Hartford Courant from Hartford, Connecticut • 16

ijrje Jlartforti ourant PAGE B8 WEDNESDAY DECEMBER 31,1986 Insurers assessed $22 million for failed firms Corporations playing ball as year ends liability insurance policies issued by Midland Insurance Co. in New York City and Transit Casualty both being liquidated. Raymark is seek Kenneth Ross BUSINESS Mi D'T0R By DIANE LEVICK Courant Staff Writer Some 350 insurance companies will be assessed more than $22 million to help pay claims of Connecticut businesses and residents whose own insurers are unable to meet their financial obligations. The amount, which is assessed in 1986 but collected in 1987, will be the largest yearly assessment ever levied by the 16-year-old Connecticut Insurance Guaranty Association. Last year's assessment was less than $6 million, a spokesman said.

Created by state law, the association collects money from financially healthy insurers to pay property and casualty insurance claims owed by insolvent companies to their policyholders. The assessment reflects the growing financial troubles through the early 1980s of the property-casualty insurance industry, which has reported a turnaround in the past year. The assessment stems from insol owed by insolvent insurers on product liability, medical malpractice, general liability and other business insurance policies. In addition, the association will separately assess $275,000 to cover personal and commercial auto insurance claims, and another $500,000 for workers' compensation insurance claims, Gulko said. Based on insolvencies around the country, the association believes it may have to pay as much as $100 million to Connecticut policyholders and people bringing claims against policyholders.

But $22 million is the maximum it can legally assess for 1986 to cover claims other than auto and workers' compensation claims, Gulko said. Connecticut law says each insurer licensed in the state, regardless of where the company is based, can be assessed up to 2 percent of the net premiums it wrote in Connecticut the previous year. If the maximum assessments aren't enough to pay what the association owes, it must make up the difference with future years' assessments, Gulko explained. The Connecticut guaranty association isn't assessing insurers yet for approximately $25 million sought by Danbury, Union Carbide in connection with the Bhopal, India, disaster, and $32 million sought by Raymark Industries a subsidiary of Trumbull, Raytech for asbestos-related claims. Gulko said the association has filed a Connecticut Superior Court lawsuit claiming it is responsible for paying only $1.8 million of the $32 million which Raymark seeks.

The association, which wants court rulings on the differing interpretations of the Connecticut guaranty fund law, also filed a separate suit disputing the amount sought by Union Carbide. Union Carbide, Gulko explained, was unable to collect money owed on Indicators suggest growth in economy Associated Press WASHINGTON The Commerce Department said Tuesday the government's main index of future economic activity jumped 1.2 percent in November, the biggest increase in seven months. Private economists, however, were divided over whether the surprisingly strong advance in the Index of Leading Indicators was a true signal of a rebounding economy or an overstatement of growth prospects for next year. The advance was more than double the 0.5 percent October rise in the leading index, which is a compilation of various forward-pointing economic statistics designed to predict economic activity six to nine months in the future. Some analysts cautioned against reading too much into the November gain, contending it was more a reflection of short-term economic activity than a sign of future strength.

"I think this is an overly optimistic view of what we can expect the economy to do," said Cynthia Latta, an economist with Data Resources Inc. of Lexington, Mass. "I think we will see moderate, steady growth, but this number would suggest a boom period and we are not going to get that." Latta estimated the economy, as measured by the gross national product, was expanding at a 3.5 percent annual rate as 1986 ended, but she said this would weaken to 1 percent rate in the first three months of 1987. Jm fTJre I 'yyw0 c3ttd -r-iirmiinMiiiiriir vencies of out-of-state insurers, such as Transit Casualty Co. in Los Angeles and Ideal Mutual Insurance Co.

in New York City, which sold coverage to Connecticut businesses. Insurance companies pass on the cost of guaranty fund assessments in prices they charge their customers for insurance, said Paul M. Gulko, president of Guaranty Fund Management Services in Boston, which administers the Connecticut guaranty association. Hartford-based Aetna Life Casualty for example, a leading Connecticut insurer, paid $126,510 to the Connecticut guaranty association in 1985 and $782,843 in 1986. Information was unavailable Tuesday on what its share of the new $22 million assessment will be.

Aetna says it paid a total of $12.1 million in 1986 to states' guaranty funds around the nation, compared to $8.03 million in 1985. The Connecticut guaranty fund says the new $22 million assessment will help cover claims payments She said the faster growth in the final three months of this year and the big drop next year were both attributable to the massive overhaul of the tax law that takes effect on Jan. 1. To take advantage of expiring tax benefits, businesses and consumers accelerated purchases this quarter but will cut back on spending in the first three months of next year, Latta and other economists contend. But Doug Handler, an economist at Wharton Econometrics, another private forecasting firm, argued that the effect of the tax law has been overstated.

He predicted 1987 will show steadily improving growth throughout the year, just as the leading index is suggesting. "We have had three consecutive months of positive increases in the index Given this trend, we should have good growth next year," he said. "And if we get more reports like today's rise, then 1987 could turn out to be a fantastic year." In other economic news Tuesday, the Commerce Department said sales of new homes slid further in November, dropping to an annual rate of 661,000 units, 2.2 percent below the October figure. It was the seventh decline in the past eight months and showed, analysts said, that the impact of falling mortgage rates was being outweighed by price increases for new homes. The average price of a new home shot up 3.8 percent in November to $116,800.

The November increase in the See New, Page B9 ple who make long-distance calls from home. competitors said earlier they will reduce their long-distance rates to remain competitive. Fowler estimated that their reductions, coupled with cuts, will bring the total reduction in 1987 phone bills to more than $2 billion. The cuts were made possible in large part by reductions in the rates thalong-distance companies pay local phone companies for making the See FCC, Page B9 Neither Sala nor Donovan could be reached Tuesday, and a telephone information operator said there was no listing in Albany for First Meridian. Acquisition done ComFed Savings Bank of Lowell, said Tuesday it has completed its acquisition of Heritage Savings and Loan Association of Manchester.

The merger was approved on Monday by Heritage Savings shareholders. As previously announced, each of the approximately 496,000 common shares of Heritage will receive $15 a share in cash. Employee stock options for about 60,000 shares will be cashed out in the merger. The transaction is valued at approximately $7.7 million. I NATION Associstsd Prsss Soft drink partners Thomas O.

Hicks, left, and soft drink concern, behind No. 1 Coca Cola Co. and Robert B. Haas now control nation's third-largest No. 2 PepsiCo, from their Dallas offices.

Hicks Haas create third tier in soda ing money from the guaranty fund because it cannot collect from Tran sit Casualty, Gulko said. The guaranty association assessments for 1986 won't be collected from insurance companies for an other five months or more because it's not needed yet, he added. He said the association has roughly $4.5 mil lion on hand, and insurance companies which rely heavily on invest ment income prefer to retain- their money as long as possible. Of the $22 million assessment, $18 million stems from Transit Casualty policies, $3 million from Ideal Mutu al, and $1 million from Union Indem nity Insurance Co. of New York.

Ideal and Midland insolvencies are responsible for the $275,000 in auto insurance assessments, and for the $500,000 in workers compensation claims. headlong into the soft drink industry? "We had no preconceived notion of what kinds of firms we were interested in when we formed this partnership in 1984 as long as they weren't energy related," Haas said during an interview at his office in downtown Dallas. "Then we saw in soft drinks a growing market, prices and popularity," added Hicks, 40. "It's a steadily increasing industry that requires few capital expenditures and has no foreign competition, obsolescence or cycles." "Each of the brands we bought is the leader in its class," Hicks said. "None of them are colas.

We all compete for the same share of stomach, but we don't want to run head-to-head with Coke and Pepsi." By staying away from colas, Hicks Haas is showing that "Pepsi and Coke, not necessarily in that order, clearly have the lead See Dallas, Page B9 WATCH Dollar UP The dollar rose in light trading on U.S. markets after a mixed performance overseas. Gold DOWN $388.75 London p.m. fixing MORTGAGES Adj 7.10-11.25 Fixed Based on local survey. Here it is, the last day of the year, and we all know what that means.

Tomorrow we start misdating our checks. Unlike many last days of the year, this one has attracted much attention as the end of income tax deductibility as we know and love it. The tax-related frenzy has pretty much passed us by, alas, by a lack of notable gains upon which to capitalize, and because we didn't spend 14 grand on a new car to save 300 or 400 bucks on income taxes. That does not suggest disinterest in another taxing exercise associated with the end of one year and the beginning of another. That, of course, is the impending culmination of a series of college bowl games long enough to drive the most devoted football fan into catatonia, which, contrary to popular belief, is not a city in California.

One notable departure in this year's batch of bowls has been the proliferation of corporate sponsorships of the games themselves, not just the purchase of commer cial television air time. For example, on Christmas day we were introduced to the John Hancock Sun Bowl from El Paso, Texas, just as on New Year's Day we won't just see the Sugar Bowl but the Sugar Bowl. Then on Friday, the championship of the cosmos will be decided when Penn State and Miami (the university, not the Dolphins) play in the Sun-kist Fiesta Bowl somewhere in Arizona. In there, somewhere, was the Mazda Gator Bowi in Jacksonville, Fla. In some cases, the corporate sponsors and their clout with the television networks preserves a bowl game's, network affiliation.

the Baltimore- based insurance firm whicb isn't a household word though it may be-come household initials, hopes its sponsorship of the Sugar Bowl this year and in four succeeding years in New Orleans will help increase its name recognition. We think it a good means of advertising," a company spokeswoman said. "Football is an ail-American sport and we're an all-American company." The Sugar Bowl is a natural for she said, because the Southeast is one of the company's major markets and it previously has sponsored a golf tournament the classic in New Orleans. John Hancock Mutual Life In surance affiliation with the Sun Bowl arose out of the urging of Hancock's agent in El Paso, Ted Houghton, who finally convinced David D'AUessandro, senior vice president for communications to pick up the ball (bad pun intended.) Jack Mahoney, director of spe cial events for Boston-based Hancock, noted that the company's sponsorship of the Boston Marathon produced great rewards in terms of name recognition and by helping it shed "its stodgy old New England image." "The Sun Bowl fit all the crite ria we were interested in," Mahoney said. "It was in an area were we were not strong and it had a national appeal." By holding the game on Christ mas day following a National Basketball Association game, the Sun Bowl also had a monopoly on the holiday audience as opposed to the New Year's day bowl blitz, he not ed.

Hancock agreed to sponsor the game ana participate in sponsor ship in related Sun Bowl events for three years with an option to renew for two more. One of Hartford's insurance Ei- ants Travelers Corn. will buv one TV spot each on five college games, the Cotton Bowl, the Rose Bowl, the Orange Bowl, the Fiesta Bowl and the Hula Bowl. It also will bring pro football playoff games and the Super Bowl under its advertising umbrella. Aetna Life Casualtv Co.

will sit out the bowl season, a spokesman said, as befits its advertising strategy of hitting three or four programs a year. lne bowl season is more clut tered," he said. "We try to concentrate on premier sports events or miniseries where we're one of two or three big advertisers." inat put Aetna on the World Series, which didn't have competition from any other kind of baseball, which is not to say it didn't have any casualties. Even the Red FCC orders added cuts for long-distance rates By DOUG CRICHTON Associated Press DALLAS People kept asking, "Hicks Haas who?" Even Robert Haas' daughter wasn't quite sure what he did for a living. "But now the nice thing is that my kids know what I do," says Haas, 39.

"All they have to do is open the refrigerator to see my portfolio." So can the rest of America. Haas and partner Thomas Hicks popped onto the soft drink scene in March 1985 with the unassuming purchase of a Dr Pepper bottling plant. They have since acquired four soft drink companies and now control the nation's third largest soda concern behind Coca-Cola Co. and PepsiCo Inc. "After everybody moaning about how tough it was to create a third tier, Hicks Haas, not knowing it was impossible, went out and did it," said Jesse Meyers, who publishes Beverage Digest, a ROUNDUP newsletter that reports on the soft drink business.

In May, the Dallas-based investment partnership bought Brands Inc. for more than $74 million. Then came the $416 million purchase of Dr Pepper on Aug. 20 and Seven-Up Co. for $240 million on Oct.

3. The acquisition of Squirt Co. in mid-November gave the partners a healthy 13.8 percent share of the $38 billion-a-year retail soft drink industry, Meyers said. That trails far behind Coca-Cola's 39.6 percent share of the market and Pepsi's 29.2 percent, but it is ahead of the next closest rival, Royal Crown Cola, at 4.5 percent. The two partners first met each other in 1978.

The partners also have acquired two radio stations in Baton Rouge, and they are completing a $45 million purchase of the Muskegon, Clarke Floors division of Cooper Industries Inc. What led Hicks Haas to dash TUESDAY Stocks Associated Press WASHINGTON The government on Tuesday ordered American Telephone Telegraph Co. to reduce rates an additional $650 million to $700 million, bringing a scheduled New Year's Day long-distance price cut to almost $1.9 billion, or 11 percent. Federal Communications Commission Chairman Mark S. Fowler said a large portion of the new reductions will come in the night and weekend time periods to benefit peo I STATE Status revoked State Banking Commissioner Howard B.

Brown has ordered a New York financial planning company and its officers to cease selling securities in Connecticut and notified the company of his intent to revoke its registration as an investment adviser, the state Department of Banking said Tuesday. The department said the action was taken against First Meridian Planning Corp. of Albany, its president, Roger V. Sala, and its vice president, John W. Donovan, for violation of the Connecticut Uniform Securities Act An investigation by the department's securities and business investments division found that First Meridian offered and sold unregistered securities and employed certain personnel not registered as investment adviser agents.

In addition, the probe found the firm and its employees provided investors with false or misleading information pertaining to their NYSE INDEX 139.12 SAP COMPOSITE 243.37 AMEX INDEX 261.54 NASDAQ INDEX 347.32 ADVANCES 473 UNCHANGED 467 DECUNES 1,129 NYSE VOLUME 126.180,000 ISSUES TRADED 2,069 ket and continued selling for tax purposes, analysts said. The Dow Jones average of 30 industrial stocks closed at 1,908.61, down 3.51. "The bond market was weak, and that undoubtedly had some effect on it. But things are usually dull this time of year anyway," said Alan C. Poole, an analyst at the Laidlaw, Adams Peck securities firm.

BellSouth Corp. led the Big Board's most-active issues at down 87 cents. It begins trading ex-dividend Monday. Exxon pullout NEW YORK Exxon Corp. joined the growing list of U.S.

and foreign companies that have pulled out of South Africa, announcing on Tuesday the sale of its small holdings in the racially torn country. The world's biggest oil company said its two South African affiliates, which together employ about 200 people, were sold to an independent trust set up to continue operations and pursue social and employee support programs. From staff and wire reports 1 19501 1925 1875 1850! DOW JONES INDUSTRIALS 1,908.61 The market absorbed another loss, due in part to the slumping bond market and year-end tax-selling. Data UNEMPLOYMENT Conn. (Oct.) 3.6 U.S.

(Oct.) 7.0 PRIME RATE 7.5 T-BILLS 12-month .......5.92 6-month 5.68 3-month .5.68 Stock prices slip NEW YORK Stock prices slipped broadly lower Tuesday, pressured by the sagging bond mar- 6 Sox fans at John Hancock know that 6.