Whither TRIA? Check this space next week

Although it is coming down to the wire, there seems to be little doubt that negotiators in the House and Senate will hammer out a compromise on the reauthorization bill for the Terrorism Risk Insurance Act (TRIA) in the next few days or weeks. Despite the fact that the House and Senate versions of the bill differ substantially and the White House has threatened to veto any bill that veers far from TRIA in its current form, industry and government insiders expect compromise legislation to emerge that extends TRIA for at least another seven years, similar to the Senate version, without some of the more expansive changes passed by the House in September—such as expanding TRIA coverage to nuclear, biological, chemical and radiological acts of terrorism—which currently are not part of the existing law.

“It’s absolutely critical that TRIA pass,” says Janice Ochenkowski, president of the Risk & Insurance Management Society (RIMS) and a managing director at Chicago real estate and financial services firm Jones Lang LaSalle. “We had a taste of what it was like not having a viable [terrorism] insurance market shortly after 9/11.” That was a time, she recalls, when construction projects had to be postponed because they could not buy either property or workers compensation coverage and companies struggled with sizable in hikes in almost every line of insurance—all factors that led to TRIA’s initial passage in 2002. “Given the state of the economy currently, we need this,” adds Ochenkowski.

Born from the 9/11 terrorist attacks, TRIA established a federal backstop for insurance policies covering catastrophic losses from terrorist attacks. Without it, there is agreement that insurance companies would be unwilling to cover such risks, leaving the market and insurance buyers without coverage options. Part of the problem with the extensions of TRIA—this would be the second—is that the program was not meant to be a permanent solution to catastrophic terrorist losses. Even sponsors of the expansive House bill, which calls for a 15-year extension, claim that the long extension is meant to “help spur the further development of a private market for terrorism risk insurance,” something that has yet to happen. Insurance industry advocates call such a private sector solution fantasy. “Large-scale terrorist attacks are not an insurable risk. You don’t know where the risks are, and there is no information on which to base rates,” says Robert Hartwig, president and chief economist at the Insurance Information Institute in New York. “Most would view a permanent TRIA as ideal, but the political reality is that it is not going to happen.”

In the meantime, insurance buyers and providers will have to settle for extending the current law into the next decade. Even if the current negotiations between the House and Senate stall ahead of the December holidays, insurance policy holders should feel little pain. The House has already called for a 120-day extension to the current law, should current negotiations fail to end in compromise this year.

Without a corporate culture based on ethics, SOX means little

More than five years after the implosion at Enron Corp. and other corporate scandals prompted Congress to impose strict new regulations aimed at reducing financial misconduct, little has changed on the morality front, according to a recent survey by the Ethics Resource Center (ERC). Some 56% of respondents to ERC’s 2007 National Business Ethics Survey said that in the past year, they had personally observed violations of company ethics standards, policy or the law, compared with 55% in the same survey in 2000. Of those that witnessed breaches of conduct 42% didn’t report them, with 36% saying they feared retaliation.

“The ethics risk landscape in business is as treacherous as it was before implementation of the Sarbanes-Oxley Act of 2002 (SOX),” says Patricia Harned, president of the Arlington, Va.-based organization devoted to the advancement of high ethical standards in private and public institutions.

That’s not to say SOX has failed, Harned quickly adds. In fact, she notes, the regulations provide a much-needed framework for identifying and correcting ethical lapses. The real failure, she says, is the lack of corporate focus on building an enterprise-wide culture of morality that requires individuals to know and understand corporate ethics problems and report any misconduct that they observe to the appropriate parties.

“The important thing is building a strong culture and you can’t legislate that,” she says. “It requires a focus on ethical leadership, supervisor reinforcement, peer commitment to ethics and embedded ethical values.”

The fact is, Harned says, only 25% of the companies studied actually have well-implemented ethics and compliance programs, according to ERC standards. And only 40% of employees know and understand their companies’ policies.

Careers

The $22.6 billion provider of products and services to the energy industry, with headquarters in Houston, Halliburton has appointed senior vice president and chief accounting officer Mark A. McCollum executive vice president and CFO. McCollum, 48, replaces C. Christopher Gaut, who has been promoted to president of the company’s drilling and evaluation division. McCollum served in various capacities with Tenneco Automotive Inc., including CFO, before joining Halliburton in 2003.


Time Warner Cable Inc., the $11.7 billion cable company based in Stamford, Conn., has promoted senior executive vice president, Robert D. Marcus to senior executive vice president and CFO. Marcus, 41, succeeds John K. Martin Jr., newly named executive vice president and CFO of the parent company, Time Warner Inc. Marcus came to Time Warner Cable in 2005 as senior executive vice president after spending seven years with the parent Time Warner Inc. serving in a variety of executive positions, including senior vice president of mergers and acquisitions.

Reynolds American Inc., the $8.5 billion Winston-Salem, N.C.-based parent company of the R.J. Reynolds Tobacco Co., Conwood Co., Santa Fe Natural Tobacco Co. and R.J. Reynolds Global Products, has named Thomas R. Adams executive vice president and CFO. Adams, 57, replaces Dianne M. Neal, who has resigned. Adams joined the Reynolds family of companies in 1999 as senior vice president and controller of R.J. Reynolds Tobacco Holdings Inc. and R.J. Reynolds Tobacco Co. Five years later he was promoted to senior vice president and chief accounting officer for the companies. He stepped into his current role in March 2007. Prior to joining Reynolds, he spent 14 years as partner at Deloitte & Touche LLP.

NCR Corp., the $6.1 billion technology company, with headquarters in Dayton, Ohio, named Tony Massetti CFO. Massetti, 45, replaces interim CFO Bob Fishman, who will continue his duties with the company as corporate controller. Massetti comes to the company from QLogic where he serves as CFO and will remain until the end of the year. Before spending five years with QLogic, Massetti held senior positions with Aurum Solutions, Scandisk and Technology Group. Massetti started his career with IBM where he remained for almost two decades, serving in various capacities in the accounting, financial planning, treasury and business controls departments.


Analog Devices Inc., the $2.6 billion leader in data conversion and signal conditioning technology, with headquarters in Norwood, Mass., has announced that CFO Joseph E. McDonough will be retiring by May 2008. McDonough, 60, will continue to work with Analog to ensure a smooth transition. He joined the company in 1983 serving in various roles of increasing responsibility. In 1991, he was named CFO.


NYSE Euronext, the $2.6 billion holding company comprising of NYSE Group Inc. and Euronext N.V., based in both New York and Paris, has named Bruno Colmant deputy CFO. Colmant, formerly the head of NYSE Euronext Belgium, succeeds Nelson Chai, who has accepted the CFO position with Merrill Lynch & Co. Colmant, 46, began his career with Arthur Andersen in 1984 where he held various executive management positions. Then he served as CFO of ING Group in Belgium. He was later promoted to CEO of ING Group in Luxembourg, where he served until September 2007. Colmant was then named to his current roles as head of European Affairs and the NYSE Euronext Belgium.

Dynegy Inc., the $2 billion Houston-based producer and seller of electric energy, has named Charles C. Cook senior vice president of strategic planning, corporate business development and treasurer. Cook, 43, came to Destec Energy Inc., predecessor of Dynegy, in 1991 and has most recently served as the company’s senior vice president and controller.


TravelCenters of America LLC has named Andrew J. Rebholz executive vice president, treasurer and CFO of the $4 billion network of interstate highway travel centers, with headquarters in Westlake, Ohio. Rebholz, 42, succeeds John R. Hoadley, who will remain with the company as executive vice president through the transition. Rebholz was named corporate controller in 1997 and was promoted to vice president and controller in July 2002. He was appointed senior vice president and controller in January 2007.


RSC Holding Inc., the $1.6 billion holding company for RSC Equipment Rental Inc., with headquarters in Scottsdale, Ariz., named David Mathieson senior vice president and CFO. Mathieson, 53, replaces Keith Sawottke, who has resigned to pursue other interests. Mathieson joins RSC from Brady Corp.


Checkpoint Systems Inc., the $688 million Thorofare, N.J.-based manufacturer and marketer of security systems and services, named Raymond Andrews senior vice president and CFO. Andrews, 54, replaces Craig Burns, who has accepted a position with Modular Space Corp. Andrews has served as vice president and chief accounting officer since August 2005. Before coming to Checkpoint, he assumed the role of controller for INVISTA S.a’r.l, a subsidiary of Koch Industries. He also served as director of accounting operations for INVISTA Inc. Prior to INVISTA, he served as controller for DuPont Pharmaceuticals Co. and was then named controller of Bristol-Myers Squibb Pharma Co. when DuPont was acquired by Bristol-Myers Squibb.

How do you say ‘taxes’ in Hungarian, let alone calculate them?

Figuring out tax laws in emerging market countries can, well, be taxing. But new software from CCH, a Wolters Kluwer unit, provides instantaneous, real-time national and local tax rates, tax forms and up-to-date answers to frequently asked questions for each country. Worldwide Tax Rates and Answers: Emerging Markets also features real-time legislative tracking of future tax rates. “Given the rigorous requirement of SOX and FIN 48 [which changed how companies account for uncertain income taxes], multinational companies are under increased pressure to have both up-to-date and historical cross-border information,” says Mark Friedlich, head of CCH International tax development. CCH software uses Smart Chart technology that lets users quickly access rates and get answers to key tax questions in easy-to-understand chat format for easy comparisons across jurisdictions, the company says. Smart Chart technology is an interactive online tool the can be used to help revise, update or create a strategic communication plan.

There's no time for anything but real-time

BB&T Corp. is offering a new integrated financial supply chain management service that, it says, provides real-time visibility into invoice and payment processes so that corporate clients can manage cash flow in a timely fashion with a minimum of risk and expense. Partnering with business-to-business e-commerce provider GXS Managed Services, BB&T says it can connect buyers and suppliers around the world using GSX’s Trading Grid in a move to ensure that funding and payments are allocated appropriately and efficiently. The Trading Grid allows integration between client enterprise resource planning systems and the bank’s product applications. As a result, BB&T has moved beyond offering simple financing or payment services to help clients improve working capital and manage liquidity and risk, says Bennett Bradley, manager of BB&T’s payment solutions division. “Corporations are continuing to look to their banking partners for help aligning their financial and physical supply chains,” says Steve Keifer, senior vice president of industry and product marketing at GXS.

Supply chain finance and trade visibility are hot industry trends, with technology consultants TowerGroup noting that banks have identified business-to-bank integration as a top priority and a space where collaboration with solutions providers can yield significant benefits.