Steve Wevodau

Steven Wevodau - Retirement Experts Urge Plan Sponsors to Shift Focus from Accumulation to Generating Lifetime Income

HARTFORD, Conn.–(BUSINESS WIRE)–Generating secure lifetime retirement income should become an urgent priority for plan sponsors and participants, according to the Institutional Retirement Income Research Council (IRIRC).

In its first white paper, Institutional Retirement Income Solutions: A Call to Action, available through the organization’s website, www.irirc.com, the IRIRC discusses why defined contribution plan sponsors should consider adding retirement income solutions to their plans.

“We realize that the current defined contribution approach is leaving retiring participants unprepared to construct a sustainable draw down of their assets in order to generate secure lifetime income that they will not be able to outlive,” said IRIRC co-chair Martha Spano, who is the West Division Practice Leader for the consulting firm Watson Wyatt.

In the 12-month period through October 2008, research has found that 401(k) plans and individual retirement accounts dropped in value by $2 trillion due to market volatility.

“The current economic crisis has exposed the flaws in the existing retirement system and the IRIRC can provide tools and information to help plan sponsors and participants fill in the gaps, and capably manage the ever-changing defined contribution marketplace,” Spano said.

An increasing number of workers with retirement plan coverage – nine in 10 – are covered by 401(k) or similar defined contributions plans. As a result, defined contribution plan assets are projected to be the primary source of retirement income for future retirees, and the responsibility to save for and generate a guaranteed retirement income has transferred from institutions to individuals.

“The shift toward individual responsibility has swung too far,” said Dr. Jeffrey Brown, William G. Karnes professor, Department of Finance at the University of Illinois and Director of the Center for Business and Public Policy in the College of Business. “Participants are unprepared to manage the dizzying amount of choices and decisions they must make in order to prepare for retirement.”

“We need a new model – it is not enough for an individual to accumulate savings to have retirement security at 62. We now need to think about the sustainability it provides as people continue to enjoy longer lives,” Brown said.

Institutional Retirement Income Solutions: A Call to Action suggests:

• Increasing longevity, poor financial literacy and behavioral biases are compounding the challenge for plan participants;
• Employers’ roles are evolving and they are in a unique position to have the greatest impact in helping plan participants become more successful through the emergence of automatic enrollment, escalation and qualified default investment alternatives as common features in many plans;
• Plan designs should evolve beyond their current focus on helping employees accumulate an adequate amount of retirement savings and expand to encourage participant behavior that accomplishes the goal of securing lifetime income during retirement; and
• Success of the DC plan should be based on whether the plan facilitates adequate retirement income versus participation rates.

“The only way to quell the increasing public angst around the ability of Americans to retire in the future is for stakeholders from all areas of the retirement industry to come together and encourage plan sponsors to implement optimal retirement income solutions that address many of the problems retirees face in generating secure lifetime income,” said Spano.

The Institutional Retirement Income Research Council, an independent think tank, was established in 2007 to advance the interests of retirement savings plan participants, plan sponsors, plan advisors and consultants by: analyzing innovative approaches to in-plan, institutional retirement income solutions; creating acceptable best practices and evaluation tools to supplement the decision making; discussing and identifying regulatory, legislative, and fiduciary issues pertinent to in-plan, institutional income solutions; and producing and publishing relevant findings through various media outlets.

Prudential Retirement is member of the independent think tank. Prudential Retirement is a business of Prudential Financial, Inc. (NYSE: PRU - News).

Prudential Retirement Insurance and Annuity Company, Hartford, CT, a Prudential Financial company.

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Manulife earns second consecutive ‘Excellent’ rating from DALBAR for group savings plan member statements

POSTED BY STEVEN WEVODAU

TSX/NYSE/PSE: MFC; SEHK: 0945

KITCHENER, ON, Dec. 1 /CNW/ - Manulife Financial Group Savings and Retirement Solutions (GSRS) has once again received an “Excellent” rating for its year-end plan member statement, according to a recently-released study by DALBAR, a leading communications consulting firm.

Manulife’s statement received 84.64 out of 100 points, considerably higher than the industry average of 70.82 points. The clear display of the member’s estimated retirement income was one of the leading features DALBAR identified in its review. Calculated using the member’s real-time data, the estimate also shows the member’s progress toward his or her specified retirement goal. According to organizations such as the Association of Canadian Pension Management - and leading behavioural finance expert Dr. Shlomo Benartzi - showing members a continuing estimate of retirement income is key to building understanding and engagement.

According to DALBAR, Manulife’s statement is the only one in the industry that displays the plan member’s asset allocation both in dollar amounts and percentage terms. DALBAR also identified the statement’s comprehensive rate of return summary and targeted alerts as features that contributed to its overall strength.

“We’re very pleased to receive another Excellent rating from DALBAR. In 2005, Manulife was the only company to receive this distinction and we’re really pleased to see the industry moving in this direction with us,” said Sue Reibel, Senior Vice-President, GSRS. “Clear communication that engages members is central to our service vision. That belief has guided the development of our plan member statement, and we’re pleased to play a leading role in shaping this direction.”

Manulife’s updated member statement was released in tandem with enhancements to the Steps Retirement Program(R) (Steps). An enhanced user-friendly presentation using leading-edge technology offers a more detailed display of retirement income sources for plan members.

“This second generation of Steps shows members their sources of retirement income and indicates when income payments will start,” explained Mike Collins, Vice President of Marketing, GSRS. “Although there’s more detail, the clearly displayed summary tested extremely well with plan members who said it was easy to understand and very useful.”

Steps video content now includes a host who welcomes members and outlines the simple goal-setting process. A series of video lifestyle illustrations bring the goal-setting concept to sharper focus, connecting activities with the annual income required to support them.

“Offering plan members resources that lend greater perspective to their retirement income continues to be a focal point for GSRS,” said Ms. Reibel. “An excellent statement design and more powerful version of Steps work together to give our plan members a clear, comprehensive sense of where they’ll be at retirement. While the benefits to the members are certain, plan sponsors benefit as well with a population of engaged participants who see the value their group retirement savings plan delivers, and who won’t be surprised with their outcome at retirement.”

For more information - or a demonstration of the new Steps - please contact Nancy Campbell, Director of Marketing, GSRS at nancy_campbell(at)manulife.com.

             About Manulife Financial

             ------------------------

Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$385.3 billion (US$363.5 billion) as at September 30, 2008.

Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945′ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.

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Ahead of the Bell: Prudential Financial Inc.

POSTED BY STEVEN WEVODAU

Analyst cuts Prudential’s estimates, citing investment losses and potential need for capital

CHARLOTTE, N.C. (AP) — Continued declines in equity markets and the potential for a capital raise — including offloading its joint venture with Wachovia Corp. — led an analyst on Monday to cut his earnings estimates and price target for insurer Prudential Financial Inc.

Citi Investment Research analyst Colin Devine cut his fourth quarter and 2008 earnings estimates because of “sub-par performance” from the company’s domestic variable annuity and 401(k) group pension businesses and continued declines in equity markets on fee based revenues.

“To be certain, Prudential has issues; a lot of them,” Devine wrote in a research note to clients.

Devine lowered his fourth-quarter earnings estimate to $1.54 per share from $2.01 per share, and his 2008 estimate to $5.95 per share from $7.40 per share.

Analysts polled by Thomson Reuters, on average, forecast quarterly earnings of $1.40 per share and $5.97 per share for the year.

Devine slashed his price target to $30 from $80, but raised his rating for the Newark, N.J. company to “Buy” from “Hold.” He said he believes the market has significantly over-discounted the company’s shares.

Prudential’s shares closed Friday at $21.70. In premarket trading Monday, the shares were down 35 cents to $21.35.

Devine said Prudential may need to raise capital by year-end, as many insurance firms have been hit hard in recent quarters by investment losses as the stock markets have sunk. It could consider monetizing the company’s nearly 25 percent stake its retail-brokerage joint venture with Charlotte, N.C.-based Wachovia, he said.

“We expect Prudential will attempt to either negotiate an early exit from the joint venture or potentially sell its stake to a third-party,” Devine wrote.

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Federal Regulation Unlikely In 2009, FDIC Says - Steven Wevodau

BY ARTHUR D. POSTAL
NU Online News Service, Dec. 1, 6:00 a.m. EST

WASHINGTON—Congressional approval of federal regulation for insurance appears unlikely for 2009, and an optional federal charter may never be created, the head of the Federal Deposit Insurance Corp. indicated in a recent confidential briefing to American Insurance Association directors, National Underwriter has learned.

Indeed, if insurance is addressed at all next year, the focus of the incoming Obama Administration and federal banking regulators will be on the life insurance side of the business, not property-casualty, FDIC Chair Sheila Bair told AIA directors in an off-the-record briefing on Nov. 14. A copy of a summary of her remarks was obtained by NU and confirmed through other sources.

Meanwhile, Ms. Bair said that plans to create an optional federal charter may fall by the wayside in Congress, as the administration seeks to consolidate regulatory agencies, not create new ones.

She suggested that insurers seeking federal regulation might be better off finding a regulatory home within existing federal banking agencies.

“Re-regulation will favor fewer regulators at the federal level, rather than more, and it will be done in phases,” she said. “All current federal regulators have their hands full with the various bailout and stimulus packages that Congress has passed.”

Creation of a separate federal agency to regulate insurance is unlikely, she added, because “the last thing federal regulators need is to be distracted by turf fights among the four current federal regulators.”

Those in the p-c industry who want federal oversight in general, and a federal charter in particular, face a difficult uphill climb because their sector “is not in any financial trouble, and it is state-regulated, so it is not in the sights of those will be involved in federal financial services regulatory reform,” Ms. Bair explained.

Ms. Bair told AIA the p-c industry “may have to fight to get in the process and the [regulatory reform] legislation, and differentiate itself from the banks, if that’s what the AIA companies want.”

However, “in the long term, there seems to be consensus that it would be beneficial to Congress and the Treasury/Administration if there were insurance expertise at the federal level,” Ms. Bair said, according to the AIA summary.

Looking at the broader regulatory reform picture, Ms. Bair told AIA officials that dealing with an overhaul of financial services regulation will be delayed by the incoming Obama administration and Congress until 2010 in favor of tackling more urgent priorities. Moreover, it will be done in “phases,” she said.

She also told AIA members that the Obama administration will take the lead in drafting legislation overhauling regulation of financial services. During the question-and-answer session that followed, an industry lobbyist said that Sen. Chris Dodd, D-Conn., chair of the Senate Banking Committee, and Rep. Barney Frank, D-Mass., who heads the House Financial Services Committee, will serve to “balance things out.”

Asked to elaborate on her remarks to the AIA, Ms. Bair, responding through FDIC representative David Barr, said that “since this was not a public event, we will not comment on the discussion.”

Blain Rethmeier, an AIA representative, would only say that “as with all our meetings, they are closed to the press, so I can’t give you any guidance on what she said.”

One industry lobbyist working on the future shape of insurance regulation cautioned that “nothing is set in stone, and this is just one idea.”

However, several life insurance lobbyists confirmed that as a result of recent direction as to how insurance might be regulated by the federal government, their companies are going back to the drawing board to determine what form of federal regulation would be acceptable, and which banking agency they believe would be their most appropriate federal regulator.

Jack Dolan, a representative for the American Council of Life Insurers, confirmed that Kim Dorgan, its chief lobbyist, recently told an industry strategy group that “Congress will be quite busy at the start of 2009,” and that an “OFC is likely not a top item on their agenda.”

However, Mr. Dolan added, “that does not mean it is a non-issue.” Moreover, he said, the “ACLI is still pursing an OFC.”

In her comments to AIA, Ms. Bair said the Obama administration’s priorities in 2009 will be:

• Regulation of mortgage-backed securities and credit default swaps.

• Standards for the mortgage lending industry and for all mortgage brokers/originators.

• Stronger disclosure rules for executive compensation and balance sheets.

Regarding the possibility of “systemic regulation” across industries, she said that would be “hard to conceptualize.” In theory, she said, “such a regulator would look at the systemic/liquidity risk of the enterprise and work with its functional regulators to address its financial problems.”

However, the current thinking is that such a regulator would be a backstop for financial services entities that cannot be allowed to fail, she added.

“It is anticipated that there would be a recovery/fee/assessment mechanism for any funds provided by backstop to such an entity,” she said.

On Nov. 24, President-Elect Obama said he will nominate Timothy Geithner, current president of the Federal Reserve Bank of New York—which oversees the government’s bailout of American International Group—as Treasury secretary.

Ms. Bair told the AIA directors that AIG represents the first non-bank entity that is “too big to fail” as seen through a federal lens.

POSTED BY STEVEN WEVODAU

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Economy Shrinks At Fastest Pace In Seven Years - Steven Wevodau

WASHINGTON (Reuters) - The U.S. economy contracted at its fastest pace in seven years in the third quarter as consumer spending plunged to a 28-year low, data showed on Tuesday, raising the specter of a deeper recession.

Separate reports showed U.S. home prices continued their downward spiral, with the cost of single-family homes plunging by a record 17.4 percent in September from a year earlier.

The data painted a dismal picture of the troubled economy and backed views the Federal Reserve could push benchmark lending rates to an unprecedented zero percent by early 2009.

“We are in the early stages of one of the worst recessions in the post-war period, even factoring in a massive stimulus program,’ said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts.

The grim reports partially overshadowed the Fed’s announcement that it would use up to $800 billion to buy mortgage-related debt and consumer debt securities. The Dow Jones industrial average ended up 36.47 points at 8,479.86, after a choppy session.

U.S. government debt prices rallied, helped by a safe-haven bid fueled by the worsening outlook. The dollar, however, fell a third session against the euro, handing the European single currency its best three-day percentage advance ever.

The Commerce Department revised the annual rate of decline in third-quarter gross domestic product to 0.5 percent from the 0.3 percent that it reported a month ago. It was the sharpest fall in GDP since the third quarter of 2001, in the aftermath of the September 11 attacks.

Corporate profits dropped for a second straight quarter and business investment fell for the first time since the end of 2006, signaling a wariness about prospects for future sales.

Consumers, hard hit by rising unemployment and plunging home equity, held back and sent spending falling at its sharpest rate since the second quarter of 1980. Consumer spending accounts for two-thirds of economic activity.

Many analysts believe the United States already has joined Europe in recession, though it will take another quarter of contraction to meet a widely used definition for it — back-to-back quarters of declining output.

The third-quarter decline in GDP was a striking contrast with the second quarter’s relatively brisk 2.8 percent rate of growth. The U.S. economic decline is widely predicted to accelerate in the fourth quarter and last into 2009.

POSTED BY STEVEN WEVODAU

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Department of Justice Will Not Challenge Formation of Consortium of Commercial Insurers

POSTED BY STEVEN WEVODAU

WASHINGTON, Nov 24, 2008 /PRNewswire - Proposal Could Result in Greater Competition for Large Commercial Insurance Policies

The Department of Justice announced today that it will not challenge a proposal by the Ivy Capital Group, LLC (Ivy) to form a consortium that will offer business insurance policies to large companies. The Department said that the formation and operation of the consortium is not likely to reduce competition and could offer a new competitive option for large commercial insurance policies.

Ivy has proposed forming Concepta Services LLC (Concepta) to offer large commercial insurance policies equal to or in excess of $250 million, by consolidating the capacity of commercial insurers that lack the capacity individually to offer large commercial insurance policies.

The Department’s position was stated in a business review letter from Deborah A. Garza, Acting Assistant Attorney General in charge of the Department’s Antitrust Division, to counsel for Ivy. Ivy is a Delaware limited liability company, the investors of which are principals in an independent firm that provides management and financial consulting services to Fortune 500 companies.

“The formation of Concepta is not likely to reduce competition in the sale of large commercial insurance policies,” said Garza. “To the contrary, Concepta may provide a competitive new option for those looking to purchase these types of policies.”

Ivy proposed forming and operating Concepta as a consortium that would allow commercial insurers to combine their insurance capacity to jointly offer large commercial insurance policies. Membership in the consortium would be limited to those insurers who do not have the ability to offer such policies on their own. Ivy represented that the likely Concepta participants currently generate no more than five percent of the total premiums from the sale of large commercial insurance policies in the United States, and that they do so by pooling capacity with other insurers. Jointly offering large commercial insurance policies through Concepta could be more efficient for these insurers than their current methods of offering such policies, including the use of reinsurance.

Under the Department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the Division currently intends to challenge the action under the antitrust laws.

A file containing the business review request and the Department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, NW, Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the Business Review Procedure.

SOURCE U.S. Department of Justice 

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Pennsylvania Insurance Commissioner Announces $40 Million Settlement With Deloitte & Touche LLP - Steven Wevodau

HARRISBURG, Pa., Nov 24, 2008 /PRNewswire - Litigation Recoveries at $145 million

Pennsylvania Insurance Commissioner Joel Ario, in his capacity as statutory liquidator for Reliance Insurance Company, announced today that the Insurance Department has finalized a $40 million settlement with Deloitte & Touche LLP in connection with the firm’s auditing services for Reliance.

“We have fought long and hard in this case, and we are pleased with this settlement,” Commissioner Ario said, adding that the goal in this, and prior actions, has been to maximize recovery for Reliance policyholders from its parent companies, management and outside professionals.

“This $40 million settlement will directly benefit Reliance’s policyholders. When combined with the $45 million previously recovered from the Reliance parent companies, as well as the approximately $60 million recovered from the settlement of actions against the company’s former officers and directors, the grand total of recoveries in the Reliance estate total nearly $145 million from litigation brought by the department,” Ario said.

In addition to this substantial recovery, insurance regulation now provides additional protections to minimize the risks associated with the auditing of insurance companies.

The department has been working through the National Association of Insurance Commissioners on new requirements related to auditor independence, corporate governance and internal control over financial reporting designed to promote the accuracy and reliability of financial statements filed by insurance companies.

Other key developments in financial regulation include strengthening risk-based capital requirements and adopting more stringent standards for actuarial opinions on the adequacy of insurance company reserves.

The department will continue working to develop and implement new tools for state regulation of insurance company financial solvency and to minimize the number and impact of insurance company insolvencies.

A copy of the settlement agreement can be found at the Reliance Documents Web site: www.reliancedocuments.com. Policyholders with questions in the Reliance liquidation estate should call (215) 864-4500.

The Insurance Department took statutory control of Reliance on May 29, 2001, under an Order of Rehabilitation, followed by an Order of Liquidation that October. On Oct. 15, 2002, the department, as the liquidator, filed a complaint in Commonwealth Court of Pennsylvania against Reliance’s outside auditor, Deloitte & Touche LLP, and its appointed actuary, Lommele. This complaint was originally captioned as “Koken v. Deloitte & Touche LLP et al” (Docket No. 734-MD2002) and is now captioned as “Ario v. Deloitte et al.” Among other things, the complaint alleged claims for breach of fiduciary duties, professional negligence and the recovery of preferential transfers.

A Pennsylvania-based insurance company, Reliance was licensed to write insurance in all 50 states. The states with the largest number of policyholders included California, New York, Florida, Pennsylvania, Illinois and Texas. Reliance Insurance Company’s insurance business consisted primarily of workers’ compensation, commercial auto, commercial liability and personal auto coverage.

POSTED BY STEVEN WEVODAU

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On Eve of Black Friday, Survey Suggests a Mixed Forecast for Consumer Technology and Media Sales

POSTED BY STEVEN WEVODAU

NEW YORK–(BUSINESS WIRE)–As the holiday shopping season approaches, six out of ten U.S. consumers intend to cut their spending in at least one area of communications and media entertainment – ranging from purchases of PCs, digital cameras, and music players to premium TV channel subscriptions and landline phone service – according to a detailed new survey of consumer sentiment by international management consulting firm Oliver Wyman. Only 21% of survey respondents plan to increase spending in at least one of the areas.

If this snapshot of consumer sentiment were to prevail over the next year, the overall impact for these sectors would be a 5-6% decline in sales, said Mark Teitell, a partner in Oliver Wyman’s Communications, Media, and Technology practice. Teitell directed the online survey of more than 500 adults across the country.

Sales of devices such as desktop and notebook computers, music players, and digital cameras are the most threatened, with over 50% of respondents reporting they plan to spend less on devices over the next year, which equates to about a 10% drop in sales. However, sales of next-generation devices are expected to increase: Blu-ray players by 140%, smartphones by 9%, and HDTVs by 3%.

In most device categories, promotional pricing would increase unit sales but not enough to justify broad discounts. Teitell noted that a discount of 20% could motivate a handful of on-the-fence purchasers to buy, but broad discounts might result in an overall decrease in sales revenue. “Price discounts should be used cautiously and targeted at on-the-fence purchaser segments when used,” he said. “There’s a risk of cannibalizing revenue from consumers already intending to make the purchase, without drawing sufficient new buyers to increase revenues overall.”

Subscriptions including broadband Internet access, mobile phone plans, pay-TV and content subscriptions such as Netflix are the most insulated from the economic downturn. 63% of respondents expect their spending to be about the same next year as it was this past year, and 9% plan to spend even more. Only 28% plan to spend less on network subscriptions. However, a 5% sales decrease is still predicted within this category, with premium TV channels being the most vulnerable; 22% of current subscribers said they are somewhat likely to discontinue premium channels to watch more standard pay-TV.

In the area of entertainment content, such as movies, TV shows, and video games, 36% of consumers intend to spend less, equating to a 5% sales drop. Of these entertainment categories, watching movies in theaters could prove to be most volatile, as it’s the most cited category among both respondents who plan increases and those who plan decreases in spending in entertainment.

“Consumers are being selective in where they pull back,” Teitell said. “Delaying the purchase of a computer, digital camera, or music player as a cost-saving measure is easier than canceling or downgrading a subscription for high-speed Internet access or a mobile phone data plan, which consumers may be contractually locked into.”

About Oliver Wyman

With more than 2,900 professionals in over 40 cities around the globe, Oliver Wyman is an international management consulting firm that combines deep industry knowledge with specialized expertise in strategy, operations, risk management, organizational transformation, and leadership development. The firm helps clients optimize their businesses, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is part of Marsh & McLennan Companies (NYSE: MMC - News). For more information, visit www.oliverwyman.com.

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Minnesota banks saw profits hit in Q3

POSTED BY STEVEN WEVODAU

Minneapolis / St. Paul Business Journal - by Jennifer Niemela Staff Writer

Minnesota’s banks have seen their profits more than halved in one year, according to third-quarter data released Tuesday by the Federal Deposit Insurance Corp.

Net income for the first nine months of 2008 was $443 million for Minnesota’s 410 commercial banks, compared to $980 million for the first nine months of 2007.

While about two-thirds of the Twin Cities’ 119 banks were profitable in the third quarter, seven Twin Cities banks lost more than $2 million in the third quarter.

The biggest loser was BankFirst, based in Minneapolis, which lost $9.1 million for the quarter on assets of $320 million, bringing its total losses for the first nine months of 2008 to $77.5 million.

Next was Inter Savings Bank, based in Maple Grove, which lost $7.8 million on assets of $858 million. The bank, which does business as Interbank and is one of the state’s largest savings and loans, agreed earlier this month to be sold to Richmond, Va.-based Genworth Financial Inc. Interbank has been hit hard by the housing crisis. Its profits have been on a downward spiral for the past year. It lost $3.5 million in the second quarter and $5.2 million in the first quarter.

The loses were from a combination of write-downs or loses on sales of properties, as well as increased allowances for future losses, said Fred Stelter, president and CEO of Interbank. “You just keep plowing through this stuff and in the process we’ve taken some hits, but our goal is maintain our well-capitalized position,” Stelter said.

Mainstreet Bank, of Forest Lake, lost $5.6 million on assets of $463.6 million. It has downsized its pool of lenders in recent months. The loss is from loan loss provisions, said Karen Greisinger, a spokeswoman for the bank. Mainstreet officials expect the bank to profitable by the first quarter of 2009.

First Minnesota Bank in Minnetonka lost $3.9 million on assets of $345.2 million.

American Bank of St. Paul in St. Paul, lost $2.8 million on assets of $673.7 million. The bank lost money its preferred stock holdings in Fannie Mae and Freddie Mac, said John Kimball, its president.

Riverview Community Bank in Otsego, and Citizens State Bank in Hudson each also lost more than $2 million for the third quarter.

AnchorBank, based in Madison, Wis., which has several branches in the western-Wisconsin portion of the Twin Cities metro area, lost $21.8 million and had that state’s second-steepest losses. AnchorBank is different from Wayzata-based Anchor Bank, which was profitable this quarter.

On a brighter note, the metro area’s biggest loser of the second quarter 2008, M&I Bank, which lost $388 million on assets of $57.7 billion, was profitable this quarter. M&I, which is based in Milwaukee but has a growing Twin Cities presence, this quarter was Wisconsin’s most profitable bank with income of $78.6 million on assets of $56.9 billion.

Biggest losers, metro area banks, Q3 2008

• BankFirst Minneapolis:
Assets: $319 million; Losses -$9.1 million
• InterBank Maple Grove
Assets: $858 million; Losses: -$7.8 million
• Mainstreet Bank Forest Lake
Assets: $463.6 million; Losses: -$5.6 million
• First Minnesota Bank Minnetonka
Assets: $345.2 million; Losses: -$3.9 million
• American Bank of St. Paul St. Paul
Assets: $673.7 million; Losses: -$2.8 million
• Riverview Community Bank Otsego
Assets: $131.7 million; Losses: -$2.5 million
• Citizens State Bank Hudson
Assets: $193.3 million; Losses: -$2.3 million
Source: FDIC

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AIG, Brazil’s Unibanco buy each other’s venture holdings

POSTED BY STEVEN WEVODAU

By Robert Daniel

TEL AVIV (MarketWatch) — American International Group Inc., (AIG

American International Group, Inc

BR:UNIBANCO) the Sao Paulo, Brazil, banking group, said late on Wednesday that they agreed to buy each other’s cross-holdings in their Brazilian joint ventures. Terms weren’t disclosed. Under the terms, Unibanco will purchase the shares in Unibanco AIG Seguros SA that are held by certain AIG subsidiaries; and an AIG subsidiary will purchase Unibanco’s stake in AIG Brasil Co. de Seguros. Unibanco AIG Seguros will be renamed Unibanco Seguros SA. Unibanco AIG built an 8% market share during its 11 years in operation, the companies said. AIG will continue to offer products and services through AIG Brasil, “while continuing to work with” Unibanco Seguros on opportunities in fields including reinsurance and corporate insurance, the companies said.

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