USI Holdings Unit To Pay $470,000 In Pact With Conn AG
March 04 2009 - 2:00PM
Dow Jones News
A unit of USI Holdings Corp. (USIH) has agreed to pay $470,000
and change its business practices to resolve allegations it
received undisclosed payments from insurers in exchange for access
to pension-plan business, Connecticut Attorney General Richard
Blumenthal said.
In a statement Wednesday, Blumenthal said USI Consulting Group,
an employee-benefit consulting and outsourcing firm, has agreed to
no longer accept or request contingent compensation related to
single premium group annuity insurance contracts and will disclose
all quotes and indications sought and received in connection with
an SPGA placement.
"More than the money, this settlement provides business reforms
that prevent artificially inflated pension plan costs for private
and public companies, nonprofits and others," Blumenthal said.
"Today's settlement stops secret payments to pension plan brokers,
ensuring transparency and integrity for certain investments."
Blumenthal had alleged USI Consulting, since at least 1998, had
received undisclosed payments from insurers in connection with some
single premium group annuity insurance contracts, including
payments from units of Hartford Financial Services Group (HIG),
Principal Financial Group (PFG) and Mutual of Omaha Insurance Co.
All three insurers have previously settled with Blumenthal.
In exchange for the hidden payments, the insurers received
competitive information and "last look" bidding opportunities not
provided to carriers that declined to pay the secret compensation,
Blumenthal said.
The undisclosed agreements increased USI Consulting's overall
compensation on those SPGA placements by as much as 33% to 50%,
Blumenthal said.
The attorney general had alleged that USI Consulting's practices
- including misrepresentations to plan sponsors and conspiring with
carriers in a scheme to deceive its clients - violated
Connecticut's unfair trade practice laws.
Blumenthal noted USI Consulting cooperated early in the in probe
and his investigation is continuing.
"There were other brokers involved in these schemes, and my
investigation into pay-to-play in the SPGA market will continue,"
Blumenthal said.
A USI Holdings spokesman didn't immediately return a phone call
seeking comment Wednesday.
-By Chad Bray, Dow Jones Newswires; 212-227-2017;
chad.bray@dowjones.com