Morris Review

A review of the actuarial profession in the UK.

http://www.hm-treasury.gov.uk/independent_reviews/morris_review/review_morris_index.cfm

ACS Acquiring Mellon HR

ACS announced today that it has signed a definitive agreement to acquire the human resources consulting and outsourcing businesses of Mellon Financial Corporation for approximately $445 million. For the year ended December 31, 2004, the HR Business recorded revenues of approximately $660 million. The transaction is scheduled to close by the end of the fourth quarter of ACS' fiscal year 2005 (Apr-Jun 2005).

Mellon Financial yesterday said it has agreed to sell its human resources consulting and outsourcing businesses to Affiliated Computer Services for $445 million in cash. The deal is scheduled to close by the end of the second quarter, subject to regulatory approval. Gerard Cassidy, an analyst at RBC Capital Markets, said the price was lower than he expected. "We were thinking from the combination of historical transaction prices of these types of companies that the price was going to be closer to $500 million, and it came in obviously below that. It points to the fact that the business was wounded, hurt, and Mellon was unable to receive top dollar for this business."

AIG replaces CEO

AIG replaced Maurice "Hank" Greenberg as chief executive amid concern over a rising number of regulatory inquiries at the financial services titan he built over nearly four decades. Greenberg, 79, will continue as non-executive chairman. The company named Martin J. Sullivan, 50, its co-chief operating officer and vice chairman, as chief executive.

Actuaries do not predict age at death

Despite what you may have seen on Las Vegas last night (and on any other show that has ever depicted an actuary), actuaries do NOT have, use or create models that predict the age at which an individual will die. What (life insurance) actuaries do basically boils down to using the law of large numbers to determine how many people in a large group are going to die this year.

Aon settles with Spitzer for $190 million

Story 1: Aon’s top executives, including CEO Patrick Ryan and COO Michael O’Halleran, personally arranged to steer client business to certain insurers in return for their agreement to use Aon’s separate reinsurance brokerage services, according to a complaint filed today by New York Attorney General Eliot Spitzer. The complaint, which was filed and then immediately settled as part of a $190 million agreement between Aon and the states of New York, Illinois, and Connecticut, outlined in detail numerous examples of Aon compromising client interests by placing business with favored insurers.

Story 2: Aon agreed Friday to pay $190 million to end Spitzer's investigation into conflicts of interest and alleged fraud at the world's second-largest insurance broker. The pact also includes the New York and Illinois state insurance departments as well as attorneys general in Connecticut and Illinois, according to the Chicago-based company. Aon will pay the $190 million over 30 months to policyholders deemed to have been damaged by the company's actions. The company also agreed to adopting reforms designed to avoid conflicts of interest.

The stock went up 28 cents (1.16%) in today's trading, and there's been no movement in after-hours trading.

MMC Quarterly Loss

Yesterday, Marsh & McLennan reported a fourth-quarter loss of $676 million, or $1.28 a share, compared with a profit of $375 million, or 69 cents a year, a year earlier. Consolidated revenue for all of 2004 fell 1% to $3 billion. The world's biggest insurance broker said an ongoing restructuring of its business could result in the loss of another 2,500 jobs [in addition to the 3,000 already announced]. The stock's quarterly dividend was also cut, to 17 cents a share down from 34 cents, which would reduce the company's annual payout by $360 million a year. The company's stock fell $1 to $32 today.

Georgia Insurance Scam

A father-and-son team in Barnesville GA allegedly ran a taxicab insurance scam that left thousands of cabdrivers across Georgia without coverage because the vehicles were never insured. Law enforcement officials say the taxi scam, which allegedly ran for more than two years, netted Godfrey Waterhouse and his son, Robert Waterhouse, more than $3 million in premiums. Robert Waterhouse was arrested Tuesday and charged with 40 counts of theft by deception, 40 counts of insurance fraud and one count of racketeering. Godfrey Waterhouse, who was charged with the same 81 counts, is in New Zealand, and state officials are seeking extradition.

The two were licensed to sell insurance in Georgia; the state is in the process of revoking their licenses. The pair allegedly signed up livery companies for policies by saying they were representatives of the Mark Solofa Company, an insurer based in Pago Pago, American Samoa. But Solofa executives told officials they had never heard of the Waterhouses and that they sell policies only to vehicles in American Samoa. They just picked the company's name and were using it. They were just issuing policies and collecting money.