As part of our new format and shows here on The Settlement Channel and Legal Broadcast Network we are going to be doing a weekend summary of any events that impacted either the settlement profession directly, or indirectly through news at life, property casualty or legal firms. So with our further delay, the first week in review:
1. Allstate was clearly pressured to send out a "we are still committed to the structured settlement market" letter to it's agents and brokers after their announcement the week before that they were suspending their medical underwriting option on structured settlements. As someone that does quite a bit of business with Allstate on their non-qualified product I have to admit my own first thought when I got the original email and announcement was, ok, here we go again, first step toward ending the structured settlement division. The fact that one of the big multi-line companies with a strong internal structured settlement division was pulling back on a key component of structured settlements was not going to be construed as a business positive by anyone in the settlement profession. Also, what was basically a three line email making a major change with very little elaboration on the reason other then low placement rates and high underwriting volumes might have been ok for an internal document, but in this hyper sensitive market of today it was destined to blow up with rumors and concerns when sent to the agents. Allstate did the right thing by sending out the follow up to nip any rumors in the bud, but it should serve as a cautionary example to other life markets that MORE communication is better at this point, not less, when changes are made.
2. Along those lines are the emails we get from our friends at Pacific Life and John Hancock, updating us on financial ratings, in which you learn by digging through them that ratings have changed for the worse at a particular market. I have to profess I am exceptionally unconcerned about the safety and stability of both Hancock/Manulife and Pacific Life as they are really well run, well capitalized giants that are simply falling under the rating agency paranoia that is sweeping the financial markets, and the down grades from either A.M. Best or S&P from top ranking to second from the top ranking really don't cause any alarm what so ever. However, I wish they would do more then send out some bland update and give a highlight in the email about the change instead of hoping we don't notice it. It looks like they are trying to throw one past us, which no one appreciates. Pacific Life by contrast at least mentioned in the first sentence a rating change and downgrade, which is the appropriate way to let us know about the news, not making us dig for it in the attached pdf, but lets have a little more communication on why the downgrade took place, outlook for the coming year and some talking points for our clients and potential customers. It would help us sell more of your product guys!
3. Hartford Financial is of course the big news of the week. In an email on March 2, from Melissa Chase at Hartford they did a good job of outlining the changes, addressing concerns and making a case for their continued stability. The issue with Hartford is the financial press is on the story, the word is that MetLife walked away from negotiations to buy the life unit and now Sun Life of Canada is being mentioned in a potential acquisition of the Hartford Life unit. Much as the financial products division at AIG sunk an exceptionally well run and profitable structured settlement division through bad press, financial rating downgrades and other issues, Hartford Life is being battered by the concerns over it's variable annuity business and the market and minimum guarantee costs of that line of variable products. The question now, if the flood of phone calls to my office from Hartford life annuity holders, is whether or not the company can stem the tide of bad news and concerns over it's drop in ratings by AM Best and S&P. However this drama unfolds in the coming weeks, it is bad news for the structured settlement business when a major underwriter is in the business press and headlines as it stokes fears from annuity holders and cripples the ability of that division to write new premium.
4. AIG is back in the headlines with the names of the counter parties to all that debt finally coming out after Congressional pressure to reveal who was benefiting from the ever increasing AIG bail out by the Fed. It is a who's who of international and US banks and brokerage houses, lending credibility to the argument that a failure or default by AIG on it's guarantees would have caused a systemic collapse of major banks and brokers. What we are facing now however, once again, is sure to be another round of populist and press bashing of AIG using U.S. taxpayer funds to bail out foreign interests. The biggest issue we face as a profession at the moment is the flood of press of some of our biggest names running into problems and the lack of counter press from our industry addressing consumer concerns.
5. Some good news! Wyeth v Levine was decided in favor of the plaintiffs and gave the tort reform lobby a serious kick in the groin in the process. The day after the decision, legislation was filed in Congress to also effectively mute the impact of the Medtronics decision and thus reverse what looked to be the inevitable tide favoring the concept of preemption. These twin actions are going to do more to jump start negotiations on cases like Accutane, Fentanyl patch, HRT and other mass torts as well as send a message to corporate defense counsel that the ability to run out the clock and sit on cases hoping for a bail out from the Supreme Court or Congress has come to an end. Legitimate cases need to be filed, pushed through the legal system and tried or settled and these twin actions should go a long way toward starting us in that direction.
Not a great week for the big players in our business, but some good news at the end.