USI Holdings Unit To Pay $470,000 In Pact With Conn AG
By Chad Bray
Dow Jones Newswire
March 4, 2009
NEW YORK (Dow Jones)--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.
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