The AFL-CIO has filed shareholder proposals with The Hartford Financial Services Group and five other firms involved in private lawsuits and ongoing investigations by regulators in several states, the Hartford Courant reported.
The AFL-CIO proposal urges The Hartford’s board to establish a special committee of independent directors to “review the company’s sales practices, including its use of contingent commissions and recent allegations of bid rigging and price fixing in association with Marsh and McLennan.”In our view, a board level review of [The Hartford’s] business practices will enhance investor faith in Hartford’s willingness to reform,” the AFL-CIO said in a statement.
But the companies are fighting back. According to the report, the Hartford and American International Group have asked Securities and Exchange Commission (SEC) staff to confirm that they won’t recommend enforcement action if the companies block the proposals from being considered at their annual meetings. The other firms are Marsh & McLennan Cos., ACE Ltd., Prudential and MetLife.
The Hartford launched an internal probe in October, and says the shareholder proposal, if adopted, would hurt the company’s ability to defend itself in state and private legal actions.
The AFL-CIO sent its proposal to the company nearly two months ago, as investigations of the insurance industry by attorneys general Eliot Spitzer in New York and Richard Blumenthal in Connecticut (See CT Attorney General to Sue over Insurance Commissions ) were in full swing, the Courant said. The Hartford, however, told the SEC that such a report could result in a waiver of attorney-client privilege because the board committee would likely hire outside legal counsel to advise on its review.
The Hartford and several other insurers were implicated, but not named as defendants in Spitzer’s bid-rigging lawsuit in October against broker Marsh & McLennan Cos (See Spitzer Takes On Contingent Commissions ). The Hartford fired two employees last month for failing to cooperate fully with Spitzer’s office.