Oklahoma Governor Frank Keating, a Republican, will become the next president of the American Council of Life Insurers.
The ACLI, based in Washington, says that Keating will assume the office in January of 2003, when his term as governor expires.
Keatings appointment as ACLI president had been widely rumored for several weeks (See National Underwriter, March 25, page 34).
“We are truly fortunate that Frank Keating has agreed to take the helm at ACLI, says Joe Gasper, ACLIs chairman.
“Frank Keating is a strong leader with rich experience in state government, federal government and executive management,” Gasper says.
Keating says he is flattered that ACLI has put its faith in him to lead the organization.
He says that the life insurance industry is dedicated to helping Americans achieve financial and retirement security and that the industry contributes significantly to the American economy.
“So in many ways, I see my new role at ACLI as an extension of my career in public service,” Keating says.
According to Keatings official biography, the 58-year-old governor is a former special agent for the FBI.
After serving in law enforcement and federal government positions during the Reagan administration and the first Bush administration, Keating was elected governor of Oklahoma in November of 1994.
He was reelected in 1998. His biography does not list any specific experience in the life insurance business.
He does cite reform of Oklahomas workers compensation system as one of his major accomplishments.
In addition, he has twice supported legislation, which was eventually enacted, to cut the state personal income tax rate.
Moreover, the state is now studying ways to completely overhaul the Oklahoma tax system, including a proposal to eliminate the personal income tax.
A representative of the National Association of Insurance and Financial Advisors, Falls Church, Va., says NAIFA is looking forward to meeting and working with Keating.
NAIFA, the representative says, hopes to further the already excellent relationship between NAIFA and ACLI.
In other news, ACLI is praising the Internal Revenue Service for regulations it recently issued on distribution rules for retirement plans.
The regulations, which were published in the April 17 issue of the Federal Register, involve, among other things, notification requirements for individual retirement account trustees reporting the required minimum distributions to IRA owners.
Kathryn Ricard, vice president for pensions and retirement with ACLI, says the IRS is making things easier for taxpayers with the new rules.
“These rules will go a long way in helping taxpayers get their required minimum distribution rights,” she says.
For life insurers, Ricard adds, this is an important issue in their role as service providers to IRA owners.
Life insurers have a big stake in assuring that they get the right information to their clients.
Ricard notes that under the law, IRA owners who have reached the age of 70 must take a certain minimum distribution from an IRA.
The previous rules on the minimum distribution were too complicated, she says.
The new rules, Ricard says, establish a uniform chart that will make it easier for taxpayers to know exactly how much they need to account for the RMD requirement.
The new rules require IRA trustees to report the RMD amount to IRA owners, or to calculate it separately on the owners request.
However, trustees need not report the RMD amount to the IRS.
The first report is due on Jan. 31, 2003.
Starting in 2004, trustees will be required to identify to the IRS each IRA for which a lifetime minimum distribution is required for the year.
Finally, a longstanding battle that has largely been fought on the property-casualty side of the business involving insurance companies based in so-called tax havens such as Bermuda may have an impact on life insurance companies as well.
Two leading members of the Senate Finance CommitteeChairman Max Baucus, D-Mont., and Ranking Republican Charles Grassley, R-Iowahave introduced legislation that would give the IRS greater leeway in determining how to allocate income in a reinsurance transaction involving related parties.
The legislation, S. 2119, affects Section 845(a) of the tax code. Currently, Section 845(a) allows the IRS to allocate income among the parties to reflect the “source and character” of the income.
S. 2119 would expand that authority to allow allocations that reflect the proper “amount” of taxable income, as well as source and character.
The purpose is to prevent insurance companies from “stripping” earnings out of the U.S.
A representative of a major Bermuda-based insurance company ACE Ltd. notes that the language of the bill is generic and would affect all insurance companies, life as well as p-c.
The representative added that the legislation does not identify offending transactions or how any specific penalty or tax would work.
Life insurers are examining the legislation.
Reproduced from National Underwriter Life & Health/Financial Services Edition, April 22, 2002. Copyright 2002 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.