Marsh & McLennan Companies Inc said on Friday it was suspending its practice of using "market services agreements" with insurance carriers, which the New York attorney general has alleged were used to rig bids, cheating customers. \nThe agreements -- also known as contingent commissions or placement service agreements -- are at the center of a lawsuit announced on Thursday by New York State Attorney General Eliot Spitzer accusing the New York-based firm of taking payoffs from insurance companies to steer corporate clients their way, rather than get those customers the best prices for corporate property and casualty policies. \nThe fees are over and above the ordinary commissions brokers receive from insurance companies, mainly for steering volume business the insurer's way. \nMarsh & McLennan said the practice would be suspended at Marsh Inc, its risk and insurance services subsidiary. \n"Today's decision was made in light of the serious allegations and questions that have been raised about this long-standing industry practice," the company said in a statement. \nThe statement also quoted chairman and chief executive Jeffrey Greenberg as saying: "We are greatly disturbed by the allegations of wrongdoing. We take them very seriously, and we are conducting a thorough investigation of these allegations." \n"As the facts are being reviewed, we believe it is in the best interest of our clients to suspend MSAs immediately," he said. \nThe announcement came as shares in Marsh & McLennan, which fell 25 percent on Thursday, took another beating on Friday. Moody's Investors Service put Marsh & McLennan's debt rates on "outlook negative," which often precedes a downgrade. And several brokerages, including Prudential Equities Group, lowered their ratings on the stock. \nIn early afternoon trading, Marsh & McLennan shares were down US$5.76, or nearly 17 percent, at US$29.09 on the New York Stock Exchange. \nShares in insurance companies named in Spitzer's civil suit Thursday against Marsh & McLennan also tumbled for a second day. \nAmerican International Group was down US$2.93 at US$57.07, ACE Ltd was off US$2.66 at US$33.81, and Hartford Financial Services Group Inc was down US$255 at US$55.85. The probe also mentioned Munich-American Risk Partners, a division of the German-headquartered Munich Re Group. \nSpitzer said other insurance companies are being investigated. \n"The damages are vast, the corruption is remarkable," Spitzer said at a news conference after a court appearance. \nThe attorney general's office also announced that two executives of AIG pleaded guilty on Thursday to participating in the illegal conduct and are expected to testify in future cases. \nThe two executives, Karen Radke, 42, a senior vice president of an AIG division, and co-worker Jean-Baptist Tateossian have been suspended pending the outcome of the case, AIG said on Friday. They face up to four years in prison, but their sentence will depend on how much more they cooperate, Spitzer said.
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
The output of the global smartphone industry this year is to contract by 7.8 percent on an annual basis as the COVID-19 pandemic ushers in a global recession, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report on Monday. The global production of smartphones is expected to fall to 1.29 billion units, as the pandemic dampens demand for consumer electronics, leading to a decline in shipments across Europe and North America, TrendForce said. With consumers delaying smartphone purchases and thereby lengthening the device replacement cycle, overall prices would suffer a setback that is expected to negatively affect the profitability of smartphone
ELECTRONICS Lite-On delays sale of unit Lite-On Technology Corp (光寶科技) yesterday said it would postpone the sale of its solid-state drives (SSD) business to Kioxia Holdings Corp, formerly known as Toshiba Memory Holdings Corp, due to disruptions amid the COVID-19 pandemic. Last year, the Taiwan-based electronics components supplier struck the deal with the Japanese firm, agreeing to sell the unit for US$165 million. Citing unfinished integration work due to the pandemic, Lite-On has deferred today’s closing date until further notice, adding that the delay would not have a negative effect on the unit’s operations. AUTO PARTS Hiroca approves dividend Automotive interior parts supplier Hiroca
ALL ABOUT STRATEGY: The company is optimistic, saying that its gross margin should increase year-on-year, but it is scaling back on its plans to expand capacity Quang Viet Enterprise Co (QVE, 廣越), which makes down jackets and garments for sportswear and outdoor brands including Adidas AG, yesterday said that revenue might drop 5 to 10 percent annually this year as some customers trimmed orders in response to the COVID-19 pandemic. That would mark its first revenue decline since 2016. Quang Viet posted record-high revenue of NT$16.26 billion (US$537.45 million) last year, up 22 percent from 2018. Down jackets made up 40 percent of it revenue last year. North Face Inc and Patagonia Inc are this year likely to reduce orders by 20 to 30 percent from a