THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, March 20, 1996 TAG: 9603200456
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 75 lines
Steven T. Foster, who has overseen the regulation of insurance in Virginia for almost a decade, said Tuesday he will step down to take a newly created post at Prudential Insurance Company of America, the giant life insurer.
The 43-year-old Portsmouth native said he expects to leave the Bureau of Insurance in late April or early May to become vice president of corporate compliance for insurance operations at Prudential.
``They recognize that they need to do more to oversee their compliance efforts,'' Foster said. ``That's one of the things I found appealing about the job.''
Prudential, based in Newark, N.J., has come under fire in recent years for the aggressive sales tactics used by some of its life insurance agents. Regulators in several states have been investigating these practices.
One multistate investigation is being coordinated by the National Association of Insurance Commissioners. Foster declined to discuss what involvement Virginia's insurance bureau might have in those investigations.
Prudential's reputation and finances also have been bruised in recent years by legal battles over limited partnerships that its brokerage subsidiary, Prudential Securities, sold during the 1980s.
Foster, who had no previous experience with insurance when he was tapped in 1987, became Virginia's chief insurance regulator at a time when the cost of liability insurance was soaring and the availability was dwindling.
However, he developed a reputation for learning quickly about the intricacies of insurance.
``A lot of people shook their heads and said, `Who in the world is this?' '' Foster recalled of his appointment. ``I had a lot to learn, but we had a lot of talent in the bureau, and I wasn't afraid to ask questions.''
In 1992, he became vice president of the National Association of Insurance Commissioners, and in 1993, he served a one-year term as its president.
As president of the commissioners' association, Foster found himself in the national spotlight during congressional hearings over the way states regulated the insurance industry.
The Virginia bureau's biggest accomplishment during his tenure as commissioner was its liquidation and sale of Fidelity Bankers Life Insurance Co. in the early 1990s, Foster said.
The Richmond-based insurer had invested heavily in high-risk, high-yielding ``junk'' bonds. In May 1991, adverse publicity about other life insurers with junk-bond investments prompted a run on Fidelity Bankers by its policyholders.
Foster received court approval to take control of Fidelity Bankers to protect its assets and meet policyholders' claims.
The insurance bureau, Foster said, was able to liquidate Fidelity Bankers' bond portfolio at a profit and avoid using insurance guarantee funds to reimburse policyholders.
Before being named insurance commissioner, Foster spent two years as administrator of King George County and then eight years as administrator of Spotsylvania County.
He previously had earned an undergraduate degree in urban affairs and a master's degree in public administration, both from the University of Virginia.
A spokesman for the State Corporation Commission said Tuesday that the commission has not yet named anyone to succeed Foster.
With 185 employees and an annual budget of $14 million, the insurance bureau is the largest division within the commission, which also has broad regulatory power over banking, telecommunications, electric utilities and transportation companies in Virginia.
The insurance bureau is responsible for regulating 1,500 insurance companies and 78,000 insurance agents doing business in the state. ILLUSTRATION: Photo
Steven T. Foster
To be a vice president at Prudential
by CNB