University of Texas Investment Management executives asked the Texas attorney general to rule on allowing UTIMCO to publicize all of its private equity investment return information. The attorney general's office ruled in September that the information must be released, even where non-disclosure agreements existed, but that ruling applied only to records available at that time. UTIMCO, which manages $13 billion in assets for the University of Texas endowment, wants a ruling covering future performance records.
UTIMCO also said it will not sign new non-disclosure agreements and that 36 of 67 general partners refused to release UTIMCO from confidentiality agreements that pre-date the open-records policy UTIMCO approved in September.
Democrats assail regulation
Two dozen Democratic lawmakers from the Senate and House urged regulators to pull proposed regulations that would enable pension plan sponsors to once again receive IRS approval of conversions of traditional pension plans to cash balance plans.
"We strongly believe that the Treasury Department should not issue any regulations that will increase the risks and insecurity that employees face, including regulations that seek to address the issue of cash balance pension plan conversions under the guise of age discrimination regulations," they wrote to Treasury Secretary John Snow and Labor Secretary Elaine Chao.
Cross-border plans get nod
The European Parliament adopted a law helping to establish company-sponsored cross-border pension plans. The new law will enable institutions to run a pension scheme for a company located in another member state, according to a statement from the European Commission. Companies within individual member states still will be allowed to form their own pension schemes, according to their state's individual laws.
US Air board hopefuls named
David Bronner, CEO of the $24 billion Alabama Retirement System, and James M. Simon, former assistant director of the CIA, were among those proposed by the system to be board members of US Airways Group if the airline emerges from Chapter 11 bankruptcy protection.
Other board members, all named in documents filed today in U.S. bankruptcy court in Alexandria, are: Rono J. Dutta, former United Airlines president; Cheryl Gruetzmacher Gordon, partner at Apollo Management; Bruce R. Lakefield, retired chairman of Lehman Brothers Europe; John A. McKenna, managing director at Houlihan, Lokey, Howard & Zukin; Hans Mirka, former senior vice president at American Airlines; and William T. Stephens, general counsel to the Alabama system.
Under the proposed plan, which will be heard Tuesday, the Alabama Retirement System will inject $240 million into the reorganized company in exchange for a 36% ownership stake, if it comes out of bankruptcy, Mr. Bronner said.
Schwab axes employer match
Charles Schwab is eliminating the matching contribution to its $1.3 billion profit-sharing and 401(k) plan for the second consecutive year. "It is a temporary measure. We intend to put it back when business conditions improve," a spokesman said. That action is part of cost-cutting measures Schwab is taking to avoid more layoffs.
Gartmore grabs Groupama
Gartmore Global Investments acquired Groupama Asset Management, a subsidiary of parent Groupama SA. Terms were not disclosed. Groupama Asset's founders, portfolio managers Mark Bronzo, Daniel Portnova and Joseph O'Connor, will continue to manage their respective portfolios. Personnel changes are not anticipated. Groupama Asset Management manages $1.2 billion in growth equity and fixed-income assets.
Groupama is the third acquisition Gartmore has made in its emerging managers group.
Plans seek lead status in suit
Illinois State Universities Retirement System and the West Virginia Investment Management Board applied to be lead co-plaintiffs in the securities litigation class action against Cable & Wireless PLC. Each fund lost about $2 million through Cable & Wireless investments, said Dan M. Slack, general counsel for the $9 billion Illinois system, and H. Craig Slaughter, executive director for the $3.8 billion West Virginia board. Mark Solomon, partner at Milberg Weiss Bershad Hynes & Lerach, which represents the funds, said a ruling on the application could be made at a March 21 hearing in U.S. District Court in Alexandria, Va.
FAS 87 to be reviewed
Members of the Financial Accounting Standards Board voted to begin a project to remake FAS 87, the pension accounting rule. Later this year, the board will issue an exposure draft for public comment.
The board acted in response to comments by investors and analysts who want more disclosure; many say deficiencies in FAS 87 distort operating earnings by including financial items related to pension cost and investments. The board also voted to undertake a project to consider accounting for stock-based compensation as a corporate expense, among related issues.
6 announce pension changes
Six big companies announced they are increasing their pension fund contributions and/or decreasing the funds' investment return assumptions:
* General Motors executives said GM contributed 149.2 million newly issued shares of GM Class H stock, valued at $1.24 billion, to its $67 billion pension fund. GM Class H stock tracks the financial performance of the company's Hughes Electronics unit. The contribution reduces GM's stake in Hughes Electronics to 20%, from 30.7%. The contribution will reduce GM's pension expense in 2003 to $2.8 billion from the $2.9 billion forecast last year. As of Dec. 31, the pension fund was underfunded by $19.3 billion.
* IBM, with $49 billion in pension fund assets, lowered its expected 2003 return on its pension fund to 8% from 9.5% in 2002, said spokeswoman Kendra Collins. In December, the company contributed $4 billion to its U.S. pension plan, $2.1 billion in cash and $1.9 billion in IBM stock, restoring the plan to fully funded status. Ms. Collins said it hadn't yet been decided how the cash portion will be invested and when or if the stock portion will be sold.
* Smurfit-Stone Container expects to contribute at least $120 million to its U.S. and Canadian pension plans this year, similar to its contribution in 2002, according to the company's 10-K filing. The long-term rate-of-return assumption was reduced to 9% in 2002, from 9.5%, Ms. Johannes said. The discount rate assumption for the U.S. plans was reduced to 6.75% from 7.25%, according to the SEC filing. The company expects its pension expenses to increase by $39 million this year, Ms. Johannes added.
* Boise Cascade expects to contribute $80 million to $120 million to its pension plan this year, with a minimum required contribution of $26 million, said Ralph Poore, spokesman. The company contributed $48 million in cash to the $1 billion pension plan in 2002; the minimum required contribution was $1 million, he said. It had a projected total liability of $1.6 billion as of Dec. 31. Plan officials expect pension costs to rise to $75 million this year, from $30 million in 2002. The plan also reduced its long-term rate-of-return assumption to 8.5%, from 9.25%, he said.
* Eli Lilly lowered its pension and retiree health-care assumptions, which it expects will decrease its income before taxes this year by $90 million, the company said in its annual report. It lowered the discount rate to 6.8% and 6.9% for pensions and retiree health care, respectively. Both were at 7.2%. The company also lowered the assumed return on assets to 9.26% for pensions and 9.25% for retiree health care; both were at 10.5%. The company expects the changes to reduce income before taxes by $30 million and $50 million, respectively. Lilly had $3.2 billion in pension assets and $3.9 billion in pension liabilities as of Dec. 31.
* SBC Communications doesn't plan to make a cash contribution to its underfunded pension plan this year but does plan to contribute about $25 million in 2004, according to its annual report. The $24.9 billion plan was underfunded by $1.1 billion as of Dec. 31; it was $7.6 billion overfunded in 2001. The company lowered its long-term return assumption to 8.5%, from 9.5% the previous year, and lowered its discount rate to 6.75%, from 7.5%.
Private equity group formed
Asset Management Advisors, the asset management subsidiary of SunTrust Banks, formed a private equity group to provide private equity management for institutional investors and high-net-worth individuals. Jeff Dyment will be the group's CEO. He had been the director of investments for a family.
Commission recapture sold
BNY Brokerage will acquire Capital Resource Financial Services from Capital Resource Holdings. Terms were not disclosed. It will combine two commission recapture and transition management providers. Shauna M. Lambright, president of CRFS, will be senior vice president of BNY Plan Services.