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David Merkel Program Trade Exacerbates Insurers' Lousy Open By David Merkel RealMoney.com Contributor 10/15/2004 12:41 PM EDT URL: http://www.thestreet.com/p/rmoney/davidmerkel/10188246.html |
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The selling climax in insurance that peaked (for now) at 10 a.m. EDT was exacerbated by a big program trade rotating from insurers to regional banks. A number of names that participate in the employee benefits business got thrown out the window, along with Marsh & McLennan (MMC:NYSE) and the other brokers today. Included in that group were MetLife (MET:NYSE) , Prudential (PRU:NYSE) and StanCorp (SFG:NYSE) , all of which I am long and might buy on weakness, of which we certainly have had a lot. The question with the employee benefits business is whether the sale of that sort of business is subject to the same problems as the brokerage of casualty business. Having worked in employee benefits at one point, it is possible for there to be some conflicts of interest in the sales process, but some companies explicitly avoided those practices, mainly because of the potential for violations of ERISA; the consequences of that would be very severe. Though New York Attorney General Eliot Spitzer said Friday that his investigations extend into health, life and auto insurance, the nature of the complaint would have to be different, unless he is dealing with cases where group sales go on -- that is, employee benefits and commercial auto. In individual sales, the agent is always an agent for the company, even when he is an independent agent. That doesn't mean that Spitzer can't bring a case, but it does mean that it would have to be a different sort of case. After my posts Thursday, a number of people pinged me, asking for names. Without saying whether you should buy or sell now, here are a few names that I am long: Personal lines: Allstate (ALL:NYSE)
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