Core systems

Springfield, Mass. - MassMutual Financial Group, Springfield, Mass., announced the acquisition of New York-based Golden Retirement Resources Inc., (GRR) a privately held firm that develops and distributes products and services for the retirement-income market. Comprising member companies with more than $350 billion in assets, MassMutual Financial Group is a global, diversified financial services organization providing life insurance, annuities, disability income insurance, long-term care insurance, retirement planning products, structured settlement annuities, trust services, money management, and other financial products and services. Under the transaction, MassMutual Holding, LLC, a wholly owned subsidiary of Massachusetts Mutual Life Insurance (MassMutual) purchased a majority interest in GRR (including all intellectual property), and intends to own the entire company by year-end. No financial terms were disclosed.

Boston - Liberty Mutual has launched a new Website designed to put benefit tools and information at the fingertips of benefit managers, employees, brokers and consultants. The site - MyLiberty Connection - is a gateway to the Boston-based carrier's on-line tools, secure services, and product information. From the site, users access resources built just for them; so each audience gets specific product and service information answering their common questions, and on-line tools to manage their exact benefit needs.

Jersey City, N.J. - Despite slowing premium growth and a deluge of catastrophic losses, property and casualty insurers ended a 26-year drought by posting $5 billion net underwriting profit in 2004, according to Insurance Services Office (ISO), Jersey, City, N.J. Powered by the best underwriting results in almost three decades, insurers' net income after taxes and overall profitability rose for the third consecutive year, and insurers' surplus climbed to a record high, according to ISO's newly-published insurance issues series study "Insurer Financial Results: 2004."

Hartford, Conn. - The U.S. life insurance industry is projected to post operating gains in 2005 and 2006 that build on positive 2003 and 2004 results, according to Conning Research and Consulting Inc. Hartford, Conn.

Dublin, Ireland - In response to the increasing in outsourcing of insurance company assets to third-party investment firms, Ireland-based Research and Markets released a Resource Guide that profiles the industry's most prominent global asset management firms, insurance companies, and key industry service providers. Included in the guide are industry rankings and comparisons, asset management firms, industry service suppliers, and corporate indexes. The names of major property and casualty, life and health, mutual property and casualty, mutual life and health, and reinsurance companies are also included, along with executive-level contact information. The Resource Guide also includes a full directory listing for industry consultants, technology and information providers, custodian banks, industry-related law firms, and industry associations.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) warns that significant market disruptions could develop with the Federal Terrorism Risk Insurance Act's (TRIA) expiration on December 31, 2005, the law's current sunset date. The economy's current strength reflects the ability of businesses to cover affordably catastrophic terrorism risks.

El Segundo, Calif. - Ohio Mutual Insurance Group, a Bucyrus, Ohio, insurance company, has experienced a 13 percent increase in staff productivity over the previous year, thanks in part to software from Computer Sciences Corp. (CSC), El Segundo, Calif. Previously known as the Ohio Mutual Tornado, Cyclone and Windstorm Insurance Assoc., Ohio Mutual today provides auto, home, farm and business insurance. The implementation of CSC's property and casualty insurance software follows its move last year to replace its legacy system with CSC's POINT IN policy administration and claims components. The POINT IN policy administration component provides Ohio Mutual with an integrated, paperless system for rating, underwriting, reinsurance, and billing and collection. The advanced claims component automates claims assignment and tracking. The company, which writes more than $120 million in premiums each year, reports a surplus of more than $67 million. CSC reports that the carrier also achieved the largest annual net operating profit in the company's 104-year history.

San Diego, Calif. - Abovehealth, a healthcare information technology company, has founded The Dolphin Group, a "think tank" comprised of industry peers who wish to discourse on the unique problems facing IT executives in the healthcare information industry. The group held its inaugural event in Las Vegas in conjunction with last month's America's Health Insurance Plans (AHIP) Institute 2005.

Minneapolis - UnitedHealth Group will acquire Cypress, California-based Pacificare Health Systems, Inc., the company announced today. The acquisition, expected to be financed 27% in cash and 73% in shares of UnitedHealth common stock, is valued at $8.1 billion in stock and cash plus $1.1 billion in PacifiCare debt to be retired at closing. The deal would close in late 2005 or early 2006, pending approvals from federal regulators and shareholders of PacifiCare. Minneapolis-based UnitedHealth, one of the nation's largest managed-care companies, plans to expand its West Coast presence and its involvement in the Medicare market. According to Chicago-based Fitch Ratings, approximately 1.8 million, or 57% of Pacificare's 3.2 million members are located in California, which is a state where UnitedHealth has historically lacked a competitive market share. In addition, UnitedHealth will be acquiring the largest player in the Medicare Advantage program, reports Fitch. Pacificare will add approximately 720,000 Medicare Advantage members to UnitedHealth's existing Medicare Advantage membership of approximately 345,000 and will give an additional boost to UnitedHealth's plans to participate in the Medicare drug benefit beginning in 2006, says the ratings firm.

Salt Lake City - GE Healthcare, a $14 billion unit of General Electric Company that is headquartered in the United Kingdom, and Intermountain Health Care, a Salt Lake City-based integrated health care system, announced the organizations' joint project to develop a new advanced electronic medication administration record, also known as an eMAR, which will better enable collaboration among a patient's care team.

Hartford, Conn. - Personal automobile and homeowners market leaders are employing a new mix of tactics as they compete for growth, according to two new publications by Conning Research and Consulting Inc., Hartford, Conn."Personal lines market leaders are more aware now than last cycle of the price points that damage profits," said Bruce Hale, analyst at Conning Research & Consulting Inc. "Modest price cuts are common in personal automobile, while the homeowners line is showing flat to minimal rate increases in most states. These measured actions are affordable for insurers because of recent strong profits. The aggressive competition is occurring in data modeling and branding. Market leaders are outsmarting their rivals in risk selection and staking a superior position in the mind of the consumer."

New York - MetLife Inc. reports completion of its $11.8 billion acquisition of New York-based Citigroup's Travelers Life and Annuity Co. and nearly all of Citigroup's international insurance businesses. The New York carrier paid Citigroup $10.8 billion in cash and about 22.4 million of its own shares, which are valued at roughly $1 billion. Travelers Life and Annuity Co., which is based in Hartford, Conn., reported 2004 sales of $822 million. Once the deal is closed, Citigroup says it will record a $2 billion gain in the third quarter.

Over the past three years, publicly held companies in the insurance industry have become painfully familiar with the stringent requirements of the Sarbanes-Oxley (SOX) corporate governance law.A senior-level executive with Chicago-based global brokerage firm Aon Inc., confirmed that the company's audit fees skyrocketed 53%, from $10 million in 2003 to $15.3 million in 2004. And, with annual revenue of $800 million and income of approximately $73 million, RLI Corp., a Peoria, Ill.-based specialty insurer, absorbed Section 404 compliance costs last year of $1.9 million.

If the leading policy administration software executives were a bit surprised to see a standing-room-only crowd at their ACORD-LOMA Insurance Systems Forum session in Orlando on May 23, it's because they had yet to see results of a general session poll that would occur the following day: a full 46% of voting attendees reported policy administration systems as a high investment priority (see page 10).The topic for discussion for the session, "What Do the Experts Say About Administration Systems?," was finding cost-effective ways to merge systems and reduce complexity and associated costs.

The good news coming out of the ACORD-LOMA Insurance Systems Forum, held May 22-24 in Orlando, Fla., is: The role of standards is strong and growing for top-ranking carriers. The not-so-good news is: For many other carriers, it's still a struggle to get buy-in for standards from the business side.According to a survey conducted by ACORD of its top 25 members-chosen based on A.M. Best data for premiums and market penetration-90% currently have a strategy in place to implement ACORD standards and 93% have plans to do so this year.

In software buys that have risen fairly steadily over the past eight quarters, core systems appear to be carriers' priority, according to a report released by Celent Communications Inc., Boston.Celent's goal in conducting its research, "Insurance Software Deal Trends 2003-2004," was to find out what types of insurers (by size and lines of business) purchased application and infrastructure packaged software during that time period. The study also looked at the business processes supported by these deals, as well as some of the broad trends in terms of deal activity.

To the Agents Council for Technology (ACT), anything is possible."We want to do everything we can to accelerate agent, carrier, and vendor implementation of money-saving technologies," says Jeffrey Yates, executive director for ACT, which is an operating unit of the Independent Insurance Agents & Brokers of America (IIABA), Alexandria. Va.

A survey of life insurance CFOs conducted by the Tillinghast division of Towers Perrin revealed that significant changes in insurance distribution are likely.In March, the Stamford, Conn.-based services firm asked more than 70 executives about the issues underlying distribution and remuneration concerns.

Two primary trends are emerging that are impacting the state of underwriting in the P&C market. The first is the drive to reduce complexity. New technology is simplifying systems and reducing the amount of manual document-handling between carriers and agents. The second trend is an increased use of data-driven decision-making for more predictable underwriting results.This is the conclusion of research conducted by TowerGroup, a Needham, Mass.-based research and advisory firm to the financial services industry.

MassMutual Adds ERISA Advisory TabTo help plan sponsors stay apprised of fiduciary obligations and minimize their fiduciary liability, MassMutual Retirement Services, Springfield, Mass., has added a new ERISA Advisory tab to its Total Retirement Center (TRC) online. The ERISA Advisory tab replaces the Plan Info tab that was previously on the Web site. All plan-level compliance information is still available within ERISA Advisory under the Consulting Services section. In addition, plan sponsors now have access to qualified retirement plan reference material and important testing and reporting information in one location.