UnumProvident Subpoenaed in Insurer ProbeOct 19, 2004 | AP Disability insurance firm UnumProvident Corp. said Tuesday that it received subpoenas from New York's attorney general seeking additional information related to the company's compensation of insurance brokers.
Shares of UnumProvident sank on the news, sliding 10.6 percent, or $1.43, to $12.09 on nearly three times its average volume in recent New York Stock Exchange trading.
UnumProvident said it will continue to fully cooperate with the inquiry and plans to review its broker compensation structure, which is the focus of Attorney General Eliot Spitzer's sweeping crackdown on the insurance industry.
"In addition to promoting full disclosure, we will further review our compensation policies and procedures to be sure that we appropriately compensate our brokers but do not create any actual or perceived conflict between the broker and the customer," president and chief executive Thomas R. Watjen said in a statement. "As this review is underway, UnumProvident will not enter into any new compensation agreements until this review is completed."
In June, UnumProvident was among a number of insurance companies to receive subpoenas from Spitzer's office for information regarding broker compensation and commission rates.
Spitzer launched his attack last week by suing insurance giant Marsh & McLennan Cos., alleging the firm paid out excessive incentive fees to brokers who steered profitable clients its way. The probe has since extended to several other major insurance firms.