmad, Mr. Cohn, Ms. Cohn, and its registered representative Robert M. Jaffee, the company's vice president, with helping to conceal Mr. Madoff's fraud. "As reward for their stunning marketing success, Defendants were paid more than $100 million through Cohmad," SEC v. Cohmad Securities Corp., 09 Civ. 5680, alleges...

New York Law Journal: Picard, SEC Sue Investment Firms

Jefferson National's Monument Advisor, the first flat-insurance fee variable annuity with the largest supermarket of more than 175 tax-deferred investment options, now offers the VA industry's most subaccounts with the Five-Star Morningstar Rating according to the latest Morningstar Direct data...

Featuring 50 subaccounts with the Five-Star Morningstar Rating, Monument Advisor significantly outranks any other competing VA...

Trading Markets: Jefferson National's Monument Advisor Offers VA Industry's Most Subaccounts with Five-Star Morningstar Rating

Shares of Manulife Financial Corp. (MFC) are down sharply Monday after the insurance company made a series of surprise announcements late Friday that could cut its earnings outlook. A steep drop on the Toronto Stock Exchange is contributing to the sell-off... In Toronto, Manulife is off C$2.93, or 12.6%, to C$20.32 on 9.7 million shares.

"They've had a quadruple whammy," said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services... Not only did Manulife announce late last week that its highly regarded chief financial officer, Peter Rubenovich, would retire shortly, it also said it was under investigation...

WSJ: Manulife Down Sharply As Markets Drop, OSC Launches Probe (Subscription required)

Client portal planning software connects to Redtail CRM

Advisor Products Inc. has integrated its Personal Client Portal with the web-based customer relationship management system of Redtail Technology Inc. of Gold River, Calif.

Using the portal technology of Westbury, N.Y.-based Advisor Products, financial advisers can set up a secure financial web page for each client. That dedicated page will allow clients to access their account data from advisers’ portfolio management, financial planning and CRM systems, as well as market data. Advisers can also publish a blog and provide other personalized financial content to clients via the system.

Advisers can reach out to clients through the CRM system. "If an adviser notices that it is time for an annual meeting with a client, he can assign a reminder to the client via Redtail CRM," said Brian McLaughlin, chief executive of Redtail...

Investment News: Advisor Products integrates, AdviceAmerica updates software

Banking companies will be hard-pressed to repeat a banner 2008 in terms of sales of fixed annuities.

Fixed annuities were popular late last year and early this year, but with interest rates falling and the markets in a fingers-crossed recovery, executives and analysts expect demand for these products to start tapering off.

At SunTrust Banks Inc., strong fixed annuity sales last year carried over into this year, said Alex Null, the senior vice president of mutual funds and annuities at SunTrust Investment Services Inc...

Bank Investment Consultant: '08 Will Be Tough Act to Follow in Fixed Annuities

With many insurers and financial institutions looking to fund potential capital shortfalls by divesting non-core insurance businesses at attractive valuations, strategic buyers and sovereign wealth funds may be able to expand into new markets through acquisition, according to Deloitte's The 2009 Insurance M&A Outlook: Opportunity in an Uncertain Environment, released today.

Deloitte Finds Insurance M&A Likely to Increase in Late 2009
Source: PR Newswire

Jefferson National's Monument Advisor, the first flat-insurance fee variable annuity with the largest supermarket of more than 175 tax-deferred investment options, now offers the VA industry's most subaccounts with the Five-Star Morningstar Rating according to the latest Morningstar Direct data.

Jefferson National's Monument Advisor Offers VA Industry's Most Subaccounts with Five-Star Morningstar Rating
Source: Trading Markets

Manulife Financial Corp. said Friday it has received an enforcement notice from regulators over what Canada's largest insurance company told investors about the risks of its guaranteed fund business.

Canada's Largest Insurance Co. Investigated
Source: Yahoo! Finance

During this tough economy, the financial burden on cancer patients can be especially trying. Balancing everyday expenses with care-related costs and, for some, income loss, can result in significant financial stress.

Recognizing these challenges, Dana-Farber Cancer Institute has teamed up with the Financial Planning Association of Massachusetts to offer free, individual financial coaching services to its patients and their caregivers. It is one of the nation's first such programs.

"Financial planners can provide invaluable assistance with budgeting, debt management, estate planning, and insurance, but the cost of these services can be out of the question for people who are already maxed out," says Deborah Hoffman, associate director of Dana-Farber's Shapiro Center for Patients and Families and coordinator of the new program...

eMaxHealth: Financial Coaches Help Cancer Patients At Dana-Farber

Fitch Ratings changed its outlook to negative from stable on ratings of Teachers Insurance & Annuity Association of America and its life-insurance unit, reflecting worries about the company's exposure to the worsening commercial real-estate market...

WSJ: Fitch Changes TIAA Ratings Outlook To Negative On CMBS Worry (Subscription required)

Several trade groups and the Office of the Inspector General appeared Thursday before a House Financial Services Subcommittee on Oversight and Investigations where they called for more resources to ensure HUD program’s presence in the mortgage market remains.

According to a testimony from HUD, the Federal Housing Administration has seen dramatic changes in its business. It has gone from less than 3% market share a few years ago to approximately 30% of the single family mortgage market today.

As part of the 2010 Budget, HUD is launching an expanded initiative designed to improve its ability to combat mortgage fraud, teach consumers how to avoid predatory practices and enhance oversight of FHA approved lenders. For FY 2009, as of May 31 HUD referred 543 cases of suspected fraud to the Office of the Inspector General (OIG), according to the departments testimony...

Reverse Mortgage Daily: Inspector General Concerned About Reverse Mortgage Fraud

T2 Partners LLC: An Overview Of The Housing/Credit Crisis And Why There Is More Pain To Come (PDF)

..."Ever since life insurance companies and their agents have been using computers to produce policy illustrations, these illustrations have been, at best, misunderstood," says Byron Udell, founder and CEO of AccuQuote. "Worse, they have all too often been used - either negligently or intentionally - by agents to create unrealistic expectations in the minds of life insurance buyers."

Udell says when reviewing a permanent or term life insurance policy illustration, keep the following points in mind...

eMediaWire: Term Life Insurance Policy Illustrations... Fact or Fiction?

Surviving banks accused of undermining stability

Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.

A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm...

Guardian: Goldman to make record bonus payout

Bank of America has now unveiled this unexciting bit of corporate branding, which will be the new look of Merrill Lynch. The bank is planning an international ad campaign touting the merger of Bank of America and Merrill Lynch...

Business Insider: Check Out The New Merrill Lynch Logo

Market downturn highlights the risk of using the age-old insurance strategy

Some financial advisers are rethinking the idea of: Buy term insurance and invest the difference.

That old saw refers to purchasing term life insurance instead of buying the more expensive permanent coverage such as whole life and encouraging customers to invest the money saved.

Following that investing maxim, however, likely didn't work out well for investors when the market cratered...

Investment News: Investing money saved on term life might not be slam-dunk once thought

But recent proposals from Congress attempt to address the issue

Legislative movement is afoot to address the long term care crisis, but recent efforts may be thwarted as the Obama administration grapples with health care reform, according to public-policy experts.

“We won't see anything to move in the direction of more funding for long term care,” said Dallas L. Salisbury, president and chief executive of the Employee Benefit Research Institute in Washington. “With the government's fiscal situation and the unsustainability that the president has stated is present for Medicare and Medicaid, if anything, there will be a reduction [in spending]..."

Investment News: LTC on the back burner under Obama health plan

Planners and their regulatory concerns don't appear to be on the administration's radar

If you are a commercial banker, savings and loan operator, mortgage broker or hedge fund artist, there is a lot to concern you in the regulatory-reform proposal outlined by the Obama administration last week... If you are a securities broker, the plan might have you shivering in your product-and-customer suitability boots.

But if you are a registered investment adviser or a financial planner you can be forgiven for simply scratching your head, or perhaps sighing with relief, after scouring the detailed analysis and reform suggestions that Treasury Secretary Timothy Geithner forwarded to Congress...

Investment News: White House leaves advisers up in the air

Bank holding companies generated 29% more revenue from the sale of annuities last year than in 2007 and set a record with annuity sales of $2.61 billion.

Sales rose from the $2.02 billion reported by bank holding companies in 2007, according to the Michael White-American Bankers Insurance Association Bank Annuity Fee Income Report, which pools data from all 7,495 commercial and FDIC-supervised banks and 880 large bank holding companies (BHCs) operating last Dec. 31...

IFA Web News: Bank holding companies set record, see 29% rise in annuity sales

Well, just when you thought that the Bearer Bond story was finished, it gets twisted yet again.

Remember, this was the claim:

“They’re clearly fakes,” said Stephen Meyerhardt, a spokesman for the U.S. Bureau of the Public Debt in Washington.

Uh, Bloomberg..... how about an accurate quote?

"Based on the photograph we've seen online, they are clearly fake. And not even good fakes," said Stephen Meyerhardt, a spokesman for the Treasury's Bureau of the Public Debt.

Online? You mean that the Treasury Department hasn't been sent a high-resolution digital photo of what was seized? A week after the fact?

I don't believe you Stephen.

In the last two years, Italian authorities have seized some $800 million of U.S. bonds in the Como area in northern Italy.

Those would be real bonds, I assume? But I thought Stephen said....

Market-Ticker: The Bond Saga: It Gets More Odd

It just gets more and more odd after my original report, with the latest coming from a German newspaper (translation courtesy of Google):

Hit for the Zöllner: The contraband securities valued at 134 billion U.S. dollars are apparently real. Die italienische Finanzpolizei hatte zwei Japaner ertappt, die im doppelten Boden eines Koffers milliardenschwere Anleihen in die Schweiz schaffen wollten. The Italian financial police had two Japanese caught in the false bottom suitcase billion-dollar bonds in Switzerland wanted to create. Von dem Fund profitiert das hochverschuldete Italien.

Note that this has received very little coverage in the so-called "mainstream US media" - but it is everywhere in Europe and Asia.

Japan, for its part, oddly said the following as soon as this story started to hit the press:

“We have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental,” Yosano, 70, said in an interview in Tokyo on June 10 before attending a Group of Eight meeting of finance ministers starting today in Italy. “So our trust in U.S. Treasuries is absolutely unshakable.”

Uh huh. And the Japanese said in December of 1941 that all was well too. Anyone remember what happened on the morning of the 7th? ...

Market Ticker: The Saga Of The Bearer Bonds

Chalian ABC News’ David Chalian Reports: Health Care for America Now (HCAN), one of the leading interest groups on the left fighting for health care reform that includes a public option, is launching a 10-day, $1.1 million TV ad campaign in 10 states with key targeted senators: Arkansas, Delaware, Florida, Iowa, Louisiana, Maine, New Mexico, North Carolina, Oregon, and Washington.

Although one of the main policy goals for HCAN is to get a public option included as part of the health care reform effort in Congress, the new ad seems to concede a bit to the political reality of just how difficult that goal may be to achieve... The mention of a public option doesn’t come until 20 seconds into the 30-second spot.

Instead, the ad targets insurance company profits, CEO pay, and denied claims. It focuses more directly on the issue of the huge costs in health care and the need to bring those costs under control...

ABC News: Obama Allies Target Insurance Companies in New TV Ad

The nearly 78 million baby boomers in America have long been a huge target for life insurance professionals, as well as everyone else seeking to sell to this unprecedented demographic. Better educated and more successful than any other generation, boomers have enjoyed the enormous benefits of the burgeoning ranks of those known as “professionals.”

5 Challenges of the New Boomer
Source: Life Insurance Selling

MassMutual's Retirement Services Call Center recently earned Gold and Silver awards as well as being highly commended in the 2009 Top Performers in the Contact Center Industry competition sponsored by ContactCenterWorld.com, North America.

MassMutual Retirement Services Call Center Recognized Among 'Top Performers' in the Contract Center Industry
Source: PR Newswire

To succeed in financial services, you must be able to find and close a sufficient number of highly qualified prospects. This highlights why most agents who do traditional "cold-calling" fail. They fail because most of the appointments they make are with low probability prospects -- prospects who will not buy.

Ten Tips for Prospecting Success
Source: Producers Web

Prudential plc announces that it has completed the transfer of the assets and liabilities of its agency distribution business and its agency force in Taiwan to China Life Insurance Company, Ltd of Taiwan ("China Life").

Prudential Completes Taiwan Transfer
Source: Yahoo! Finance

The IRS recently issued guidance in connection with employer-owned life insurance contracts ("EOLI"). Notice 2009-48 clarifies a number of administrative questions. It does not eliminate the loss of tax benefits applicable to EOLI or the need to satisfy notice and consent formality in order to quality for exception from these rules. An inadvertent failure to satisfy the notice and consent requirements could result in the loss of a significant tax exclusion...

Mondaq: IRS Answers Questions On Employer-Owned Life Insurance Contracts But Tax Traps Remain

Treasuries were little changed, erasing earlier gains, as the market prepares for a record $104 billion of auctions next week.

Bonds headed for a weekly loss on concern the government will continue to increase borrowing even after overseas demand for U.S. assets slowed in April. The yield differential between 2- and 10-year notes held near the widest in more than a week as reports signaled the world’s largest economy is recovering...

Bloomberg: Treasuries Are Little Changed Before Record $104 Billion Sales

Nationwide Life Insurance Co. on Thursday announced plans to cancel contracts with a union that some have alleged amount to kickbacks.

The move came a day after the State Personnel Board voted to end the contract that gave Nationwide responsibility for more than 11,000 state employee pensions.

The board cited unresolved questions about payments, sometimes in excess of $1 million a year, from Nationwide to the Alabama State Employees Association...

Al.com: Nationwide cancels state workers' union pension contracts

Five of the nation’s largest organizations representing the life insurance industry are voicing their support for optional federal insurance regulation to legislators.

In a statement issued June 15, the American Council of Life Insurers, the National Association of Insurance and Financial Advisors, the National Association of Independent Life Brokerage Agencies, the Life Insurers Council and the National Fraternal Congress Association issued a joint statement in support of an optional federal charter...

IFAWebNews: Life insurance groups unite to support optional federal charter

The Actuarial Profession has put a prototype model to project future mortality rates out for industry consultation... The model has been developed in response to the continuation of significant increases in life expectancy since projections were last published by the Profession in 2002.

The body said the assumptions on future rates of mortality are important in valuing the liabilities of pension schemes and life insurance companies...

Professional Pensions: Actuarial Profession consults on mortality rate projection prototype

Deutsche Bank issued some positive comments on Hartford Financial (NSYE: HIG) saying the new TARP and equity capital insulates the company from significant credit and equity market deterioration.

Deutsche Bank said the stock, which is trading at 25% of book (x-AOCI), is suggesting almost zero value for the life insurance operations. The firm is maintaining their $19 price target. And said the stock offers potentially more than 100% upside over a three-year period...

StreetInsider: Deutsche Bank Makes Positive Comments on Hartford Financial (HIG), Sees A Double In 3-Years

A decision by China to reduce its US Treasury holdings suggests concern about the US attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday.

The remarks, coming after US data showed a modest decline in Chinese investments in US government bonds, were in contrast to an earlier statement in Beijing which had said the recent sell-off was a routine transaction... According to US Treasury data issued Monday, Beijing owned 763.5 billion dollars in US securities in April, down from 767.9 billion dollars in March...

Breitbart: China sells US bonds to 'show concern'

As program trading computers pretend to care about such fundamental things as continuing jobless claims, a peculiar trend emerges. Over the past two months, it has become obvious that while continuing claims have doubled (up 124% to be precise from March 2007) - a major metric that many market participants (at least ones not based on a SPARC architecture) have been following - another, potentially more troubling observation is that Monthly Unemployment Payments have doubled the rate of increase in jobless claims (234% from March 2007 based on the Treasury Daily Statement)...

Zero Hedge: The Doubling Of Unemployment "Paychecks"

R. Allen Stanford, under investigation in an alleged $8 billion fraud involving sales of certificates of deposit through his Antiguan bank, surrendered to federal agents yesterday, his attorney said.

The case is one of the largest alleged financial frauds in U.S. history and comes just months after New York financier Bernard L. Madoff pleaded guilty to charges in a Ponzi scheme of up to $50 billion...

WaPo: Billionaire Financier Stanford Surrenders to FBI

Standard & Poor's Ratings Services slashed Beneficial Life Insurance Co. to junk territory in the wake of the company sending a letter to policyholders Tuesday saying it won't accept applications for new life-insurance and annuity products as of Aug. 31...

WSJ: Beneficial Life To Stop New Policies; Ratings Slashed

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a+” of American United Life Insurance Company (AUL) (Indianapolis, IN) and its affiliates, The State Life Insurance Company (Indianapolis, IN) and Pioneer Mutual Life Insurance Company (North Dakota), comprising the OneAmerica Group (OneAmerica). Concurrently, A.M. Best has affirmed the debt rating of “a-” on the surplus notes of AUL. Additionally, A.M. Best has affirmed the ICR and senior debt rating of “bbb+” of OneAmerica Financial Partners, Inc., an intermediate holding company. The outlook for all ratings is stable.

The ratings reflect OneAmerica’s sound capital position, well-managed distribution and above-average enterprise risk management for its business profile as compared to similarly rated peers. Additionally, the ratings recognize OneAmerica’s diversified sources of revenues and earnings generated by its streamlined operating segments, which have facilitated organic growth. OneAmerica has established and growing positions in several markets—full-service micro/small retirement plans, employee benefits, life insurance and asset-based long-term care. A.M. Best notes that OneAmerica’s investment portfolio has performed significantly better than most if its life/annuity peers with respect to realized and unrealized losses. Furthermore, OneAmerica’s mutual holding company structure facilitates a strategy focused on long-term financial strength...

BusinessWire: A.M. Best Affirms Ratings of the OneAmerica Group Members

Outlook on New York Life, TIAA Lowered

Standard & Poor's Ratings Services warned its considering cutting the AAA credit rating on Massachusetts Mutual Life Insurance Co., while also lowering its ratings outlook on two other AAA-rated U.S. life insurers, amid investment losses and credit impairments.

Life insurers have been hammered by tumult in the financial markets, which has led to giant investment losses...

WSJ: S&P May Downgrade MassMutual (Subscription required)

Eight state attorneys general want President Barack Obama to keep in mind their roles in consumer protection as he overhauls the financial regulatory structure.

The eight sent a letter to Obama on Tuesday, urging him to preserve states' ability to enforce consumer protection laws, make sure federal consumer protection laws are the responsibility of an agency that can handle the task and not allow the financial industry to regulate itself...

Legal Newsline: Eight AGs write Obama about financial regulation overhaul

Company Growth up Substantially, Adds Offices in NY and Florida

RIA In A Box (www.riainabox.com), a consulting business aimed exclusively at fast, efficient creation of registered investment advisory firms, today announced it has expanded beyond its Houston headquarters, adding offices in Manhattan and Orlando, Florida. In addition, the company states that it has experienced substantial growth in each of the last two years.

The double digit growth of RIA In A Box both this year and last has been particularly interesting given the economic climate of the last year. “I think my clients are anxious to take more control of their own future, not be tied to a broker/dealer, and are ready to evolve and grow with new vigor,” Zachary Gronich, RIA in a Box owner and lead compliance consultant stated. “This is counter-intuitive given the aftermath of the worst financial collapse in decades and in the face of the Madoff scandal.”

To help meet the growing demand, Gronich’s firm is adding new offices to its headquarters to deliver additional service around the country. Focusing exclusively on delivering fast, efficient and accurate registration with all fifty states and the SEC, RIA in a Box generally completes the required registration materials in three to seven days and then submits them to the appropriate governmental organizations...

...One of RIA In A Box’s newest RIA firms is NMS Capital (www.nmscapital.com) in Beverly Hills, California. Trevor Saliba of NMS Capital worked with Gronich’s company to complete the paperwork and registration submission as efficiently as possible and was just approved as an RIA this month. Saliba says the experience with Gronich’s company made the RIA submission “simple and user friendly.” Says Saliba, “I could tell from the first conversation that Zachary is very hands-on and that he really knows what he is talking about. I went to some attorneys first and they were very expensive, and then I checked out some consultants who were expensive and didn’t give me any flexibility. RIA In A Box offered what I needed...”

Business Wire: RIA In A Box Finds Its Registered Investment Advisor Consulting Services in High Demand (Press Release)

In April 2009, the delinquent unpaid balance for CMBS increased by an unprecedented $3.26 billion, up to a trailing 12-month high of $17.15 billion. Overall, the delinquent unpaid balance grew for the eighth straight month, up over 329% from one-year ago (when only $3.99 billion of delinquent balance was reported for April 2008), and is now over seven times the low point of $2.21 billion in March 2007. An increase in four of the five delinquent loan categories was noted in April, including over $1.96 billion in 30-day delinquency. The distressed 90+-day, Foreclosure and REO categories grew in aggregate for the 17th straight month – up 15% from the previous month and over 260% in the past year...

Realpoint: CMBS: Monthly Delinquency Report (PDF)

Annuities as an investment option in defined contribution plans have legal and fiduciary hurdles to overcome before there's any chance they will become commonplace, members of a Pensions & Investments round table warned.

The panelists also agreed use of automatic enrollment will continue to increase, despite the topic's absence from President Barack Obama's most recent budget. They also tackled the thorny issue of what should be done to ensure target-date funds have appropriate equity exposures...

Pension & Investments: P&I round table discusses problems surrounding annuities and other issues facing industry

“BuyaPension.com was created to help consumers create, safe, secure retirement plans.” say the founders.

“BuyaPension.com was created to help consumers create, safe, secure retirement plans.” say the founders. “Clearly, the time was right for a new way to sell annuities and retirement planning, by educating potential retirees and acquainting them with various types of annuity programs available to help insure that their retirement plans will pay off when they need them.

“Annuities are the wave of the future”, say the founders at BuyaPension.com. “As more and more Americans find themselves in charge of their own retirement plans, annuity programs will be a big part of their efforts to protect those retirement plans in good times and bad. With the growth of the Internet it is only natural that more and more people will be seeking to buy an annuity online. Therefore, consumers have to be educated on how to get the most from annuities.

“BuyaPension.com is meant to be ‘Annuity Online Central’”, say the founders, “not just another broker or financial planner selling annuities, or one particular annuity program. BuyaPension.com is a resource center for information about annuities and retirement plans. BuyaPension.com does not just sell one annuity program with a one size fits all approach. For example, a variable annuity may not be right for everyone and this is why it is only one type of annuity program that BuyaPension.com offers...

PR Urgent: Company teaches consumers how to use annuities to create secure retirement plans (Press Release)

Individual long-term care insurance sales fell by a third in the first quarter, as consumers chose to spend their money on more immediate needs.

The 34% decline for the first quarter when compared to the fourth quarter in 2008 marks the second straight quarter where premium showed double-digit declines, according to LIMRA’s Individual Long-Term Care Sales survey.

Sales also sagged 32%, as did the average cost of coverage...

IFA Web News: LTC insurance sales shrink for second straight quarter

Penn Mutual Life Insurance has created a Professional Advisors Alliance program with the aim of bringing together financial advisors and CPAs to expand their services, distribution channels and revenue.

Under the PAA program, CPAs partner with financial advisors to offer more financial planning services. According to a recent AICPA/Moss Adams LLP personal financial planning study, CPA financial planning practices are growing faster than the broader financial planning industry. Survey respondents who offer combined CPA, financial planning and other investment advisory services reported an average year-over-year growth rate of 34.9 percent. Members of the PAA will work with CPA firms to develop a marketing plan that aligns with the best practices cited in the AICPA/Moss Adams study...

WebCPA: Penn Mutual Forms CPA Partnership Program

There are a number of economists who strongly object to even the basic idea that government spending is a useful tool during this crisis. For example, 1995 Nobel Laureate Robert Lucas called multiplier estimates from Economy.com "schlock economics"; John Cochrane of the University of Chicago has called government spending stimulus "a fallacy"; Robert Barro of Harvard called one version of the American Recovery and Reinvestment Act (ARRA) "the worst bill that has been put forward since the 1930s..."

Forbes: How Stimulating Is Stimulus? Not very. (Sorry, Paul Krugman.)

It’s a plot better suited for a John Le Carre novel.

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?

The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale...

Bloomberg: Suitcase With $134 Billion Puts Dollar on Edge

As many as 7 million Americans have long-term care insurance policies, and many states confronting burgeoning deficits are urging consumers to buy this type of insurance as a way to protect Medicaid budgets. But at a recent Senate hearing, lawmakers and watchdog groups cautioned that greater consumer protections are needed.

“There are no guarantees that the policies purchased today will serve your needs 20 to 30 years down the road,” Diane Rowland, executive vice president of the Kaiser Family Foundation, told the Senate Special Committee on Aging earlier this month...

NY Times: Congress Airs Concerns on Long-Term Care Insurance

Although most funds absorb costs, some popular offerings pass them along

Pershing LLC, the largest provider of back-office services and financing to small and independent broker-dealers, this month began charging shareholder servicing fees to brokers and financial advisers who buy certain mutual funds from its Fund Center platform...

Investment News: Pershing asks advisers to pay surcharges for more funds

Bernard Madoff, who ran the biggest investment fraud in history, has partially settled a U.S. Securities and Exchange Commission civil complaint against him without having to admit any wrongdoing.

Tuesday's announcement left some legal experts dumbfounded over why the SEC would accept Madoff's settlement offer to be barred from working with any broker, dealer or investment adviser, without demanding he accept responsibility for his $65 billion fraud...

Reuters: Madoff barred from acting as investment adviser

Sales of individual guaranteed renewable disability insurance policies have been holding up well during the recession, and are expected to grow at an attractive clip. Higher-income individuals are also buying bigger-ticket policies.

Over the past four years, sales of individual guaranteed renewable coverage grew at an annual rate of 5 percent to $211 million in 2008,according to according to insurance trade group LIMRA. Sales of group coverage, as well as non-cancelable individual coverage, declined in the first quarter, but remained up about 10 percent over the same period.

Karen Terry, manager of individual product research at LIMRA, believes more will get disability coverage as the economy improves...

Registered Rep: Disability Insurance Sales Rise

Barry Miller figured he was saving $100 a month when he scaled back his disability insurance. After all, he was healthy.

"It just looked like the policy was too expensive," said Miller, who was paying for his own disability insurance carried over from a previous job. "Sometimes you don't know what will happen."

What happened was this: In January, he was diagnosed with Bell's palsy, a condition that causes facial paralysis. Now, at 61, he has left his job as a sales manager for a girls' accessories company, and the Ridgewood, N.J., resident is out $3,000 a month in disability payments...

AP: During recession consumers should keep insurance

Lincoln National, the insurance company, said on Monday that it would take nearly $1 billion in federal bailout money, issue new stock and debt, and sell its British insurance business in an effort to shore up its deteriorating capital base.
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The insurer, based in Philadelphia, said in a statement that it was seeking to raise about $2 billion. About $950 million of that will come from issuing preferred stock to the government through the Troubled Asset Relief Program run by the Treasury Department. Lincoln National will be the second insurer to take money from the program since the Treasury approved six major insurance companies for relief money. Hartford Financial said on Friday that it would take $3.4 billion...

NYT: Lincoln National to Take Bailout Money and Issue Stock

Proponents of creating an optional federal charter for the insurance industry, which is currently regulated by the states, were set to press their case Tuesday before a House panel.

The issue has split the industry, pitting life insurers and large property and casualty insurers against small and medium-sized P&C and mutually-owned companies.

It is unclear if the Obama administration will back federal regulation for insurers when it unveils its plan to rewrite financial rules Wednesday...

WSJ: US Insurers Press Case For Federal Regulation

Given the stock market’s volatility, a number of 401(k) plan sponsors are seriously discussing adding an annuity option to their 401(k) plans.

Ever since his company closed its defined-benefit plan to new hires in 2007, Tony Cost has been looking for ways to guarantee his 401(k) plan participants some post-retirement income. But it’s just been recently that his colleagues have started to take his idea more seriously.

"This could mean a hell of a lot to a retiree," says Cost, who is vice president of HR at Silgan Containers, a Woodland Hills, California-based container manufacturer with 4,000 employees.

Given the stock market’s volatility, Silgan is one of a number of 401(k) plan sponsors seriously discussing adding an annuity option to their 401(k) plans. With most employees’ 401(k) accounts decimated, the idea of providing guaranteed post-retirement income seems attractive, experts say...

Workforce Management: 401(k) Plans Eye Annuities With Caution

The regulator delayed the principal review and supervisory procedures due to industry criticism about those provisions

The Financial Industry Regulatory Authority Inc. yesterday adjusted its variable annuity suitability rule, releasing the final version of the much-debated Rule 2821.

Originally, the rule had four major components.

The first established guidelines on annuity recommendations, requiring suitability considerations and disclosures to the consumer...

Investment News: Finra releases the final version of its variable annuity suitability rule

John Hancock Financial Services says it hopes to broaden the appeal of variable annuities by making them less like the complicated insurance products they've been and more like mutual funds.

Hancock's effort comes as many insurance companies have been raising prices on and adding restrictions to their variable annuity offerings.

"We are literally trying to create a new space here," said Tom Mullen, the chief marketing officer for John Hancock variable annuities, adding that the company's new product is being positioned to compete against mutual funds...

Financial Planning: Hancock Variable Annuity Simplified to Rival Funds

As he prepares to release the most extensive proposals to change financial regulations since the 1930s, President Barack Obama is a bit anxious.

Anxious, that is, for people -- and specifically for his conservative critics -- to know he isn't the heavy-handed meddler some suspect.

"I think the irony … is that I actually would like to see a relatively light touch when it comes to the government," he said Tuesday in a White House interview...

WSJ: Obama Aspires to a 'Light Touch,' Not a Heavy Hand