Hooper Holmes, of Basking Ridge, NJ, is a consultant for the health insurance industry, founded in 1899. It was originally known as the National Insurance information Bureau. It is described on its website as having a "vision," to wit, "collecting personal health data and transforming it into information enabling our customers to take actions that manage or reduce their risks and expenses."
It plans to expand its board of directors from seven members to nine. Ronald V. Aprahamian, accordingly, has requested that the company put him on one of the newly-created board seats. He also has a nominee for the other open seat: Larry Ferguson, veteran of a "nearly 30 year career in the healthcare technology industry," one filing tells us.
I'm still trying to get a fix on this apparently looming proxy contest. I'll come back to it shortly.
For now, I'll just quote Aprahamian's statement: "Hooper Holmes' financial performance has been inadequate for quite some time and its stock price has steadily declined over the last years. My nominees will bring a fresh, owners' perspective to the various alternatives that could remedy this situation. I remain hopeful that the Hooper Holmes' Board of Directors will reconsider its position and thereby choose to avoid an unnecessary, costly and distracting proxy contest against nominees that are advocating for the broad interests of all shareholders."
Showing posts with label insurance industry. Show all posts
Showing posts with label insurance industry. Show all posts
Monday, April 20, 2009
Monday, July 28, 2008
Dysfunctional bankruptcy courts
It is a truth universally acknowledged that a failed business must be in want of a lawsuit.
My own bias in such cases is that investors --especially the institutional sort -- have to be prepared to take their knocks. When they invest in a risky posititon, either they were aware of the risk or they were likely lacking in their due diligence. Either way, I can work up more sympathy for the failed managers than for their vengeful former investors.
The failed managers aren't the only targets of the lawsuits that follow from a typical early 21st century business debacle.
We have these darned "fraudulent conveyance" and "avoidance" lawsuits that help spread trouble. Even the possibility that X now teeters near bankruptcy makes it very risky for anyone to accept money from X, which has a variety of perverse consequences and may have helped lead Bear Stearns to slaughter earlier this year.
Bridgeport Holdings will likely worsen the problems that arise from such situations. All it seems likely to accomplish in the first round of consequence is to drive up D&O liability insurance rates. The second round? the impact of those higher rates? an arbitrary re-allocation of resources toward fields thought to be inherent lewss transparent, and thus less likely to draw lawsuits.
My own bias in such cases is that investors --especially the institutional sort -- have to be prepared to take their knocks. When they invest in a risky posititon, either they were aware of the risk or they were likely lacking in their due diligence. Either way, I can work up more sympathy for the failed managers than for their vengeful former investors.
The failed managers aren't the only targets of the lawsuits that follow from a typical early 21st century business debacle.
We have these darned "fraudulent conveyance" and "avoidance" lawsuits that help spread trouble. Even the possibility that X now teeters near bankruptcy makes it very risky for anyone to accept money from X, which has a variety of perverse consequences and may have helped lead Bear Stearns to slaughter earlier this year.
Bridgeport Holdings will likely worsen the problems that arise from such situations. All it seems likely to accomplish in the first round of consequence is to drive up D&O liability insurance rates. The second round? the impact of those higher rates? an arbitrary re-allocation of resources toward fields thought to be inherent lewss transparent, and thus less likely to draw lawsuits.
Monday, December 17, 2007
Controlling Group
I over-promised yesterday, when I said I'd discuss the legal issue today of whether Greenberg is running a "controlling group" in the meaning of New York's law governing who does or doesn't get to control an insurance company.
Researching the matter turns out to be more trouble than I thought, and would expect that words like "control" and "group" have the same meaning in New York state law, in particular in its insurance law, that they have in the federal securities regulatory system.
But maybe not. The point, after all, is different. In federal securities law, the question often arises, "is so-and-so seeking to acquire control of a company without paying a control premium for it?" That is, after all, how the temptation to buy shares through surrogates, acting informally as a 'group,' would arise. An acquirer given its druthers wouldn't announce on the news "I'm going to start buying up AIG shares until I control the company"! That would be akin to saying, "Please demand ever-higher prices from me for that stock -- I'll pay them," and this of course gets to be expensive. Hence the phrase "control premium."
But the acquirers don't get their druthers. If you act surreptitiously, as a 'group,' to acquire the stock without paying such a premium you're in violation of the securities laws and regulations which require candor on such matters, on the theory that its only fair to pay the stockholders that sort of control premium, and you've cheated them out of something if you avoid paying it.
There's more to it than that, but my point is just that the significance of words "control" and "group" in the typical securities litigators' setting is different from the concern of the insurance regulators of a state to keep track of just who it is they are regulating. The meaning of the words may not be the same.
And of course you must suppress any impulse that arises in your throat to say, "maybe group just means plain-old-English 'group'." Tautologies don't enlighten.
Researching the matter turns out to be more trouble than I thought, and would expect that words like "control" and "group" have the same meaning in New York state law, in particular in its insurance law, that they have in the federal securities regulatory system.
But maybe not. The point, after all, is different. In federal securities law, the question often arises, "is so-and-so seeking to acquire control of a company without paying a control premium for it?" That is, after all, how the temptation to buy shares through surrogates, acting informally as a 'group,' would arise. An acquirer given its druthers wouldn't announce on the news "I'm going to start buying up AIG shares until I control the company"! That would be akin to saying, "Please demand ever-higher prices from me for that stock -- I'll pay them," and this of course gets to be expensive. Hence the phrase "control premium."
But the acquirers don't get their druthers. If you act surreptitiously, as a 'group,' to acquire the stock without paying such a premium you're in violation of the securities laws and regulations which require candor on such matters, on the theory that its only fair to pay the stockholders that sort of control premium, and you've cheated them out of something if you avoid paying it.
There's more to it than that, but my point is just that the significance of words "control" and "group" in the typical securities litigators' setting is different from the concern of the insurance regulators of a state to keep track of just who it is they are regulating. The meaning of the words may not be the same.
And of course you must suppress any impulse that arises in your throat to say, "maybe group just means plain-old-English 'group'." Tautologies don't enlighten.
Sunday, December 16, 2007
AIG and New York
New York State's insurance department has taken a position that may frustrate Hank Greenberg's efforts to ... do whatever it is he's planning to do, in connection with AIG, the global insurance giant he headed for years.
Perhaps the reader will recall my discussions from Nov. 4 through Nov. 7. I didn't know then, and still don't know, whether Greenberg seeks outright control of AIG, or whether he'll be satisfied engineering some profitable change in its corporate structure and policy. But something is up.
The New York Insurance Dept. filed a letter December 7 stating its position, which is that too much is up.
New York law says that if individual stockholder or group acting together acquires more than 10% of the equity of a company selling insurance within that state, the acquirer becomes a "controlling entity" -- which requires permission.
New York now calculates that entities Greenberg is piloting control more than the threshold amount of AIG, and must either seek permission to be a controlling entity or "cease and desist immediately from engaging in any further activities aimed at exercising a controlling influence over AIG."
An attorney for Greenberg, Marcia Alazraki, has replied, saying that the various entities involved aren't a group in the relevant sense, and asking for a meeting with NY officials to discuss the issue.
Ms Alazraki knows the issue well. She was deputy superintendent at the NY Dept. of Insurance herself in the early 1980s, and assistant counsel to the Governor of the state, Hugh Carey, before that (1979-81).
She's also got a fine, somewhat intimidating, photograph on her webpage. One likes that in a lawyer.
http://www.manatt.com/Attorneys.aspx?id=1247&item=1245
Tomorrow, then, let's examine the issue of when does a group of shareholders act in concert for purposes of sucg regulatory concerns.
Perhaps the reader will recall my discussions from Nov. 4 through Nov. 7. I didn't know then, and still don't know, whether Greenberg seeks outright control of AIG, or whether he'll be satisfied engineering some profitable change in its corporate structure and policy. But something is up.
The New York Insurance Dept. filed a letter December 7 stating its position, which is that too much is up.
New York law says that if individual stockholder or group acting together acquires more than 10% of the equity of a company selling insurance within that state, the acquirer becomes a "controlling entity" -- which requires permission.
New York now calculates that entities Greenberg is piloting control more than the threshold amount of AIG, and must either seek permission to be a controlling entity or "cease and desist immediately from engaging in any further activities aimed at exercising a controlling influence over AIG."
An attorney for Greenberg, Marcia Alazraki, has replied, saying that the various entities involved aren't a group in the relevant sense, and asking for a meeting with NY officials to discuss the issue.
Ms Alazraki knows the issue well. She was deputy superintendent at the NY Dept. of Insurance herself in the early 1980s, and assistant counsel to the Governor of the state, Hugh Carey, before that (1979-81).
She's also got a fine, somewhat intimidating, photograph on her webpage. One likes that in a lawyer.
http://www.manatt.com/Attorneys.aspx?id=1247&item=1245
Tomorrow, then, let's examine the issue of when does a group of shareholders act in concert for purposes of sucg regulatory concerns.
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