GM Posts Biggest Annual US Auto Loss

Since UAW is one of our largest accounts you may find this article of interest. It underscores the continued difficulties faced by the US auto makers.


DETROIT - General Motors Corp. reported a $38.7 billion loss for 2007 on Tuesday, the largest annual loss ever for an automotive company, and said it is making a new round of buyout offers to U.S. hourly workers in hopes of replacing some of them with lower-paid help.

The earnings report and buyout offer came as GM struggles to turn around its North American business as the economy weakens.

But GM Chairman and Chief Executive Rick Wagoner said that the company made significant progress in 2007, reducing structural costs in North America, negotiating a historic labor agreement and growing aggressively in Latin America and Asia.

The Detroit-based automaker said it was offering a new round of buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers.

GM won't say how many workers it hopes to shed, but under its new contract with the UAW, it will be able to replace up to 16,000 workers doing non-assembly jobs with new employees who will be paid half the old wage of $28 per hour.

Ford Motor Co. and Chrysler LLC already have announced similar buyout offers.

GM shares fell 71 cents, or 2.6 percent, to $26.41 in premarket trading.

GM's annual loss of $38.7 billion largely was due to a third-quarter charge related to unused tax credits.

The 2007 loss topped GM's previous record in 1992, when the company lost $23.4 billion because of a change in health care accounting, according to Standard & Poor's Compustat.
Excluding the tax charge and other special items, GM lost $23 million, or 4 cents per share, for the year, compared with a net income of $2.2 billion in 2006, beating Wall Street's expectations. Analysts polled by Thomson Financial expected GM to post a full-year loss of 95 cents per share.
For the fourth quarter, GM posted a loss of $722 million, or $1.28 per share, in the fourth quarter, compared with a net income of $950 million in the year-ago quarter. Fourth-quarter charges included $622 million to Delphi Corp., GM's former parts division, for its restructuring efforts.

GM reported $181 billion in revenues for the year, down from $206 billion in 2006. Its automotive business saw record automotive revenues of $178 billion in 2007, up $7 billion from a year ago thanks to growth in emerging markets and favorable exchange rates.

GM was profitable in every region outside North America. GM's Latin America, Middle East and Africa division reported a record $1.3 billion in earnings, up 140 percent from 2006. GM's Asia Pacific division earned $744 million, up from $403 million in 2006, while GM Europe reported a profit of $55 million, down from a profit of $357 million in 2006.

But GM's North American division continued to struggle, posting a $1.5 billion loss for the year, nearly identical to its $1.6 billion loss in 2006. GM's North American division also reported a loss of $1.1 billion in the fourth quarter, compared with a loss of $129 million in the year-ago quarter.
Wagoner said the weak U.S. economy and high commodity prices hurt turnaround efforts in North America. He said GM's decision to reduce low-profit sales to daily rental companies by 110,000 in 2007 also affected U.S. sales.

"We're pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the U.S. and Germany, but we have more work to do to achieve acceptable profitability and positive cash flow," Wagoner said in a statement.

GM's results also were dragged down by its 49 percent stake in GMAC Financial Services, which lost $2.3 billion in 2007. GM reported a $1.1 billion loss attributed to GMAC.

GM barely retained its title as the world's largest automaker in 2007, selling just 3,000 more vehicles than Toyota Motor Corp. GM sold a total of 9,369,524 vehicles worldwide, up 3 percent from the year before.
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Suggested by Cheri Brewer

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In their ordinary business relationships with clients, agents are not fiduciaries

The Ohio Court of Appeal recently provided some comfort to insurance agents and brokers regarding their responsibilities to clients with whom they have ordinary business relationships. This case demonstrates that insurance agents and brokers who wish to avoid litigation should make it clear to clients:

-That they are not a fiduciary for the insured.

-That they are simply carrying out the client's instructions and make no guarantees about the adequacy of the insurance.

-That they do not provide expert advice concerning the adequacy of limits.

-That an insured should carefully review the policy wording and declarations to determine that the policy limits are adequate.

-That an insured who is unsure of the adequacy of his or her limits should retain an expert in repair and reconstruction who can determine how much coverage is needed.

-That agents should protect themselves by carefully documenting the nature of their agent-client relationships.

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We'll Believe It When We See It.

D.C. Adopts New Standards for Walkways at Construction Sites

February 6, 2008

D.C. Mayor Adrian Fenty has announced new safety standards to protect pedestrians walking by construction sites.

Fenty says the changes end "the era when sidewalks were blocked for months on end." The new policy requires that construction sites preserve existing walkways as closely as possible. The walkways must either be covered or protected.

Developers are required to submit traffic control plans to the city Transportation Department and receive city permission to temporarily use public space as part of a construction site.

The standards were developed after a study of those used in other cities.

Information from: The Washington Post

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Fiduciary Liability is for Everyone

The fundamental exposure under ERISA liability is for fiduciaries of an ERISA plan. A primary purpose of ERISA is to protect employee benefit plans by establishing standards of conduct, responsibility and obligations for fiduciaries of such plans. Fiduciaries are personally liable under ERISA for breaches of fiduciary duty to an ERISA covered plan. A fiduciary who commits a breach is responsible for any resulting monetary losses to the plan. The fiduciary is also subject to "such other equitable or remedial relief as the court may deem appropriate."

Under ERISA, a "fiduciary" is defined as one who (1) exercises discretionary authority or control over plan management, administration or disposition of plan assets, or (2) renders investment advice for a fee or other compensation. ERISA fiduciary status in this latter category requires,
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AIG Enhances Corporate Counsel Policy

The heightened risk of being named in securities litigation has lead corporate counsel to face increasing liability exposures from a variety of claimants. These liabilities may result from legal services provided on behalf of and to their employers, as well as pro bono and moonlighting services. Because the role of corporate counsel continues to change, AIG Executive Liability, a division of the property casualty insurance subsidiaries of American International Group Inc., enhanced its Corporate Counsel Premier (CCP) insurance policy to protect the personal assets of corporate counsel and their staff.

Read more at:

http://www.insurancejournal.com/news/national/2008/01/23/86658.htm

N.Y. Insurance Agency's Computer Hacked to Gain Forged Insurance Docs

Police in New York have arrested a computer consultant who is charged with fraudulently printing an insurance certificate from an agency's computer and using the document for his part-time snowplowing business.

Joseph Mori, 43, of Fishkill, has been charged with insurance fraud and criminal possession of a forged instrument. He was arrested by the New York State Insurance Department's Frauds Bureau, assisted by the Dutchess County Sheriff's Department.

Mori allegedly gained access to the computer system of Kaplan Insurance agency in Wappingers Falls to print the fraudulent insurance certificate. Agency employees discovered the fraud.
Mori reportedly worked as a computer consultant for the agency for approximately 10 years. Aside from allegedly printing the certificate, no evidence was uncovered that Mori had tampered with other agency computer files, Toucher said.

The misdemeanor insurance fraud charge could result in a sentence of up to one year in jail.

Source: New York State Insurance Dept.

Find this article at:
http://www.claimsjournal.com/news/east/2008/01/14/86402.htm