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Actuarial Firms React To Antitrust Inquiry

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NU Online News Service, June 3, 2004, 12:59 p.m. EDT – Actuarial firms that sell employee benefits consulting services confirm that they have been contacted by the U.S. Department of Justice regarding anticompetitive activity.[@@]

The firms are responding to press reports about the contacts, including an initial report in Pensions & Investments.

The firms are Hewitt Associates Inc., Lincolnshire, Ill.; Milliman USA, Seattle; Towers Perrin Inc., Valhalla, N.Y.; and Watson Wyatt, Washington. Each firm says it has received a civil investigative demand for information.

The inquiry concerns legal liability clauses in contracts that limit the liability of consulting firms for poorly performing pension funds.

The Justice Department’s antitrust division sent Towers Perrin a letter concerning limitation of liability clauses March 30. The letter seeks information about the company’s decision to “adopt and implement limitation of liability in consulting contracts that relate to consulting services provided to employee benefit plans,” according to Joe Conway, a Towers Perrin spokesperson.

Towers Perrin “made an independent and unilateral business decision to require a limitation of liability in the agreements we enter to deliver consulting services to our clients,” Towers Perrin says in a statement. “The firm is confident that this decision was made and implemented in a completely proper and lawful manner.”

At Milliman, “the request we received relates to whether there have been anticompetitive agreements or understandings among firms providing employee benefits actuarial consulting services,” Milliman says in its statement. “Milliman has not been accused of any wrongdoing. We are comfortable that our firm has acted in compliance with its legal and professional obligations.”

Both Towers Perrin and Milliman say they are complying fully with the Justice Department requests for information.

Hewitt Associates has been contacted by the Justice Department and is cooperating fully, Hewitt spokesman Maurissa Kanter says.

Watson Wyatt is providing information requested by the Justice Department and will continue to provide information if additional information is requested, Watson Wyatt spokesman David Popper says.