New York--The Sarbanes-Oxley Act disclosure requirements won'tdetect accounting fraud, in the opinion of one of several insuranceexecutives who analyzed the costs and benefits of the legislationat an industry conference here.

They voiced their differing views during a panel discussion ofcorporate governance issues Monday, at the Standard & Poor'sInsurance Conference in New York.

Their perspectives included a mention of some benefits byStephen Lilienthal, chairman and chief executive of Chicago-basedCAN; Dennis Glass, president and CEO of life insurerJefferson-Pilot, downplaying the cost impact on his company; andBrian O'Hara, president and CEO of XL Capital Ltd, voicingcriticism.

During discussion of the internal controls over financialreporting required by Section 404 of Sarbanes-Oxley, Mr. O'Harasaid, "Fraud isn't going to be caught by looking at minorcontrols.

"Some of the things that are coming out" now through probes byattorneys general, insurance regulators, and the Securities andExchange Commission "weren't even going to be caught by 404," Mr.O'Hara explained.

Mr. Lilienthal, responding to a question from panel moderatorSteven Dreyer, S&P managing director, said that betterfinancial statements are being produced as a result of Section404.

"Partnerships with external auditors--the amount of work that wedo with them--while...intense right now, make for a bettercompany," Mr. Lilienthal said.

"I can't think I would volunteer to do that again, but I thinkit was a better process....I think it was a better answer.

"Certainly I didn't enjoy the amount of money involved," hesaid, referring to the hike in audit fees. "But at the end of theday, I actually prefer having a definition with respect to what wasgoing to be done--and that there was a deadline to get it done.

"After all the time, after all the money and the lostopportunity...it's done. Let's get on with it," he said, noting hisdesire to return to core activities of operating an insuranceenterprise.

That's not how Mr. O'Hara viewed 404 deadlines. "I thought wewere kind of stampeded," he said. In the first year ofimplementation, "there was an atmosphere of, 'If you don'tpass--get signoffs from your auditors...with no materialdeficiencies, it's a death sentence.'"

That wasn't even true, he said, noting that some publiccompanies have had material deficiencies "and nothinghappened--because investors really care about the core business,whether earnings are going in the right direction," rather than ifthere's a material deficiency in the tax department.

"The scope was ridiculous. The level of detail of what wasconsidered a significant control was absurd. And the cost benefit,I couldn't find," he said.

Mr. Glass said that while his company spent a lot of money onthe process (without disclosing the figure), as a percentage ofoverall budgeted expenses it was less than industrycounterparts.

"We did it. We came out of it, I think, more comfortable thanwhen we went into it--not that we were uncomfortable when we wentinto control review," Mr. Glass said.

Mr. Lilienthal also commented on the fact that while largecompanies had some flexibility to use internal resources tocomplete the 404 process, "smaller publicly traded companies chokedon this," he said, noting that costs to comply with requirementsdid not vary by size of company.