Monday, October 28, 2019

No. 339: The House Judiciary Committee Wins a Major Court Victory

On July 26, 2019, the House Judiciary Committee (HJC) filed in federal court an application for an order authorizing release to HJC of certain grand jury materials. On September 13 the Department of Justice (DOJ) responded to the application. On October 3 Doug Collins, the ranking minority member of HJC, filed an amicus brief arguing that the court should deny the application without prejudice because, among other reasons, the House has not authorized HJC to open an impeachment proceeding.

On October 25 Chief Judge Beryl A. Howell of the U.S. District Court for the District of Columbia handed down a lengthy opinion and a brief order granting HJC's application. DOJ had redacted certain material from the report filed in March 2019 by Special Counsel Robert S. Mueller III. (See In re Application of HJC for an order authorizing release of certain grand jury materials, U.S. District Court. District of Columbia, Grand Jury Action No. 19-48.)

Excerpts from the Opinion
The opinion includes a one-page table of contents and 74 pages of text. Here (without citations) are the first three paragraphs and the concluding two paragraphs of the opinion (the full opinion and the order are in the complimentary package offered at the end of this post):
In March 2019, Special Counsel Robert S. Mueller III ended his 22-month investigation and issued a two-volume report summarizing his investigative findings and declining either to exonerate the President from having committed a crime or to decide that he did. The Special Counsel explained that bringing federal criminal charges against the President would "potentially preempt constitutional processes for addressing presidential misconduct." With this Statement, the Special Counsel signaled his view that Congress, as the federal branch of government tasked with presidential impeachment duty under the U.S. Constitution, was the appropriate body to resume where the Special Counsel left off.
The Speaker of the House of Representatives has announced an official impeachment inquiry, and the House Judiciary Committee ("HJC"), in exercising Congress's "sole Power of Impeachment," is reviewing the evidence set out in the Mueller Report. As part of this due diligence, HJC is gathering and assessing all relevant evidence, but one critical subset of information is currently off limits to HJC: information in and underlying the Mueller Report that was presented to a grand jury and withheld from Congress by the Attorney General.
The Department of Justice ("DOJ") claims that existing law bars disclosure to the Congress of grand jury information. DOJ is wrong. In carrying out the weighty constitutional duty of determining whether impeachment of the President is warranted, Congress need not redo the nearly two years of effort spent on the Special Counsel's investigation, nor risk being misled by witnesses, who may have provided information to the grand jury and the Special Counsel that varies from what they tell HJC. As explained in more detail below, HJC's application for an order authorizing the release to HJC of certain grand jury materials related to the Special Counsel investigation is granted....
For the foregoing reasons, HJC's application is granted. Consequently, DOJ is ordered to provide promptly, by October 30, 2019, to HJC all portions of the Mueller Report that were redacted pursuant to Rule 6(e) and any underlying transcripts or exhibits referenced in the portions of the Mueller Report that were redacted pursuant to Rule 6(e). HJC is permitted to file further requests articulating its particularized needs for additional grand jury information requested in the initial application.
An appropriate Order accompanies this Memorandum Opinion.
The Order
The "final and appealable" order grants HJC's application and orders DOJ to disclose to HJC, by October 30, certain material from the Mueller Report. It also says HJC may submit further requests for material in addition to the material requested in the application.

General Observations
At this writing I do not know whether DOJ will comply with the order. Recent press reports say DOJ is studying the ruling and considering its options. Meanwhile, I strongly recommend you read the entire opinion, whether or not you have read the Mueller Report. The early sections of the opinion include an interesting summary of the Mueller report.

In No. 295 (November 9, 2018), I wrote about the "Road Map" the Watergate Grand Jury transmitted under seal to HJC in 1974. HJC used the Road Map in developing articles of impeachment against President Richard Nixon. On September 14, 2018, three individuals petitioned for an order to unseal the Road Map. On October 11, 2018, Chief Judge Howell granted the petition.

Available Material
In the above mentioned No. 295, I offered a complimentary 68-page package containing the Road Map. That package is still available.

Now I am offering a complimentary 77-page PDF consisting of Chief Judge Howell's opinion (75 pages) and her order (2 pages). Email and ask for the October 2019 package relating to Chief Judge Howell's ruling on the HJC application.


Thursday, October 24, 2019

No. 338: Greg Lindberg—An Update

In No. 309 (April 17, 2019), I discussed the indictment of Greg E. Lindberg and three others by a federal grand jury in North Carolina. In No. 320 (July 1, 2019), I provided an update, including a discussion of the placement of four Lindberg insurance companies into court-ordered rehabilitation at the request of the North Carolina insurance commissioner. Here I provide a further update. (See U.S.A. v. Lindberg, U.S. District Court, Western District of North Carolina, Case No. 5-19-cr-22.)

The Lindberg Motion to Dismiss
On September 18, 2019, Lindberg filed a motion to dismiss the indictment for failure to state an offense. Here (without citations) are the first two paragraphs of the supporting memorandum (the motion and the full supporting memorandum are in the complimentary package offered at the end of this post):
The government's entire case against Greg E. Lindberg turns on a legally flawed understanding of what constitutes an "official act." According to the government, requesting a personnel move is an official act giving rise to federal criminal liability even when the defendant in no way requested an ultimate outcome on any matter or proceeding that may in the future be pending before the government.
The government's theory is foreclosed by the logic of two recent decisions of the Supreme Court: McDonnell v. U.S. and Skilling v. U.S. And the government's theory raises the full range of constitutional issues that the Court identified in those decisions. Most notably, prosecutions of this nature will inhibit the rights of all Americans to make demands of their elected representatives—and vote and contribute accordingly. Because the charges against Mr. Lindberg are legally infirm, this Court can—and should—dismiss the indictment against him.
The Government Opposition
On September 25 the U.S. Attorney filed an opposition to the Lindberg motion to dismiss the indictment. Here (without citations) is the three-paragraph introduction to the opposition (the full opposition is in the complimentary package offered at the end of this post):
Decisions to hire, fire, assign, and reassign government employees are core official acts under McDonnell v. U.S. The Bill of Indictment charges the defendant, a wealthy insurance executive, with offering a $2 million bribe to the top ranking insurance official in North Carolina to remove a subordinate regulator the defendant did not like, and replace her with one of the defendant's co-conspirators or another individual of his choosing. The defendant's argument that he could do this as long as he did not explicitly request an "ultimate outcome" rests upon a misreading of McDonnell, which nowhere applies an "ultimate outcome" test. Instead, as McDonnell and the courts that have subsequently interpreted that decision have made clear, the removal of the disfavored regulator—and her replacement by a regulator of the defendant's choosing—were themselves "official acts." This Court should reject the defendant's novel and erroneous interpretation of McDonnell.
Similarly, the defendant's argument that Skilling v. U.S. imposed a new requirement that the government must prove a personal financial benefit to a bribe payor is unsupported by any authority, including the Skilling decision itself. A bribe is a bribe, regardless of the payor's motive or realization of profit.
Finally, the defendant's constitutional concerns—regarding the First Amendment's alleged protection of the exchange of campaign contributions for specific action—are unfounded, and have already been addressed by the Supreme Court. When a campaign contribution is conditioned on specific official action it constitutes a bribe and is not protected by the First Amendment. McCormick v. U.S.
The Lindberg Reply
On October 2 Lindberg filed a reply to the government's opposition to the motion to dismiss the indictment. Here is the first paragraph of the argument in the reply (the full reply is in the complimentary package offered at the end of this post):
The government is incorrect that the jury, rather than the Court, must decide the legal definition of "official act." Before trial, a defendant may move to dismiss an indictment for failure to state an offense. And the Court must grant the motion if the "indictment fails to allege facts which constitute a prosecutable offense." Thus, where there is "an infirmity of law in the prosecution" contained in the indictment, a case should not reach a jury. That is the situation here. Because Mr. Lindberg's indictment fails to allege either an official act—a required element of all charges against him—or a bribery scheme that benefitted him, the Court must dismiss the indictment.
The Hayes Guilty Plea
Robert Cannon Hayes is one of Lindberg's four co-defendants named in the indictment. He was charged with five criminal counts: one count of conspiracy to commit honest services wire fraud, one count of bribery concerning programs receiving federal funds and aiding and abetting, and three counts of false statements.

On September 27 Hayes pleaded guilty to one count of false statements. The plea agreement is not publicly available. What is publicly available is a document called "entry and acceptance of guilty plea." It lists 39 questions the magistrate judge asked Hayes, and shows the answers given by Hayes. It also includes the magistrate judge's acceptance of the guilty plea on October 2. The document is in the complimentary package offered at the end of this post.

The Journal Article
On October 4 the print edition of The Wall Street Journal carried a 2,540-word front-page article entitled "Indicted Executive Used Operatives To Spy on Women—Insurance tycoon's surveillance included GPS trackers, secret photos, dossiers." The reporters were Mark Maremont and Leslie Scism. Here are the first few sentences of the article:
Federal investigators were closing in on Greg Lindberg. FBI agents confronted the North Carolina insurance tycoon last year as they probed whether he tried to bribe a state regulator. In March, officials obtained a sealed warrant for his arrest. His attorneys were negotiating his surrender.
Mr. Lindberg also had something else on his mind—the comings and goings of a number of women he was dating, interested in dating, or, in at least one case, cultivating as an egg donor for his future offspring.
Mr. Lindberg paid for dozens of surveillance operatives to tail the women up to 24 hours a day, taking surreptitious photos and sometimes putting GPS trackers on their vehicles, according to former security staffers and copies of internal reports produced by these operatives that were reviewed by The Wall Street Journal.
General Observations
As indicated in No. 320, I think the federal criminal case against Lindberg and his four associates will be lengthy. I plan to report further developments.

I found the Journal article shocking. I have no idea where it might lead, and will not speculate on what if anything will happen as a result of the findings in the article.

Available Material
The complimentary packages offered in Nos. 309 and 320 are still available. Now I am offering a complimentary 62-page PDF consisting of the Lindberg motion to dismiss the indictment (27 pages), the government's opposition to the motion to dismiss (16 pages), Lindberg's reply to the opposition (15 pages), and the material relating to the guilty plea by Hayes (4 pages). Email and ask for the October 2019 Lindberg package.


Thursday, October 17, 2019

No. 337: Long-Term Care Insurance—Another Class Action Lawsuit Against Genworth

On September 21, 2018, Richard F. Burkhart and four other individuals filed a class action lawsuit against Genworth Financial, Inc. (Genworth) and four affiliates relating to long-term care (LTC) insurance. The plaintiffs filed the lawsuit in state court in Delaware, where Genworth and several of its affiliates were organized. On January 29, 2019, according to the docket, the plaintiffs filed a confidential, unredacted version of an amended complaint, which I have not seen. On February 5, 2019, the plaintiffs filed a redacted version of the amended complaint, which I discuss in this post. (See Burkhart v. Genworth, Court of Chancery, State of Delaware, Case No. 2018-0691.)

The Parties
Three plaintiffs are Massachusetts residents and two are Connecticut residents. Three of them bought LTC insurance policies during the 2002-2004 period from General Electric Capital Assurance Company, a predecessor of Genworth Life Insurance Company (GLIC). One bought an LTC insurance policy in 2013 from GLIC. One is an agent who sold LTC insurance policies and other policies issued by GLIC. The defendants are Genworth, GLIC, and three other Genworth affiliates.

The Amended Complaint
The amended complaint describes how Genworth and its affiliates allegedly reduced GLIC's capital to the detriment of policyholders and agents. Here is the first paragraph of the introduction (the amended complaint is in the complimentary package offered at the end of this post):
This action challenges a deliberate, long-term scheme by defendant Genworth, an insurance holding company, and by its affiliated defendants, to bleed capital from GLIC, a wholly-owned insurance subsidiary of Genworth upon which over a million policyholders depend for long-term care insurance benefits in the event that they become disabled. This conduct has profoundly harmed and will continue to harm GLIC policyholders and the agents through whom such policyholders purchased insurance. Absent injunctive and other equitable relief, defendants' conduct will leave the policyholders at critical risk at the point in their lives when they have greatest need for the benefits provided by the policies.
The amended complaint describes how Genworth allegedly used fraudulent transfers to remove assets and capital support from GLIC for the benefit of other Genworth companies, shareholders, bondholders, and management, to the detriment of GLIC, its policyholders, and its agents. Among the allegedly fraudulent transfers are substantial dividends, the termination of a reinsurance transaction, and the proposed merger with China Oceanwide. The amended complaint includes four counts: (1) Intentional Fraudulent Transfer—Payment of GLIC Dividends, (2) Constructive Fraudulent Transfer—Payment of GLIC Dividends, (3) Intentional Fraudulent Transfer—Reinsurance Termination, and (4) Constructive Fraudulent Transfer—Reinsurance Termination. The plaintiffs seek, among other things, an unwinding of the reinsurance termination, an unwinding of the GLIC dividends, attorney fees, and costs.

The Redactions
The redactions are three paragraphs (24 lines) in the amended complaint. Here are four paragraphs preceding and four paragraphs following the redactions:
60. There is substantial evidence that was not known or discoverable by Plaintiffs at the time the GLIC dividends were paid that demonstrates that Genworth knew full well that GLIC's DLR [disabled life/claim reserve] was inadequate long before it corrected the DLR in November 2014 and again in 2016, and rather than correct the inaccuracies in the Statutory Financial Statements filed with the [Delaware] Department, Genworth suppressed the adverse information.
61. In January 2014, Genworth hired James Boyle as the CEO of its U.S. Life Insurance Division ("Division"), which included the long-term care business of GLIC. Shortly thereafter, Lynne Patterson was hired as the Division's interim CFO. In May 2014, Patterson began a review and investigation of the underlying actuarial assumptions for long-term care reserves.
62. On information and belief, in early June 2014, following a series of meetings with the actuaries involved in developing the reserves, Patterson discovered that the assumptions the actuaries were using to develop the reserves had been "back-fitted" to meet the demands of senior management and were unreliable. Boyle and Patterson shared their concerns with Genworth's CFO, Martin Klein, on June 16, 2014.
63. On July 16, 2014, Boyle advised Genworth's Audit Committee: that John Nigh, the Division's chief actuary, and Loida Abraham, a supervising actuary, had attempted to manipulate actuarial assumptions to reduce long-term care claim reserves; that Genworth's chief actuary, Robert Vrolyk, on June 6, 2014, had admitted to Boyle that based on independent work Vrolyk had performed, there may have been an error in Genworth's long-term care claim reserve calculations of as much as 20%, or approximately $500-600 million; that three in-house actuaries overseen by Patterson to prepare a new "clean-slate" estimate of long-term care claim reserves using actual claims experience had arrived at a claim reserve that was $800 million higher than previously stated; that assumptions underlying the long-term care claim reserve announced in December 2013 had not been properly peer-reviewed, and that the documentation needed to support the claim reserve announced in December 2013 was incomplete or missing; and that Boyle and Patterson were being isolated and that efforts were being made to slow down a final conclusion regarding the claim reserve's adequacy and amount. Those efforts included directions to Milliman, an independent actuarial firm that Genworth had retained, to eliminate its validation of the proposed $800 million claim reserve adjustment.
64. Five lines redacted.
65. Seven lines redacted.
66. Five lines redacted.
67. Seven lines redacted.
68. On information and belief, in or around mid-July 2014, Boyle gave a "red alert" warning to Genworth's Board of Directors.
69. Less than two weeks later, on July 28, 2014, Boyle and Patterson resigned, about six months after joining the company. Genworth issued a press release stating that Thomas J. McInerney, Genworth's CEO, would also assume the duties of CEO of the Division effective immediately.
70. Immediately following the resignation of Boyle and Patterson, on a July 30, 2014 investor conference call, McInerney, who was now CEO of both Genworth and the Division, revealed that Genworth would be conducting a detailed review of its DLR assumptions, methodology and process, and that changes to the assumptions for the DLR could be required as a result.
71. On November 6, 2014, Genworth's management disclosed during an earnings call with investors that the DLR for its long-term care policies had been understated by $589 million in the Statutory Financial Statements filed with the [Delaware] Department, resulting in a reserve restatement in that amount (the "2014 DLR Restatement"). During that call, Klein, Genworth's CFO, stated that approximately half of this overall increase in the DLR was attributable to "updating" assumptions regarding claim termination rates, including adjusting the average length of claim assumption to reflect Genworth's actual experience between 2010 and 2013, the period during which the GLIC Dividends were paid.
The Motion to Dismiss
On March 13, 2019, Genworth filed a motion to dismiss. Here is the first paragraph of the summary (the full motion to dismiss is in the complimentary package offered at the end of this post):
The named plaintiffs in this purported nationwide class action are long term care ("LTC") insurance policyholders of defendant Genworth Life Insurance Company ("GLIC") and agents who sold LTC policies for GLIC. The policyholder Plaintiffs have been insured continuously since they bought their policies. Not one alleges to have ever made an LTC policy claim, let alone that a claim has gone unpaid. The agent Plaintiffs are compensated through commissions paid each time an annual premium is paid on an LTC policy they sold; they also do not allege that GLIC has ever failed to pay them a commission they are owed. Plaintiffs nonetheless ask this Court to reverse GLIC's payment of $410 million in dividends between 2012 and 2015 to its corporate shareholder parent and to unwind a 2016 merger of subsidiaries because, at some unspecified point in the distant future, GLIC might have insufficient assets to pay their possible LTC claims and commissions. Plaintiffs assert that these were fraudulent transfers of GLIC's assets to other Genworth affiliates. This action should be dismissed in its entirety because Plaintiffs fail to allege an actual or imminent injury sufficient to confer standing in this Court.
The Opposition to the Motion to Dismiss
On April 26, 2019, the plaintiffs filed an opposition to the motion to dismiss. Here is the first paragraph (the full opposition is in the complimentary package offered at the end of this post):
In their Motion to Dismiss, Defendants posit a classic Catch-22. They argue first that Plaintiffs sued too soon, because Defendant Genworth Life Insurance Company ("GLIC") has not (yet) defaulted on the relevant insurance policies. At the same time, Defendants argue Plaintiffs sued too late, because the challenged transfers cannot be avoided more than four years after they were made. That is, Plaintiffs must wait decades until they are infirm and GLIC collapses, at which point they will be told it is too late to avoid the challenged transfers. Catch-22. [Emphasis in original.]
The Reply to the Opposition to the Motion to Dismiss
On June 14, 2019, Genworth filed a reply to the opposition to the motion to dismiss. Here, without citations, is the first paragraph of the summary (the full reply is in the complimentary package offered at the end of this post):
Plaintiffs assert repeatedly that Defendants' 2012-2015 dividend payments and purported "Reinsurance Termination" caused them "injury," but Plaintiffs do not plead facts demonstrating that any such injury is actual or imminent. Their Answering Brief admits that "GLIC has not yet defaulted" on any obligations to Plaintiffs. Their Amended Complaint can only conclusorily [sic] speculate that GLIC "will likely become unable to pay its policyholders and agents in full" at some indeterminate point in the far future. And Plaintiffs also admit that "the maturity date and scope of any particular policyholder's claim is unknowable."
General Observations
Oral argument on Genworth's motion to dismiss is scheduled for October 21, 2019. It will be interesting to see the judge's ruling on the motion to dismiss.

With regard to the redactions in the amended complaint, they probably reflect Milliman's findings, which Milliman probably submitted to Genworth on a confidential basis. I have been through this before.

In 2008, when Conseco transferred its LTC insurance company to a trust that would own Senior Health Insurance Company of Pennsylvania (SHIP), Conseco told the Pennsylvania Insurance Department that Milliman had prepared a report saying the assets transferred would be sufficient to run off all of SHIP's LTC insurance business. I tried to obtain the Milliman report, but Conseco and the Department said it was confidential. As I reported in No. 308 (April 11, 2019), SHIP's liabilities of $2.653 billion at the end of 2018 exceeded its assets of $2.206 billion, leaving the company insolvent by $447 million. The deficit was $481 million as of March 31, 2019, and $496 million as of June 30, 2019. Many years remain before all of SHIP's LTC insurance business runs off.

As a layman—I am not an attorney—I read the documents in this case. In my opinion, the arguments advanced by the plaintiffs are stronger than those advanced by the defendants, although others who read the documents may feel differently. If the lawsuit survives the motion to dismiss, the case should be followed closely. However, like other such lawsuits, the case is likely to be settled before trial. I plan to report further developments.

Available Material
I am offering a complimentary 227-page PDF consisting of the amended complaint (65 pages), the motion to dismiss the amended complaint (60 pages), the opposition to the motion to dismiss the amended complaint (64 pages), and the reply to the opposition to the motion to dismiss the amended complaint (38 pages). Email and ask for the October 2019 package relating to Burkhart v. Genworth.


Thursday, October 10, 2019

No. 336: Long-Term Care Insurance—An Update on the Newman Lawsuit Against Metropolitan Life

In No. 253 (February 15, 2018), I wrote about a class action lawsuit filed in March 2016 by Margery Newman, an Illinois resident, against Metropolitan Life Insurance Company relating to long-term care (LTC) insurance. She was 56 when she bought an "LTC Premier" policy in September 2004. The policy included a "reduced-pay at 65 option," which Metropolitan had described as follows in a marketing brochure:
By paying more than the regular annual premium amount you would pay each year up to the Policy Anniversary on or after your 65th birthday, you pay half the amount of your pre-age 65 premiums thereafter.
Before Newman turned 65, the semiannual premium was $3,813.68. In September 2012 the semiannual premium declined by 50 percent, to $1,906.84. In March 2015, Metropolitan increased the semiannual premium by 102 percent, to $3,851.81.

The Complaint
In her March 2016 complaint and June 2016 amended complaint, Newman alleged breach of contract, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, fraud, and fraudulent concealment. In July 2016 Metropolitan filed a motion to dismiss the complaint for failure to state a claim. In March 2017 U.S. District Court Judge Thomas A. Durkin dismissed the complaint without prejudice. His ruling is in the complimentary package, which is still available, offered at the end of the above-mentioned No. 253.

In April 2017, in accordance with the judge's ruling, Newman filed a motion for leave to file a second amended complaint and attached a proposed second amended complaint. The judge denied the motion and dismissed the case with prejudice. (See Newman v. Metropolitan, U.S. District Court, Northern District of Illinois, Case No. 1:16-cv-3530.)

The Appeal
Newman appealed to the Seventh Circuit, and the case was assigned to a three-judge panel. On February 6, 2018, the panel unanimously reversed the district court's action and sent the case back to the district court for further proceedings. Here is the final paragraph of the panel's ruling (the full ruling is in the complimentary package, which is still available, offered at the end of the above-mentioned No. 253):
Newman asserts that MetLife lured her into a policy by promising a trade of short-term expense for long-term stability. She took the deal and spent nine years investing in a plan, only to have MetLife pull the rug out from under her. Neither MetLife's brochure nor the terms of the policy forecast this possibility. These allegations were enough to entitle her to prevail on the liability phase of her contract claim, and they are enough to permit her to go forward on her other theories. We therefore REVERSE the district court's grant of MetLife's motion to dismiss and REMAND for further proceedings.
On February 20, 2018, Metropolitan petitioned for a rehearing by the full appellate court. On March 7 Newman opposed the petition. On March 22 the panel denied the petition and filed an amended ruling. There were only a few changes from the panel's original ruling. One of the changes was in the next-to-the-last sentence of the final paragraph quoted above. That sentence in the amended ruling reads: "These allegations were enough to state a claim under the theories Newman presented." The amended 17-page appellate ruling is in the complimentary package offered at the end of this post. (See Newman v. Metropolitan, U.S. Court of Appeals for the Seventh Circuit, Case No. 17-1844.)

Recent Developments in the District Court
On April 18, 2018, Metropolitan filed an answer to Newman's complaint. During the next few months several individuals sought to intervene in the case, and three were allowed to do so. During that time, there were also discussions of mediation with the goal of settling the case. In August 2018 the parties held a settlement conference. In November the judge held a telephone conference to discuss settlement issues, but the parties were not able to reach a settlement. In December the judge ordered the parties to submit a proposed discovery plan for class certification.

On January 3, 2019, the parties submitted a proposed discovery plan for class certification. On January 24 the parties said settlement discussions were ongoing. On January 27 the parties said they have agreed to private mediation. On March 5 Newman filed a motion for a stay pending the outcome of the private mediation. On March 12 the judge granted the motion. On April 25 the parties said they are proceeding with private mediation.

On September 24, I emailed an attorney on each side asking whether they think the private mediation eventually will succeed or whether they think the case will go to trial. One acknowledged the email but declined to comment. The other did not acknowledge the email.

General Observations
Newman is an interesting case. However, I will not speculate on whether the private mediation will succeed, or whether the case will go to trial. I plan to report significant further developments in the case.

Available Material
I am offering a complimentary 17-page PDF consisting of the March 22, 2018 appellate panel's amended ruling. Email and ask for the October 2019 package relating to Newman v. Metropolitan.


Thursday, October 3, 2019

No: 335: Executive Compensation in the Insurance Industry in 2018

Beginning in 1975, in many issues of The Insurance Forum, I provided tabulations of executive compensation data in the insurance industry. The final tabulation was in the July 2013 issue, because I ended the Forum with the December 2013 issue. From time to time since then, I have posted some executive compensation data on my blog. The most recent tabulation was in No. 287 (September 24, 2018), which showed data for 2017. Here I show data for 2018.

Sources of Data
The three sources of data for my tabulations have long been the Securities and Exchange Commission (SEC), the New York State Department of Financial Services (DFS), and the Nebraska Department of Insurance (NDI). In some instances, the figure I show for an individual differs from one of my sources to another. A reason for such occurrences is differing definitions of compensation among the sources.

Chapter 24 of my 2015 book, The Insurance Forum: A Memoir, describes the history of my executive compensation tabulations. It also describes the efforts of the insurance industry and state insurance regulators to prevent access to all or some of the data. Chapter 24 is in the complimentary package offered at the end of this post.

During the final seven years of the Forum, I showed data for individuals who received at least $1 million in the year under study. The final tabulation in the Forum, showing data for 2012, is in the complimentary package offered at the end of this post. In the new tabulation in this post, I show data for individuals who received at least $5 million in 2018. Where two or more individuals in a company are shown, they are listed in descending order of compensation.

SEC Data for 2018
SEC data are filed by shareholder-owned public companies. Each figure I show is the "total" in the 2019 Summary Compensation Table (Table). The components of the "total" are "salary," "bonus," "stock awards," "option awards," "non-equity incentive plan compensation," "change in pension value and non-qualified deferred compensation earnings," and "all other compensation."

The Table for most companies is in the proxy statement filed in advance of the company's 2019 annual meeting of shareholders. For a few companies, the Table is in the 10-K annual report for 2018. For the Canadian companies—Manulife and Sun Life—the Table is in the 6-K annual reports for 2018. The documents referred to here are available to the public without charge on the SEC website at

SEC Data for 2018
Daniel P Amos
Frederick J Crawford
Eric M Kirsch
Alleghany Corp
Weston M Hicks
Joseph P Brandon
Allstate Corp
Thomas J Wilson
Steven E Shebik
John E. Dugenske
Glenn T Shapiro
AMBAC Financial Group
Claude LeBlanc
American Financial Group
Carl H Lindner III
S Craig Lindner
American International Group
Brian Duperreault
Peter Zaffino
Douglas A Dachille
Kevin T Hogan
Siddhartha Sankaran
Ameriprise Financial
James M Cracchiolo
Walter S Berman
William F Truscott
Colin Moore
Gail K Boudreaux
Brian T Griffin
Peter D Haytaian
Gloria M McCarthy
John E Gallina
Gregory C Case
Christa Davies
Arch Capital Group
Marc Grandisson
Arthur J Gallagher & Co
Pat Gallagher
Alan B Colberg
Richard S Dziadzio
Assured Guaranty
Dominic J Frederico
AXA Equitable Holdings Inc
Mark Pearson
Seth Bernstein
Jeffrey Hurd
Anders Malmström
AXIS Capital Holdings
Albert A Benchimol
Steve K Arora
Berkshire Hathaway Inc
Gregory E Abel
Ajit Jain
Brighthouse Financial Inc
Eric Steigerwalt
Peter Carlson
John Rosenthal
Brunswick Corp
Mark D Schwabero
Michael F Neidorff
Jeffrey A Schwaneke
Brandy L Burkhalter
Jesse N Hunter
Evan G Greenberg
John W Keogh
John J Lupica
Paul J Krump
Philip V Bancroft
David M Cordani
Timothy C Wentworth
Alan M Muney MD
Christopher J Hocevar
CNA Financial
Dino E Robusto
D Craig Mense
CNO Financial
Gary C Bhojwani
CVS Health (Acquired Aetna)
Larry J Merlo
Jonathan C Roberts
Derica W Rice
Thomas M Moriarty
Eva C Borrato
David M Denton 
Everest Re
Dominic J Addesso
Fidelity National Financial
Raymond R Quirk
First American Financial
Dennis J Gilmore
Genworth Financial
Thomas J McInerney
Globe Life (Formerly Torchmark)
Gary L Coleman
Larry M Hutchison
Hartford Financial Services
Christopher Swift
Douglas Elliot
Heritage Ins Holdings Inc
Bruce Lucas
Humana Group
Bruce D Broussard
Brian A Kane
Kemper Corp
Joseph P Lacher Jr
Lincoln National
Dennis R Glass
James S Tisch
David B Edelson
Kenneth I Siegel
Magellan Health Inc
Barry M Smith
Manulife (U.S. Dollars)
Roy Gori
Warren Thomson
Marsh & McLennan
Daniel S Glaser
John Q Doyle
Julio A Portalatin
Peter C Hearn
William C Fallon
Anthony McKiernan
Adam T Bergonzi
MetLife Inc
Steven A Kandarian
Michel A Khalaf
Martin J Lippert
Steven J Goulart
MGIC Investment
Patrick Sinks
Molina Healthcare
Joseph M Zubretsky
Mr Cooper Group Inc
Jay Bray
Anthony L Ebers
National General Holdings Corp
Barry Karfunkel
Robert Karfunkel
NMI Holdings Inc
Bradley M Shuster
Primerica Inc
Glenn J Williams
Principal Financial
Daniel J Houston
James P McCaughan
Susan Patricia Griffith
John P Sauerland
Protective Life
John D Johns
Richard J Bielen
Prudential Financial
John R Strangfeld
Stephen Pelletier
Mark B Grier
Charles F Lowrey
Robert M Falzon
Scott G Sleyster
Richard G Thornberry
Reinsurance of America
Anna Manning
RenaissanceRe Holdings
Kevin J O'Donnell
State Auto Financial Corp
Michael E LaRocco
Sun Life Canada (U.S. Dollars)
Dean A Connor
Jacques Goulet
Alan D Schnitzer
William H Heyman
Avrohom J Kess
Jay S Benet
Andrew P Witty
David S Wichmann
Stephen J Hemsley
Steven H Nelson
John F Rex
Universal Ins Holdings
Sean P Downes
Jon W Springer
Richard P McKenney
Voya Financial
Rodney O Martin Jr
Christine Hurtsellers
W R Berkley
William R Berkley
W Robert Berkley Jr
WellCare Health Plans
Kenneth A Burdick
White Mountains
G Manning Rountree

DFS Data for 2018
DFS 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 2019 "Schedule G" (Schedule), which is in the New York Supplement to the statutory annual statement. I obtained the Schedules through a request pursuant to the New York State Freedom of Information Law. The Life Bureau of DFS sent the Schedules for life insurance companies, and the Health Bureau of DFS sent the Schedules for health insurance companies. Both bureaus provided the Schedules by email without charge. The Schedule for life insurance companies differs significantly from the Schedule for health insurance companies.

The Schedule 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." For life insurance companies that are part of a group of companies, the Schedule may not show the individual's total compensation from all companies in the group. Also, 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 Schedule sometimes redacts the names but shows the amounts of compensation and the titles of certain individuals. In those instances, I show the individual's title and the amount of compensation.

The Schedule 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.

DFS Data for 2018
Life Insurance Companies
Aetna Life (Acquired by CVS Health)
Mark Bertolini
Thomas J Sabatino
Margaret McCarthy
Steven B Kelmar
Gary Loveman
Thomas W Weidenkopf
Karen S Lynch
Harold L Paz
Jean LaTorre
EVP Integration
EVP Government Services
SVP Medicare
SVP & Dep Gen Cnsl Aetna
SVP Commercial Business
SVP Products & Services
VP JV Operations
SVP Service Operations
VP Enterprise IT Delivery
VP Chief Mktg Officer
American Progressive
Kenneth Alan Burdick
Andrew Lynn Asher
AXA Equitable Life
Mark Pearson
Cigna Health & Life
David Cordani
First Health Life & Health
Karen S Lynch
Richard M Jelinek
Shawn M Guertin
Globe Life of New York
Frank Martin Svoboda
Guardian Life of America
Deanna Mulligan
Liberty Life Assur of Boston
Dennis A Glass
Randal J Freitag
Wilford H Fuller
Ellen G Cooper
Massachusetts Mutual Life
Roger Crandall
Melvin Corbett
Metropolitan Life
Steven Albert Kandarian
New York Life
Theodore A Mathas
John Y Kim
John T Fleurant
Matthew M Grove
Anthony R Malloy
Northwestern Mutual Life
John E Schlifske
Gregory C Oberland
Principal Life
Daniel Joseph Houston
President Global Asset Mgmt
Karl W Nolin
Prudential Ins Co of America
John Robert Strangfeld Jr
Mark Brown Grier
Teachers Ins & Annuity Assn
Ronald Pressman
Roger Ferguson
Voya Retirement Ins & Annuity
Charles Patrick Nelson
Health Insurance Companies
Gail A Boudreaux
Joseph R Swedish
Peter David Haytaian
Gloria M McCarthy
John E Gallina
Hallmark Life
Michael Frederic Neidorff
Jesse Nathan Hunter
Humana of New York
Christopher Howal Hunter
Mutual of Omaha
James T Blackledge
Sierra Health & Life
Forrest Gregory Burke
UnitedHealthcare of New York
Peter Marshall Gill
Robert Worth Oberrender
William John Golden
WellCare Prescription Ins
Kenneth A Burdick
Andrew L Asher

NDI Data for 2018
NDI data are in a "Supplemental Compensation Exhibit" (Exhibit) filed by all insurance companies doing business in Nebraska. The Exhibit normally shows figures for ten top officials. The figure I show is the "total" for each individual. Components of the "total" are "salary," "bonus," "stock awards," "option awards," "sign-on awards," "severance payments," and "all other compensation." NDI provided the Exhibits on a CD at a cost of $80.

Where companies are members of a company group, some 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. Thus, for some individuals, the figure I show may be smaller than the individual's total compensation, for two reasons. First, I may not have found exhibits for all companies in the group. Second, some company groups may include companies that are not licensed in Nebraska and therefore do not file Exhibits.

NDI Data for 2018
Acuity, A Mutual Ins Co
Benjamin M Salzmann
Daniel P Amos
Frederick J Crawford
Eric M Kirsch
Alleghany Group
Michael C Sapnar
Javier E Vijii
AMBAC Financial Group
Claude LeBlanc
Allstate Corp
Thomas J Wilson
Steven E Shebik
John E Dugenske
Glenn T Shapiro
Dogan Civgin
American Family Ins
Jack C Salzwedel
Jonathan Ritz
Fabian John Fondriest
American Financial Group
Carl H Lindner III
American International Group
Kevin Hogan
Jay S Wintrob
American Pet Ins Co
Darryl Rawlings
Ameriprise Financial
Steven B Staver
Amtrust Financial Services
Jean Bahier
Apollo Global Management
James Belardi
Assured Guaranty
Dominic Frederico
Atlantic Specialty Ins
Timothy M Miller
Automobile Club of Michigan
Joseph Richardson Jr
Mark Pearson
Berkshire Hathaway
Thomas P Nemey
Olza Minor Nicely
Sidney Ferenc
Steven Menzies
William Evan Roberts
Timothy Kenesey
Brighthouse Holdings
Eric T Steigerwalt
John J Lupica
Cigna Health
David Cordani
Cincinnati Financial
Steven Justus Johnston
Dino Robusto
D Craig Mense
CVS Health (Acquired Aetna)
Karen S Lynch
Richard M Jelinek
Shawn M Guertin
Essent Group
Mark Casale
Everest Reinsurance
Dominic J Addesso
Factory Mutual Ins
Thomas A Lawson
Federated Mutual
Jeffrey E Fetters
Fidelity & Guaranty Life
Dennis R Vigneau
Fidelity National Financial
Raymond Randall Quirk
Roger Scott Jewkes
Erika Meinhardt
First American Title
Dennis J Gilmore
Genworth Financial
Thomas McInerney
Globe Life (Formerly Torchmark)
Frank Martin Svoboda
Guardian Life of America
Deanna Mulligan
Hartford Fire & Casualty
Douglas G Elliot
Christopher Swift
Health Care Service Corp
Paula A Steiner
Colleen Foley Reitan
Humana Group
Bruce D Broussard
Christopher Howal Hunter
Insurance Co of the West
Kevin Prior
Ernest Rady
Bernard Feldman
Jackson National Life
Barry Stowe
Paul C Myers
James R Sopha
John Hancock
Daniel Janis III
Liberty Mutual
David H Long
J Paul Condin III
Neeti Bhalla
Timothy Sweeney
Kevin H Kelley
Dennis J Langwell
Christopher L Peirce
Lincoln National
Dennis R Glass
Randal J Freitag
Wilford H Fuller
Ellen G Cooper
Main Street America
T Van Berkel
E Kuhl
Massachusetts Mutual Life
Roger Crandall
Michael Fanning
Elizabeth Chicares
Metropolitan Life
Steven A Kandarian
Mortgage Guaranty Ins
Patrick Sinks
Mutual of Omaha
James T Blackledge
Nationwide Corp
Steve Rasmussen
New York Life
Theodore A Mathas
John Y Kim
John T Fleurant
Matthew M Grove
Anthony R Malloy
Northwestern Mutual Life
John E Schlifske
Gregory C Oberland
Ohio National Life
Gary Thomas Huffman
OneAmerica Financial
James S Davison
Pacific Life
James T Morris
Primerica Inc
Glen J Williams
Principal Financial
Daniel J Houston
Karl W Nolin
Progressive Corp
Susan Patricia Griffin
Protective Life
John Johns
Deborah Long
Richard Bielen
John Sawyer
Prudential Ins Co of America
John R Strangfeld Jr
Mark Brown Grier
Radian Group
Richard Thornberry
Jonathan E Michael
Sammons Enterprises
Esfandyar E Dinshaw
Security Benefit Life
Michael Patrick Kiley
Selective Ins
Gregory E Murphy
Sentry Ins Group
Peter McPartland
Standard Ins Co
John Gregory Ness
State Farm Mutual
Michael Leon Tipsord
Teachers Ins & Annuity Assn
Ronald Pressman
Roger Ferguson
Alan D Schnitzer
Willaim H Heyman
Jay S Benet
Avrohom J Kess
Madelyn Joseph Lankton
Stevan Dean Garcia
Voya Financial
Alain Maurice Karaoglan
Rodney Owen Martin Jr
Western & Southern
John Barrett

Available Material
I am offering a complimentary 22-page PDF containing Chapter 24 of The Insurance Forum: A Memoir (12 pages) and the executive compensation tabulation in the July 2013 issue of The Insurance Forum (10 pages). Email and ask for the October 2019 package relating to executive compensation.

The 361-page Memoir may be purchased at If you would like it autographed, please so indicate on your order.