Sierra Club Sues EPA Over Oklahoma Power Plants

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The Sierra Club filed a lawsuit in Washington, D.C., District Court against the U.S. Environmental Protection Agency on Wednesday, seeking to ensure that the federal agency enforces a state plan that monitors and reduces pollution from Oklahoma coal-fired power plants.

The Sierra Club warned the EPA in February that the lawsuit was coming in 60 days if the agency failed to act, the environmental group said in a statement.

No action was taken, so the Sierra Club followed through, said Whitney Pearson, associate field organizer for group’s Oklahoma chapter.

“Sierra Club brought this citizen suit because EPA must act to either approve or disapprove the state’s plan to address these excess harmful emissions,” Pearson said. “What we ultimately expect out of this action is to end the free pass that large polluters currently have which allows them to emit unlimited amounts of pollution during certain phases of their operations. Because people need to breathe all the time, limits of the amount of pollution that polluters can emit need to apply all the time. This case is one step in getting to that point.”

The EPA will review the details of the Sierra Club lawsuit, said Dave Bary, EPA Region 6 spokesman.

“EPA will discuss with the Sierra Club and the state of Oklahoma the next appropriate steps in this legal matter,” Bary said.

The plants involved include the Oklahoma Gas and Electric Co.’s Muskogee plant, Pearson said. OG&E has another coal-fired power plant, Sooner Station, in Red Rock.

Brian Alford, OG&E spokesman, said the company will have to wait for an outcome.

“So, once we know what this process will be, rest assured we will follow that process, once we know what that is,” Alford said.

All coal plants in Oklahoma emit excess emissions, Pearson said.

“And we are reminding the EPA to help close this loophole so that Oklahomans can breathe cleaner air,” Pearson said.

The coal-fired plants are allowed to pollute above legal levels, said Jenna Garland, associate press secretary with the Sierra Club Southeast and South Central Region.

“Currently, under what is known as a pollution excuse provision, coal plants can turn off pollution controls when starting up, shutting down, or performing maintenance on a malfunctioning plant,” she said.

The loophole allows Oklahoma plants to pump more mercury and smog into the air than in other places around the country, Garland said.

“Although the Clean Air Act requires the EPA to approve or disapprove Oklahoma’s proposed plan to manage these emissions, EPA failed to act by the deadline,” she said.

Coal-fired plants release excess emissions during periods of starting, shutting down and maintenance because operators generally turn off any existing pollution controls during these times, which cause significant emissions spikes to occur, Garland said.

“For example, starting up a coal boiler that has not been running can take hours to bring it up to temperature, and during this time no pollution controls are running on the boiler, so 100 percent of the pollution is going into our air,” she said.

Additionally, engineers at regulatory agencies do not include these excess emissions in a plant’s air permit, Garland said. As a result, they exceed the amount allowed by permit.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Conn. House Passes Firefighter Compensation Bill

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A bill that would make certain local firefighters eligible for workers’ compensation coverage for mental or emotional damage has passed the Connecticut House of Representatives.

State representatives voted 141-to-0 in favor of the bill Wednesday. It now awaits action in the state Senate.

Under the proposed legislation the current workers’ compensation statutes would be expanded to include firefighters who are diagnosed with post-traumatic stress disorder after witnessing the death of a colleague in the line of duty.

To qualify, the diagnosis would need to be made by a licensed and board certified mental health professional.

Connecticut police officers currently receive similar protections.

Republican Rep. Christie Carpino, of Cromwell, spoke in favor of the bill, saying a large percentage of local Connecticut firefighters are volunteers and should have this benefit.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

N.Y.-Based Alleghany Acquires Stake in Manufacturing Firm Bourn & Koch

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New York-based global specialty insurer Alleghany Corporation said its investment management unit acquired a majority stake in manufacturing firm Bourn & Koch. Terms of the transaction were not disclosed.

Alleghany, in addition to its core P/C insurance business, invests in various subsidiaries through its Alleghany Capital Corporation division. Alleghany Capital Corporation’s current investments include: Stranded Oil Resources Corp., an exploration and production company focused on enhanced oil recovery; ORX Exploration, a regional oil and gas exploration and production company; Homesite Group Inc., a national, full-service, mono-line provider of homeowners insurance; and Article One Partners, the world’s largest patent research community.

Bourn & Koch is a privately-held manufacturer and remanufacturer/retrofitter of precision machine tools and supplier of replacement parts for 27 different product lines headquartered in Rockford, Ill.

Notably, Alleghany is also the parent company of reinsurer Transatlantic Holdings. The widely publicized Transatlantic acquisition deal, which was first announced on Nov. 20, 2011, was valued at $3.4 billion. That acquisition was completed in March.

Ratings Recap: National General, Univé Her/Stormher, Radius

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A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘B++’ (Good) and the issuer credit rating of “bbb+” of the United Arab Emirates National General Insurance Company (P.S.C.) (NGI), both with stable outlooks. Best noted that both ratings “continue to be supported by NGI’s very strong risk-adjusted capitalization, long track record of generating sound technical profits and its established domestic franchise.” However, the report also noted that the ratings take into account “the company’s investment strategy, which is considered to be a source of potential volatility in earnings. NGI is a well-established composite insurer, ranking as the seventh-largest by gross written premiums in 2011.” Best said it expects NGI to be able “to protect its domestic position going forward, growing its top line through increased cooperation with its largest shareholder.” In Best’s opinion, NGI’s “risk-adjusted capitalization is very strong with sufficient room to absorb planned growth over the next two years. The company has demonstrated good ability to generate capital internally, with a long track record of generating sound returns, supported by consistently good underwriting performances.” However, Best also noted that “NGI’s investment portfolio—of which real estate, equities and unquoted investments accounted for 72 percent at year-end 2011—generates volatility in investment income.” As a result Best indicated that “NGI’s ratings are likely to come under negative pressure should the company fail to halt the technical losses in its medical business. Negative pressure also may result should the company’s trend in increased risk and lower liquidity of investments persist. Any upward movement in NGI’s ratings is likely to result from an improvement in its business profile in its domestic market or better diversification of its investment portfolio.”

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘A-’ (Excellent) and the issuer credit ratings of “a-” of Onderlinge Verzekerings Maatschappij Univé Her u.a. (Univé Her) and Onderlinge Verzekerings Maatschappij Univé Stormher u.a. (Univé Stormher). Both companies are domiciled in the Netherlands. The outlook for all of the ratings remains stable. The ratings “reflect each company’s excellent risk-adjusted capitalization, good operating performance and good business profile as a specialist insurer within its domestic market,” said Best. However, Best also pointed out that both Univé Her and Univé Stormher “are small in absolute terms and have a client base that is restricted to the 22 Dutch mutual property insurers that own and govern the two companies. As a consequence, geographical and business line diversification is limited. Risk-adjusted capitalization is expected to remain strong for both companies. Univé Her’s risk-adjusted capitalization continues to be enhanced by its members’ account, the reported value of which is expected to be around €14.0 million [$18.4 million] at year-end 2011.” Best explained that the members’ account “acts similarly to a subordinated debt and can be used if the company experiences financial difficulties. In addition to having access to the members’ account, Univé Stormher is expected to report a catastrophe reserve of € 22.4 million [$29.5 million] at year-end 2011, which can be utilized if the company experiences large catastrophe losses. Univé Her is expected to report a small underwriting loss of approximately €700,000 [$920,000] in 2011, as a result of several medium-sized claims. Univé Stormher experienced one claim in 2011 and as a result, overall reported earnings for the company are expected to significantly improve in 2011, with an expected loss ratio in the region of 15 percent (2010: 106.5 percent). Given Univé Stormher’s exposure to catastrophes, technical results are volatile.” However, Best also noted that the “company has an extensive reinsurance program in place with cover up to a one in 200 year event. Univé Her and Univé Stormher maintain their specialist business profiles as the sole property reinsurers for the 22 Univé property mutuals, which own and govern the two companies. Although the client base is limited, the customers are loyal, and neither Univé Her nor Univé Stormher has ever failed to renew an account (with the exception of mergers between mutuals). Both companies possess extensive knowledge of their customers’ business and are able to provide underwriting and claims support as well as competitive prices. In 2012, Univé Her and Univé Stormher are expected to be merged into a limited company, which will be 100 percent owned by Co?peratie Univé U.A. (a mutual holding company with the Univé insureds as members). The merger and restructuring are still subject to final regulatory approval, and completion is expected by the end of June 2012. The merged company will be active retrospectively from 1 January 2012. The members’ account will be repatriated back to the mutual insureds, nevertheless, risk-adjusted capitalization at the new company is expected to remain strong. Upward rating movements at this point are unlikely. Downward rating movements may be triggered if there is a significant reduction in risk-adjusted capitalization as a result of a large catastrophe and/or changes to either company’s client base.”

A.M. Best Co. has assigned a financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a” to Cayman Islands-based Radius Insurance Co., Ltd., both with stable outlooks. The ratings of Radius “are based on its excellent capitalization, a history of profitable business written from a predecessor captive, as well as the position the company holds as the captive insurer for its ultimate parent, Phillips 66,” best explained. “Phillips 66 became a publicly traded company under the ticker symbol, NYSE: PSX, and is the result of ConocoPhillips spinning off the downstream portion of its business to the public. The ratings also consider the level of commitment on the part of its parent, whose management incorporates Radius as a core element in its overall risk management program.” As partial offsetting factors Best cited “Radius’ exposure to large losses due to the limits offered on its policies as well as its significant dependence on reinsurance protection. The business that will be written by Radius has a history of strong underwriting results and operating returns. The company’s loss experience has remained favorable due in part to the strong loss control programs at the parent. Phillips 66 will conduct annual reviews of its potential loss exposures through a specialist in industrial risks. A single occurrence could result in a large loss that approaches Radius’s limits.” However, Best also indicated that the “company has the capital to fund claims in the event of a reinsurance recovery problem. Key rating triggers that could result in positive rating actions would be Radius generating consistent net income, limited losses and meeting and/or exceeding its business plan over the long term. Key rating triggers that could result in negative rating actions would be Radius generating consistent net losses, numerous large claims and/or not executing its business plan over the long term.”

Idaho Man Gets Jail Time For Faking Motorcycle Mishap

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The insurance claim seemed straightforward: Jason Preston said his motorcycle was wrecked.

His clothing was scuffed up to prove it.

But Idaho investigators figured there was something fishy about the Blackfoot man’s story he’d crashed the bike to avoid hitting an animal in July 2011.

So what began as a seemingly ordinary Idaho traffic mishap has resulted in Preston being sentenced to 20 days in jail _ for insurance fraud and damaging insured property.

A 6th District judge suspended Preston’s one-to-four-year prison term.

Idaho Attorney General Lawrence Wasden described Tuesday what really happened.

The 31-year-old placed his motorcycle in his truck, accelerated and pushed it off the back.

Preston’s girlfriend then dragged him down the road.

The case was investigated by the Bonneville County sheriff and Idaho Department of Insurance.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Texas Attorney General Takes on State Farm Non-Renewal Plans

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Texas Attorney General Greg Abbott is taking issue with one of the nation’s largest homeowners insurer’s plan to non-renew thousands of policies for properties along the Gulf Coast.

Abbott said his office is conducting an investigation into State Farm Insurance Co.’s proposal to deny renewed coverage on more than 11,000 policies of Gulf Coast Texans.

“The largest issuer of homeowners insurance in Texas has filed a lawsuit in an attempt to prevent the Attorney General’s Office from investigating its non-renewal of thousands of residential property insurance policies along the Gulf Coast,” Attorney General Abbott said in an announcement released by his office. “Given the number of Texans that are affected, we want to ensure that State Farm complies with the law. If State Farm has not done anything wrong, it’s certainly curious that they would go to court just to avoid the State’s subpoenas.”

In mid-April the Attorney General’s Office sent civil investigative demands — a type of civil subpoena — to State Farm Lloyds of Texas seeking information about the company’s decision not to renew the coastal policies.

State Farm subsequently filed a lawsuit against the AG’s office in an attempt to modify or set aside the AG’s request for information. In the filing, State Farm indicated Abbot had demanded 22 “separate categories of information, involving potentially thousands of pages of documents” to be produced in a week’s time.

While the AG’s office asserted that State Farm’s lawsuit was an “effort to avoid its obligation to provide the information requested by the State,” the company countered that its filing was an effort to “preserve its rights.”

State Farm indicated that it notified the AG’s office before filing the lawsuit, and that the company intended to cooperate and would not go forward with the lawsuit “unless and until it becomes necessary.”

State Farm public affairs representative Patti Kelly confirmed that the non-renewal of around 11,000 Texas coastal policies began on May 1

As to the attorney general’s actions, Kelly said the company could not comment as the matter is in litigation. “However, we have filed suit in an effort to protect our legal rights,” Kelly told Insurance Journal.

Kelly said the company is cooperating with TDI on its market conduct exam of State Farm’s non-renewal activity on the coast.

“The impacted counties are Galveston, Brazoria, Jefferson, Orange and Chambers,” she said. “Even with these changes, State Farm has more policies in coastal counties than any other private insurer. In fact, we serve more customers throughout all parts of Texas than any other insurance provider — showing a commitment to the state that no other carrier can match.”

In the lawsuit filed against the AG’s office, State Farm stated that in December 2011, it provided TDI with “underwriting guidelines for property insurance that modified the eligibility requirements for new business along the Coast.”

State regulators were also “provided additional requested information – prior to implementation,” Kelly said

TDI ultimately “determined the guidelines complied with state law,” State Farm’s lawsuit states.

However, when the company informed regulators in 2012 that it intended to non-renew some 11,300 customers — both residential and commercial — along the coast “consistent with the eligibility requirements for new business” contained in the previously filed underwriting guidelines, TDI opened an investigation.

That investigation is ongoing, according to the company’s lawsuit.

Kelly said that while the company is committed to protecting its Texas homeowners customers, “we must find the appropriate balance between exposure, the resources available to maintain a quality level of service, and our ability to meet our financial obligations. We use detailed models to ensure we have the resources in place to meet all the promises we make to policyholders in Texas.”

Lawmakers OK Limits on Mississippi AG’s Deals with Private Law Firms

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A measure to limit Democratic Attorney General Jim Hood’s ability to control state legal business is on the way to Republican Gov. Phil Bryant.

The Mississippi Senate voted 34-18 Wednesday to pass House Bill 211, after the House voted 64-55 for final passage. Both chambers are controlled by Republicans.

Hood opposes the bill, saying it’s unconstitutional and would cost the state money.

The bill would limit the share of a verdict that would go to private lawyers hired on contingency, normally capping payments at $50 million. It would require the attorney general to appoint outside lawyers if he declines to represent an agency or if there is a “significant disagreement” with an agency head or elected official.

The measure would create a commission of the governor, lieutenant governor and secretary of state to referee disputes. All three of those current officials are Republicans. Commission decisions could be appealed to court.

Republicans have long criticized the practice of hiring outside lawyers, saying attorneys general give lucrative cases to their political allies, who in turn give campaign contributions back to the official. However, the measure would not restrict that practice as tightly as some have wanted in the past.

Hood claims any efforts to limit his power are unconstitutional, pointing to a decades-old court case that supports the view. He has threatened to sue over limits to his power.

Senate Judiciary A Committee Chairman Briggs Hopson, R-Vicksburg,  denies that anything in the bill is unconstitutional.

The issue has surfaced in other states, in part because conservatives and business interests want to limit the power of attorneys general to bring blockbuster lawsuits against corporations. The biggest suit of that kind was the one where Mississippi Attorney General Mike Moore hired Richard “Dickie” Scruggs to sue the tobacco industry. Mississippi settled its litigation in 1997 for an estimated $4.1 billion over time. Scruggs and affiliated lawyers were supposed to rake in a billion dollars in fees over time from the whole $248 billion national settlement. Scruggs later went to prison.

The Mississippi attorney general could still hire outside lawyers and could still pay them on contingency, under the bill. However, the attorney general would be bound by law to publish outside legal contracts, and those lawyers would have to keep time and expense records, down to how they spend as little as six minutes.

The attorney general wouldn’t be able to file suit until giving an elected official or agency seven working days to object. Those agencies would be able to seek other lawyers from the commission.

Hood said in a written statement that the bill is a “short-sighted attempt to strip the people of a constitutionally empowered attorney general and instead hire a barrel full of hand-picked lawyers doing the bidding of a few politically minded individuals. Not only is it a recipe for disaster legally and ethically, it will cost taxpayers millions of extra dollars each year.”

Hopson said the commission could turn down agencies or elected officials that made bad requests.

“This is going to prevent an agency from going out and hiring counsel willy-nilly,” Hopson said.

If the commission approves an outside lawyer, the bill says the attorney general would have to withdraw from representing the agency. However, Hopson said the attorney general could be barred from representing an agency or elected official, but would still be able to represent the state as a whole.

Rep. Cecil Brown, D-Jackson, said the bill would require an expensive legal fight if it becomes law, and that he ultimately believes Hood will prevail because it would be unconstitutional. Brown noted that Hood has won large sums for the state when agencies might have settled for less.

“He has a terrific track record,” Brown said of Hood. “It’s clearly about partisan politics. We do not object to sunshine, we’ve done a lot to create transparency. This is not a transparency bill, this is an attack on Jim Hood and it’s totally unnecessary.”

Hood said the law could lead to agencies settling piecemeal with BP PLC or similar companies that have wronged the state “thereby fracturing Mississippi’s united defense against corporate wrongdoing.”

House Judiciary A Committee Chairman Mark Baker, R-Brandon insisted that Hood’s own politics are getting in the way. He said Tuesday that the attorney general should not have the ability to legislate through his position.

“The people of Mississippi want the attorney general to be the lawyer and the state to be the client,” Baker said.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.