San Juan, Puerto Rico
Two insurance trade groups whose members are predominantly smaller companies are in serious merger negotiations.
At the fall conference of the National Alliance of Life Companies here, Judith Wright, the group’s immediate past president, briefed members on proposed terms of consolidation between the NALC and the Life Insurers Council.
The two associations have about 50 or so member companies each.
Wright said the purposes of the consolidation were first, to create an organization that has the potential to be stronger than the two existing organizations in their individual capacities; and second, to create an organization able to accomplish its purpose and be sustained for the long term.
Under the proposal, the new organization, as yet unnamed, would be a subsidiary of LOMA and members would be LOMA members. LIC is already a LOMA subsidiary.
After a phase-in period, dues would be paid to LOMA.
According to Wright, the new organization would be managed by a board of directors, separate and apart from LOMA. The directors would be elected by the members of the new association.
Scott Cipinko, currently NALC’s executive director, has been invited to be executive director of the new organization. He would relocate to Atlanta where he would become an employee of LOMA and would report to LOMA’s CEO.
Wright pointed out to the NALC members, who have traditionally prized their independence, that under the proposal the new organization could separate from LOMA at any time and for any reason on a two-thirds vote of its board.
Indeed, a member of the audience said he thought the consolidation was a bad idea. “If you lose control of revenues, you lose control of the issues and the agenda,” this member said.
In response, Harry Lee Waterfield, a founding member of the NALC, said he wrestled for a long time over whether to favor the consolidation. He said what decided him was the fact that membership was not increasing, which was putting more pressure on the group.
“When we can’t get companies to join us on the small policy issue,” Waterfield said, “we can’t get them to join on anything.”
Although the two groups anticipate that the consolidation would be agreed upon by the end of 2001, the new organization would not begin to operate as a combined entity until June 1, 2002.
Reproduced from National Underwriter Life & Health/Financial Services Edition, November 5, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.