Employee stock ownership legislation passed

The Iowa Legislature enacted incentives to encourage Iowa companies to form more employee stock ownership plans (ESOPs). The legislation put into place one of four economic development goals outlined by Gov. Terry Branstad in his 2012 Condition of the State address. The incentives should be a boon for the state’s economic development climate, predicted an expert with Principal Financial Group Inc.

“You have a whole bunch of family-owned businesses with owners who are approaching or past retirement age and who are looking for solutions to transition their business,” said Jerry Ripperger, Principal’s director of consulting for retirement and investor services.

The legislation created a tax incentive for business owners to establish ESOPs and established a $1 million fund to provide loans and technical assistance to help companies form them. An owner who sells at least 30 percent of his or her company to an ESOP would qualify for exemption from Iowa capital gains taxes on the sale.

“We think that (provision is) going to make a lot of owners who had been waiting for the right time to now seriously take a look at ESOPs,” said Ripperger, who has more than 25 years of experience in employee benefits. Read full story

Property/casualty insurance premiums begin to rise

After being pummeled by unprecedented catastrophe losses in the past several years and facing continued flat investment returns, property and casualty insurers by early 2012 began to raise premiums and tighten underwriting standards, signs of a transition toward a “hard” insurance market, said Greg LaMair, president of LaMair-Mulock-Condon Co.

The U.S. insurance market has for about the past eight years experienced soft market conditions characterized by declining insurance rates and robust competition. By late 2012, it was still uncertain whether the market would harden to the point that it’s difficult to obtain coverage or that policyholders will see the kind of double-digit premium increases last experienced in 2001, when average quarterly increases topped 28 percent. Read full story

Aviva USA sold to Athene

Just in the nick of time before this issue’s deadline on Dec. 21, Aviva plc announced that it had agreed to sell West Des Moines-based Aviva USA Corp. to Athene Holding Ltd for $1.8 billion.

The deal will make Aviva USA – which will be renamed Athene USA – the parent company of Athene’s U.S. operations, and the company will remain headquartered in West Des Moines.

A company press release at the time said Athene was committed to “retaining a substantial employee base in Des Moines as the centerpiece of Athene USA’s nationwide operations.”The transaction was expected to close in 2013, and was subject to regulatory approval. Athene said the West Des Moines operations would combine with Delaware-based Athene Annuity & Life Assurance Co. to form the second-largest issuer of fixed indexed annuities in the United States.

Aviva also said it would retain the North American asset management activities of Aviva Investors that are focused on third parties, and Aviva plc assets outside of the United States. Aviva plc built a $135 million headquarters for Aviva USA in 2010 in West Des Moines.

Cognizant and ING establish center of excellence in Des Moines

In June, Greater Des Moines gained the presence of another major global Fortune 500 insurance company without losing an existing major insurer to a buyout or merger.

Cognizant Technology Solutions Corp. and ING U.S., a subsidiary of Dutch financial services giant ING Groep NV, announced a seven-year agreement in which Cognizant will establish an “insurance center of excellence” that will have operations in Des Moines and Minot, N.D.

The agreement, which developed out of a six-year relationship between the two companies, is a recognition of “an emerging and robust business opportunity that’s beginning to show up in the insurance industry,” said Gajen Kandiah, Cognizant’s managing director of business process services. Since 2006, Cognizant has been working as an information technology partner with ING to provide end-to-end processing services for ING’s annuities business. Now, with the center of excellence, Cognizant will also provide those business process services to other insurers, he said. Read full story