World insurance in 2007: emerging markets leading the way

According to Swiss Re’s sigma study "World insurance in 2007", World insurance premium income grew 3.3% in real terms in 2007, reaching USD 4 061bn. This growth was primarily driven by the life business in industrialised and emerging markets and to a lesser extent by the non-life business in the emerging markets.

Life insurance premiums increased 5.4%, which is above the previous ten year average. Non-life premium growth was robust in the emerging markets (+10%), but decreased in the industrialised countries (-0.3%). However, both the life and non-life industries are financially sound despite the challenging economic environment.

Life insurance: pension and annuity products drive growth

According to Daniel Staib, one of the study’s authors, “Despite a macroeconomic environment characterised by marginally slower economic growth and rising inflation, life insurance continued to expand in 2007 with world life insurance premiums increasing by 5.4% to USD 2 393 billion.” Sales of retirement and other wealth accumulation products spurred growth in the industrialised economies. Life insurance in the emerging markets was fuelled by strong economic performance and catch-up potential.

Key drivers of growth in the life business:

the trend towards single premium business and pension and annuities products continued to drive sales in countries where an aging population and reductions in state social security benefits were causing a shift from a traditional life insurance model to a pension-driven one;

the growing economies of the emerging markets with a relatively young population and an expanding middle class are driving sales across all products;

in 2007, the severe credit crisis and turbulent financial markets did not significantly affect life insurance sales.Non-life insurance: profitable despite slow growth

Global non-life premium growth slowed to 0.7% in real terms, totalling USD 1 668bn in 2007. Non-life premium growth continued to follow divergent trends in the industrialised and the emerging markets. While premium volume retreated in the industrialised markets, growth slowed marginally in the emerging markets. Though downward pressure on premium rates continued in some countries, overall technical results were favourable and profitability remained sound.

Outlook: healthy growth in life, a stagnant non-life sector

Growth in life insurance premiums in 2008 is expected to moderate as capital and stock market turmoil dampen demand. Daniel Staib notes, “As the economic environment and capital markets stabilise, life insurance is projected to resume its strong performance in the medium term, both in terms of growth and profitability.” In regard to the non-life business, he adds, “Non-life insurance premiums are expected to fall in the industrialised economies. However, non-life premiums will continue to grow in the emerging economies, albeit at a slightly slower rate than in the recent past. ” The effects of the sub-prime crisis are expected to be limited, resulting in lower investment results. A further concern is rising global inflation, which will increase claims costs in liability insurance and other long-tail business lines as well as hamper profitability.

Note: Swiss Re’s sigma study "World insurance in 2007" examines the insurance markets of 147 countries, making explicit reference to 88

Swiss Re’s sigma study "World insurance in 2006"

Bancassurance

Bancassurance symbolises the convergence of banking and insurance. The term has its origins in France and involves distribution of insurance products through a bank's branch network. While bancassurance has developed into a tremendous success story in Europe, it is a relatively new concept in Australia and Asia.

Most new insurers have entered into memoranda of understanding with banks to use their branches as outlets for marketing standard products. State Bank of India, Vysya Bank and J&K Bank already have joint ventures in life insurance. Vijaya Bank and Punjab National Bank are in the midst of finalising life and non-life ventures.

The Insurance Act allows only those companies registered under the Companies Act to become corporate agents. This gives the new generation and old private sector banks a head start over Public sector banks , which are technically not eligible to sell risk products.

IRDA, IBA & RBI are in discussions to iron out the various issues, as public sector banks will play a key role in the distribution of products.
Bancassurance: emerging trends, opportunities and challenges ... click here

Bank.net India

New AIG CEO Liddy: Insurer's 'Mess is Solvable'

American International Group Inc., which narrowly escaped financial collapse this week, on Thursday said it had named Edward Liddy as chairman and chief executive.Liddy succeeds Robert Willumstad, who is leaving after three months on the job, and in the wake of AIG -- once the world's largest insurer -- agreeing to an $85 billion rescue plan from the U.S. Federal Reserve.

"My intention is not to liquidate the company," said Liddy, speaking with employees on Thursday, according to a source who heard the comments.

Liddy also said AIG's insurance operations were well funded, and that the company's "mess is solvable."

AIG, at the end of 2007, had 116,000 employees in operations throughout 130 countries and territories.

As part of the federal bailout, AIG will have to repay monies borrowed from the government by selling assets or units.

Liddy said AIG had to move quickly to decide what should be sold, or risk being hurt further.

Liddy was formerly chief executive of large U.S. home and auto insurer Allstate Corp.

(Reporting by Lilla Zuill; Editing by Phil Berlowitz, Bernard Orr)
Copyright 2008 Reuters.

Kentucky Checking Insurer Response to Storm Damage

The Kentucky Department of Insurance continues to assess insurance company response to the devastating Sept. 14 windstorms. The storms caused widespread damage, according to reports that insurers submitted to DOI, but company representatives were on the ground quickly to begin the claims process.

"There was a delay in the beginning because many areas were blocked by downed power lines and trees. Company representatives are not first responders so they are careful to stay out of the way until that important work has been completed," said DOI Commissioner Sharon P. Clark. "However, we are hearing from many companies, some daily, and are pleased so far with the responsiveness."

Clark said most of the inquiries received by DOI's Consumer Protection and Education Division have been related to tree damage or food spoilage.

"We urge consumers to be patient as they work through the claims process. Many adjusters were working in Gulf Coast states impacted by Hurricane Ike and are being pulled back to Kentucky. With the widespread damage we've seen, it will take some time to respond to all customers," she said.

DOI offers these basic tips:
- Most policies cover tree removal if the tree falls on a covered structure. If your neighbor's tree falls on your property and damages a covered structure or vehicle, your insurance policy covers your loss.
- Read your policy carefully. Many policies do not offer coverage for food spoilage if the electrical outage took place off premises.
- When the adjuster arrives, ask for identification. Get the adjuster's name, a local phone number and the company he/she represents. Ask questions and take detailed notes.
- Broken glass or other damage to your car is covered if you have comprehensive coverage. You are not covered if you only have liability insurance.
- When having repairs completed, deal only with reputable, licensed and insured local contractors you know or can check out. Don't deal with "fly-by-night" remodelers who go door-to-door, especially those offering greatly reduced prices.
- Contact DOI at (800) 595-6053 and ask for a copy of "After the Storm Has Passed." This publication includes valuable information, a complaint form and information on how to prepare for the next disaster. The publication is available online at http://doi.ppr.ky.gov/kentucky/Documents/pubs/AfterTheStorm060408.pdf

Source: Kentucky Department of Insurance

Restaurants' Workers' Comp Insurance Decisions Based Heavily on Price

A recent national survey of restaurant decision-makers finds that they place too much emphasis on the price of their workers' compensation insurance, potentially forgoing the long-term financial benefits of accident prevention and other loss control measures.The survey results, released by Reno, Nev.-based Employers Holdings Inc., found that most workers' compensation insurance decisions are made by restaurant owners themselves (96 percent of the time). The survey also found that price is the key criterion that drives the workers' compensation decision for 71 percent of restaurant owners and managers -- and that restaurants are more likely than other small businesses to switch carriers based on price.

While nearly half of all restaurant survey respondents reported having had at least one costly workers' compensation claim in the past five years, 61 percent of survey takers who switched carriers at their last renewal switched because of price -- and no restaurant owners participating in the survey reported switching carriers to obtain more effective loss control and safety program support.

"Price can logically serve as a deciding factor in many restaurant purchases, but when it comes to workers' compensation insurance, a carrier's claims management, financial strength, safety and loss control expertise can bring added value," noted Martin Welch, president and chief operating officer of Employers Compensation Insurance Co. and Employers Insurance Company of Nevada, insurance subsidiaries of Employers Holdings Inc.

Both the price sensitivity and busy schedules of restaurant owners are recognized by trade groups and industry associations which frequently ally with insurance carriers to offer association members group incentives, industry-specific expertise, and loss control programs. Restaurant decision-makers in the survey weighed their trade group's recommendation as extremely important (rated 9 or 10 on a 1-10 scale) when they purchase workers' compensation insurance. Yet despite the importance placed on restaurant association recommendations and potential savings through group incentives, only about 1 in 10 survey-takers reported buying workers' compensation insurance through an association, the survey indicated.

Employers released survey results on the restaurant industry, obtained through its semi-annual Small Business Market Monitoring Program conducted in collaboration with Profile Marketing Research, Inc., of Lake Worth, Fla. Restaurant industry-specific data was collected through telephone interviews with a representative industry sampling of 107 respondents representing eating places with 5-99 employees. Overall survey results have a +/- 9.47 percent margin of error.

Source: Employers

Hawaii Pacific University Launches Insurance and Risk Management Program

Hawaii Pacific University has instituted a graduate program in insurance and risk management.According to Hawaii Insurance Commissioner J.P. Schmidt, "HPU's graduate insurance program is the first in the West. Many corporations, as well as insurance companies, have an increasing appreciation for the need to understand all the risks their companies' face and the alternative means of mitigating that risk."

The Hawaii Pacific graduate program will offer classes leading to a graduate certificate, or if students take the core Masters of Business Administration classes, they will receive an MBA with a specialization in insurance and risk management. Dr. Warren Wee helped to design the program.

"[This new program] is a useful service to the local business and insurance community, who have stated that it is difficult to find people with this important knowledge. And, it provides good opportunities to local students and employees to get a leg up in a growing industry," Wee said.

"The Certificate program is an outstanding opportunity for those who wish to advance up the corporate ladder. It provides specialized knowledge that is critical to modern corporate management," added Commissioner Schmidt.

For more information on the program, contact Dr. Warren Wee at wwee@hpu.edu or (808) 544-9325.

Source: DCCA

Zurich Completes Banco Sabadell Insurance Partnership Deal

Zurich Financial Services Group announced the completion of the acquisition of a 50 percent stake in the insurance operations of Spain's Banco Sabadell S.A. and the establishment of a long-term strategic distribution partnership with the country's fourth largest bank.Zurich acquired a 50 percent participation in BanSabadell Vida S.A. de Seguros y Reaseguros (BanSabadell Vida), BanSabadell Pensiones E.G.F.P., S.A., and BanSabadell Seguros Generales, S.A. de Seguros y Reaseguros (BanSabadell Seguros Generales). The transaction was first announced on July 11, 2008, and could be closed ahead of plan.

Jochen Schwarz, Zurich's Head of Bancassurance, has been appointed as the new Chairman and Silvia Avila, former Bancassurance Deputy CEO in Banco Sabadell, as the new CEO of the jointly owned companies.

Zurich said the joint management arrangement demonstrated its "commitment and strong interest to develop jointly life and general insurance business lines and to assure a smooth and effective integration into Zurich."

Source: Zurich - www.zurich.com

House Bill Would Extend Flood Insurance Program 7 Months

The troubled U.S. flood insurance program would be temporarily extended for seven months under legislation introduced in Congress Thursday, buying time for lawmakers to work out deep disagreements over reforming the debt-burdened program.The short-term extension would prevent the National Flood Insurance Program (NFIP) from expiring as scheduled on Sept. 30. Expiration could further unsettle already fragile U.S. housing markets.

With Texas recovering from Hurricane Ike and the Midwest from heavy flooding, Massachusetts Democratic Rep. Barney Frank introduced the extension bill in the House, saying it would give negotiators time to complete work on a permanent extension and "assess the implications of the 2008 hurricane season."

"I am disappointed that a permanent solution is not before us, but we can and should extend the program while we work on that final bill," said Frank.

It was unclear whether the Senate would agree to the extension, which would move into 2009 any final action on the program insuring millions of homeowners in flood-prone areas.

Big insurers with a stake in the issue include Allstate Corp., Nationwide Financial Services Inc., Fidelity National Financial Inc., Travelers Cos. Inc. and Hartford Financial Services Group Inc.

Congress has been unable to agree on whether to add wind damage coverage to the 40-year-old NFIP, and whether to forgive its $18-billion debt.

The program has been swimming in red ink since Hurricane Katrina slammed into the Gulf Coast in 2005. The devastating hurricanes of that year and 2004 revealed deep problems in the program, but efforts to fix it have been unsuccessful.

The Senate voted in May to extend the program until 2013 and forgive its debt. The House also has voted to extend the program, but added a controversial wind damage coverage clause to its bill and refused to forgive the debt.

On Tuesday, Alabama Sen. Richard Shelby, the senior Republican on the banking committee, said the House would be "making a mistake" if it did not back down and accept the Senate's terms in negotiations over the program.

(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)
Copyright 2008 Reuters. Click for Restrictions.

AIG Crisis Restarts Debate Over State vs. Federal Insurance Regulation

The crisis surrounding giant insurer American International Group has reignited the debate within insurance circles over whether state or federal regulation is preferable.The parent AIG got into trouble with credit transactions that were beyond the oversight of state insurance regulators. These ventures led to the situation that culminated in its $80 billion government loan. However, its insurance subsidiaries remain solvent.

Wasting little time, the insurer trade group, the American Insurance Association (AIA), used the AIG crisis to repeat its call for letting the federal government regulate insurers.

Marc Racicot, AIA president, said the recent turmoil in the financial markets and emergency government loan to AIG highlight a need to revisit the regulatory framework of the property/casualty insurance industry.

"Policymakers should look for solutions that avoid the potential for market crises and consider more effective ways of regulating the financial services sector and protecting consumers without compromising the efficiency benefits that free and open markets provide," Racicot said.

He said that insurers should have the option to be regulated by a federal agency rather than various states.

"For highly-diversified financial services conglomerates that operate in multiple regions of the country and around the world, it makes little sense to continue to single out insurance for regulation on a piecemeal basis at the state level. It makes a great deal more sense for a federal regulator to monitor systemic risk and exercise group-wide supervision on a national basis to ensure safety and soundness," Racicot said.

Not so fast, say state regulators, who point out that the problem with AIG is not its insurance operations that are regulated by them but with risky operations that federal regulators missed.

"The key distinction here is that AIG's insurance subsidiaries did not cause this crisis — rather, they will play a critical role in the solution," maintained Sandy Praeger, Kansas insurance commissioner who also heads the National Association of Insurance Commissioners.

"Calls for federal regulation of insurance in light of these events are simply unable to be supported. State regulatory oversight has kept the AIG insurance subsidiaries solvent, despite the actions of its federally regulated parent and non-insurance entities. If future developments challenge that solvency, there are state insurance regulatory safeguards in place to protect policyholders," she said.

AIG's non-insurance parent company is federally regulated and not held to the same investment, accounting and capital adequacy standards as its state-regulated insurance subsidiaries, according to Praeger. "This allowed various non-insurers to engage in risky credit transactions (huge positions in credit derivative swaps on mortgage-backed securities) without the appropriate limits and minimum capital/surplus to protect the company from a downswing in the mortgage-backed security markets," she said.

She predicted that it will likely be the insurance subsidiaries — or their blocks of business and assets — that will be sold in an attempt to return the AIG parent company to a more stable financial position.

The NAIC has established a working group to oversee AIG insurance interests in the current financial situation and to coordinate with federal regulators. New York State Insurance Superintendent Eric Dinallo is chair of the working group and Pennsylvania Insurance Commissioner Joel Ario will serve as vice-chair.

Under the federal Gramm-Leach-Bliley Act (GLBA), insurance regulatory authority only applies to actual insurance entities and transactions with those entities. Within AIG, there are 71 U.S. insurers subject to this authority. The remaining 176 entities are split between foreign entities and non-insurance U.S. entities. The lead U.S. regulator of AIG financial holding company is the Office of Thrift Supervision (OTS), a federal banking regulator.

Hurricane Ike to Cost Insurers $7B to $12B, RMS Says in Revised Tally

Risk Management Solutions (RMS), the catastrophe risk modeling firm, has refined its estimate for U.S. onshore and offshore insured losses from Hurricane Ike to $7 to $12 billion from its original estimate of $6 to $16 billion.This estimate includes both onshore and offshore losses resulting from strong winds and storm surge but does not include losses covered under flood policies issued by the National Flood Insurance Program, or loss of oil and gas production due to pipeline supply interruptions.

The revised estimate is based on analysis of damage reports, verified wind speed and tidal gauge observations, and on-site assessment from multiple reconnaissance teams.

"Our reconnaissance teams have focused on evaluating wind and storm surge damage in the landfall region, and they have found that despite some severely affected coastal areas, Ike wasn't as damaging as initially feared," commented Dr. Christine Ziehmann, director of model management at RMS. "While the 75- story JPMorgan Chase tower was extensively damaged, the majority of downtown Houston had minimal damage. They also found that most of the large industrial facilities, including the oil refineries, escaped significant flooding or other damage, though they are dependent on power being restored to regain operations."

She said that one of the remaining uncertainties will be how much of the onshore loss will be paid out under flood or wind policies, particularly for the destroyed coastal communities of Bolivar, which were subject to some of Ike's strongest winds and storm surge.

Losses to offshore oil and gas platforms will contribute a relatively small proportion of the total insured losses for Ike, since winds and waves offshore were generally within the design levels for the platforms.

Source: RMS
www.rms.com

Property Insurer Affiliated FM Offers 'Green' Endorsement on All Risk Policy

Middle-market commercial property insurer Affiliated FM has introduced a new 'green' coverage endorsement to its proVision all-risk property policy.The green endorsement provides flexible coverage for the additional costs of repairing, replacing or rebuilding damaged property using environmentally responsible practices, green alternatives and to whatever level of green standards a policyholder chooses.

The endorsement limit, which has no built in sub-limits, also covers the potential increased time and associated business interruption that may occur when undertaking green, sustainable practices and securing third-party certification from green authorities.

Coverage also includes:

Additional costs to replace damaged roofs with green roofing systems, including vegetative roofing systems

Additional costs for the green removal, disposal and recycling of damaged property

Air flushing with 100 percent outside air for establishing healthy indoor building environments

Replacement filtration media for ventilation systems

Costs to hire an accredited green consultant to assist in green design and reconstruction

Affiliated FM is a member of the FM Global Group.

Source: Affiliated FM
www.affiliatedfm.com/green

Gallagher & Co. Acquires San Antonio's Summit Insurance Group

Illinois-based Arthur J. Gallagher & Co. announced it has acquired Summit Insurance Group in San Antonio, Texas. Terms of the transaction were not disclosed.Established in 1997, Summit Insurance Group offers a wide range of employee benefit consultation and brokerage services for their Texas clients. The firm specializes in group medical, dental, life and disability insurance with an emphasis on planning, design, implementation, cost containment and plan administration for group businesses with 50 or more employees.

L.P. "Buddy" Morris and his associates will continue to operate in their current location under the direction of John Neumaier, South Central Regional executive vice president of Gallagher's employee benefit consulting and brokerage operations.

Source: Arthur J. Gallagher & Co., www.ajg.com/

Ratings Recap: AIG (Taiwan) Lehman Re, Swiss Re (Denmark), Connaught, Allianz (Austria), China Insurance. (Singapore)

Standard & Poor's Ratings Services has lowered its long-term counterparty credit rating and insurer financial strength rating on AIG General Insurance (Taiwan) Co. Ltd. (AIG Taiwan), to 'A' from 'A+'. S&P also placed the ratings on CreditWatch with negative implications. The downgrade follows S&P's action in lowering its long-term counterparty rating on American International Group Inc. (AIG) to 'A-' from 'AA-', and its short-term counterparty credit rating to 'A-2' from 'A-1+' [See related article, as the short-term rate has now been upgraded to 'A-1+']. S&P also noted that it had lowered its ratings on most of AIG's insurance operating subsidiaries to 'A+' from 'AA+'. All of these ratings remain on CreditWatch with negative implications. ""The rating action mainly reflects the AIG group subsidiaries' reduced flexibility in meeting additional collateral needs and the increasing risks tied to residential mortgage-related losses," explained credit analyst Chang. The rating adjustments on AIG Taiwan mainly reflect the decline in implicit parent support, given the company's strategically important position in the group and the group's weaker financial strength.A.M. Best Co. has downgraded the financial strength rating (FSR) to 'B' (Fair) from A- (Excellent) and issuer credit rating (ICR) to "bb" from "a-" of Bermuda-based Lehman Re Limited, and has assigned a negative outlook to both ratings. Best noted that Lehman Re is "a wholly owned reinsurance subsidiary of Lehman Brothers Holding Inc., and the decision of Lehman Brothers to petition for Chapter 11 bankruptcy protection has prompted these rating actions." Best added: "While Lehman Re is not included in the bankruptcy petition, A.M. Best believes that the pending reorganization of Lehman Brothers could have a significant adverse impact on Lehman Re. A.M. Best had expected that the balance sheet of Lehman Brothers would be a source of capital for Lehman Re, if needed." Best also remains "concerned about the future of ongoing operating ties such as the securities activity between Lehman Re and other Lehman Brothers' affiliates, the administrative and investment management services provided to Lehman Re by other subsidiaries of Lehman Brothers and the inability of Lehman Brothers to refer potential insurance clients to Lehman Re."

A.M. Best Co. has withdrawn the financial strength rating of 'A' (Excellent) and issuer credit rating of "a" of Swiss Re Denmark Reinsurance A/S (Swiss Re Denmark) and assigned a category NR-5 (Not Formally Followed) to the company. "These rating actions follow the announcement that Swiss Re Denmark has merged with Swiss Re Europe S.A. (Swiss Re Europe) (Luxembourg), a subsidiary of Swiss Reinsurance Company," said Best. "The consolidation of the European reinsurance business under Swiss Re Europe is part of Swiss Re's plan to optimize its legal entity structure in the European Union. Swiss Re Europe has been gradually assuming the assets, liabilities and ongoing businesses of Swiss Re's various reinsurance subsidiaries and branches in Europe."

A.M. Best Co. has affirmed the financial strength rating of 'B+' (Good) and the issuer credit rating of "bbb-" of Guernsey-based Connaught Insurance Company Limited, the captive insurance company of Thomas Greg and Sons Limited (TG&S), a printing and security specialist. The outlook for both ratings is stable. "The ratings of Connaught reflect the company's solid and improving risk-adjusted capitalization supported by strong underwriting performance," said Best. "An offsetting factor remains the continued significant reduction of the cash in transit that was the major business line for the captive. The reduction arises as a result of the complete disposal of a security company in Columbia by TG&S group in 2008 who was the main client."

A.M. Best Co. has affirmed the financial strength rating (FSR) of 'A+' (Superior) and issuer credit ratings (ICR) of "aa" of Allianz-Elementar Versicherungs-AG and Allianz-Elementar Lebensversicherungs-AG (both of Austria). The outlook for all ratings is stable. Concurrently, Best withdrew both companies' ratings at their request and assigned the FSR a category NR-4 and the ICRs an "nr".

A.M. Best Co. has assigned a financial strength rating of 'B++' (Good) and an issuer credit rating of "bbb+" to China Insurance Co. (Singapore) Pte. Ltd. (CICS). The outlook for both ratings is stable. Best explained: "The ratings reflect CICS' diversified underwriting portfolio, solid distribution network, conservative investment strategy and adequate risk-adjusted capitalization. The ratings also acknowledge operational support from its affiliation within China Insurance Group pertaining to investment and reinsurance capacity. With an operating history of 70 years, CICS has established a strong distribution network with agents and brokers that generated 87 percent of gross premiums written in 2007. In addition, the company continues to strengthen its direct sales and build up its bancassurance channel by partnering with some Chinese banks. A.M. Best believes that a wider distribution platform will enable CICS to further expand its product reach going forward."

Calif. Insurance Commissioner Considers 2010 Bid

California Insurance Commissioner Steve Poizner, a wealthy Silicon Valley entrepreneur with a centrist political style, took an initial step toward seeking the Republican nomination for governor in 2010.Poizner filed papers with the secretary of state's office to form an exploratory committee as he considers entering the race to succeed Gov. Arnold Schwarzenegger, a fellow Republican who is termed out of office in two years.

Poizner, 51, was elected insurance commissioner in 2006 and is the only other Republican to hold statewide office.

He said he wants to help California be a leader in the global economy, institute reforms to make state government more efficient, improve public schools and bolster the state's water supplies.

"A few years ago, I made a decision that I can't sit on the sidelines and watch California's economy continue to deteriorate," Poizner said in a telephone interview with The Associated Press. "I have this very unique set of experiences and talents that I want to apply to the governorship of California."

By forming an exploratory committee, Poizner can start raising money and conducting polls.

One other Republican -- former eBay Inc. president Meg Whitman -- also has been mentioned as a possible Republican candidate, although she has not publicly disclosed her intentions.

Former Massachusetts Gov. Mitt Romney, who earlier this year bought a home in the San Diego area, has been floated as a possible candidate. His spokesman, Eric Fehrnstrom, said that Romney has no "political designs" for office in California. He added that Romney remains a resident of Massachusetts.

The winner of the Republican primary will face a well-known Democratic challenger.

San Francisco Mayor Gavin Newsom has formed an exploratory committee, while Attorney General Jerry Brown, who served as governor from 1975 to 1983, has said he's contemplating the job. U.S. Sen. Dianne Feinstein and Los Angeles Mayor Antonio Villaraigosa also are possible contenders for the Democratic nomination. Lt. Gov. John Garamendi announced his candidacy earlier this summer.

If Poizner enters the race, he could face a difficult climb in the Republican primary. He would be a pro-choice candidate from the San Francisco Bay area who has donated to both Republican and Democratic candidates.

In his announcement, Poizner released a list of 21 moderate and conservative Republican state lawmakers who have endorsed him --proof, he said, that he can unite the party.

"I think conservative Republican voters will focus on the fact that we will agree 100 percent on what we need to do to get California's economy back on track," Poizner said.

He won the praise of conservative Republicans earlier this year when he led opposition to a February ballot measure that would have modified term limits for state lawmakers, extending the time some current legislators could remain in office. He spent $2.5 million of his own money to help defeat the initiative.

Poizner made his fortune as head of SnapTrack, which developed technology that allowed global-positioning satellites to help emergency-services workers pinpoint the locations of cell phones. He sold the company in 2000 to telecom giant Qualcomm for about $1 billion.

He then spent a year as a public school teacher and worked as a White House fellow at the National Security Council on counterterrorism issues.

Poizner dipped into his personal finances to win his current post, outspending former Lt. Gov. Cruz Bustamante by more than 7-to-1 in 2006. The $17 million he spent during the campaign came primarily from a family trust.
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.