Friday, September 24, 2021

No. 439: Another Class Action Lawsuit Against Genworth

The Halcom Lawsuit
On January 11, 2021, Judy Halcom and three other individuals filed a class action lawsuit against Genworth Life Insurance Company (GLIC) and Genworth Life Insurance Company of New York (GLICNY). In this case, the two defendants collectively are referred to as "Genworth." (See Halcom v. Genworth, U.S. District Court, Eastern District of Virginia, Case No. 3:21-cv-19.)

A Brief Summary
The introduction in the Halcom complaint describes the nature of the lawsuit. Here is the third paragraph of the introduction:
3. Since 2008, Genworth has steadily and substantially increased the premiums on these policies. To be clear, this case does not challenge Genworth's contractual right to increase these premiums, or its need for premium increases given changes in certain of Genworth's actuarial assumptions and the historical experience of these policy blocks. Nor does this case ask the Court to reconstitute any of the premium rates or otherwise substitute its judgment for that of any insurance regulator in approving the increased rates. Rather, this case seeks to remedy the harm caused to Plaintiffs and the Classes from Genworth's partial disclosures of material information when communicating the premium increases, and the omission of material information necessary to make those partial disclosures adequate. Without this material information, Plaintiffs and the Classes could not make informed decisions in response to the premium increases and ultimately made policy option renewal elections they never would have made had the Company adequately disclosed the staggering scope and magnitude of its internal rate increase action plans in the first place.
The Judge
The Halcom case was assigned to U.S. Senior District Court Judge Robert E. Payne. President George W. Bush nominated him in November 1991. The Senate confirmed him in May 1992. He assumed senior status in May 2007.

The Halcom Settlement
On August 30, 2021, Judge Payne issued an order granting preliminary approval of the Halcom settlement and directing notice to the class of over 146,000 members in all 50 states and the District of Columbia. He appointed Epiq Class Action & Claims Solutions, Inc. (Epiq) as administrator of the settlement, approved the class notice and the publication notice, and ordered Epiq to disseminate the class notice to class members within 60 days. He approved the form of the Special Election Letter to be mailed to class members, subject to possible changes by state insurance regulators. He described the procedure for exclusions and objections, set the final approval hearing for February 9, 2022, and attached a list of all the policy form numbers. He also attached the notice to class members (nine pages) and the publication notice (one page), which are here.

In the notice to class members, there is a section on attorneys' fees and litigation expenses. It says the class attorneys (the same attorneys who filed the Skochin complaint mentioned later), as part of the request for final approval of the settlement, will request (a) $1 million relating to the injunctive relief that is in the form of the disclosures, and (b) an additional contingent payment of 15 percent of certain amounts related to the class members' selection of options, but no greater than $18,500,000. None of the attorneys' fees will be deducted from the payments made to class members. Also, the class attorneys will request an award of litigation expenses of no more than $50,000. Genworth has agreed to pay all fees and expenses. The class attorneys will also request approval of payment of up to $15,000 for each of the four named plaintiffs.

Genworth's Comments on the Halcom Settlement
On August 5, 2021, Genworth filed its 10-Q report for the quarter ended June 30, 2021, with the Securities and Exchange Commission. On pages 66-67 of the report, Genworth made these comments on the proposed settlement of the Halcom case:
If we enter into a settlement consistent with the agreement in principle reached on June 18, 2021, we do not anticipate the result to have a material negative impact on our results of operations or financial position. If we do not enter into a final settlement, we intend to continue to vigorously defend this action.
The Eastern District of Virginia
The United States District Court for the Eastern District of Virginia (where Genworth is based) has a reputation as the fastest civil trial court in the United States. The Halcom case is an example. The complaint was filed on January 11, 2021. Genworth's answer to the complaint was filed on March 15. A pretrial conference was held on April 21. A scheduling order was issued on May 3. The parties were engaged in private mediation on May 27. The parties agreed to a settlement on June 30. The proposed settlement was filed on August 23. Preliminary approval of the settlement was granted on August 30. The settlement approval hearing on February 9, 2022 was set on September 2, 2021.

The Skochin Lawsuit
The Halcom case resembles the case of Skochin v. Genworth. My most recent update on Skochin is in No. 398 (November 13, 2020).

General Observations
I plan to post a follow-up to this blog post after Judge Payne grants final approval of the Halcom settlement.

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Friday, September 17, 2021

No. 438: The Texas Republicans' Abortion Law

The Texas Abortion Law
The Republican-controlled Texas legislature recently enacted, and the Republican governor of Texas signed, a frightening abortion law that took effect at midnight on September 1, 2021. Opponents immediately asked the U.S. Supreme Court to rule that the law is unconstitutional. In a shocking development, the Supreme Court denied the request in a 5 to 4 Court order, with Chief Justice Roberts joining with the three liberal justices.

The Sotomayor Dissent
Justice Sonia Sotomayor wrote a powerful dissenting opinion, with which liberal Justices Breyer and Kagan joined. The first paragraph and the last two paragraphs of the Sotomayor dissent read as follows:
The Court order is stunning. Presented with an application to enjoin a flagrantly unconstitutional law engineered to prohibit women from exercising their constitutional rights and evade judicial scrutiny, a majority of Justices have opted to bury their heads in the sand. Last night, the Court silently acquiesced in a state enactment of a law that flouts nearly 50 years of federal precedents. Today, the Court belatedly explains that it declined to grant relief because of procedural complexities of the State's own invention. Ante, at 1. Because the Court's failure to act rewards tactics designed to avoid judicial review and inflict significant harm on the applicants and on women seeking abortions in Texas, I dissent....
The Court should not be so content to ignore its constitutional obligations to protect not only the rights of women, but also the sanctity of its precedents and of the rule of law.
I dissent.
Dissenters normally say "I respectfully dissent." In this instance, Sotomayor said "I dissent." I recommend that you read the full Sotomayor dissent and the related filings (12 pages).

The Garland Statement
On September 6, the U.S. Department of Justice released a statement from U.S. Attorney General Merrick B. Garland about the Texas abortion law. Here is the full statement:
While the Justice Department urgently explores all options to challenge [the Texas abortion law] in order to protect the constitutional rights of women and other persons, including access to an abortion, we will continue to protect those seeking to obtain or provide reproductive health services pursuant to our criminal and civil enforcement of the FACE Act, 18 U.S.C. § 248.
The FACE Act prohibits the use or threat of force and physical obstruction that injures, intimidates, or interferes with a person seeking to obtain or provide reproductive health services. It also prohibits intentional property damage of a facility providing reproductive health services. The department has consistently obtained criminal and civil remedies for violations of the FACE Act since it was signed into law in 1994, and it will continue to do so now.
The department will provide support from federal law enforcement when an abortion clinic or reproductive health center is under attack. We have reached out to U.S. Attorneys' Offices and FBI field offices in Texas and across the country to discuss our enforcement authorities.
We will not tolerate violence against those seeking to obtain or provide reproductive health services, physical obstruction or property damage in violation of the FACE Act.
General Observations
My blog posts usually are devoted to insurance matters. However, the Texas abortion law is so outrageous that I decided to comment on it.

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Friday, September 10, 2021

No. 437: The Securities and Exchange Commission Files a Civil Lawsuit Against Several Investment Promoters

On August 20, 2021, the Securities and Exchange Commission (SEC) filed a civil lawsuit in federal court in San Antonio against Robert J. Mueller (Mueller) and several other investment promoters. The defendants allegedly persuaded investors, many of whom are retirees, to cash out annuities and individual retirement accounts they held with other investment companies and invest in funds promoted by the defendants. (See SEC v. Mueller et al., U.S. District Court, Western District of Texas, Case No. 5:21-cv-785.)

The SEC Complaint
The SEC complaint (24 pages) contains eight counts alleging violations of federal securities laws. The SEC seeks a permanent injunction, disgorgement of ill-gotten gains, and payment of a civil penalty.

The Judge
The case has been assigned to U.S. District Court Judge Xavier Rodriguez. President George W. Bush nominated him, and he assumed office on August 1, 2003.

General Observations
This case is in its very early stages. The defendants have not yet filed an answer to the complaint. I plan to report significant developments.

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Friday, September 3, 2021

No. 436: More on the $97 Million Regulatory Settlement Imposed on TIAA

In No. 434 (August 18, 2021), I reported on the $97 million regulatory settlement imposed on The Teachers Insurance and Annuity Association of America (TIAA) by the Securities and Exchange Commission (SEC) and the New York State Attorney General (NYAG). On August 20, I received an email from a former Wealth Management Advisor (WMA) at TIAA. In response to that email, I sent the former WMA links to three earlier blog posts about developments at TIAA. The purpose of this follow-up is to share those three earlier posts with other readers. In each of the posts, I offered a complimentary package of additional material; those packages remain available upon request.

The Earlier Blog Posts
The first of the earlier blog posts is No. 68 (September 22, 2014) entitled "TIAA, Moody's, and Surplus Notes." In it, I offered the September 2014 TIAA package.

The second of the earlier blog posts is No. 240 (November 9, 2017) entitled "TIAA-CREF Under the Microscope." In it, I offered the November 2017 TIAA package.

The third of the earlier blog posts is No. 321 (July 9, 2019) entitled "TIAA Is Exiting the Life Insurance Business." In it, I offered the July 2019 TIAA package.

More on Surplus Notes
Surplus notes have a long and interesting history in the insurance business in the United States. TIAA and The Northwestern Mutual Life Insurance Company (Milwaukee, WI) were the last two holdouts against what became the widespread use of these extraordinary financial instruments.

My 2015 book entitled The Insurance Forum: A Memoir contains a chapter devoted to the subject of surplus notes. For readers who might be interested, here is a link to Chapter 25.

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Friday, August 27, 2021

No. 435: Ohio National Is the Defendant in a Job Discrimination Lawsuit

The Modified Work Schedule
Jessica Walker (Walker), an Ohio resident, was employed by Ohio National Financial Services. Inc. (Ohio National) from July 7, 2012 to July 31, 2017. In 2017, Ohio National announced it would implement a modified full-time work schedule that would be available to some employees. It was Walker's understanding that the modified work schedule was to benefit female employees with young children. In July 2017, Walker expressed concerns about the modified work schedule not being offered to all similarly situated employees.

The Meeting
On Friday, July 28, 2017, Walker met with several Ohio National officials to discuss her concerns. During the meeting, Walker said that, if the company did not offer the same work schedule to all similarly situated employees, she would likely contact the Equal Employment Opportunity Commission (EEOC) to determine if the disparate treatment would be unlawful. On Monday, July 31, 2017, Ohio National terminated Walker's employment.

The Lawsuit
On April 13, 2021, Walker received a "right to sue" letter from the Indianapolis office of the EEOC. On July 1, Walker filed a job discrimination lawsuit against Ohio National in federal court in Ohio. The "right to sue" letter is attached to the complaint as an exhibit. The complaint and exhibits are here. In her complaint, Walker said she had exhausted her administrative remedies by filing a charge of retaliation with the EEOC alleging that the company had terminated her employment because she had indicated her intent to contact the EEOC. (See Walker v. Ohio National, U.S. District Court, Southern District of Ohio, Case No. 1:21-cv-448.)

The One Claim for Relief
Walker's complaint contains one claim for relief. She alleges that Ohio National's actions constitute retaliation in violation of Title VII of the Civil Rights Act of 1964. She seeks lost wages, fringe benefits, compensatory and punitive damages, and attorney fees and costs.

The Judge
The case has been assigned to U.S. District Judge Donald R. Cole. President Trump nominated him in May 2019. The Senate confirmed him in December 2019.

General Observations
This lawsuit is in its early stages. I think it is likely that the case will be settled. I plan to report significant developments.

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Wednesday, August 18, 2021

No. 434: Regulators Impose a $97 Million Settlement on TIAA

On July 13, 2021, the Securities and Exchange Commission (SEC) and the New York State Attorney General (NYAG) announced a $97 million enforcement action against Teachers Insurance and Annuity Association of America (TIAA). Here are the title and the subtitle of the SEC press release:
SEC Announces $97 Million Enforcement Action Against TIAA Subsidiary for Violations in Retirement Rollover Recommendations.
SEC and N.Y. Attorney General Secure Significant Relief for Investors and Reforms at TIAA.
The SEC Action
The SEC action took the form of a 17-page Order. Here are the first two paragraphs of the summary in the Order:
  1. This matter concerns TIAA's failure to disclose adequately conflicts of interest and dissemination of inaccurate and misleading statements in connection with recommendations that clients invested in TIAA employer-sponsored retirement plans (ESPs) roll over retirement assets into a managed account program called "Portfolio Advisor." TIAA had a conflict of interest because Portfolio Advisor generated greater revenue than other available alternatives.
  2. From January 1, 2013 through March 30, 2018, TIAA created positive incentives and negative pressures for its Wealth Management Advisors (WMAs) to prioritize the rollover of ESP assets into Portfolio Advisor over lower cost alternatives for rollover-eligible ESP participants who were receiving advisory services as part of the financial planning process TIAA offered. Those incentives and pressures included: (1) an incentive compensation plan that paid WMAs more in variable compensation when they signed clients up for the Portfolio Advisor program than for some alternatives, and (2) negative consequences for failure to meet related targets, including the placement of some WMAs on performance improvement plans and the threat of termination of employment. TIAA also trained WMAs to use the rollover process to discover areas of vulnerability for these clients, called "pain points," to "create pain" by helping clients "self-realize" the financial vulnerability, and then to recommend Portfolio Advisor as the solution to their problem.
The NYAG Action
The NYAG action took the form of a 24-page Assurance of Discontinuance. Here are the first two paragraphs of the NYAG's findings in the Assurance of Discontinuance:
  1. Beginning in or about 2012, TIAA and its salespeople used a false and misleading marketing pitch to convince investors to roll over assets from low-fee employer-sponsored retirement plans to individual managed accounts in TIAA's Portfolio Advisor program, on which TIAA charged lucrative management fees. TIA trained its salespeople to describe themselves as "objective, non-commissioned" advisors. In truth, TIAA's salespeople had a serious conflict of interest, since they were heavily incentivized—through financial compensation and supervisory and disciplinary pressures—to identify clients' "pain points" and recommend Portfolio Advisor as the preferred solution. In many cases, TIAA salespeople also presented clients with a misleading comparison of their investment options, promoting managed accounts as the only alternative to self-directed investment while downplaying or omitting advantages of employer-sponsored plans.
  2. TIAA has earned hundreds of millions of dollars in management fees on Portfolio Advisor accounts that clients opened with assets rolled over from employer-sponsored plans.
General Observations
I think the SEC/NYAG enforcement action against TIAA is an important development. For readers to understand it fully, I recommend you read in their entirety the SEC Order and the NYAG Assurance of Discontinuance. Those documents are available through links provided in this blog post.

Personal Observations
I joined the faculty of Indiana University (IU) in 1962. One year later, I was enrolled automatically in IU's faculty retirement plan with TIAA and its affiliated College Retirement Equities Fund (CREF). Since my retirement from IU, I have been receiving distributions from CREF. Thus I have had personal experience with TIAA and CREF for almost 60 years. Except for some minor administrative problems from time to time, my experience with TIAA and CREF has been satisfactory. Therefore, the news of the SEC/NYAG investigation came as a surprise and a disappointment. I knew personally some of the people (all now deceased) who were involved in the creation of IU's early relationship with TIAA. I think they would have been shocked by the findings of the SEC/NYAG investigation.

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Thursday, August 12, 2021

No. 433: Executive Compensation in the Insurance Industry—2020 Data from 2021 Filings with New York

Background
In No. 428 (July 7, 2021), I reminded readers that I started publishing insurance industry executive compensation data in 1975 in The Insurance Forum, my monthly newsletter. I continued doing so on my blog after ending the Forum in December 2013.

My three sources of data have been the Securities and Exchange Commission (SEC), the Nebraska Department of Insurance (NDI), and the New York State Department of Financial Services (NYDFS). In No. 428, I showed data for 2020 from 2021 filings with the SEC. In No. 431 (August 4, 2021), I showed data for 2020 from 2021 filings with the NDI. Here I show data for 2020 from 2021 filings with the NYDFS.

NYDFS Data
In the tabulation below, I show the NYDFS data for individuals who received at least $5 million in 2020. Where two or more individuals in a company are shown, they are listed in descending order of compensation.

NYDFS data are filed by life insurance companies doing business in New York State, and by health insurance companies doing business there. The data are from the 2020 "Schedule G," which is in the New York Supplement to the statutory annual statement. I obtained the Schedule Gs through a request pursuant to the New York State Freedom of Information Law. The Life Bureau of the NYDFS sent the Schedule Gs for life insurance companies, and the Health Bureau of the NYDFS sent the Schedule Gs for health insurance companies. Both bureaus provided the schedules without charge.

The Schedule G for life insurance companies differs significantly from the Schedule G for health insurance companies. The Schedule G for life insurance companies shows one figure for each individual. It is "the aggregate amount (any and all remuneration, including all wages, salaries, commissions, stock grants, gains from the exercise of stock options and other emoluments) received by the payee attributable to services performed for, or on behalf of, the reporting insurer, regardless of whether the payee is employed and paid by the insurer or a related or affiliated company."

The Schedule G for health insurance companies shows four figures for each individual: (1) "salary paid by company and all other companies in holding company system," (2) "bonus & all other compensation deferred or paid by company and all other companies in holding company system," (3) "total amount paid by company and all other companies in holding company system," and (4) "amount paid by or amount allocated to company." I show the third of those four figures, which is the sum of the first two figures.

Pursuant to changes made several years ago in the New York State executive compensation disclosure statute to curtail the amount of compensation data available to the public, the names of individuals are sometimes redacted, so that the Schedule G sometimes shows only the amounts of compensation and the titles of certain individuals. In those instances, I show the individual's title and the amount of compensation.

NYDFS Data for 2020
Life Insurance Companies
Aetna Life Ins Co
EVP, Integration $11,129,096
American National Life of NY
James E Pozzi 6,028,583
Equitable Financial Life Ins Co
Mark Pearson 6,958,433
First Health Life & Health Ins Co
Karen S Lynch 10,730,916
Alec R Cunningham 5,465,563
Globe Life Ins Co of NY
Frank Martin Svoboda 7,807,475
William M Pressley 6,746,829
Guardian Life Ins Co of America
Deanna Mulligan 10,300,764
Eric Dinallo 5,517,427
Lincoln Life Assur Co of Boston
Dennis R Glass 20,090,545
Randal J Freitag 5,878,200
Wilford H Fuller 5,753,626
Massachusetts Mutual Life Ins Co
Roger Crandall 21,875,488
Melvin Corbett 8,489,343
Michael Fanning 7,700,159
Metropolitan Life Ins Co
Michel Abbas Khalaf 7,624,215
EVP & Chief Investment Officer 5,239,381
New York Life Ins Co
Theodore A Mathas 24,238,639
Matthew M Grove 10,739,520
Anthony R Malloy 6,265,631
Yie-Hsin Hung 5,340,371
Northwestern Mutual Life Ins Co
John E Schlifske 18,018,703
Principal Life Ins Co
Karl W Nolin 9,434,249
Daniel Joseph Houston 6,240,643
Kelly D Rush 5,696,725
Prudential Ins Co of America
Charles Lowrey 6,347,293
Robert Michael Falzon 5,090,249
Stephen Pelletier 5,051,205
Securian Life Ins Co
Christopher Michael Hilger 6,479,342
Teachers Ins & Annuity Assn
Roger Ferguson 6,127,887
Health Insurance Companies
Anthem Ins Companies Inc
Gail A Koziara Boudreaux $16,306,318
Gloria M McCarthy 5,096,581
John E Gallina 5,091,054
Peter David Haytaian 5,091,054
Delta Dental Ins Co
Michael J Castro 9,523,333
Hallmark Life Ins Co
Michael F Neidorff 73,772,977
Jesse N Hunter 12,046,956
Health Ins Plan of Greater NY
Karen M Ignagni 5,342,500
Timothy Nolan 5,074,404
Humana Ins Co of NY
Brian Andrew Kane 18,738,968
Christopher Howal Hunter 6,157,542
Timothy Alan Wheatley 6,072,881
Mutual of Omaha Ins Co
James T Blackledge 6,648,722
Solstice Health Ins Co
Leonard Weiss DMD 5,486,569
UnitedHealthcare Ins Co of NY
Peter Marshall Gill 11,167,181
William John Golden 8,587,204
WellCare Prescription Ins Inc
Andrew Lynn Asher 16,259,880
Jeffrey Alan Schwaneke 15,136,733

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Wednesday, August 4, 2021

No. 432: Thomas Joseph Barrack—The Indictment Against Him and Two Others

On July 16, 2021, the U.S. Attorney's office in the Eastern District of New York filed in federal court a sealed 46-page indictment against Thomas Joseph Barrack (Barrack) and two other individuals. The indictment was unsealed the same day. The seven counts against Barrack are: (1) Acting as Agent of a Foreign Government Without Prior Notification to the Attorney General, (2) Conspiracy to Act as Unregistered Agent of a Foreign Government, (3) Obstruction of Justice, and four counts of Material False Statements. (See Barrack et al., U.S. District Court, Eastern District of New York, Case No. 1:21-cr-371.)

The Judge
The case was assigned to U.S. Senior District Court Judge Brian M. Cogan. President George W. Bush nominated him in January 2006. The Senate confirmed him in May 2006. He assumed senior status in June 2020.

Barrack
Barrack is a U.S. citizen residing primarily in California. He served as Executive Chairman of a global investment management firm headquartered in Los Angeles. From about April 2016 to about November 2016, he served as an informal advisor to the campaign of Presidential candidate Donald J. Trump. From about November 2016 to January 2017, he served as Chairman of the Presidential Inaugural Committee. Beginning in January 2017, he informally advised senior U.S. government officials on issues related to U.S. foreign policy in the Middle East. He also sought appointment to a senior role in the U.S. government, including the role of Special Envoy to the Middle East. Here is paragraph 13 of the indictment:
Government officials in the United Arab Emirates, including Emirati Official 1, Emirati Official 2, Emirati Official 3, and Emirati Official 4, tasked the defendants [including Barrack] with, variously and among other things, (a) influencing public opinion, the foreign policy positions of the Campaign and the foreign policy positions of the United States government; (b) obtaining information about foreign policy positions and related decision-making within the Campaign and, at times, the United States government; (c) developing a backchannel line of communication with the Campaign and, at times, officials of the United States government; and (d) developing plans to increase the United Arab Emirates' political influence and to promote its foreign policy preferences.
Following that paragraph are ten subsections of the indictment. They are: (1) Initial Meeting and the Energy Speech, (2) Media Appearances, (3) Preparation of Strategy to Promote Emirati Policy Interests and Meeting in Morocco, (4) The Encrypted Messaging Application, (5) The BARRACK Op-Ed, (6) Assistance to United Arab Emirates During the Presidential Transition, (7) Assistance to the United Arab Emirates in the New Presidential Administration, (8) Assistance to the United Arab Emirates with Appointments in the New Presidential Administration, (9) Emirati Official 1's White House Visit, and (10) The Qatari Blockade and Continuing Efforts to Assist the United Arab Emirates.

The Arraignment
On July 26, Barrack was arraigned in New York City. He entered a plea of not guilty on all counts. He was required to post a bond of $250 million, and was then released pending a conference to be held before Judge Cogan on September 2 at 10:00 a.m. He was required to surrender all his passports. He will be subject to severe travel restrictions and continuous electronic surveillance.

General Observations
According to recent news reports, the indictment was ready to go a long time ago. Two members of Congress have asked the inspector general of the Department of Justice to investigate the delay.

I think the indictment in this case is an amazing document. I strongly recommend that you read it in full. It is available through the link in the first sentence of this blog post.

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Wednesday, July 28, 2021

No. 431: Executive Compensation in the Insurance Industry—Data for 2020 from 2021 Filings with Nebraska

Background
In No. 428 (July 7, 2021), I reminded readers that I started publishing insurance industry executive compensation data in 1975 in The Insurance Forum, my monthly newsletter. I continued doing so on my blog after ending the Forum in December 2013. My three sources of data have been the Securities and Exchange Commission (SEC), the Nebraska Department of Insurance (NDI), and the New York State Department of Financial Services (NYDFS). In No. 428, I showed data for 2020 from 2021 filings with the SEC. Here I show data for 2020 from 2021 filings with the NDI. I plan to show data for 2020 from the NYDFS later.

NDI Data
In the tabulation below, I show NDI data for individuals who received at least $5 million in 2020. Where two or more individuals in a company are shown, they are listed in descending order of compensation.

NDI data are in a "Supplemental Compensation Exhibit" (Exhibit) filed by each insurance company doing business in Nebraska. Each Exhibit normally shows figures for the top ten company officials. The figure I show for each individual is the "Total." The seven components of the "Total" are "Salary," "Bonus," "Stock Awards," "Option Awards," "Sign-on Payments," "Severance Payments," and "All Other Compensation." NDI provides all the Exhibits on a CD to any member of the public for $80.

The Allocation Problem
Where companies are members of a Holding Company Group ("Group"), many companies show the total amount received by each individual from all companies in the Group. Some companies, however, allocate each individual's compensation to each company in the Group.

For companies that allocate, it is extremely difficult to locate all companies doing business in Nebraska that are part of a Group. For that reason, as I did last year, I have modified the tabulation below from years prior to 2020 by not trying to assemble the Group data. Instead, with one exception noted below, I show figures for the company with the largest dollar amounts for each Group. Because of the modification, the compensation figure shown for many individuals is smaller, and often much smaller, than the individual's total compensation from all members of the Group. Also, because of the modification, some companies probably are not listed because no individual had at least $5 million of compensation from a single company in the Group.

The Liberty Mutual Group Exception
The Liberty Mutual Group is a special case. Unlike any other company, the Exhibit for Liberty Mutual Insurance Company makes clear that the total compensation paid to each executive from all members of the Group is exactly twice the figure shown in the Exhibit. I have therefore shown in the tabulation below the larger figure for each executive listed.

NDI Data for 2020
Accident Fund General Ins Co
Elizabeth Haar $8,684,745
Ace Fire Underwriters Ins Co
John J Lupica 6,630,000
Paul J Krump 5,650,000
Acuity A Mutual Ins Co
Benjamin M Salzmann 17,998,084
Aetna Life Ins Co
Karen S Lynch 10,730,916
Alec R Cunningham 5,465,563
Affiliated FM Ins Co
Thomas A Lawson 5,564,595
AIG Assurance Co
Alexander Ross Baugh 5,954,901
Allstate Ins Co
Thomas J Wilson 18,009,544
Dogan Civgin 5,873,381
Terrence Williams 5,699,432
Glenn T Shapiro 5,032,673
Ambac Assurance Corp
Claude LeBlanc 6,022,820
American Family Ins Co
Jack C Salzwedel 12,359,016
William B Westrate 6,217,990
American Family Life Assur (AFLAC)
Daniel P Amos 14,367,561
American General Life Ins Co
Kevin Hogan 5,111,283
American National Ins Co
James E Pozzi 6,028,583
American Pet Ins Co
Tim Graff 5,013,734
American United Life Ins Co
James S Davison 6,019,250
AmGUARD Ins Co
Sy Foguel 5,322,285
Assured Guaranty Corp
Dominic Frederico 11,963,691
Auto-Owners Ins Co
Carolyn B Muller 6,065,377
Brighthouse Life Ins Co
Eric T Steigerwalt 8,890,177
Chicago Title Ins Co
Raymond Randall Quirk 18,168,514
Michael Joseph Nolan 5,597,464
Cincinnati Ins Co
Steven J Johnston 5,765,855
Continental Casualty Co
Dino Robusto 7,951,499
Contractors Bonding & Ins Co
Jonathan E Michael 7,114,515
Crum & Forster Indemnity Co
Marc James Adee 6,191,370
Employers Assurance Co
Douglas Dean Dirks 5,624,736
Equitable Financial Life Ins Co
Mark Pearson 6,958,432
Essent Guaranty Inc
Mark Casale 7,570,910
Everest Reinsurance Co
Mark Kociancic 5,292,109
Juan C Andrade 5,223,820
Farmers Ins Exchange
Jeffrey J Dailey 7,084,202
Fidelity & Guaranty Life Ins Co
Christopher O Blunt 8,082,752
First American Title Ins Co
Dennis Gilmore 11,020,220
Kenneth DeGiorgio 7,766,153
George Livermore 6,432,197
Mark Seaton 5,392,110
Christopher Leavell 5,094,983
GEICO Indemnity Co
Olza Minor Nicely 77,879,001
William Evan Roberts 14,169,158
Todd Anthony Combs 9,730,769
Genworth Financial Group
Kevin Douglas Schneider 7,724,612
Thomas McInerney 7,317,588
Daniel Joseph Sheehan IV 7,126,812
Globe Life & Accident Ins Co
Frank M Svoboda 7,807,475
William M Pressley 6,746,829
Great American Ins Co
Carl H Lindner III 10,346,831
Great-West Life & Annuity Ins Co
Edmund F Murphy 6,811,265
Guardian Life Ins Co of America
Deanna Mulligan 10,300,764
Eric Dinallo 5,517,427
Hanover Ins Co
John Roche 5,467,660
Hartford Fire Ins Co
Christopher Swift 5,560,332
Douglas G Elliot 5,286,046
Health Care Service Corp
David Lesar 16,967,386
Paula Steiner 12,647,352
Milton Carroll 8,918,153
Blair Todt 6,361,493
Maurice Smith 5,904,535
Danny McCoy 5,079,145
Horace Mann Ins Co
Marita Zuraitis 5,853,495
Humana Ins Co
Bruce D Broussard 23,173,229
Brian A Kane 18,738,969
Christopher Howal Hunter 6,157,542
T Alan Wheatley 6,072,881
William K Fleming 5,499,625
Insurance Co of the West
Kevin Prior 18,068,044
ISMIE Mutual Ins Co
Alexander R Lerner 5,119,812
John Hancock Life Ins Co (USA)
Daniel Janis III 6,692,374
Emory Sanders Jr 6,386,545
Christopher Conkey 5,242,891
Liberty Mutual Group
David H Long 23,180,342
Dennis J Langwell 13,030,176
Timothy Sweeney 11,347,194
Christopher L Peirce 8,715,066
Neeti Bhalla Johnson 8,242,320
James F Kelleher 7,423,518
James M McGlennon 6,780,962
LifeSecure Ins Co
Ken Dallafior 5,885,498
Lincoln Life Assur Co of Boston
Dennis R Glass 20,090,544
Randal J Freitag 5,878,201
Wilford H Fuller 5,753,626
Massachusetts Mutual Life Ins Co
Roger Crandall 16,916,485
Michael Fanning 6,397,603
Elizabeth Chicares 5,314,695
Melvin Corbett 5,069,947
Metropolitan Group
Michel Khalaf 7,624,215
Steven J Goulart 6,338,392
Midland National Life Ins Co
Esfandyar E Dinshaw 6,186,835
Minnesota Life Ins Co
Christopher M Hilger 6,479,342
Mortgage Guaranty Ins Corp
Timothy Mattke 6,686,421
Munich Reinsurance America Inc
Anthony J Kuczinski 5,222,034
National Western Life Ins Co
Ross R Moody 8,191,259
New York Life Ins Co
Theodore A Mathas 24,238,639
Matthew M Grove 10,739,520
Anthony R Malloy 6,265,631
Yie-Hsin Hung 5,340,371
Northwestern Mutual Life Ins Co
John E Schlifske 18,018,703
Ohio National Life Ins Co
Gary Thomas Huffman 16,443,349
Pacific Life Ins Co
James T Morris 8,174,088
Penn Mutual Life Ins Co
Eileen McDonnell 6,276,600
David M O'Malley 5,168,950
Principal Life Ins Co
Karl W Nolin 9,434,249
Daniel J Houston 6,240,643
Kelly D Rush 5,696,725
Protective Life Ins Co
Carl Thigpen 21,716,296
Richard Bielen 6,092,393
Prudential Ins Co of America
Charles Frederick Lowrey 8,332,876
Robert Michael Falzon 6,657,252
Stephen Pelletier 5,641,262
QCC Ins Co
Daniel J Hilferty 9,926,721
Radian Guaranty Inc
Richard A Thornberry 7,723,478
RiverSource Life Ins Co
John R Woerner 7,695,824
Security Benefit Life Ins Co
Michael Patrick Kiley 7,721,877
Selective Ins Co of America
Gregory Murphy 5,690,743
SILAC Ins Co
Stephen C Hilbert 5,839,167
Standard Ins Co
John Gregory Ness 14,187,730
State Farm Group
Michael Leon Tipsord 20,266,506
Paul Joseph Smith 6,812,210
Randall Houston Harbert 6,806,447
Mary Angela Schmidt 6,048,516
Teachers Ins & Annuity Assn
Roger Ferguson 6,127,887
Transatlantic Reinsurance Co
Michael C Sapnar 9,546,207
Kenneth Apfel 5,708,125
Travelers Casualty Co
Alan D Schnitzer 18,184,834
Avrohom J Kess 6,325,135
United States Liability Ins Co
Thomas P Nerney 18,198,604
Voya Retirement Ins & Annuity Co
Rodney Owen Martin Jr 5,975,117
Westcor Land Title Ins Co
Mary O'Donnell 5,326,688
Western & Southern Life Ins Co
John Barrett 11,495,043
Wilton Reassurance Co
Michael Fleitz 22,564,030
Michael Greer 21,792,750
Mark Sarlitto 21,463,100
Chris Stroup 20,524,898
Enrico Treglia 15,068,725
Andrew Wood 14,914,350
Ray Eckert 13,592,822
Perry Braun 7,616,725

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Wednesday, July 21, 2021

No. 430: Academic Freedom, Tenure, and Nikole Hannah-Jones

The Howard Press Release
On July 5, 2021, Howard University (Washington, DC) issued a press release announcing that Nikole Hannah-Jones, a prominent Black journalist at The New York Times, is joining the Howard faculty. She will be a tenured professor in Howard's Cathy Hughes School of Communications. Hannah-Jones will occupy the newly created Knight Chair in Race and Journalism. In 2020, Hannah-Jones received a Pulitzer Prize for her work in establishing The 1619 Project.

The LDF Press Release
The events that preceded the Hannah-Jones move to Howard provide a powerful lesson in the importance of academic freedom. On July 6, the Leadership Defense Fund (LDF) of The National Association for the Advancement of Colored People issued a press release entitled:
Nikole Hannah-Jones Issues Statement on Decision to Decline Tenure Offer at University of North Carolina-Chapel Hill and to Accept Knight Chair Appointment at Howard University
The LDF web site provided in full a lengthy explanatory statement by Hannah-Jones. That caught the attention of Dan Rather, a well-known former television reporter who is highly regarded by many people (including me). He is now retired and publishes an email newsletter called Steady. On July 9, Dan Rather, Elliot Kirschner, and the Steady team published a piece entitled "In Defense of Freedom—of the Press and the Academy," and published in it the entire Hannah-Jones statement as it appeared on the LDF web site. I strongly recommend you read it in full.

A Personal Experience
The Hannah-Jones story reminded me of a personal experience relating to academic freedom. I joined the Indiana University (IU) faculty in 1962. My research was controversial in life insurance circles, and it generated complaints to IU from prominent alumni in the life insurance business. IU provided me with complete academic freedom, even in the years before I was granted tenure.

IU strongly protects the academic freedom of its faculty. A vivid example was the furor over Professor Alfred Kinsey's research on human sexual behavior. When I mentioned to a colleague my concerns over the complaints against me, he said: "Joe, you don't understand. Indiana University is where Alfred Kinsey did his research."

In my 2015 book entitled The Insurance Forum: A Memoir, I described an incident that occurred in 1965. Here is what I said in the book:
A friend on the faculty at a university in a state other than Indiana invited me to visit his school and present a guest lecture. He said his school might offer me a faculty position. He told me his school would cover my travel expenses. I made the visit, presented the lecture, and met some people there.
Shortly after my return to Bloomington, I received a telephone call from my friend informing me the expense check was in the mail. He said he had bad news he felt obligated to share. He said he was embarrassed to inform me there would be no offer of a position. He explained that the chief executive officer of a major insurance company in the school's state had learned of my visit and had told school officials there would be no further contributions by the company to the school if I was appointed to the faculty. My friend said his school decided it could not afford to antagonize a major donor.
My immediate thought was that a financial threat by a donor to influence a faculty hiring decision is not tolerated by a great university, and I was grateful to have avoided a disastrous career move. All I said to my friend was that I understood, and I thanked him for the explanation. That was the first and last time I considered leaving Indiana University.
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Wednesday, July 14, 2021

No. 429: The U.S. Department of Justice Sues Georgia over the State's New Voter Suppression Law

Background
In No. 415 (April 5, 2021), I discussed a lawsuit challenging Georgia's recent election law, often called Senate Bill 202 (SB 202). It was enacted in March 2021 by the Republican-controlled legislature, and signed by Governor Brian Kemp, a supporter of former president Trump. The private signing ceremony was attended by several white men in front of a painting that appears to be an old southern plantation. The new law is called an "election security law" by proponents, and a "voter suppression law" by opponents. If the Republicans dislike the election result in any county or precinct, the new law would allow the result to be altered to their liking.

The DOJ Complaint
On June 25, 2021, the U.S. Department of Justice (DOJ) filed a 46-page complaint against Georgia, its election board, and its Secretary of State. Attached to the complaint is a 99-page exhibit showing SB 202. (See U.S.A. v. Georgia, U.S. District Court, Northern District of Georgia, Case No. 1:21-cv-2575.)

DOJ alleges that SB 202 was enacted "with knowledge of the disproportionate effect that the challenged provisions . . . would have on Black voters' ability to participate in the political process on an equal basis with white voters." DOJ asks the court for declaratory relief and injunctive relief. Specifically, DOJ seeks an order declaring that the challenged provisions of SB 202 violate the Voting Rights Act of 1965 and the voting guarantees of the Fourteenth and Fifteenth Amendments to the U.S. Constitution. DOJ also seeks an order enjoining the defendants from enforcing the challenged provisions, authorizing appointment of Federal observers to observe elections in Georgia, retaining jurisdiction, and requiring certain new voting changes in Georgia.

The Judge
The case was assigned to U.S. District Judge Jean-Paul "J.P." Boulee. President Trump nominated him in July 2018. The Senate confirmed him in June 2019.

The Supreme Court Ruling
On July 1, 2021, the U.S. Supreme Court handed down a major opinion relating to the U.S. Voting Rights Act of 1965. The Court ruled 6 to 3, along political lines, in favor of the Arizona Republican Party and against the Democratic National Committee. The majority opinion was written by Justice Alito, with which the other five conservatives concurred. Justice Gorsuch wrote a concurring opinion with which Justice Thomas concurred. Justice Kagan wrote a strong dissent, with which Justices Breyer and Sotomayor concurred. It remains to be seen what effect the Supreme Court's ruling will have on the DOJ's lawsuit against Georgia. (See Arizona Republican Party v. Democratic National Committee, U.S. Supreme Court, Case Nos. 19-1257 and 19-1258.)

General Observations
The DOJ lawsuit against Georgia is an important case. Also, it raises the question of whether DOJ will take similar action in other states where voter suppression laws have been enacted recently. Readers are encouraged to review No. 415, the DOJ complaint, and SB 202, each of which is available via a link above.

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Wednesday, July 7, 2021

No. 428: Executive Compensation in the Insurance Industry—Data for 2020 from 2021 Filings with the SEC

Background
The Insurance Forum, the monthly newsletter I published for 40 years, began with the January 1974 issue and ended with the December 2013 issue. In 1975 I began publishing in the Forum data on executive compensation in the insurance industry. After ending the Forum, I began to publish less elaborate tabulations of executive compensation data through blog posts. The most recent posts are No. 381 (July 13, 2020), No. 385 (August 7, 2020), and No. 404 (December 23, 2020), in which I published data for 2019 from my three sources: the Securities and Exchange Commission (SEC), the New York State Department of Financial Services (DFS), and the Nebraska Department of Insurance (NDI).

In my 2015 book entitled The Insurance Forum: A Memoir, in Chapter 24, I described the history of my executive compensation tabulations. Here I show data for 2020 from the SEC. I plan to show data for 2020 from the DFS and the NDI later.

SEC Data
During the final seven years of the Forum, I showed data for individuals who received at least $1 million in the year covered. In the current tabulation below, I show SEC data for individuals who received at least $5 million in 2020. Each figure in the tabulation is the "Total" shown in the SEC's "summary compensation tables" for 2020. The five components of the "Total" are "Salary," "Bonus," "Stock Awards," "Non-Equity Incentive Plan Compensation," and "All Other Compensation." Where more than one individual in a company is shown, they are listed in descending order of compensation.

The summary compensation tables for 2020 for most companies are in proxy statements filed in advance of the 2021 annual meeting of shareholders. For the two Canadian companies, Manulife Financial and Sun Life Financial, the summary compensation tables for 2020 are in 6-K annual reports, and the figures shown are in Canadian dollars. If you want to see any of the summary compensation tables for 2020, go to the EDGAR Search page of the SEC web site and key in the name of the company in which you are interested.

SEC Data for 2020
AFLAC Inc
Daniel P Amos
$14,099,140
Frederick J Crawford 5,130,661
Alleghany Corp
Weston M Hicks 7,451,772
Allstate Corp
Thomas J Wilson 18,009,544
Don Civgin 5,873,381
Glenn T Shapiro 5,032,673
Ambac Financial Group Inc
Claude LeBlanc 6,011,501
American Financial Group Inc
Carl H Lindner III 9,631,170
S Craig Lindner 9,596,241
American International Group Inc
Peter Zaffino 24,066,986
Brian Duperreault 18,810,374
Mark D Lyons 10,236,456
Douglas A Dachille 8,666,267
Lucy Fato 8,592,190
Ameriprise Financial Inc
James M Cracchiolo 20,794,703
Walter S Berman 9,200,374
William F Truscott 7,333,308
Colin Moore 5,955,390
Anthem Inc
Gail K Boudreaux 17,109,952
Gloria M McCarthy 5,530,661
John E Gallina 5,401,735
Peter D Haytaian 5,387,111
Felicia F Norwood 5,236,403
Aon plc
Gregory C Case 20,294,496
Christa Davies 12,243,943
Eric Andersen 6,674,303
Arch Capital Group Ltd
Marc Grandisson 8,779,832
Arthur J Gallagher & Co
Pat Gallagher 11,177,460
Assurant Inc
Alan B Colberg 11,855,966
Gene E Mergelmeyer 5,649,562
Assured Guaranty Ltd
Dominic J Frederico 10,876,524
AXIS Capital Holdings Ltd
Albert A Benchimol 7,265,614
Berkshire Hathaway Inc
Gregory E Abel 19,014,250
Ajit Jain 19,014,250
Brighthouse Financial Inc
Eric Steigerwalt 8,133,344
Brunswick Corp
David M Foulkes 7,820,863
Centene Corp
Michael F Neidorff 24,956,777
Kenneth A. Burdick 15,042,226
Jeffrey A Schwaneke 8,006,713
Brandy L Burkhalter 7,807,113
Jesse N Hunter 7,679,402
Chubb Ltd
Evan G Greenberg 20,328,167
John W Keogh 8,627,780
John J Lupica 6,722,380
Paul J Krump 6,438,889
Philip V Bancroft 5,012,115
Cigna Corp
David M Cordani 19,929,493
Timothy C Wentworth 10,780,189
Eric P Palmer 6,336,563
Matthew G Manders 6,204,451
CNA Financial Corp
Dino E Robusto 11,469,174
Douglas M Worman 5,157,796
CNO Financial Group Inc
Gary C Bhojwani 8,260,886
CVS Health Corp
Larry J Merlo 23,043,822
Jonathan C Roberts 13,001,212
Karen S Lynch 11,307,916
Eva C Boratto 8,921,153
Alan M Lotvin MD 7,472,175
Equitable Holdings Inc
Mark Pearson 14,874,955
Seth Bernstein 9,402,563
Jeffrey Hurd 5,359,626
Nick Lane 5,225,351
Anders Malmström 5,120,515
Everest Re Group Ltd
Juan C Andrade 8,063,212
Mark Kociancic 5,791,714
Fidelity National Financial Inc
Raymond R Quirk 9,716,868
First American Financial Corp
Dennis J Gilmore 11,173,959
Kenneth D DeGiorgio 5,538,235
Christopher M Leavell 5,528,016
Genworth Financial Inc
Kevin D Schneider 9,087,804
Daniel J Sheehan IV 8,635,193
Thomas J McInerney 7,357,588
Globe Life Inc
Gary L Coleman 9,158,910
Larry M Hutchison 8,443,364
Hartford Financial Services Group Inc
Christopher Swift 11,806,195
Douglas Elliot 7,542,532
Heritage Insurance Holdings Inc
Bruce Lucas 7,787,404
Humana Inc
Bruce D Broussard 16,489,639
Brian A Kane 5,543,558
Kemper Corp
Joseph P Lacher Jr 9,251,315
Lincoln National Corp
Dennis R Glass 14,300,822
Loews Corp
James S Tisch 5,838,853
David B Edelson 5,698,625
Kenneth I Siegel 5,571,515
Jonathan M Tisch 5,066,530
Magellan Health Inc
Kenneth J Fasola 7,516,266
James Murray 7,382,021
Manulife Financial Corp
(Canadian Dollars)
Roy Gori 14,697,088
Marianne Harrison 5,904,563
Anil Wadhwani 5,700,992
Scott Hartz 5,353,629
Phil Witherington 5,171,813
Marsh & McLennan Companies Inc
Daniel S Glaser 19,695,980
John Q Doyle 8,202,312
Mark C McGivney 5,943,911
Peter C Heam 5,734,867
Martine Ferland 5,145,730
MetLife Inc
Michel A Khalaf 15,434,255
Bill Pappas 7,063,257
Steven J Goulart 6,839,384
John D McCallion 6,800,860
Ramy Tadros 5,681,122
MGIC Investment Corp
Timothy Mattke 5,517,169
Molina Healthcare Inc
Joseph M Zubretsky 17,812,327
Marc S Russo 6,189,788
Mr Cooper Group Inc
Jay Bray 9,261,290
Christopher Marshall 5,747,012
Anthony Ebers 5,261,400
Primerica Inc
Glenn J Williams 5,279,867
Principal Financial Group Inc
Daniel J Houston 15,614,418
Timothy M Dunbar 5,414,165
Deanna D Strable-Soethout 5,234,424
Progressive Corp
Susan Patricia Griffith 15,220,523
Protective Life Ins Co
Richard J Bielen 6,467,503
Prudential Financial Inc
Charles F Lowrey 14,990,254
Robert M Falzon 11,986,516
Stephen Pelletier 9,257,246
Scott G Sleyster 7,672,098
Andrew F Sullivan 6,271,772
Kenneth Y Tanji 5,040,380
Radian Group Inc
Richard G Thornberry 7,944,227
Reinsurance Group of America Inc
Anna Manning 9,044,233
RenaissanceRe Holdings Ltd
Kevin J O'Donnell 9,556,635
Sun Life Financial Inc
(Canadian Dollars)
Dean A Connor 10,090,374
Stephen C Peacher 7,152,382
Travelers Companies Inc
Alan D Schnitzer 18,990,270
Avrohom J Kess 6,576,439
Gregory C Toczydlowski 5,446,367
Michael F Klein 5,136,598
Daniel S Frey 5,122,446
UnitedHealth Group Inc
David S Wichmann 17,872,713
Andrew Witty 12,857,176
Dirk C McMahon 12,606,484
John F Rex 12,597,062
Patricia L Lewis 7,190,693
Unum Group
Richard P McKenney 13,258,738
Voya Financial Inc
Rodney O Martin Jr 13,597,008
Christine Hurtsellers 5,414,402
W R Berkley Corp
William R Berkley 10,153,856
W Robert Berkley Jr 9,982,728
White Mountains Ins Group Ltd
G Manning Rountree 7,170,628
Frank R Bazos 5,417,208
Reid T Campbell 5,255,382

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