State may be hit with disaster insurance

QUEENSLAND has been issued its strongest warning yet that it may be forced to take out costly disaster insurance that could further cripple the state's struggling budget.

 

The matter, that will potentially cost Queensland billions, is a likely trading card for Prime Minister Julia Gillard, who needs to secure the support of Senator Nick Xenophon to get her controversial $1.8 billion flood levy through the Parliament.

 

Senator Xenophon is holding out, determined to make a deal that will effectively force Queensland to take out expensive disaster insurance.

 

Yesterday, Federal Treasurer Wayne Swan and Finance Minister Penny Wong both signalled the Government was closely considering the matter.

 

"I think it is probably timely for us to evaluate (the insurance issue), to have a good hard look ... to see what the implications for the future are," Mr Swan told Network 10.

 

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Queensland chose not to reinsure for disasters, with the Government preferring to rely instead on a long-held deal whereby the Commonwealth will cover up to 75 per cent of the damage bill.

 

But state Treasurer Andrew Fraser said no Australian state had the type of insurance that would cover the costs of Queensland's 2011 summer of disaster.

 

"It is important for Senator Xenophon to understand that getting reinsurance for Queensland is an entirely different proposition than getting reinsurance for South Australia," Mr Fraser said.

 

"Queenslanders are relying on Canberra politicians to pass the disaster funding package so we can accelerate the recovery and reconstruction effort."

 

Speculation is mounting that the Federal Government might propose funding disincentives for states without insurance, in terms of limiting access to the national disaster fund. Senator Xenophon welcomed the idea.

 

"Now's the time to fix this up so that taxpayers aren't left with a future bill for any other natural disasters," he said.

READ MORE - State may be hit with disaster insurance

Insurance cover for army personnel increased

Extending a better life insurance cover for its personnel, Indian Army has increased the Army Group Insurance Fund (AGIF) by Rs. 10 lakh and Rs. 5 lakh for its 35,000 officers and over one million jawans respectively.

 

"The government has taken a decision to increase the AGIF coverage for soldiers in the Army. Under the new scheme, the officers would avail coverage of Rs 40 lakh, while the same has been increased to Rs. 20 lakh for jawans," Defence Ministry officials told PTI.

 

The premium amount payable by the soldiers has also been increased accordingly.

 

Now jawans would have to pay a minimum of Rs. 2000 annually while earlier they were paying between Rs. 600 to Rs. 1000.

 

For officers, the same amount has been increased from Rs. 2000 to Rs. 4000.

 

"It is the minimum deduction from the salary of soldiers and after the sixth pay commission soldiers are contributing even more voluntarily," the officials said.

 

The decision, which would come into effect from April 1, was pending with the Ministry for quite some time.

 

Earlier, the officers were provided an insurance package of Rs. 30 lakh and for the Personnel Below Officer Ranks (PBORs), it was Rs. 15 lakh.

 

"The policy was pending with the ministry and its concerned department for review and the Army had mentioned few important points to raise the insurance limits," officials said.

 

While counter-insurgency operations in Jammu and Kashmir and North-East region have always been a major task for the Army, its role during disasters and natural calamities across the country, has further increased the stress on its men.

 

"The soldiers posted in difficult terrain and elsewhere must believe that the organisation is taking care of the basic needs of his family.

 

"Besides, there are issues of rising prices and meeting the requirements of good education and health for the old parents. It takes out a lot of stress and even motivates him to perform better," officials said.

 

Over the years, a number of new monetary measures have been initiated by the Indian army to ensure better life and facilities for the family members of its soldiers.

 

The focus has been mainly on ensuring good education for the children and re-employment of the soldier in case of disability during action.

 

Various options have been made available for the children from military background.

 

Along with education loans, soldiers get due assistance from Army Welfare Corpus in form of scholarship, tuition fee and higher technical education through educational institutions run by the army.

 

"There are provisions for covering the tuition fee and the cost of books for children pursuing professional courses.

 

"A significant amount is spent by the army in ensuring these measures. It is very important for the organisation to take care of the family members specially parents and children so that he can perform his tasks well," officials said.

READ MORE - Insurance cover for army personnel increased

Scotia Capital's Analyst Meeting with Manulife CEO

• In our opinion, the lunch did a good job of clearing the air. Guloien mentioned to us in our subsequent meeting he was amazed that a sell-side only meeting held June 25 "produced" everything from a dividend cut to an equity raise when nothing suggesting anything of the sort was ever mentioned (in our opinion, broad market dissemination of a message is a much better way to go).

• What he did say in our meeting yesterday is that nothing has essentially changed over the last couple of months in terms of the company's capital plan, even though the market has rebounded. Priorities remain to build capital through, in order of preference, preferreds, innovative tier 1, medium term notes, reinsurance, and lastly dividend cuts/common equity. In effect, everything is on the table, just as it was a couple of months ago. They're looking at more debt/prefs/innovatives, and with a debt+prefs+innovatives/total capital ratio of 27%, vs. SLF at 29% and GWO at 41%, they still have ample room, possibly another $1.5B to reach 30%. Housing the recent $1B in innovative Tier 1 at the holdco provides lots of flexibility as well.

• With respect to all this dividend talk, Guloien said essentially said nothing has changed. It's a Board decision, it remains the last item in the pecking order in the capital plan, he's very cognisant of investor sentiment (acknowledging though that lifecos are different than banks), and it's not his job to say it will never happen. The payout ratio is a function of "core earnings" (which will be elaborated on when the company reports Q2/09 Aug 6) over the long run and he has suggested growing into the target payout ratio could be a more likely scenario. The target payout ratio is 25%-35%, our 2010 estimate puts them at 38%, and consensus puts them at 41%, which is lower than consensus for SLF of 44% (above their 30%-40% target) and consensus for GWO of 50% (above their 30%-40% target).

• Unlike other CEOs Guloien is very open. He's blatantly honest and will explain both sides of any idea freely and openly with the Street. His style will likely take a bit of getting used to.

• MFC sees plenty of acquisition opportunities down the road and believes that these volatile markets will separate the strong from the weak.

• At 7x 2010E EPS, we believe MFC is good value for an excellent franchise.

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Financial Post, David Pett, 3 July 2009

Manulife Financial Corp. was one of the biggest gainers on markets over the past three months, but thanks to a late June slump, the life insurance giant still remains one of the better buying opportunities heading into the third quarter, says Desjardins Securities analyst Michael Goldberg.

"We believe that the recent decline in Manulife's stock price has been an overreaction by investors, Mr. Goldberg said in a note to clients.

For the second quarter, Manulife shares were up 42%, compared to 19% for the broader TSX benchmark. However, since June 19, the stock has dropped 14%.

The sell off followed news that the OSC is investigating the company's disclosure to investors regarding its segregated funds and annuity business, but Mr. Goldberg believes the real culprit behind the drop was a Manulife statement saying it may need to strengthen its reserves .

"As we have said in the past, we expect any reserve strengthening next quarter to be minimal on a net basis and any expectation of a net reserve release following the buildup of those reserves at a cost of $7-billlion over the past few quarters, would be naive," he said.

He said Manulife is now trading at 7.6x his projected 2010 EPS forecast of $2.80, which compares favourably to his $26.50 price target based on 9.5x 2010 EPS.

READ MORE - Scotia Capital's Analyst Meeting with Manulife CEO

Health Insurance Companies Easing Burden of High COBRA Costs

Senate Health Committee Chairman, Senator Kemp Hannon, announced a part of the recently adopted a new budget, which enables health insurance companies to carry individuals under their parent's policy to age 25, instead of age 19 for those who do not go to college and 23 for those who do.

The part of the bill, announced at a University Student Center during a June 1 press conference, will be a relief to many parents and young people facing extremely high COBRA costs when their child reaches the age of ineligibility under their plan, but is either still in school or searching for employment. The legislation also assists those young 20-somethings who are bearing the brunt of their own health insurance costs by enabling them to obtain health insurance coverage through their parents.

"We have to be realistic," Senator Hannon said. "With double and triple majors and five-year master's programs, many of our young people are not graduating college when they are 21 anymore. Burdening them and their families with COBRA costs is unfair."

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Health records on internet

Privacy groups are sounding alarms as the nation's largest insurance companies finalize plans to allow millions more customers to post their health records on the Internet.

Insurers like Aetna Inc. say Web-based tools help patients and physicians keep track of medical information while potentially holding down spiraling medical costs.

About 100 million insurance customers in the U.S. have access to Web-based tools, but companies don't have an estimate of how widely they are used. Insurers hope to at least double the technology's reach by the end of next year.

Aetna chief executive Ronald Williams says the change is as revolutionary to health care as the introduction of the ATM card was to banking in the 1980s.

But privacy advocates say there's no guarantee the records will be safe from hackers. Some worry patients may refuse to disclose some illnesses to their doctors to keep documents out of databases.

"As a former nurse, I know that back in the 1980s, patients who were alcoholics did not want to have paper records," said Sue Blevins, president of the Institute for Health Freedom "They just didn't want people to know & That could affect the quality of their care."

Aetna, which offers personal health records to its customers, says security procedures include a member login and an online registration Web site with secure sign-ons. In addition, customers can restrict elements of their records from being shared among health practitioners.
Aetna said personal health records are protected by the same security technology that is used for online banking.

Personal health records, which are available through insurers Aetna, Blue Cross Blue Shield and others, are intended to help doctors and patients track medications and treatments.

The technology allows doctors to record test results, immunizations, prescriptions and other medical information into an online database that can be accessed by patients, the insurer and other physicians if needed. Patients can also add details about over-the-counter medications, plans of care, family health histories and other information.

READ MORE - Health records on internet