Occidental alters options
The $886 million 401(k) plan of Occidental Petroleum will be adding two new options and dropping another, said Andrew Bednarz, manager of benefit plan investments.
The Putnam International Growth Fund and a small-cap equity separate account managed by Sanford C. Bernstein will be added. A money market fund managed by Northern Trust will be dropped. DeMarche assisted.
Audit bill introduced
Reps. Christopher Shays, R-Conn., and Donald Payne, D-N.J., reintroduced legislation that would give the Labor Department greater enforcement authority. It would subject plans with more than 100 participants to a full-blown audit by outside accountants instead of going through a "limited scope" audit of problem areas.
The legislation also would require plan administrators or accountants to directly report serious cases of fraud and abuse involving plan assets, and would create new standards for accountants auditing pension plans.
Fund to pare equities
Trustees of the $62.5 billion New York State Teachers' Retirement System approved a new asset allocation plan that on paper raises the equity allocation, but actually will result in paring stock investments.
The board increased total equities to a target of 55% from 50%. The strong stock market, however, has driven equities to 60% of the total portfolio, said George Philip, CIO. The only other asset type significantly affected in the new allocation is mortgages, which will be reduced to a 6% target from 8%.
The board also committed $50 million each to existing realty managers Allegis Realty Fund Separate Account and Prudential Property Investors Separate Account. Existing manager Cabot Partners will receive an additional $100 million.
British Air taps BT
British Airways Pension Fund named Bankers Trust global custodian of its (British pounds) 7.4 billion ($12 billion) in worldwide investments, replacing Barclays. Bankers Trust also will provide securities lending and ancillary administrative services.
Oregon mulls international
The Oregon State Treasury is paring a list of candidates to manage a portion of its non-U.S equity portfolio, following the termination of two firms that oversaw a total of $580 million for the state's pension fund.
A list of 22 firms has been identified. They include Bank of Ireland, J.P. Morgan, Oechsle International Advisors and Brandes Investment Partners.
The $25 billion Oregon Public Employes' Retirement Fund has about 20% of its portfolio invested in international equities. With the terminations in May of Barings Asset Management and DSI International, almost 50% of Oregon's international portfolio is under passive management, exceeding the fund's policy target of 30% Jay Fewel, the Treasury's senior equities investment officer, said the fund would have to shift about $950 million from passive to active management to reach its policy target.
Aberdeen buying Prolific
Aberdeen Asset Management is acquiring Prolific Financial Management in a deal that will boost Aberdeen's assets under management to (British pounds) 11 billion ($17.9 billion) from (British pounds) 3.1 billion ($5.1 billion). Subject to shareholder approval, Prolific's parent, The Scottish Provident Institution, Edinburgh, will receive 58.4 million new Aberdeen shares, valuing Prolific at (British pounds) 55.5 million ($90.5 million). Combined with Scottish Provident's existing 1.5 million holding of Aberdeen stock, the life insurer will own 41% of Aberdeen's equity.
The combined firm will be renamed Aberdeen Prolific Asset Management. It will continue managing Scottish Provident's life assets and unit-linked funds, accounting for 92% of Prolific's assets under management.
Aberdeen plans to start marketing its international, Asian and emerging market equity products to U.S. institutions in a joint venture with Phoenix Duff & Phelps.
NYC fund considers ETI
Trustees of the $45 billion New York City Employees' Retirement System are preparing to make their first economically targeted investment since approving a new targeted/alternative investments policy earlier this summer.
They are considering an investment in Duane Reade Holding. An affiliate of Donaldson, Lufkin & Jenrette recapitalized the retailer with $350 million this past spring.
Illinois board hires 2
The $6.3 billion Illinois State Board of Investment hired Nicholas-Applegate and J.& W. Seligman to each manage $50 million in small-cap growth equity. The firms replace Chancellor LGT.
DTE lifts managed futures
The $1.4 billion pension fund of DTE Energy is preparing for a managed futures manager search following an asset allocation study that doubled alternative investments to 10% of assets.
The fund will allocate 2.5% of total assets to each alternative subclass; managed futures; market neutral; timberland; and mezzanine debt. Funding will come from equity and bond allocations, said Allen W. Anning, director of trust fund management. No managers will be terminated.
Southfield restructures
The $60 million Southfield (Mich.) Employees' Retirement System hired GLOBALT for an $18 million portfolio that invests in stocks of U.S. companies doing sizable business abroad, and Pacific Income Advisors for $24 million in U.S. fixed income.
Assets will come from terminating Munder Capital, which managed roughly $30 million split between U.S. equities and U.S. fixed income, and eliminating the roughly $15 million fixed-income portfolio of Independence Investment Associates. Independence still manages about $15 million in U.S. equities for the fund, said Jim Pierce, deputy treasurer.
Samsonite, PBGC accord
Samsonite Corp. agreed to take over the underfunded pension plans of its subsidiaries McCrory Corp. and Schenley Industries Inc. as a result of an agreement negotiated with the PBGC.
The McCrory plan had assets of $43 million and liabilities of $68 million; the Schenley plan has assets of $29 million and liabilities of $48 million.
McCrory, which is in court-protected bankruptcy, failed to meet its responsibilities for the two pension plans.
Also, the PBGC will take over the pension plan of Kerr Group, which has about $90 million in assets and $130 million in liabilities.
Fremont Partners is acquiring Kerr and financing a large portion of the purchase price with debt secured by Kerr's assets. This would place the PBGC behind other creditors if it had to make plan-related claims.
Emerging markets eyed
Board members for the $1.4 billion Milwaukee County Employees' Retirement System this fall will begin studying emerging markets, said Jac R. Amerell, director.
The board hasn't made a decision on emerging markets, but will invite its three existing international equity managers to discuss the matter, he said.
L.A. City rehires 2
Los Angeles City Employees' Retirement System has given new three-year contracts to existing managers Morgan Grenfell Asset Management and Templeton Investment Counsel. Morgan Grenfell manages a $438.6 million global bond portfolio, and Templeton runs $272.1 million in Pacific Basin equities for the $6.3 billion system.
Utility hires 2
The $850 million fund of New England Electric System hired Crabbe-Huson and Boston Partners to each manage $21 million in small-cap stocks, said Don Goodwin, vice president of benefits finance. Assets will come from State Street Bank's midcap equity index fund, which will continue to invest 10% of total assets. Hewitt assisted.
ABA may replace fund
The $23 million 401(k) plan of the American Bankers Association may replace State Street International Equity Fund with another fund or add another international fund to the eight options, said Jerry Peterson, director of human resources.
ABA officials have not been satisfied with the State Street Global fund's overall performance, which can be explained by the fund's heavy investment in Japanese stocks, he added. A decision will be made in October.
N. Carolina retains BB&T
The State of North Carolina renewed its contract with BB&T Corp. as third- party administrator for the state's $1.3 billion 401(k) plan. The other finalist was State Street Bank.
The plan added three investment options: Putnam New Opportunities fund, a U.S. stock fund; BB&T Small Company Growth Fund; and T. Rowe Price International Stock Fund.
Conrail sued over ESOP
Former employees of Conrail filed a class-action lawsuit against the company and trustees of its ESOP to claim their share of the windfall from appreciated shares the plan sold when the company was acquired by CSX and Norfolk Southern.
The former employees asked U.S. District Court in Philadelphia to block the company's plan to divvy up an estimated $533 million in unallocated ESOP shares among current employees, charging the trustees have breached their fiduciary duty by devising a plan that disproportionately rewards senior and higher-paid employees who were able to keep their jobs, while depriving long-time employees who were forced into accepting early retirement in recent years.
New CIO at Texas Teachers
Martin "Marty" Walker is new CIO of the $59 billion Teachers' Retirement System of Texas, Austin. He replaces John Young, who left TRS in January. Mr. Walker was group executive vice president-asset management at KeyCorp until he retired in 1996.
401(k) plan picks firm
The $140 million 401(k) plan of DeKalb Genetics hired T. Rowe Price as bundled provider.
T. Rowe will provide eight options and replaces investment managers Harris Investment Management and Cooke & Bieler. Record-keeping had been done in-house. Towers Perrin assisted.
