American International Group said it has been notified by a federal prosecutor in Indiana that it is a target of a federal grand jury investigation concerning "nontraditional insurance" or "income smoothing" products it marketed. They apparently involved agreements with businesses that would appear to be insurance and be accounted for as insurance but did not involve any actual risk transfer, AIG said. AIG said the investigation is directed at a contract between AIG and Brightpoint, a cellular phone distributor based in Plainfield, Ind., that led to a September 2003 settlement with the Securities and Exchange Commission in which AIG agreed to pay $10 million to settle charges that it fraudulently helped a company falsify its earnings report.
Economic Growth Slowing, Index Says
The index of leading economic indicators edged down 0.1 percent in September, falling for the fourth consecutive month and indicating a slowing in economic growth, the Conference Board said. Separately, the Labor Department said the number of new people signing up for jobless benefits fell sharply last week, declining 25,000 to 329,000, marking the lowest level since early September.
The Securities and Exchange Commission has requested information on pension-fund accounting from Boeing and truckmaker Navistar International, the companies said. The SEC, which also has contacted Ford, General Motors, Northwest Airlines and Delphi, is trying to determine whether companies use unrealistic assumptions to estimate future returns from pension-fund assets, which could allow them to boost profit or minimize earnings swings.
Walt Disney Co. chief executive Michael D. Eisner described former president Michael Ovitz as a "psychopath" with a "character problem" in memos revealed in a shareholder lawsuit. The suit claims Disney's board did not properly scrutinize Ovitz's contract and then wrongly granted him a non-fault termination. John J. Donohue, a Yale University law professor, said in the trial's second day that Ovitz's contract and depositions in the case revealed that the board had the right to fire Ovitz for cause, citing "habitual lying" by Ovitz.
Bernard J. Ebbers, WorldCom's former chief executive, will be confronted with evidence at his fraud trial that he lied about the company on a news program and in two analyst conference calls, prosecutors said in letters sent in response to an Ebbers request for specific evidence to be used. Ebbers's lawyers told the judge in charge of the case that the letters are vague and don't detail false statements or specific transactions. Ebbers is set to face trial Jan. 17 on charges related to the collapse of WorldCom, now MCI.
UPS violates anti-discrimination laws by barring the deaf and hearing-impaired from driving parcel delivery trucks, a federal judge ruled in a class-action case representing as many as 1,000 would-be drivers. The judge ordered revisions in UPS's policies within 30 days. The company said it was considering appealing.
Computer Associates International plans to boost staff in India by 60 percent, to 1,000, by the end of the year as part of a plan to reduce labor expenses. It plans to hire 600 programmers and engineers for its office in Hyderabad, its chief financial officer said.
Pension Benefit Guaranty Corp. said it will take over the pensions of more than 12,000 workers and retirees of Kemper Insurance's Lumbermens Mutual Casualty unit. The federal agency, which insures retirement plans, said that the Lumbermens plan has $515 million in assets to cover about $1.06 billion in liabilities. PBGC's deficit reached a record $11.2 billion last year.
Donald Trump announced a bankruptcy reorganization under which he would give bondholders a stake but remain as chairman and chief executive of Trump Hotels & Casino Resorts. Under the plan, Trump would invest $71 million of his money in the company, and his personal stake would drop from 56 percent to about 27 percent, Trump said. The plan must be approved in court by bondholders.
Thomas C. Newkirk, who helped lead the Securities and Exchange Commission's fraud investigation of Tyco International, is leaving the agency after 19 years to become a partner at Jenner & Block. The agency hasn't named a replacement for Newkirk, who plans to leave the first week of November.
Mortgage rates were mixed this week, Freddie Mac said. Rates on 30-year, fixed-rate mortgages averaged 5.69 percent, down from 5.74 percent last week. Rates on 15-year, fixed-rate mortgages fell to 5.07 percent from 5.14 percent. Rates on one-year, adjustable-rate mortgages edged up to 4.02 percent from 4.01 percent.
Liz Claiborne Inc. settled its trademark-infringement lawsuit against closeout retailer Tuesday Morning for undisclosed terms. The women's clothing and accessories manufacturer had charged that Tuesday Morning stores knowingly sold counterfeit costume jewelry bearing Claiborne's Monet brand.
Adelphia Communications founder John J. Rigas and his sons said 16 cable companies they own agreed to pay more than $10 million for their defense in a criminal case and civil suits. Adelphia is suing Rigas and his sons for $3.2 billion over claims that they misused Adelphia funds before the company filed for bankruptcy protection in 2002.
Yahoo might have moved a step closer to challenging Google in searchable Web-based e-mail with its acquisition of the start-up Stata Labs, maker of the critically acclaimed Bloomba e-mail client. The technology could be used by Yahoo to try to best Google's Gmail. Neither Stata nor Yahoo could immediately be reached for financial details of the acquisition.
Rouse Co.'s sale to Chicago-based General Growth Properties for $7.2 billion in cash should close on Nov. 12, a statement released yesterday by General Growth said. The statement announced the final pricing of warrants offered to General Growth stockholders in connection with the Rouse acquisition. The price is $32.23 per share.
PeopleSoft said it turned a profit of $23.6 million in the third quarter, compared with a $7.3 million loss in the same period last year, after the business software maker posted higher revenue in three of its business lines. Revenue rose 12 percent, to $698.8 million. Separately, Oracle extended its $7.7 billion hostile takeover bid for PeopleSoft to Nov. 8 from today, saying it had secured 5 percent of PeopleSoft's shares.
American International Group, one of the insurance giants named in an investigation into questionable sales practices, said profit rose 7.5 percent, to $2.51 billion from $2.34 billion in the same quarter a year earlier, in spite of higher catastrophe losses. Revenue rose 25 percent, to $25.41 billion.
Merck's profit fell 29 percent, to $1.33 billion from $1.86 billion in the same quarter a year earlier, because of costs for withdrawing its arthritis drug Vioxx from the market. The company said hundreds of lawsuits have been filed related to the drug. Revenue was down 4 percent, to $5.54 billion.
Schering-Plough posted a profit of $14 million in its third quarter, compared with a loss of $265 million in the same period a year ago. Revenue at the drugmaker was $1.98 billion, down 1 percent.
SBC Communications said third-quarter profit almost doubled after the sale of its directory businesses, rising to $2.09 billion from $1.22 billion in the same period a year earlier. Sales at the local-telephone provider rose 1.4 percent, to $10.3 billion.
EarthLink posted a sharp rise in third-quarter profit, to $37.6 million from $3.5 million in the same quarter a year earlier, boosted by growth in users of its high-speed and value-priced Internet access services. Revenue fell 1 percent, to $344 million.
UPS reported a 20 percent jump in third-quarter profit, to $980 million from $739 million in the same quarter a year earlier. Revenue at the shipping company rose 7.7 percent, to $8.95 billion.
Maytag reported that third-quarter profit fell almost 80 percent, to $7.5 million from $36.6 million in the same quarter a year earlier. Revenue fell 3 percent, to $1.19 billion.
Coca-Cola reported a 24 percent drop in third-quarter profit, to $935 million from $1.22 billion in the same quarter a year earlier, on flat revenue.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.