
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, June 24, 1993                   TAG: 9306240311
SECTION: VIRGINIA                    PAGE: C1   EDITION: METRO 
SOURCE: Staff and wire report
DATELINE: RICHMOND                                LENGTH: Medium

POLITICAL CONFLICT DENIED LEGISLATORS SAY INSURANCE DEAL IS NO PROBLEM

Several senior Democratic legislators, including two who sit on a committee handling bills governing the insurance industry, have invested in and signed on as directors of a new mortgage insurance company.

Senate Majority Leader Hunter Andrews of Hampton and his House counterpart, Richard Cranwell of Vinton, are among the lawmakers involved with the new company, International Guaranty Insurance Corp. The directors also include Del. Alan Diamonstein, D-Newport News, chairman of the House General Laws Committee.

The company hopes to begin operation this summer, said George E. Murphy of Richmond, its chairman. It is seeking permission from the State Corporation Commission to sell private mortgage insurance, he said.

Murphy said the company will sell insurance to mortgage lenders to cover home loans they make for more than 80 percent of the value of a house. The insurance, typically costing 1 percent of the value of the loan at closing and 0.25 percent per year thereafter, is paid for by the borrower.

Mortgage guaranty insurance is regulated by the SCC. The state also sets standards for the capital insurers must maintain.

International Guaranty's organization and the involvement of the legislators was disclosed in a story Wednesday in the Newport News Daily Press.

Directors also include two key members of the House Corporations, Insurance and Banking Committee, which handles insurance legislation. They are Lewis Parker, D-South Hill, the committee chairman; and Alson Smith, D-Winchester, chairman of the insurance subcommittee. Smith, one of the state Democratic Party's most prolific fund-raisers, is retiring from the assembly this year.

Julie Lapham, executive director of Common Cause of Virginia, said the involvement of the legislators is troubling.

"You've got to ask why there are so many big fishes in such a small pond," she said.

Lapham said she was concerned about potential conflicts of interest, especially if the General Assembly should consider how the state regulates mortgage insurance.

"I see no conflict of interest in investing in this kind of insurance company," Diamonstein told The Associated Press.

Other investors in and directors of the company are: Hampton University President William Harvey; Blue Cross-Blue Shield of Virginia Chairman Norwood Davis; Mobil Corp. executive Robert J. McCool; and Mary Lou Lacy Cobbe, a Martinsville textile heiress.

by CNB