Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.insur From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: insur Fri, Apr 3 1992 Date: Fri, 3 Apr 92 05:43:48 EST Message-ID: 04-03 0000 DECISIONLINE: Insurance USA TODAY Update April 3-5, 1992 Source: USA TODAY:Gannett National Information Network ALLIED CAPITALIZES ON LOSSES: In a business where a 50-minute hailstorm can wipe out months of profits, a property casualty insurance company might think twice about expanding. But Allied Group Inc. of Des Moines, Iowa is only too happy to sell automobile and homeowners insurance to people abandoned by some of the nation's largest property-casualty companies. (For more, see special Allied package below.) GOV. TO VETO INSURANCE BILL: Michigan Gov. John Engler plans to veto a bill that would revamp a key part of the state's auto insurance law and cut rates 15%. Engler spokesman John Truscott said Wednesday the bill doesn't have enough cost savings to allow insurance companies to cut rates 15%. But state Rep. Nelson Saunders said insurance companies will remain profitable under the bill, despite their rhetoric. WOFFORD, DASCHLE UNVEIL PLAN: Sens. Harris Wofford, D-Pa., and Tom Daschle, D-S.D., unveiled legislation Thursday for a national health insurance plan that would cover every American from cradle to grave. Proponents say the American Health Security Plan would eliminate the nation's current maze of public and private health care plans and replace it with a single, federally directed health-care system. TAXES WOULD PAY FOR PLAN: The cornerstone of the American Health Security Plan is the creation of an independent Federal Health Board that would administer the system. A synopsis of the legislation provides no cost estimates but the proposed system would be financed by diverting current public spending and by assessing a health care tax on U.S. citizens. EMPLOYMENT PICTURE DIM: The number of new people applying for unemployment benefits rose 9,000 to a seasonally adjusted 456,000 the week ended March 21, the Labor Department said Thursday. Despite signs a recovery is beginning, analysts don't expect the unemployment picture to improve until late spring, when a recovery is expected to be well under way. W.VA. RATES TO INCREASE: West Virginia Gov. Gaston Caperton Wednesday signed into law a bill that increases property insurance rates. The increase will help finance volunteer fire departments and teacher pensions. He also gave his signature to a bill creating a $10 million trust aimed at adding 100,000 jobs to the state's economy by 2000. ELECTRONIC HEALTH REPORTS NEAR: Joseph T. Brophy of The Travelers says a system for the electronic transfer of medical information could be a reality in the near future, but notes it is important that there is a nationwide standard. He envisions a system similar to an automatic teller card. It could give medical background, eliminate insurance forms and be used to fill and write prescriptions. GA. PASSES MEDICAL LEAVE ACT: Georgia this week became the second southern state and the first state in 1992 to pass a Family & Medical Leave Act. Under the bill, which is expected to be signed by Gov. Zell Miller, employees are guaranteed up to 12 weeks of unpaid leave for maternity, adoption, employee illness or the illness of a family member. Continued employee health care coverage is required during the leave. SPECIAL PACKAGE ON ALLIED: DIVIDENDS UP AT ALLIED: Earnings are up at Allied, and the company recently raised the quarterly dividend 2 cents a share, to 16 cents. The company is growing at about 15% a year, mainly due to customers left behind by Travelers Corp., Aetna Life & Casualty and Cigna Corp, who announced they would stop selling auto and homeowners coverage in several parts of the country, particularly the Midwest. OTHERS LOSE WHILE ALLIED GAINS: Typically, new business brings heavy losses because the insurer is not able to screen out the bad risks. But Allied's new customers are turning out better than expected because they already had undergone the underwriting process with their old companies. "It's been screened twice, by the old company and the new company," said analyst Frederick Sandburg of Kemper Securities Group Inc. RESTRUCTURING BRINGS MORE MONEY: In 1990, Allied underwent a complicated restructuring involving Allied Mutual Insurance, the policyholder-owned company that owns a major chunk of the stock in shareholder-owned Allied Group. A key element was the creation of an employee stock ownership plan. The plan bought 2.4 million shares of new Allied Group stock, generating $28 million to finance new business. BUSINESS CAN BE ROCKY: In February, Allied raised $30 million from a public stock offering, to fuel more expansion. Yet shareholders should be aware that property-casualty insurance can be a volatile business. In July 1990, for example, a hailstorm in Denver wiped out 28 cents a share worth of profits in 50 minutes. The company's earnings for the whole year totaled just $1.79 a share, or $12.5 million. ALLIED CONFIDENT OF POSITION: John Evans, Allied's chairman and president, says Allied's growth stems in part from its ability to handle the rising tide of insurance "consumerism" that prompted many companies to retrench. Example: Proposition 103, the 1988 voter referendum in California that called for a 20% rollback in auto premiums. Allied believes it will not have to make any rollbacks. (End of package.) Insurance Editor: Michele Coleman. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM