RIMS to Congress: 10 more years, 10 more years

The Risk and Insurance Management Society Inc. (RIMS) will be descending on Capitol Hill on June 12 and 13 to push for an extension of the Terrorist Risk Insurance Act (TRIA). Passed originally in 2002 in the wake of the 9/11 attacks on the World Trade Center and Pentagon, the TRIA legislation was designed to provide a federal government backstop to the insurance industry to cover catastrophic losses from terrorist attacks. Essentially, the backstop guarantee has allowed the industry to offer affordable terrorism coverage to U.S. companies. Initially conceived as a three-year program with the idea that private industry would eventually shoulder the burden, TRIA was extended for another two years at the end of 2005, although the government raised the trigger, to $50 million in losses in 2006 and $100 million in 2007, from $5 million, at which point it would begin to share in the cost. Now, RIMS will be pushing for at least a 10-year extension of the program, scheduled to sunset Dec. 31, 2007, and the inclusion of nuclear, biological, chemical and radiological (NBCR) exposures. “We think TRIA is a matter that is essential to the national economy, not a bailout for the insurance companies,” says Terry Fleming, a RIMS board member and its director of external affairs.

The group is likely to receive a warm welcome from Congress. While it is unclear where the Bush Administration stands on the issue, Fleming acknowledges that there is broad support on both sides of the aisle for extending TRIA. While no legislation has been introduced yet, both Sen. Christopher Dodd (D-Conn.), who chairs the Senate Banking Committee and Rep. Barney Frank (D-Mass.), chair of the House Financial Service Committee, have indicated they will fast-track a long-term extension in Congress. “Indications are that they’re looking at [an extension of] between six and 15 years. We’re hoping for something in the area of 10 years,” says Fleming. “We hope that will encourage investment by the capital markets to help establish some capacity for the NBCR exposure.”

While in D.C., RIMS will also be lobbying for changes in the law that would make it easier and less costly for insurers and their corporate clients to buy and sell coverage across state borders by establishing a federal authority. The two pieces of legislation being considered by the Congress are known as the optional federal charter initiative, which would offer companies operating across state borders the option to operate under a single set of federal insurance rules, rather than individual state regulations, and the surplus lines bill. This legislation would allow companies operating in many states across the country to buy auto insurance for all company vehicles from a single insurer in their home state, rather than seek coverage through a licensed insurer in each state, as one example of its impact. “What the surplus line and optional federal charter will do is establish a federal authority so that you only have to file the rate and form information in the home state of the insured,” says Fleming, adding that it will eliminate an administrative nightmare for companies. Fleming is optimistic that the surplus lines overhaul, which was passed by a wide margin in the House during the last session, will pass this year, but adds that the outlook for passage of the optional federal charter legislation is much less bright.

Companies may not always like SarbOx, but it helps them with their IR

Just ask transportation company Burlington Northern Santa Fe, which was selected in a recent survey by portfolio managers and investment analysts as having the most outstanding investor relations program among Standard & Poor’s 500 companies. According to those surveyed by research and consulting firm Greenwich Associates, compliance with the Sarbanes-Oxley Act had helped the winning companies to distinguish themselves with more transparent accounting, more accurate financial guidance and more timely guidance. The other companies in the Greenwich top 10: EOG Resources, Entergy Corp., Chicago Mercantile Exchange, J.C. Penney, United Technologies, Staples, C.R. Bard, Gilead Sciences and AFLAC.

Each analyst polled was asked to evaluate the companies that they cover on 12 qualitative factors, including the capability and credibility of senior management, the transparency of accounting information, the quality of investor meetings and the accessibility of senior management. “This is not a popularity contest,” emphasizes Greenwich Associates consultant Bill Bruno. “From the buy side perspective, as an analyst, you can’t afford to have hot spots, meaning areas that catch you by surprise.”

This was Greenwich Associates’ third annual IR survey based on phone interviews with more than 750 analysts at 250 U.S. investment institutions conducted between January and March 2007.

Careers

Constellation Energy Group Inc. has named John R. Collins CFO of the $19.3 billion electricity provider, which is based in Baltimore. Collins, who is currently senior vice president and chief risk officer, succeeds E. Follin Smith, who stepped down to spent more time with her family. Smith will serve as a consultant to ensure a smooth transition. Collins joined Constellation in 1988, and in 1997, he was named CFO of Constellation Commodities Group, a subsidiary. Collins was named executive vice president and chief risk officer in 2002 and two years later, became senior vice president.

ITT Corp. the $7.8 billion advanced technology products supplier, with headquarters in White Plains, has appointed Denise L. Ramos CFO. Ramos, 50, succeeds George E. Minnich who has announced his retirement. Most recently Ramos served as CFO of Furniture Brands International from February 2005. Previously, she spent five years as senior vice president and corporate treasurer of Yum! Brands Inc. as well as CFO of KFC Corp. Earlier, Ramos served for 21 years at Atlantic Richfield Co. (ARCO) in various finance positions.

Lenovo Group Ltd. appointed Wong Wai Ming CFO of the $13.3 billion personal computer maker, which is based in Hong Kong. Ming, 49, succeeds Mary Ma who has retired and will take on the new role of Non-Executive Chairman. Ming most recently served on Lenovo’s Board of Directors and as chairman of the audit committee. Prior to joining the company, Ming spent 15 years in investment banking in various senior positions.

Visteon Corp. has appointed Michael J. Widgren vice president, corporate controller and chief accounting officer of the $11.4 billion global automotive supplier, which is based in Van Buren Township, Mich. Widgren, 39, succeeds William G. Quigley, who was promoted to CFO in March. Widgren arrived at Visteon in 2005 as assistant controller. Prior to joining the company, he served as chief accounting officer at Federal-Mogul Corp. Before that he spent part of his career at Coopers & Lybrand LLP.     
 
Gerdau Ameristeel Corp. has appointed treasurer Barbara R. Smith as CFO of the $4.5 billion mini-mill steel producer in North America, which is based in Tampa. She succeeds Tom J. Landa, who is retiring. Smith came to Gerdau as Treasurer in July 2006. Prior to Gerdau, she was senior vice president and CFO of Faro Technologies Inc. Previously she spent 23 years with Alcoa Inc. where she served various financial roles, including Group CFO for Aerospace, Automotive and Commercial Transportation Group, CFO Alcoa Fujikura Ltd. and Director of Internal Audit.

Ashland Inc. announced the election of new treasurer J. Kevin Willis for the $7.3 billion global chemical maker, with headquarters in Covington, Ky. Willis, replaces Daragh L. Porter, who is retiring after dedicating 31 years to Ashland. Prior to the new election, Willis served as general auditor for 3 years. Willis joined Ashland in 1987 as an associate auditor in the internal audit department.

Platinum Underwriters Holdings Ltd. has named James A. Krantz CFO and executive vice president of the $1.5 billion provider of property, casualty and finite risk reinsurance coverage, based in Hamilton, Bermuda. Krantz, 47, is replacing Joseph F. Fisher who will be leaving at the end of his contract to pursue other interests. Krantz has served as executive officer since August 2006 and was CFO, senior vice president and treasurer of Platinum Underwriters Reinsurance Inc. from March 2003 through August 2006. Earlier, he spent nine years with KPMG LLP.

Aon Corp., the $9.0 billion Chicago-based provider of risk management services, has announced the resignation of CFO and Chief Administrative Officer David P. Bolger. Prior to joining the company in January 2003 Bolger, 49, held various senior positions at Bank One Corp. and its predecessor companies, America National Bank and First Chicago Bank. He will stay with the company until a successor is named to ensure a smooth transition.

School Specialty Inc., the $1 billion education company, which is based in Greenville, Wis., has announced the resignation of CFO and treasurer David G. Gomach. Gomach, 48, has resigned to pursue personal and professional interests. Prior to joining School Specialty in August 2006, he had retired as CFO from Chicago Mercantile Exchange Holdings, Inc in November 2004. The company has in initiated a search to find a successor.

Corporate treasurers and risk managers now have a “blue book” for pricing structured derivatives

SuperDerivatives, a derivatives solution provider for multi-asset option pricing, revaluation, derivatives data, trading and risk management systems, which is based in London and New York, has added downloadable correlation tables to its derivatives market data portal as a tool for corporate treasurers as well as traders and risk managers. The correlation tables address the need of corporate treasurers to insure and manage various correlated business risks involving more than one underlying exposure across currencies, energy, interest rate, equity and credit risks. Additionally the data within the tables are essential for trading and risk management in highly structured derivatives instruments such as baskets, constant maturity swaps and callable power reverse dual currency swaps. It arms corporate risk managers with the relevant pricing information, allowing them to be well informed on the costs of highly structured derivatives. Says Daniel Weigert the head of SuperDerivatives revaluation center: “The reason that corporations and pension funds don’t invest as much in derivatives as they ought to in order to manage risk and enhance yields is because of the lack of clarity. What we bring to the buy side is that clarity and transparency of pricing.”

The correlations tables, which are updated daily, augment SuperDerivatives market data offerings for third-party risk management systems. The correlations tables are produced using SuperDerivatives’ option pricing model along with validated rates from the company’s global contributor network of brokers, exchanges and market makers, which contribute the rates and market data. The correlations tables span all asset classes—currencies, interest rates, credit, equity, commodities and energy—and data files are accessible via SuperDerivatives portal as downloadable Excel spreadsheets or automatically via Web services application programming interface.

“With our data, a corporate treasurer can get the actual fair traded market price for any derivative or structured product that is out there in the marketplace,” says Ahik Oron, SuperDerivatives global director of marketing. “SuperDerivatives serves as a sort of ‘Blue Book’ for pricing derivatives and options: When the treasurer or risk manager calls their banker, they can have a more informed discussion about the various possibilities and structures that they can use to manage corporate risk based on clear and accurate understanding of the fair market value of the structure.”

SuperDerivatives real-time pricing and analytics platforms have long been used in corporate treasuries. The company is also planning to offer an enhanced specialized corporate edition of its pricing platform, which will offer specific wizards and automated problem solvers, providing corporate risk managers with a list of the top five ways to hedge an exposure as well as being directly connected to ERP systems. The corporate version is currently available to two customers in the U.S., but SuperDerivatives is planning to make the edition more widely available later in the year.

Getting soup-to-nuts visibility into your supply chain may be Easy-er than you think

Easylink Services Corp., a hosted business process outsourcing services provider based in Piscataway, N.J., and TradeTrans Inc., a provider of Web-enabled business intelligence reporting service based in Beaverton, Ore., have teamed up to offer EasyLink TradeSmart, a tool designed to lower supply chain costs and improve efficiencies in an era of ever-increasing globalization. The Web-enabled BI tool integrates EasyLink’s electronic data interchange (EDI) service features with TradeTrans’ TradeSmart supply-chain BI reporting services. EasyLink TradeSmart offers visibility reporting on order processing, fulfillment and financial reconciliation activities. The tool allows organizations to track and monitor supply chain activities from the initial order through to the final payment. Companies can track business data, as opposed to simply the transactions, thus improving their ability to improve processes and control expenses.

EasyLink TradeSmart is a software-as-a-service (SaaS) offering that takes the data moving through the supply chain, from ordering to billing to shipping to funds transfers, and puts it into a single view for the organization. EasyLink TradeSmart integrates EasyLink’s electronic data interchange service features with TradeTrans’ TradeSmart Web-enabled supply-chain BI reporting capabilities. The service is a real-time analytical tool, which is constantly being updated as new information comes across. It allows finance to get detailed reports of everything connected with a particular order. “The benefits from the point of view of treasury are that it allows for better cash management, and you can do some very good analysis on payments. Plus, being able to track the data for two years helps with compliance issues,” says EasyLink’s EDI product manager Tim Frischholz.

Adds EasyLink’s Henry Bayard, vice president for strategic initiatives: “The service bridges the supply chain with the financial: it gives visibility into the logistics piece as well as the financial piece.” In addition to being available as a standalone product, EasyLink TradeSmart is also designed to support a trading community, where suppliers can access the same supply-chain data and reports.

Article found in Tools

NY Life brings a little behavioral science to retirement

New York Life Retirement Plan Services (NYLRPS), a division of New York Life Investment Management, has introduced a program to help the firm and its clients understand and predict employee-planning behavior. Using cluster analysis, New York Life is able to categorize participants into six segments that are derived from a number of perspectives, including: attitudinal characteristics—whether the participant wishes to self-direct their account or delegate account management decisions; behavioral characteristics—how a participant wishes to manage their account, whether through direct and personalized contact with New York Life or self-service via the Web site; investment characteristics—whether the participant invests the majority of assets in the plan’s default fund or takes on risk in exchange for higher returns in international or growth investments; and demographic characteristics.

Using this information, New York Life can work with employers to provide customized tools that fit the needs of the plan participants. For example, one segment consists of lower paid employees who are juggling financial priorities; this segment requires basic 401(k) education and do-it-yourself tools like managed accounts. Another segment might be focused on retirement planning at the lowest possible age, in which case plan sponsors should offer more sophisticated Web tools and investment advice.

The advanced segmentation process, which employs methods used by retailers to predict what customers are likely to buy based on past purchases, actively learns about each participant to help the plan sponsor adjust its plan to those needs. New York Life uses similar behavioral and preference information, along with plan and demographic data, to create and deliver personalized participant educational programs.

Article found in Retirement Plans, Tools