Losses mounting for American Family Insurance; Report says Reader’s Digest may be headed for bankruptcy; Few area CFOs plan to hire more staff
Losses mounting for American Family Insurance
Madison-based American Family Insurance Group recorded a $298.9 million loss from operations in 2008, after a $110. 4 million loss in 2007 and a $202.1 million loss in 2006. The three straight years of losses followed a record $889.1 million gain from operations in 2005. Gain or loss from operations is the group’s total revenues minus total losses and expenses.
After adding realized capital gains and tax expenses (or benefits) to the operating loss, the company’s net loss was $297.9 million for 2008, a reversal from the $82.4 million net gain in 2007.
The company attributed the 2008 losses to a faltering global economy and a near company record for storm losses.
"We made it through a rough stretch of road in 2008, but American Family remains on solid ground," said David Anderson, chairman and chief executive officer of the firm. "We have a strong financial position and a mission of providing industry-leading value to our customers."
The company’s storm and catastrophe losses topped the $1 billion mark for the second time in three years. American Family’s top four years for storm and catastrophe losses all have occurred this decade, with three of the top four taking place in the past three years.
The year started with rare January tornadoes in the Midwest. The catastrophe and storm activity peaked in May and June, with losses of a total of $691.5 million for those two months alone.
"It was another busy year to help our customers recover from the unexpected," said Jack Salzwedel, president and chief operating officer. "Our agents and employees work hard to provide excellent service and value, and not just at the time of a claim. Our customer satisfaction scores increased throughout the year and finished at levels higher than planned."
Report says Reader’s Digest may be headed for bankruptcy
Reader’s Digest Association Inc., which acquired Reiman Publications in Greendale in 2002 for $760 million cash, has hired Kirkland & Ellis as legal advisors to evaluate restructuring options, including a potential bankruptcy, according to a report by Bloomberg news.
The report said Kirkland & Ellis was asked by the company to examine options such as a pre-packaged or a pre-arranged bankruptcy for the magazine publisher.
Reader’s Digest spokesman William Adler declined to comment.
The Pleasantville, N.Y.-based publisher of 50 editions of its namesake magazine around the world as well as other magazines went private in 2007 in a $2.6 billion buyout led by private equity firm Ripplewood Holdings LLC.
The report follows an announcement in January that Reader’s Digest was cutting about 8 percent of its workforce of 3,500 people in reaction to the weakening economy.
Few area CFOs plan to hire more staff
Only 3 percent of chief financial officers (CFOs) in the Milwaukee area expect to add accounting and finance staff during the second quarter of 2009, while 7 percent anticipate reductions in personnel, according to the most recent Robert Half International Financial Hiring Index.
The majority of respondents, 89 percent, anticipate no change in hiring.
The local results reflect a two-quarter rolling average based on interviews with 200 CFOs from a stratified random sample of companies in the Milwaukee area with 20 or more employees; 1,400 CFOs were queried for the national data.
"Businesses are increasingly reluctant to hire in the current environment, choosing instead to maintain staff levels until they see definitive signs of an improving economy," said Max Messmer, chairman and chief executive officer of Menlo Park, Calif.-based Robert Half International. "Companies that are hiring are more selective because they can be – there is a larger pool of skilled applicants available. As a result, employers are taking extra time to identify and hire the best available person for each open position."
