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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Wednesday, June 30, 2021

No. 427: New York's Regulation 187—A Brief Update

Background
In No. 420 (May 7, 2021), I wrote about legal developments relating to amended Regulation 187 (Reg 187) issued by the New York State Department of Financial Services (DFS). The Independent Insurance Agents and Brokers and other entities and individuals (collectively, the petitioners) challenged in court the constitutionality of Reg 187.

In July 2019, the trial court in New York found in favor of DFS by ruling that Reg 187 is constitutional. The petitioners appealed the ruling.

In April 2021, an appellate court in New York reversed the trial court's ruling by finding that Reg 187 is unconstitutional. In No. 420, I said DFS was reviewing the appellate court's ruling.

The Notice of Appeal
On May 27, 2021, DFS filed a Notice of Appeal to the Court of Appeals, which is New York State's highest court. In the notice, DFS said it is appealing from every part of the appellate ruling. At this time, I do not know when the DFS appellate brief will be filed. I plan to report further developments in this important litigation.

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Wednesday, June 23, 2021

No. 426: More on Bitcoin after Recent Ransomware Attacks

Several years ago I posted two items about Bitcoin, a form of "virtual currency" or "cryptocurrency." In view of recent ransomware attacks involving Bitcoin, I decided to prepare this update. My previous posts are No. 34 (March 3, 2014) and No. 268 (May 30, 2018). With regard to each of the four sections of this update, I provide a link to allow interested readers to see the relevant document.

The EscoCapital Case
On April 30, 2021, the Texas State Securities Board (TSSB) issued an Emergency Cease and Desist Order directed at EscoCapital and Anthony Jerome. The order requires the respondents to cease and desist immediately from: (1) offering for sale any security in Texas until the security is registered with the Securities Commissioner or is offered for sale pursuant to an exemption under the Texas Securities Act; (2) acting as a securities dealer, agent, investment adviser, or investment adviser representative in Texas until they are registered with the Securities Commissioner or are acting pursuant to an exemption from registration under the Act; (3) engaging in any fraud in connection with the offer for sale of any security in Texas; and (4) offering securities in Texas through an offer containing a statement that is materially misleading or otherwise likely to deceive the public.

The First Unum/Paul Revere Case
On May 12, 2021, the New York State Department of Financial Services (DFS) entered into a Consent Order with First Unum Life Insurance Company and The Paul Revere Life Insurance Company. The order refers to two "Cybersecurity Events" involving violations of New York State statutes or DFS regulations. The companies will pay a civil monetary penalty of $1.8 million to DFS and meet other requirements.

The Tilford Case
On June 8, 2021, the TSSB issued an Enforcement Action entitled "Richard Gregory Tilford: Convicted." Tilford (of Arlington, Texas) was sentenced to serve 40 years in state prison for engaging in a fraudulent digital marketing investment scheme. He was also sentenced to serve ten years in prison for each of six counts of selling unregistered securities, and ten years in prison for each of six counts of acting as an unregistered dealer. The sentences will run concurrently. Tilford had been indicted in Collin County, Texas, in 2018.

The TSSB Guide
For those interested in cryptocurrencies, I recommend a guide prepared by the TSSB entitled The Investor's Guide to Cryptocurrency Offerings. The guide consists of seven parts: (1) Fiat v. Virtual Currency; (2) How Cryptocurrencies Work; (3) Initial Coin Offerings; (4) Digital Money, Real Risk; (5) Crypto-Scams; (6) Enforcement Actions; and (7) Glossary.

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Wednesday, June 16, 2021

No. 425: An Important New Book about the United States Secret Service

Carol Leonnig is a top investigative reporter at The Washington Post. She holds three Pulitzer prizes. Her new book, published May 18, 2021, is entitled Zero Fail and subtitled The Rise and Fall of the Secret Service. When I first saw the 532-page book, I was intimidated. However, I got over that feeling. When I started reading the book, I was hooked, and read the entire book.

The book is divided into five major parts: (1) The Tragedy that Birthed a New Secret Service, Kennedy to Nixon, 1963-1974; (2) Meeting the Test, Ford to Clinton, 1974-1999; (3) Terror and Politics, The Bush Years, 2000-2007; (4) The Wheels Come Off, The Obama Years, 2008-2015; (5) Sliding Backward, The Trump Years, 2016-2020. The book also includes a Prologue and an Epilogue. The final section of the Epilogue summarizes the book. It reads:
Today the [Secret] Service remains spread dangerously thin. In addition to protecting a president and vice president and their families, and key senior leaders, the Service also protects hundreds of foreign leaders who visit the United States every year, investigates a broad range of financial crimes, assesses and investigates violent threats whether they are made in bars, in written letters, or on Twitter, researches the traits of school shooters to help communities prevent future attacks, helps local police track down missing and exploited children, and much more. [One Trump Administration] official told me they and their fellow senior national security advisers revere the commitment of so many of the Secret Service's soldiers on the front line, but they remain haunted that the agency hasn't been given the money, staff, or tools to do all its jobs. This neglect creates an opening for a serious attack on our democracy. "Someone in the near future needs to sit down and figure out: What is their mission? Because they can't do the mission they have now," the person said. "These people are patriots. We're letting them down and we're leaving the country at risk." It should haunt us all.
The book is superb. I think it is essential reading for anyone concerned about the survival of our democracy.

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Thursday, June 10, 2021

No. 424: Kemper's Long Struggle Relating to Lost Policyholders

On April 5, 2021, the Florida Supreme Court agreed to take a case that has been progressing in Florida state courts. I have been writing for years about the underlying subject matter, which is the handling of lost policyholders. Here I discuss the background and recent developments.

Retained Asset Accounts
The September 2010 issue of Bloomberg Markets magazine carried a special report entitled "Duping the Families of Fallen Soldiers" and subtitled "Life insurers are secretly profiting from the death benefits owed to the survivors of [military] service members and other Americans." The report became a media sensation.

Metropolitan Life Insurance Company (Met) was heavily involved in the administration of government life insurance for members of the military. An attorney at Met dreamed up the idea of sending the beneficiaries of deceased members of the military a book of drafts instead of a check for the death benefit. Met then set up for the beneficiary a "retained asset account" (RAA). Other life insurance companies did the same. As beneficiaries moved around, companies lost contact with many of them. When state unclaimed property agencies learned that companies had not been remitting unclaimed RAA funds in accordance with state unclaimed property laws, the agencies began to investigate.

Demutualizations
During the 1990s, many mutual life insurance companies, which at least in theory are owned by their policyholders, converted themselves into shareholder-owned companies through a process called "demutualization." When that occurs, the companies must contact their policyholders, for two reasons. First, they must ask their policyholders for permission to demutualize. Second, if they go through with demutualization, they must compensate their policyholders—with cash or with shares of stock in the new company—for the loss of the policyholders' ownership rights.

Unfortunately, however, the companies may have lost contact with many of their policyholders. The problem was most acute for Met, Prudential, and John Hancock. Those large companies had long been prominent in the sale of so-called industrial life insurance, which is also called "home service life insurance." When the companies exited that business many years ago, they stopped collecting premiums and deemed all their industrial policies as paid-up. Consequently, the companies lost contact with many of their policyholders.

For example, John Hancock, then based in Massachusetts, received huge amounts of undeliverable mail because the mailing addresses were outdated. That attracted the attention of Massachusetts unclaimed property officials. They were concerned that huge amounts of unclaimed property were not being turned over to the state, as required by the state's unclaimed property law, and they launched investigations. Later the matter attracted the attention of state insurance regulators, who also launched investigations.

Kemper's Litigation
In No. 133 (December 16, 2015), I wrote about a lawsuit filed by several Kemper companies against an auditing firm that was conducting an investigation on behalf of state treasurers about unclaimed property held by the companies. In that litigation, Kemper was not successful in blocking the investigation.

Florida's Tough New Rules
In 2016, the Florida Legislature imposed tough new rules on insurance companies with regard to lost policyholders and unclaimed property. Kemper has been fighting the new rules, arguing they are unconstitutional. On June 3, 2020, a three-judge panel of the District Court of Appeal of Florida, First District, in a 2-1 decision, upheld the constitutionality of the new rules. A 26-page document containing the majority and the dissenting June 3, 2020 opinions is here.

Recent Developments
As mentioned at the beginning of this post, on April 5, 2021, the Florida Supreme Court agreed to hear Kemper's appeal of the June 3, 2020 decision by the Florida First District Court of Appeal. As of May 31, 2021, several insurance industry parties have received approval to file amicus briefs in support of Kemper's argument that Florida's new rules are unconstitutional. It appears that no one has indicated an interest in filing an amicus brief in support of the argument that Florida's new rules are constitutional. Clearly the case has a long way to go. (See United Insurance Company of America v. Patronis, Florida Supreme Court, Case No. SC20-1306.)

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Wednesday, June 2, 2021

No. 423: William Barr's New Legal Problem: An Update

On May 3, 2021, as reported in No. 421 (May 20, 2021), U.S. District Judge Amy Berman Jackson issued a 41-page partially redacted opinion. The opinion grew out of a lawsuit filed in 2019 by Citizens for Responsibility and Ethics in Washington (CREW) under the federal Freedom-of-Information Act against the U.S. Department of Justice (DOJ). (See CREW v. DOJ, U.S. District Court, District of Columbia, Case No 1:19-cv-1552.)

DOJ's Two Recent District Court Filings
On May 24, 2021, DOJ filed in the district court a one-page notice of appeal, and a 21-page motion for a partial stay pending appeal along with a partially redacted 10-page Exhibit A. Those documents are here.

Circuit Court Developments
On May 25, 2021, DOJ filed its appeal of Judge Jackson's opinion. (See CREW v. DOJ, U.S. Court of Appeals, District of Columbia Circuit, Case No. 21-5113.)

On the same day, the circuit court clerk issued a 2-page order scheduling several items to be filed by June 24, 2021, and dispositive motions (if any) to be filed by July 9, 2021. The clerk's order is here.

General Observations
I do not know how long it will take for the circuit court to handle DOJ's appeal of Judge Jackson's opinion. I plan to report further significant developments in another update.

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Thursday, May 27, 2021

No. 422: An Excellent Book about How Bill Garrett Broke the Color Line in Big Ten Basketball

Many people know Jackie Robinson of the Brooklyn Dodgers broke the color line in major league baseball. However, few people know Bill Garrett of Indiana University (IU) broke the color line in Big Ten basketball.

The Book
In 2006, a friend sent me a just-published book entitled Getting Open: The Unknown Story of Bill Garrett and the Integration of College Basketball. I read the book and found it excellent. Recently I reread the book and decided to prepare this blog post.

The Authors
Getting Open was written by the father-daughter team of Tom Graham and Rachel Graham Cody. Tom grew up in Garrett's home town of Shelbyville, Indiana, graduated from Harvard Law School, and became an international trade lawyer. He was on the freshman basketball team at IU and knew many of Garrett's coaches, teammates, and fans. Rachel is a graduate of Swarthmore College and Harvard Divinity School, where she focused on African American studies.

The Book's Structure
The first part of the book ends with Shelbyville High School's victory in the 1947 Indiana state high school basketball championship. The Shelbyville starting lineup that year consisted of five seniors, including Garrett and two other outstanding black players. The second part of the book describes the "gentleman's agreement" that had prevented blacks from playing basketball in the Big Ten conference, and how the agreement was breached.

The Garrett Story
After Shelbyville won the Indiana high school championship in 1947, and after Garrett was named Mr. Indiana Basketball, many people wanted Garrett to enroll in the fall at IU. Great black athletes had been playing football at IU for years. But Garrett decided to enroll at Tennessee State University in Nashville.

Garrett transferred to IU in 1947 from Tennessee State during the legendary tenures of IU president Herman B Wells and IU head basketball coach Branch McCracken. When I arrived at IU in 1962, I began getting my hair cut in the men's barber shop in IU's Indiana Memorial Union. I learned from my barber there that Wells years earlier had fired the barber shop's manager, because he had refused to cut the hair of blacks. Wells had taken many other steps to open up IU, and he also was a staunch defender of academic freedom. Garrett became an outstanding basketball player at IU.

The Robinson Story
The book includes extensive material about Robinson. On April 15, 1947, the Brooklyn Dodgers broke the color line in major league baseball when Robinson started at first base on opening day at Ebbets Field. Branch Rickey, then the president of the Dodgers, often told a story that had haunted him for many years. In 1910, when Rickey was the baseball coach at Ohio Wesleyan University, his team had a black catcher named Charles Thomas. A hotel in South Bend, Indiana, where Rickey's team was to play Notre Dame, refused to give Thomas a room. The hotel, when pressed, agreed to put an extra cot in Rickey's room. When Rickey got to the room, he found Thomas sitting on the cot in tears, pulling at the skin on his hands, and saying, "It's my skin, Mr. Rickey. If I could pull it off, I'd be just like everybody else."

In World War II, blacks served in the military to defend our country, and many died. After the war, there was much talk about the absence of blacks in major league baseball. Rickey asked his scouts to find an outstanding black player. They located Robinson, who had been a four-sport college athlete in California, and who was playing for a black professional baseball team. When Rickey and Robinson met, Rickey asked: "Have you got the guts to play the game no matter what happens?" Robinson asked: "Are you looking for a Negro who is afraid to fight back?" Rickey replied: "I'm looking for a ballplayer with guts enough not to fight back!"

In 1946, when I was a high school junior, I played second base for Nottingham High School in my home town of Syracuse, New York. That year I got an early look at Robinson. I attended a game between the Syracuse Chiefs, then a farm team for the Cincinnati Reds, and the Montreal Royals, then a farm team for the Dodgers. Robinson played in the game, and I could tell he was very talented.

General Observations
Getting Open remains in print, and is incredibly interesting. I strongly recommend the book, especially for readers interested in the history of race relations in America.

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Thursday, May 20, 2021

No. 421: William Barr Is in Trouble Again

Statement by Former DOJ Employees
In No. 358 (posted March 2, 2020), I reported on a February 16, 2020 statement signed by about 2,700 former employees of the U.S. Department of Justice (DOJ). The statement called for the resignation of then U.S. Attorney General William P. Barr after he interfered in the prosecution of Roger Stone. I agreed with the former DOJ employees that Barr should resign. He did not resign at that time, but he resigned shortly before the end of President Donald J. Trump's departure from office. Now that Barr is a former U.S. Attorney General, a recent development has him in trouble again.

CREW's FOIA Lawsuit against DOJ
On May 28, 2019, Citizens for Responsibility and Ethics in Washington (CREW) filed a lawsuit against DOJ under the federal Freedom-of-Information Act (FOIA). The lawsuit challenges DOJ's failure to disclose to CREW certain records pertaining to DOJ's handling of the massive two-volume report of Special Counsel Robert S. Mueller III submitted to Barr on March 22, 2019. The records in question relate to whether the evidence presented in the second volume of the Mueller report was sufficient to establish that President Trump committed obstruction-of-justice offenses. The seven-page complaint is here.

The CREW lawsuit has two counts. Count 1 is "wrongful withholding of non-exempt records." Count 2 is "failure to grant expedition." (See CREW v. DOJ, U.S. District Court, District of Columbia, Case No. 1:19-cv-1552.)

The CREW lawsuit was assigned to U.S. District Judge Amy Berman Jackson. President Obama nominated her in January 2011. The Senate confirmed her in March 2011 on a 97-0 vote.

Judge Jackson's Opinion
On May 3, 2021, Judge Jackson issued a partially redacted opinion. Here is an excerpt from page 25 of the 41-page opinion (the full opinion with redactions is here):
And of even greater importance to this decision, the [DOJ] affidavits are so inconsistent with evidence in the record, they are not worthy of credence. The review of the unredacted document in camera reveals that the suspicions voiced by the judge in EPIC and the plaintiff here were well-founded, and that not only was the Attorney General [Barr] being disingenuous then, but DOJ has been disingenuous to this Court with respect to the existence of a decision-making process that should be shielded by the deliberative process privilege. [DOJ's] redactions and incomplete explanations obfuscate the true purpose of the memorandum, and the excised portions belie the notion that it fell to the Attorney General [Barr] to make a prosecution decision or that any such decision was on the table at any time.
The "Conclusion" in Judge Jackson's opinion is on pages 34-35 of the opinion. It reads:
For all of the reasons set forth above, the Court will grant both motions for summary judgment in part and deny them in part. It will grant [DOJ's] motion and enter judgment in favor of [DOJ] on Count One with respect to Document 6. But [DOJ's] motion will be denied, and [CREW's] motion will be granted with respect to Document 15, and DOJ will be ordered to produce the document to CREW. [DOJ's] renewed motion to dismiss Count Two will be granted, and the claim will be dismissed. [DOJ] must file any motion to stay by May 17, 2021, and it must inform the Court of its position on whether this [opinion] may be unsealed at that time.
DOJ's Request for an Extension
On May 14, 2021, DOJ filed an unopposed motion for a one-week extension (to May 24) to respond to Judge Jackson's May 3 opinion. She granted the motion.

General Observations
At this time (May 14), it is anticipated that DOJ will file a reply on May 24 to Judge Jackson's opinion, and that she will comment on that reply. In due course, we may see some or all of the redacted material in the opinion. We also may see more details about Barr's handling of the Mueller report during the period between his receipt of the report and the release of the redacted report to the public. If it is found that Barr misled Congress and/or the public about the contents of the report, I do not know what actions might be taken against him. I plan to report further developments.

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Friday, May 7, 2021

No. 420: The New York State Department of Financial Services Suffers a Setback on Regulation 187

Regulation 187 (Reg 187), issued by the New York State Department of Financial Services (DFS), relates to the marketing of life insurance policies and annuity contracts. On July 27, 2018, DFS issued an amended Reg 187. The Independent Insurance Agents and Brokers of New York and other entities and individuals (collectively, the petitioners) challenged the amended Reg 187 in the New York State Supreme Court (the state's trial court).

The Two Court Rulings
On July 31, 2019, the trial court judge found in favor of DFS. He ruled that the amended Reg 187 is not unconstitutional. The trial court ruling is here.

The petitioners appealed the trial court ruling in the Appellate Division (Third Department) of the New York State Supreme Court. On April 29, 2021, an appellate division judge, with the concurrence of several other judges, reversed the trial court's ruling by finding that the amended Reg 187 is unconstitutional. The appellate division ruling is here.

General Observations
The appellate division ruling is a setback for DFS. Reading the two rulings is necessary to understand the significance of the case. According to news reports, DFS is reviewing the appellate division ruling. I plan to provide updates on this case.

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Monday, May 3, 2021

No. 419: Update on Transamerica's Appeal in the Lebbin Case

No. 414 (March 23, 2021) discussed a strange twist in the appeal to the federal Eleventh Circuit Court of Appeals by Transamerica Life Insurance Company (Transamerica) of a Florida federal district court judge's decision in a lawsuit filed by the Spector-Lebbin Family Trust (Trust). The district court judge ruled that Transamerica should pay the Trust about $2.5 million, including interest, for breach of contract.

On February 23, 2021, however, in a strange twist, the Eleventh Circuit clerk wrote a letter to the parties about jurisdiction. More recent developments are discussed in this update. (See Trust v. Transamerica, U.S. Court of Appeals, Eleventh Circuit, Case No. 20-11756-AA.)

The Clerk's Follow-Up Letter
On April 21, the Eleventh Circuit clerk wrote a follow-up letter to the parties. Here is the full text:
Based upon the responses of the parties, it appears that this court has jurisdiction to consider this appeal. A final determination regarding jurisdiction will be made by the panel to whom this appeal is submitted on the merits.
A Circuit Court Judge's Order
On March 17, after the parties filed briefs in response to the clerk's February 23 letter, one of the parties filed an additional response. The other party filed a motion seeking permission to answer the additional response. On April 26, a circuit court judge issued a one-sentence order denying the motion.

General Observations
Because Florida is in the Eleventh Circuit, I said in No. 414 that I did not understand why someone in the Eleventh Circuit thought it may not have jurisdiction. I still do not understand why.

The docket does not yet identify the three circuit court judges who will be assigned to the panel that will consider the case. I think the case has been fully briefed. I also think the parties are awaiting oral argument, or a decision if the panel does not want oral argument. I plan to report further developments.

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Monday, April 26, 2021

No. 418: More on Caro's Little Book

In No. 312 (May 15, 2019), I discussed Robert A. Caro's magnificent 2019 book entitled Working and subtitled Researching, Interviewing, Writing. Recently I reread the book. As a result, I have a few suggestions.
  1. To refresh your memory about Caro, please read or reread No. 312.
  2. Please read or reread Working.
  3. Please obtain Path to Power, which is the first volume of Caro's towering biography of Lyndon Johnson. Then please read Chapter 27 entitled "The Sad Irons," which begins on page 502 of Path to Power. If you have read Working, you already know the subject of the chapter. If you have not read Working, I can tell you the subject of the chapter is a major development in American history. I promise you will be deeply impressed by the chapter, and you will understand why many prominent historians consider Caro our greatest biographer.
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Friday, April 16, 2021

No. 417: Genworth Terminates Its Agreement with China Oceanwide

On October 21, 2016, Genworth Financial, Inc. (Genworth) entered into a merger agreement with China Oceanwide (Oceanwide). Since then, the parties have entered into sixteen "waiver agreements," under each of which the parties extended the "end date" in the original merger agreement. My two most recent updates on the situation are in No. 395 (October 26, 2020) and No. 406 (January 8, 2021).

The 8-K Report and News Release
On April 6, 2021, Genworth filed with the Securities and Exchange Commission an 8-K (significant event) report. Attached to the 8-K is a news release entitled "Genworth Announces Termination of Merger Agreement with Oceanwide." Here is the first paragraph of the news release (the full news release is here):
Genworth Financial, Inc. (NYSE: GNW) (Genworth, the Company) today announced that it has exercised its right to terminate the merger agreement with China Oceanwide Holdings Group Co., Ltd. (Oceanwide) as of April 6, 2021. Terminating the agreement allows Genworth to pursue its revised strategic plan without restrictions and without uncertainty regarding its ultimate ownership, which might impact the Company's ability to successfully execute the plan.
General Observations
During the more than four years since the merger agreement between Genworth and Oceanwide was originally signed, many federal and state regulators in the United States, as well as regulators in Canada and China, have poured a tremendous amount of effort into trying to approve the agreement.

From the beginning, I have been deeply concerned about the potential impact of the agreement on Genworth's policyholders, especially its long-term care insurance policyholders. For that reason, I am relieved that the agreement has been terminated.

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Monday, April 12, 2021

No. 416: An Interesting Beneficiary Dispute

On January 22, 2021, a three-judge panel of a state appellate court in Georgia unanimously upheld a trial court ruling in an interesting beneficiary dispute between the widow and a granddaughter of the insured. For ease of reference, here are the key parties:
Donald: Donald Usher, insured, grandfather of Emery
Emery: Sarah Emery, granddaughter of Donald
Gayle: Gayle Usher, widow of Donald
GTL: Guarantee Trust Life Insurance Company, insurer
I have the trial court ruling, the appellate court panel ruling, and some documents from the trial court proceedings. Here I describe the case based on those rulings and documents. The two rulings are in the complimentary package offered at the end of this post. (See Emery v. GTL, State Court of Gwinnett County, Georgia, Case No. 18-C-04523-S6, and Georgia Court of Appeals, Third Division, Case No. A20A2082.)

Background of the Case
On October 15, 2010, GTL issued a $25,000 policy on the life of Donald. Gayle was the beneficiary. On September 11, 2015, Donald made Emery the owner and beneficiary. I found no explanation of the reason why Donald made the change.

In August 2016, about a month before Donald died, Gayle called GTL and inquired about the policy. GTL initially informed Gayle that it could not discuss the policy with her without the permission of the owner.

On August 15, 2016, despite not having sought Emery's permission to discuss the policy with Gayle, GTL faxed a policy change form to Gayle. On August 18, 2016, Gayle returned the policy change form to GTL. When GTL received the form from Gayle, it was missing a page requiring the signatures of Gayle and Emery. GTL notified Gayle and Emery that it could not process the form because it did not contain the signatures.

Emery did not respond to GTL at that time. Gayle responded that she had retained a copy of the signature page, and faxed it to GTL. The fax showed the purported signatures of Gayle and Emery.

On August 31, 2016, GTL updated its records to reflect that Gayle was the owner and beneficiary. On September 9, 2016, Donald died. On October 15, 2016, GTL paid the death benefit to Gayle. A year later, on October 3, 2017, Emery's attorney wrote to GTL and enclosed an affidavit from Emery confirming her status as owner and beneficiary of the policy.

Emery's Lawsuit
On June 18, 2018, Emery filed a lawsuit against GTL alleging bad faith failure to perform under an insurance contract, breach of contract, and negligence. After a hearing, the trial court granted GTL's motion for summary judgment. The trial court reasoned that, because GTL had paid the beneficiary named in its file, the company had complied with applicable law and was therefore insulated from liability.

Emery's Appeal
On appeal, Emery argued that the trial court erred in finding that GTL paid the death benefit to Gayle in accordance with the terms of the policy as contemplated by §33-24-41 of the Georgia Code. The appellate court panel disagreed with Emery. The panel said the statute in question does not impose on an insurance company the duty to investigate and determine whether a person fraudulently completed and submitted a policy change form.

General Observations
As indicated at the beginning of this post, I think this is an interesting case. Because I am not an attorney, it would be inappropriate for me to express a legal opinion on the case. Having said that, it is my personal belief that Gayle stole the death benefit from Emery.

Available Material
I am offering a complimentary 10-page PDF consisting of the trial court ruling (3 pages) and the appellate court panel ruling (7 pages). Email jmbelth@gmail.com and ask for the April 2021 package about the case of Emery v. GTL.

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Monday, April 5, 2021

No. 415: Georgia's New Election Law Faces Strong Legal Challenges

The Republican-controlled legislature in Georgia recently passed, and the Republican governor immediately signed, a new election law (Georgia Senate Bill 202). It is called an "election security law" by its proponents, and a "voter suppression law" by its opponents. The 98-page law faces several strong court challenges.

Here I discuss one such court challenge, a 35-page complaint in a Georgia federal court. The law and the complaint are in the complimentary package offered at the end of this post. (See The New Georgia Project et al. v. Raffensperger et al., U.S. District Court, Northern District of Georgia, Atlanta Division.)

The New Law
Two sentences on page 4 of the new law make clear it was prompted by "The Big Lie" perpetrated by former President Donald J. Trump about the results of the 2020 general election. Here are those sentences:
  • Following the 2018 and 2020 elections, there was a significant lack of confidence in Georgia election systems, with many electors concerned about allegations of rampant voter fraud.
  • Many Georgia election processes were challenged in court, including the subjective signature-matching requirements, by Georgians on all sides of the political spectrum before and after the 2020 general election.
The Complaint
The plaintiffs are The New Georgia Project and two other entities. The defendants are Georgia Secretary of State Brad Raffensperger and four other Georgia election officials. The plaintiffs allege that the new law violates the First and Fourteenth Amendments to the U.S. Constitution and Section 2 of the U.S. Voting Rights Act. The plaintiffs seek a declaration of such violations and an injunction prohibiting the defendants from enforcing the challenged provisions.

The "Nature of the Case" section of the complaint consists of seven paragraphs. Here is the second paragraph of that section:
2. After the high-turnout general election [in 2020] officials conducted multiple recounts and audits. Supporters of former President Donald J. Trump filed several lawsuits seeking to overturn the general election's results, falsely alleging widespread fraud and misconduct on the part of election officials. No court in any of these lawsuits found support for these litigants' fanciful claims. After the senatorial runoff elections, Secretary [of State] Raffensperger declared in a nationally-televised interview that Georgia "had safe, secure, honest elections."
The complaint challenges many of the provisions of the new law. Here are some of those provisions:
  • Despite nationwide scrutiny of Georgia's elections, which confirmed the absence of any fraud, insecurity, or wrongdoing, Republican members of the General Assembly passed legislation clearly intended to make it harder for lawful Georgia voters to participate in the state's elections.
  • It will impose unjustifiable burdens disproportionately on the state's minority, young, poor, and disabled citizens.
  • It will impose unnecessary and burdensome new identification requirements for absentee voting.
  • It will unduly restrict the use of absentee drop boxes and bank mobile polling places.
  • It will prohibit the state from distributing unsolicited absentee ballot applications.
  • It will prohibit third parties—including voter engagement organizations—from collecting absentee ballot applications.
  • It will burden voters with the risk of disenfranchisement due to meritless challenges that require an immediate defense of their qualifications.
  • It will invalidate ballots cast by local voters before 5:00 p.m. in a precinct other than the one to which the voters were assigned, regardless of the reason or their inability to travel to another location.
  • It will compress the time period for voting in a runoff election.
  • It will ban any non-poll worker from giving food or drink, including water, to voters waiting in line.
General Observations
The new law is a brazen attack on the voting rights of Georgians. The law was signed by the governor in a secret signing session attended by a few Republicans immediately after he received the bill. The secrecy of the signing session became a media sensation when State Representative Park Cannon of Atlanta, a Black woman and member of the Democratic minority in the legislature, knocked quietly on the governor's office door in an effort to witness the signing of the bill. She was arrested by state troopers and dragged kicking and screaming to jail.

The new law is an outright takeover of Georgia's election system by the legislature. It is clear that, if the election result in any county or precinct is disliked by the Republicans, they can take steps to alter the result to their liking.

It is my hope that the federal judge will grant the declaratory relief and the injunctive relief that the plaintiffs seek. I plan to report further developments.

Available Material
I am offering a complimentary 133-page PDF consisting of the new Georgia election law (98 pages) and the complaint filed in federal court against the law (35 pages). Send an email to jmbelth@gmail.com and ask for the April 2021 package about the new election law in Georgia.

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Tuesday, March 23, 2021

No. 414: A Strange Twist in Tranamerica's Appeal in the Lebbin Case

Background
In No. 372 (May 18, 2020), I posted an update on the Spector-Lebbin Family Trust (Trust) lawsuit against Transamerica Life Insurance Company (Transamerica). I mentioned several aspects of the case. I said it began in federal court in Maryland, and was transferred at Transamerica's request to federal court in Florida, where the policies were originally sold and where several potential witnesses were located. I also said the judge in Florida ruled Transamerica should pay the Trust about $2.5 million, including interest, for breach of contract. I also said Transamerica appealed to the federal Eleventh Circuit.

In No. 397 (November 9, 2020), I posted another update. I said Transamerica and the Trust filed their initial appellate briefs on August 31, 2020 and October 30, 2020, respectively. I also said there was not yet a timetable for the appellate case.

A Strange Twist
The Eleventh Circuit covers Alabama, Florida, and Georgia. Thus it was natural for Transamerica to file its appeal in the Eleventh Circuit. On February 23, 2021, in a strange twist, the clerk of the Eleventh Circuit wrote a letter to the parties raising a jurisdictional issue. Here is the opening paragraph of the clerk's letter (the full letter is in the complimentary package offered at the end of this post):
After review of the district court docket entries, order and/or judgment appealed from, and the notice of appeal, it appears that this court may lack jurisdiction over this appeal. If it is determined that this court is without jurisdiction, this appeal will be dismissed.
The clerk asked the parties to advise the court simultaneously within 14 days of their positions regarding the jurisdictional issue. He said they could file their responses electronically, and did not need to file paper copies. Both parties filed their responses on March 9. On March 17, the Trust filed a "motion for leave to file sur-reply." The next day, Transamerica filed an opposition to the motion. The two responses, the motion, and the opposition to the motion are in the complimentary package offered at the end of this post. At this writing, there is nothing further on the Eleventh Circuit docket.

General Observations
In their responses to the jurisdictional issue, the parties explained why they think the Eleventh Circuit has jurisdiction. I do not understand why the Eleventh Circuit thinks it may not have jurisdiction. I will report further developments.

Available Material
I am offering a complimentary 55-page PDF consisting of the Eleventh Circuit clerk's letter (2 pages), the Trust's response to the clerk's letter (21 pages), Transamerica's response to the clerk's letter (12 pages), the Trust's motion (10 pages), and Transamerica's opposition to the motion (10 pages). Email jmbelth@gmail.com and ask for the March 2021 package about the Lebbin case.

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Wednesday, March 17, 2021

No. 413: USAA's Executive Compensation for 2020 Hits the News

On March 1, 2021 (the due date), United Services Automobile Association (USAA) filed with the Nebraska Department of Insurance the 2020 Supplemental Compensation Exhibits for USAA and four other USAA companies: USAA Casualty Insurance Company, USAA Life Insurance Company, USAA General Indemnity Company, and Garrison Property and Casualty Insurance Company. The exhibits are required by Nebraska law for insurance companies doing business in the state. The five exhibits are here.

The Danner Article
Patrick Danner is a staff writer for the San Antonio Express News. In an article updated March 5 and entitled "Former USAA CEO Stuart Parker receives more than $6 million golden parachute," Danner wrote about recent executive compensation developments at USAA. He wrote not only about Parker, but also about others, including Parker's successor, Wayne Peacock. Here are the first three sentences of the Danner article:
Former USAA CEO Stuart Parker had a cushy landing following his departure last year from the San Antonio insurance and financial services company. Parker, who retired January 31, 2020, after leading USAA for almost five years, received at least $6.5 million in severance payments. The golden parachute accounted for more than half of the $11.3 million in total compensation five USAA insurance companies paid him last year.
The Cunningham Article
Waylon Cunningham writes about business and technology. On March 5, he wrote an article in the San Antonio Report entitled "Former USAA CEO Stuart Parker netted a $6.5 million severance package." Here are the first three sentences of the Cunningham article:
Former USAA CEO Stuart Parker received a severance package worth at least $6.5 million after he left the company last year. The payments, made after he retired January 31, 2020, formed the bulk of the more than $11.3 million he received in total compensation from five USAA-affiliated companies last year, according to records from the Nebraska Department of Insurance. Besides the severance package, Parker in 2020 also received $336,473 in salaries and $4.8 million in additional compensation, including bonuses.
The USAA Campaign
In the early days of this blog site, I posted three blog items about USAA's campaign to repeal Nebraska's century-old insurance executive compensation disclosure law. William H. McCartney, who at the time was senior vice president and associate general counsel of USAA, led the repeal effort. He had served as Nebraska's director of insurance from 1987 to 1994, and as president of the National Association of Insurance Commissioners in 1992. The repeal effort failed, and Nebraska's disclosure law remains in effect today. For further details about the USAA campaign, see No. 38 (March 31, 2014), No. 39 (April 7, 2014), and No. 40 (April 11, 2014).

Executive Compensation Data for 2019
Long-time readers are aware that I have been writing about executive compensation in the insurance industry for many years. It began with an article in the October 1975 issue of my monthly newsletter, The Insurance Forum, where I showed the 1974 compensation of senior executives of five large mutual life insurance companies. The information was of such great interest to readers that I steadily expanded the coverage.

When I ended the Forum at the end of 2013, I began showing some executive compensation data on this blog site. For example, the 2019 data from my three sources (the Securities and Exchange Commission, the New York State Department of Financial Services, and the Nebraska Department of Insurance) are in No. 381 (July 13, 2020), No. 385 (August 7, 2020), and No. 404 (December 23, 2020).

Chapter 24 of My Memoir
In Chapter 24 of my 2015 book, The Insurance Forum: A Memoir, I summarized my experience over the years in assembling executive compensation data. The experience included many efforts by insurance companies and insurance regulators to prevent access to executive compensation data. Chapter 24 and the book's Table of Contents are here, along with an order form for any reader interested in buying the book.

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Thursday, March 11, 2021

No. 412: A Recent John Grisham Page Turner

John Grisham is one of my favorite authors. He has written about three dozen novels, one work of nonfiction, a collection of short stories, and several books for young readers. I have read many of his books.

A Time for Mercy
A few months ago I read A Time for Mercy, which at the time was a recently published page turner. It was set a few years after the events described in his fascinating first book, A Time to Kill, and includes many of the same characters. The book centers around the subject of domestic violence. A teenage boy murders the man in whose house the boy, the boy's mother, and the boy's sister live. The boy is charged with murder and is defended by the same attorney who was one of the central characters in Grisham's first book. The recent book, like all of Grisham's books, is almost impossible to put down, and has some surprising developments at the end. I strongly recommend the book.

My Earlier Reviews of Grisham Books
Grisham's sixth book, a 1995 novel entitled The Rainmaker, centers around a large fictional health insurance company whose refusal to honor a claim leads to the death of the claimant. The insurance angle prompted me to write a short review of the book in the August 1995 issue of my monthly newsletter, The Insurance Forum.

My second review of a Grisham book described one of the short stories, entitled "Michael's Room," in a 2008 book entitled Ford County. The story is about an infant who suffers severe brain damage as the result of a botched delivery, and about the family's negligence lawsuit against the physician. My review of "Michael's Room" was in the May 2010 issue of the Forum.

My third review of a Grisham book was about a 2010 book entitled Theodore Boone: Kid Lawyer. The book was the first of several books for young readers. The central character is a 13-year-old whose parents are lawyers and who seems headed for a legal career himself. Here though, our hero gets involved in a murder trial in his home town. My review of the book was in the December 2010 issue of the Forum.

My first three reviews of Grisham books, described briefly above, are here. My fourth review of a Grisham book, a 2013 book entitled Sycamore Row, appeared in No. 7 (November 13, 2013), one of my first blog posts.

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Thursday, March 4, 2021

No. 411: More on COVID-19 and the Underwriting of Life Insurance

In No. 409 (February 11, 2021), I reported that the Consumer Federation of America (CFA) had written a letter to the National Association of Insurance Commissioners (NAIC) about COVID-19 and the underwriting of life insurance. The letter grew out of developments reportedly occurring in Europe. The CFA sent copies of the letter to the chief executive officers of several large life insurance companies based in the United States, as well as to the American Council of Life Insurers (ACLI). In No. 409, I provided this link to the CFA letter.

The ACLI Letter to the CFA
I said I would write soon to the NAIC, the ACLI, the CEOs of a few of the companies to which the CFA had written, and a few other CEOs. I also said I would ask for their comments, and would post a follow-up report on the responses. However, I changed my mind when I received from the CFA a copy of a two-page letter it had received from Susan K. Neely, president and CEO of ACLI. The ACLI letter is here.

The CFA Reply to the ACLI Letter
Shortly thereafter, I received from the CFA a copy of its reply to the ACLI letter. The CFA reply to the ACLI letter is here.

General Observations
I think the original CFA letter, the ACLI letter to the CFA, and the CFA reply to the ACLI letter together contain a great deal of food for thought. It will be interesting to see what, if anything, the NAIC does about the problem. I plan to report about significant further developments on the subject.

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Wednesday, February 24, 2021

No. 410: The Age 100 Problem Remains Alive and Well

My first article about the age 100 problem in cash-value life insurance was in the January 2001 issue of The Insurance Forum, my monthly newsletter that preceded this blog site. My first blog post on the subject was No. 141 (February 1, 2016).

The Age 100 Problem
The age 100 problem stems from the fact that cash-value life insurance policies are often sold as "permanent life insurance," "whole life insurance," or some other expression falsely suggesting that the life insurance protection will last for the insured's entire life. In fact, however, the protection lasts only until the policy's "terminal age." Today, many millions of cash-value life insurance policies are in force in the United States with a terminal age of 100. Thus the "whole life" policy is actually an endowment at age 100. Furthermore, cash-value life insurance policies are often sold with heavy emphasis on the facts that the "inside interest" is income-tax deferred and the death benefit is income-tax exempt.

Extended Maturity Riders
In No. 226 (July 20, 2017), I reported that some (but not all) companies had begun offering extended maturity riders (EMRs) to universal life policies. Here is language describing the EMR offered by Principal Life Insurance Company:
If the insured reaches the stated maturity age, maturity is extended to the date of his or her death. The rider is automatically added to policies in states where approved, and there is no charge for the rider. There will be no charges during the maturity extension period. However, loan interest will continue to be charged. No additional premium payments, other than loan payments, will be allowed.
At the time I was not aware of any companies offering EMRs on traditional whole life policies. Nor am I aware of any such offers today.

A New Mortality Table
As mentioned earlier, millions of policies now in effect are based on a mortality table that has a terminal age of 100. However, recent policies are based on a new mortality table that has a terminal age of 121. I have often asked, but no actuary has ever explained to me why it is impossible to issue a policy based on a mortality table that has no terminal age.

A 2018 Survey
In No. 277 (July 17, 2018), I reported on the results of a survey I conducted about the age 100 problem. I wrote to the chief executives of 22 life insurance companies asking some important questions about the age 100 problem. Nine of the companies acknowledged receipt of the survey in at least some fashion. However, some of the responses provided little or no information. I showed in detail the disappointing responses to the survey.

A Recent Email
Recently I received, out of the blue, an email from an individual with a family member who survived to age 100. The family member received a check for the face amount. Later the family member was hit with huge bills for federal and state income taxes, as well as penalties. Normally I would identify the company and provide other details. In this instance, however, I am choosing to protect the privacy of the individual and the family.

General Observations
Over the 20 years that I have been writing about the age 100 problem, it has become clear that life insurance officials are reluctant to discuss the problem. I think the reason is they fear that publicity about the problem might endanger the highly favorable income tax treatment of cash-value life insurance. Although there have been important developments, such as EMRs, progress has been slow. For example, no one has ever responded to the idea of using a 1035 exchange to replace a policy based on a mortality table containing a terminal age of 100 with a policy based on a mortality table containing a terminal age of 121. I would welcome comments from readers about the age 100 problem. Please send an email to jmbelth@gmail.com.

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Thursday, February 11, 2021

No. 409: COVID-19 and Life Insurance Underwriting

The Consumer Federation of America (CFA) recently announced it had written to the National Association of Insurance Commissioners (NAIC) about COVID-19 and the underwriting of life insurance. The CFA sent copies of the letter to chief executives of several large life insurance companies based in the United States. The letter grew out of developments reportedly occurring in Europe. A week later, I asked the CFA whether it had received any replies. The CFA said no replies have been received as yet.

The CFA Announcement
The CFA announcement, dated January 29, 2021, is entitled "Recovered COVID-19 Patients Facing New Life Insurance Hurdles in Europe, Protections Needed for American Consumers." Here are the first, third, and fifth paragraphs of the announcement:
CFA sent a letter to the NAIC urging them to adopt a model rule for life insurance underwriters that might want to delay or deny coverage to people who had COVID-19 and recovered or had symptoms but no diagnosis. The letter is in response to recent reporting that some life insurers in Europe are already taking steps to delay or deny people life insurance coverage based on having contracted COVID-19 or suspected of it. Over 25.4 million Americans have already tested positive for the virus, according to The New York Times.
In Europe, some underwriters are imposing waiting periods before COVID-19 patients, even those who have recovered, can apply for coverage. Further, some insurers are limiting coverage for certain age groups as part of their response to the pandemic. Still others are postponing applications for anyone who had COVID-19 or lived with someone who got the disease.
CFA also sent the letter to the CEOs of the leading life insurance companies in America and their trade organization [American Council of Life Insurers, or ACLI] asking them to consider voluntary action to use transparent and reasonable underwriting rules relating to COVID.
My Letters
I will write soon by regular mail to the NAIC, the ACLI, the CEOs of a few of the life insurance companies to which the CFA wrote, and a few other CEOs. I will ask for their comments on the subject. I plan to post a follow-up report on the responses to my letters.

General Observations
I think this is a very important subject. Instead of offering a complimentary package of relevant material, as I normally do, I am providing here a link to the CFA letter to the NAIC.

I would welcome comments from readers on the subject. Please send your comments by email to jmbelth@gmail.com. Should you write to me, please identify yourself and indicate whether your comments may be used with or without attribution. I will honor your request.

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