$122m settlement ends commercial insurance case
HARRISBURG, Pa. - Zurich American Insurance Co. will pay $122 million to resolve claims of bid-rigging and price-fixing in the commercial insurance market under a nationwide settlement negotiated by Pennsylvania and 10 other states, including Massachusetts, state Attorney General Tom Corbett announced.
The amount to be paid to policyholders in all 50 states reflects the final terms of a settlement that was filed Monday in state courts, said Nils Frederiksen, a spokesman for Corbett.
The states discovered that Zurich failed to disclose it paid "contingent commissions" to insurance brokers and conspired with brokers in a scheme to overcharge commercial policyholders, Corbett said.
Preliminary settlement terms announced in March called for policyholders nationwide to receive $152 million in refunds, but the company was permitted to credit $30 million toward that amount in other nationwide settlements it is paying under a separate agreement with New York, Connecticut and Illinois, Zurich in North America spokesman Keith Owens said.
The multistate coalition in the settlement also includes California, Florida, Hawaii, Maryland, Michigan, Oregon, Texas, Virginia and West Virginia.
Associated Press
Bank of New York, Mellon Financial merge
NEW YORK - Bank of New York Co. has agreed to take over Mellon Financial Corp. in a $16.5 billion all-stock deal that will create the world's largest securities servicing company and one of the biggest asset managers.
The new company, which will be called Bank of New York Mellon Corp., will be the world's leading asset servicer with $16.6 trillion in assets under custody. It also will rank among the top 10 global asset managers with more than $1.1 trillion in assets under management.
But the companies also said in announcing the deal on Monday that they expect it will result in the elimination of about 3,900 jobs, or nearly 10 percent of their combined work force.
They said the job cuts from a combined work force of about 40,000 would occur in the three years after the deal closes. They said reductions would be made through normal attrition "wherever possible."
The companies expect to cut costs by about $700 million a year and said the deal will result in restructuring charges of about $1.3 billion.
The deal has been approved by each company's board of directors, but requires approval by regulators and shareholders. The companies expect the deal will be completed in the third quarter of next year.
Associated Press
Audit: Education agency records vulnerable
WASHINGTON - U.S. Education Department computer systems don't adequately protect personal information involving millions of student-loan recipients, a series of internal audits has found.
The department's inspector-general, in a semiannual report to Congress, said its audits found computer systems that are poorly guarded against both outside attacks through the Internet and inside abuses by employees.
"There are significant inadequacies with the department's management of and accountability for its internal operations," the inspector-general said in the report.
The report, following previous auditor warnings about the department's protection of its computer records, comes as the Bush administration is trying to persuade colleges and their students to trust the department with an expanded database of their academic and financial records.
More than 14 million students submit applications each year for federally backed college loans. The department wants to expand its records by creating a "unit record" system that would track each student, without identifying the person by name, to improve its evaluations of college performance.
Bloomberg News
