Citigroup, GE Make Long-Term-Care Deal
Citigroup and GE Financial Assurance agreed Monday to a strategic alliance to underwrite and distribute long-term care insurance.GE, based in Richmond, Va., will acquire 90% of the long-term care insurance portfolio of Citigroup's Hartford, Conn.-based Travelers Life and Annuity division. The deal will also allow GE to sell its long-term care products through Citigroup's and Travelers' distribution channels.
"Our product expertise coupled with Travelers' distribution will allow us to serve a growing market," a GE spokesman said.
Terms of the deal, which is expected to close in two to four months, were not disclosed.
The deal adds Travelers' 140,000 long-term care policies to GE's 500,000. Once the deal closes, Travelers will cease to underwrite long-term care policies, but will continue to share part of the risk on its existing business.
A Travelers spokeswoman said that Travelers is selling the bulk of its long-term care business in order to focus on "core products" such as individual and group annuities and life insurance. Travelers sold 17,905 long-term care policies for $34 million in 1999. The company's total revenues in 1999 were $623 million.
As baby boomers age, long-term care insurance "could become phenomenally successful," said Mark Trencher, a vice president at Conning & Co., an insurance research firm in Hartford, Conn. A study by the firm predicted that annual premiums - currently estimated at $4 billion - will reach $10 billion to $30 billion by 2010, and $75 billion to $100 billion by 2025.
- Amy L. Anderson
State Closes a Chicago-Area Trust Company
CHICAGO - Illinois regulators shut down a suburban Chicago trust company that managed $2.1 billion of assets.The Illinois Office of Banks and Real Estate said it closed Independent Trust Corp. of Orland Park on Friday because the company misappropriated money that was supposed to be invested with Chicago-based Intercounty Title Co. of Illinois. Without the missing funds, regulators said the trust company appears to be unable to meet customer obligations.
Regulators named the accounting firm Pricewaterhouse-Coopers LLP to act as receiver in liquidating Independent. In a letter to trust-account holders, the accounting firm said it is attempting to determine how much money is missing and how the missing funds might affect the trust beneficiaries.
The firm also said that the Cook County Circuit Court has temporarily halted any withdrawals or transfers until accountants can calculate the total amount missing. Independent Trust Corp. acted as a trustee for 21,500 trust accounts, mostly individual retirement accounts.
- Craig Woker
Wachovia Taking 1Q Charge to Settle Suit
WINSTON-SALEM, N.C. - Wachovia Bank said Monday that it will take a $20 million charge against first-quarter earnings to settle a nine-year-old lawsuit.The bank, a subsidiary of $67 billion-asset Wachovia Corp., said it had reached an agreement with the U.S. Department of Labor to settle litigation that was initiated against South Carolina National Bank in May 1991. Wachovia inherited the lawsuit when it bought South Carolina National in December of that year.
The lawsuit related to the purchase of private company stock by the Employee Stock Ownership Plan of Charter Medical Corp., a Macon, Ga., operator of psychiatric hospitals. South Carolina National acted as the trustee for the stock plan in that deal.
Wachovia is expected to release its first-quarter results on Wednesday.
- Louis Whiteman
