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Zore says Northwestern Mutual stands ‘strong’; MMAC economic survey indicates housing market could be stabilizing; Rockwell shares climb amid acquisition speculation

Zore says Northwestern Mutual stands ‘strong’

Northwestern Mutual Life Insurance Co. president and chief executive officer Edward Zore assured policyholders last week that the Milwaukee-based company’s financial position "remains strong," despite the recession.

The company recently mailed its annual report to policyholders.

"It’s no secret that dramatic events in the financial markets placed tremendous pressure on financial companies in the fourth quarter of 2008. I want to assure you that your company was prepared to withstand the market downturn and is in a very good position to adapt to the challenges ahead in this tough economy," Zore wrote in the report.

Moody’s Investors Service recently affirmed the Aaa insurance financial strength (IFS) ratings of Northwestern Mutual and its subsidiary, Northwestern Long Term Care Insurance Company. Moody’s outlook on Northwestern Mutual’s ratings remains stable.

The rating agency said that the affirmation of Northwestern Mutual’s ratings reflects the company’s exceptional franchise in individual life insurance, which is demonstrated by its excellent persistency, mortality, and expense management, as well as its solid capitalization.

Moody’s vice president and senior credit officer Arthur Fliegelman said, "Northwestern Mutual has performed well in a very difficult economic environment. The company benefits from excellent financial flexibility as it has no outstanding debt, has maintained a relatively conservative investment portfolio, has a strong liquidity profile, and its liability risk profile is conservative. These advantages have enabled the company to avoid financial stress during a period when many other life insurers have experienced considerably greater strains."

Northwestern Mutual will ask policyholders to re-elect a ballot of eight trustees to the company’s board of directors at its annual meeting on Wednesday, May 27.

The trustees standing for re-election to four-year terms are: Connie Duckworth, Lake Forest, Ill., president and chairman of ARZU, a nonprofit organization that provides sustainable income to Afghan women by sourcing and selling the rugs they weave; David Erne, Milwaukee, director of Artisan Funds Inc. and Northwestern Mutual Wealth Management Company; Margery Kraus, president and chief executive officer of APCO Worldwide, Washington, D.C.; John Stollenwerk, chairman of Allen Edmonds Shoe Corp., Port Washington; Barry Williams, retired managing general partner of Williams Pacific Ventures Inc., San Francisco; and Zore.

The trustees standing for re-election to one-year terms on the board are: Facundo Bacardi, Coral Gables, Fla., chairman of the board of Bacardi Limited; and S. Scott Voynich, managing partner of Robinson, Grimes & Co., Columbus, Ga.

Trustees remaining on the board include: James Hackett, president and CEO of Steelcase Inc., Grand Rapids, Mich.; Dale Jones, vice chairman and partner of the CEO and Board Practice in the Americas of Heidrick & Struggles, Washington, D.C.; Ulice Payne Jr., president and CEO of Addison-Clifton LLC, Brookfield; Peter Sommerhauser, attorney, Milwaukee; Robert Buchanan, retired chairman, Fox Valley Corp., Appleton; H. Mason Sizemore, retired president and chief operating officer, The Seattle Times, Washington; David Drury, president, Poblocki Sign Co. LLC, Milwaukee; Hans Helmerich, president of Helmerich & Payne Inc., Tulsa, Okla.; and David Lubar, president, Lubar & Co., Milwaukee.

The annual meeting will take place at Northwestern Mutual’s downtown Milwaukee campus.

MMAC economic survey indicates housing market could be stabilizing

Economic weakness continues in southeastern Wisconsin, with only three of 20 business activity indicators monitored by the Metropolitan Milwaukee Association of Commerce (MMAC) registering improvement in February from year-ago levels.

"Not much has changed between January and February, with local indicators showing limited prospects for near-term improvement," said Bret Mayborne, economic research director for the MMAC. "Yet the door to improvement could be cracking open a bit with perhaps early signs that housing and real estate indicators are turning the corner. Significantly smaller decreases have been posted in mortgage activity in recent months and declines in existing homes sales continue, but at rates below its longer term trend."

Mortgages recorded in Milwaukee County fell only 3.1 percent in February, the smallest decline posted since year-over-year declines started in November 2006.

Existing home sales fell at a 14.6-percent rate in February (to 581), matching January’s 14.4-percent fall. These declines rank smaller than the 18.7-percent average decline registered over the previous 12 months.

Mortgages recorded in Milwaukee County fell 3.1 percent from one year ago to 3,299, the smallest year-over-year decrease posted in 28 months.

Among the other indicators:

Nonfarm employment levels averaged 813,400 in February, a 3.5-percent fall from one year ago.

Three of 10 major industry sectors registered February job gains (vs. one year ago), while seven registered declines. The government sector, up 4.3 percent over year ago levels, posted the largest percentage increase over year-ago levels. For sectors with job declines, the largest was a 13.1-percent loss in the construction, mining and natural resources sector.

Steep increases were posted in local area unemployment indicators for February. The number of unemployed in metro Milwaukee rose 67.4 percent against year-ago levels, to 64,800. New unemployment compensation claims numbered 12,123 in February, a 108.8-percent jump from one year ago.

Metro Milwaukee’s seasonally unadjusted unemployment rate rose sharply in February up 3.3 percentage points from one year ago. The area’s jobless rate reached 8.1 percent in February (vs. the 4.8 percent rate for February, 2008). Nonetheless, the metro area’s unemployment rate ranked lower than both Wisconsin’s 8.8 percent and the nation’s 8.9 percent.

Air passenger usage at Mitchell International Airport fell against year-ago levels for the sixth consecutive month, down 15.8 percent in February to 500,025 passengers.

New-car registrations for the metro area fell at a 27-percent pace in February, to 1,525.

The value of signed construction contracts, as reported by F.W. Dodge for January, was $15.4 million, down 78.3 percent from January 2008.

Rockwell shares climb amid acquisition speculation

Rockwell Automation Inc. (ROK) stock shares soared last week amid speculation that the Milwaukee-based company may be acquired.

Several Internet message boards speculated that Rockwell had received an offer of $32 per share from St. Louis, Mo.-based Emerson Electric Co., a global manufacturer in the controls, electronics and process management sector.

Rockwell spokesman John Bernaden would not confirm or deny that the company had received a buyout offer.

"We do not comment on rumors, especially regarding the potential actions or intent of other companies," he said. "We believe that the highest value for Rockwell Automation shareholders will be realized by Rockwell Automation remaining an independent company and executing our growth and performance strategy."

Some of Rockwell’s recent actions could be taken as indicators that the company is preparing itself for sale.

In early March, Rockwell announced cutbacks in its global workforce. The company closed one of its manufacturing facilities in Ontario, Canada. On April 1, Rockwell chairman and chief executive officer Keith Nosbusch asked the company’s employees to take three unpaid days off per quarter. The company suspended its retirement account contributions in the United States and told employees there will be no bonuses this year. Nosbusch said his own salary will be cut by 20 percent.

Like many global manufacturers, Rockwell has been stung by the current recession. In early February, the company reported $1.18 billion in first quarter 2009 earnings, an 11-percent decline from the first quarter of 2008. The company’s fiscal first quarter net income was 81 cents per share, down from $1.04 per share in the first quarter of 2008.

"We expect the market environment in 2009 to be very difficult," Nosbusch said at the time. "The global recession has grown deeper and wider than we originally anticipated. Key economic indicators and projections continue to weaken and we are seeing a significant deceleration in customer demand."


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