Hurricanes Send Allstate Into Red
Allstate reported a third-quarter loss of $1.55 billion as a result of the Gulf Coast hurricanes -- its first quarterly loss as a publicly traded company. A year earlier, the Northbrook, Ill.-based insurer earned $56 million.
Allstate, the second-largest U.S. personal-lines insurer behind State Farm, said it had catastrophe losses of $3.06 billion, of which $2.39 billion was from Hurricane Katrina and $553 million from Hurricane Rita. The company trimmed its estimate for 2005 profit by more than half as a result of the hurricane losses.
Bantam to Publish Buffett Book
Bantam Dell Publishing, a division of Random House, has won a bidding war to the rights to an authorized biography of the "ideas" of billionaire Warren E. Buffett, left. Tentatively titled "The Snowball: How Warren Buffett Collected Friends, Wisdom and Wealth," the book is scheduled to come out in 2008.
The book will be written by Alice Schroeder, a former insurance analyst at Morgan Stanley, where she met Buffett. This marks the first time a book will be written with his cooperation, but the contract was negotiated with Schroeder.
Bill Would Shield Food Firms
The House of Representatives voted 307 to 119 to protect food companies such as McDonald's from lawsuits brought by customers who say food products made them fat. Rep. Lamar S. Smith (R-Tex.) said the legislation is intended to "prevent a few lawyers from seeking to destroy an industry that employs millions of people." At least 20 states have adopted laws preventing obesity-related lawsuits.
Carriers Sign Deal on Water
The government has signed agreements with 24 airlines subjecting the carriers to fines of up to $27,500 if they fail to adopt tougher safeguards for monitoring and disinfecting the drinking water served to passengers.
The deals with 11 major domestic airlines and 13 smaller airlines are intended to reduce disease-carrying bacteria in drinking water on planes, the Environmental Protection Agency said.
An EPA investigation last year found total coliform bacteria in 15 percent of the 327 airlines the agency reviewed at 19 airports. Total coliform is usually harmless, but it is an indicator that other disease-causing organisms could be in the water.
Delta Warns Pilots of Wider Loss
Delta Air Lines, seeking to cut labor expenses while under bankruptcy protection, told its pilots union that it expects a $2.16 billion loss this year before one-time costs or gains. Delta wants $325 million in additional annual concessions from its pilots and disclosed the forecast in a regulatory filing.
The Atlanta-based airline fended off bankruptcy last year by winning pay and benefit givebacks from the pilots worth $1 billion annually. The company filed for Chapter 11 protection last month.
MERGERS & ACQUISITIONS
Guidant Stands By J&J Deal
Medical device maker Guidant said it still believed its acquisition by Johnson & Johnson makes strategic sense, the day after the company's stock plummeted when a Johnson & Johnson executive said it was considering alternatives to the $25.4 billion deal.
"While neither company depends on this transaction for its continued future success, Guidant believes that the strategic rationale for combining the two companies is as strong today as when we entered into the merger agreement," chief executive Ronald W. Dollens said.
The deal is set to close in September but has been in question because of Guidant's repeated recalls of pacemakers and defibrillators.
J.P. Morgan Chase reported a 78 percent increase in its third-quarter profit, as fixed-income trading revenue surged. The New York bank said it earned $2.52 billion, up from $1.42 billion in the comparable period last year. Revenue increased 16 percent, to $14.5 billion. The company also said President James Dimon will take over as chief executive six months earlier than planned. Dimon will remain president and drop his other title, chief operating officer.
Bank of America said its quarterly profit climbed 10 percent, to $4.13 billion, as consumers and businesses borrowed more. Revenue increased 16 percent, to $14.81 billion.
MBNA, the Wilmington, Del.-based credit-card issuer Bank of America is buying, said its third-quarter profit fell 1.4 percent, to $717.9 million, as higher interest rates squeezed margins. Revenue from lending dropped 5.4 percent, to $2.4 billion. Deposits fell 4.9 percent, to $30.6 billion.
Washington Mutual, the biggest U.S. savings and loan, said third-quarter earnings rose 22 percent, to $821 million, on a jump in home-loan demand. The company's net interest margin, the difference between what it pays on deposits and what it earns on loans, fell to 2.61 percent from 2.66 percent in the second quarter.
AMR, the parent of American Airlines, said its loss narrowed in the third quarter, falling to $153 million, despite a 15 percent increase in revenue, to $5.49 billion. It blamed rising fuel prices and tough competition from low-cost carriers. A year earlier, AMR lost $232 million.
Abbott Laboratories, a maker of drugs and medical tests, said third-quarter profit fell 15 percent, to $680.7 million, mostly because of costs related to a realignment of manufacturing operations. Revenue rose 15 percent, to $5.38 billion.
Compiled from staff and news service reports.