Axis Gets Spitzer Subpoena On Reinsurance Tying

By Michael Ha

NU Online News Service, Nov. 4, 4:11 p.m. EST?New York Attorney General Eliot Spitzer has expanded his probe of brokerage business practices to include brokers' "tying" reinsurance arrangements, an insurance company executive said today.[@@]

Axis Chief Executive John Charman speaking during an investor conference call said the subpoena was delivered late last month.

Tying, which some insurance observers say has been a common industry practice for years, refers to arrangements where a broker awards its client's business to a particular primary insurer under the condition that the carrier place its reinsurance through the same broker or an affiliate.

Axis Capital previously had disclosed that its U.S. holding company received a subpoena on Aug. 26 from Mr. Spitzer's office seeking information regarding incentive commission agreements with brokers.

Today Mr. Charman said that, "Since then New York AG has sought additional information as the scope of his investigation has widened."

Mr. Charman said that since Axis' receipt of the first subpoena, the Axis U.S. holding company received two additional subpoenas seeking information regarding possible bid-rigging with brokers.

And on Oct. 21, Mr. Charman added, "our U.S. holding company received a further subpoena seeking information regarding tying, or conditioning of direct insurance on the placement of reinsurance." He noted that these inquiries are "part of an industrywide investigation and we are cooperating fully in the investigation."

But Mr. Charman assured that "we do not believe that we have engaged in improper business activities investigated by the New York AG." He also stressed that Axis already has suspended making payments under incentive commission agreements since the Spitzer investigation began.

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Axis Gets Spitzer Subpoena On Reinsurance Tying

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