Demand soaring for pension transfers to insurers prompted by Prudential decision

BOSTON/NEW YORK, Mon Jun 11, 2012 – Last week’s deal by Prudential Financial to take on $26 billion of the retirement liabilities of General Motors has reignited a part of the American insurance market that had been bouncing along the bottom in recent years.

But experts in the sector say GM’s splash was so big, there may be somewhat limited capacity for more mega-sized deals in the market for pension-risk transfers. Still, the market could be in the tens of billions over the next few years, they said.

A Reuters analysis of the pension obligations of the S&P 500 found that almost half of the companies with underfunded pensions have enough cash to spare to do a risk-transfer deal, including Rupert Murdoch’s News Corp and agriculture giant Archer Daniels Midland Co, suggesting there could be a scramble ahead for that limited capacity.

Known as pension terminal funding, the concept is simple: an employer pays an upfront premium to an insurance company for an annuity that covers all the members of a pension plan.

The insurer becomes responsible, via the annuity, for all of the retirees’ pensions and the sponsor gets to wash its hands of the obligation.

“Starting about a year ago it was the chatter, the chatter picked up … in the last six months, even in the low interest rate environment, transactions are starting to happen,” said Mike Devlin, the head of the Boston office for BCG Terminal Funding, which matches plan sponsors with insurers.

For years, plan sponsors have held off on buying single-premium group annuities to transfer risk, hoping that interest rates would rise from historically low levels, boosting the value of their assets and potentially filling pension gaps without extra cash.

GM signs on as Manchester United’s auto sponsor; looks to global brand

DETROIT, Thu May 31, 2012 – The world’s largest automaker has jilted America’s Super Bowl for the global variety of football.

General Motors Co has signed on as the automotive sponsor of the world’s most popular soccer club, Manchester United, in an attempt to cement Chevrolet as a global brand.

Terms of the five-year deal, announced in Shanghai on Thursday, were not disclosed. GM is hoping to piggyback on Manchester United’s fan base of an estimated 659 million people to boost its Chevy brand, especially in such growing Asian car markets as China, where the soccer club has 108 million fans.

“If our aspirations are to build global icon status for Chevrolet … soccer far and away is the world’s biggest sport,” Paul Edwards, GM executive director of global marketing strategy, said in an interview. “Manchester United stands head and shoulders above the other teams in terms of scale, brand value and their legacy in the sport.”

The announcement comes about two weeks after GM said it would drop ads both on Facebook, due to low consumer impact, and during next year’s Super Bowl broadcast, as the projected price tag – $4 million per 30-second spot – was too high.

GM has also consolidated its ad agencies globally in a move expected to save $2 billion over five years.

GM’s global marketing chief, Joel Ewanick, said he is squeezing costs in his budget where he can, but overall spending is not declining.

“There are no sacred lines in the budget,” he said at the company’s Detroit headquarters. “Everything’s got to prove to have value, including Facebook.”

GM recalls 4,300 Malibu Eco cars in U.S. for airbag issue

DETROIT, Thu May 24, 2012 – General Motors Co. said on Thursday it is recalling 4,304 Chevrolet Malibu Eco cars sold in the United States to reprogram a module that controls airbag deployments.

The U.S. automaker said in what it described as rare cases under extremely aggressive turning, the roof rail airbags in some 2013 model year Malibu Ecos might inflate. It also said in another scenario it described as rarer that the airbags and safety belt pretensioners might not deploy.

GM said no crashes or injuries have been reported related to this issue.

GM said it discovered the problem during a development test in which one of the cars was performing extreme maneuvers. It said letters will be mailed to car owners on June 1 with instructions to have the reprogramming done at no cost at a dealer.

GM’s Chevrolet to introduce small crossover SUV

DETROIT, Mon May 14, 2012 – General Motors Co.’s main brand Chevrolet will introduce a new small crossover SUV at the Paris auto show in September, the company said on Monday.

The Chevrolet Trax will be sold in 140 countries and will be introduced first in Mexico in the fourth quarter of this year. But it will not be sold in the United States.

The Trax is slightly smaller than the Chevrolet Equinox crossover SUV, which is sold only in the U.S. and Canadian markets.

The Trax will be built on the same underpinning platform as the Aveo and Sonic subcompact sedan. That subcompact sedan is sold as Sonic in the U.S. and Canadian markets and as the Aveo in the rest of the world.

Details including price, weight, length and fuel economy of the Trax were not released.

U.S. sales of the Equinox crossover SUV rose 16 percent to about 70,000 in the first four months of this year.

Among crossover SUVs, the Equinox is No. 3 in the U.S. market, behind the Honda Motor Co. CR-V at about 98,000 sales through April and the Ford Motor Co. Escape at nearly 75,000 in sales.

GE annual meeting interrupted by 99 Percent protesters

DETROIT, Wed Apr 25, 2012 – Nearly 100 protesters affiliated with the “99 Percent” populist movement disrupted General Electric Co’s. annual shareholders’ meeting on Wednesday in an attack on the largest U.S. conglomerate’s low tax rate.

The demonstrators, who began chanting “Pay Your Fair Share” when the meeting began, were quickly ushered out of the meeting — held in the Detroit building that houses General Motors Co’s. headquarters — but could still be heard chanting protests as the meeting got under way.

After their exit, Chief Financial Officer Keith Sherin stepped up to defend GE’s tax practices, and noted that the company’s low tax rates in 2008 and 2009 were the result of heavy losses at GE Capital.

“Over the 2008 through 2010 time period we lost over $30 billion in credit losses at GE Capital and that reduced our pre-tax income and also our rate,” Sherin said. “Our U.S. tax expense last year was $2.6 billion. We are a large taxpayer, we pay our taxes and we very much support tax reform.”

As they were ushered outside, protesters rejoined a large crowd of hundreds of other demonstrators with signs that read “Tax Dodgers at Work” and “This is What Democracy Looks Like.” Police herded them away from the riverfront building.

GM recalls more than 6,000 vans, SUVs in the U.S. over steering

DETROIT, Mon Mar 26, 2012 – General Motors Co. is recalling 6,159 big vans and sport-utility vehicles in the United States for possible loss of steering.

The U.S. automaker is recalling certain 2012 model-year Chevrolet Express and GMC Savana vans, and Chevy Suburban and GMC Yukon XL SUVs because the gear shaft could fracture, which could lead to a loss of steering and increased risk of an accident, according to documents filed with the National Highway Traffic Safety Administration.

GM said the issue was discovered by the supplier during the testing of steering gear units and testing suggested a failure would not occur until at least five months after the most severe use. The automaker said there were no known crashes, injuries or complaints related to the recall.

GM said its dealers will inspect the steering gear shaft and replace it if necessary. Letters to owners will be sent April 4.

Porsche is recalling 1,232 2012 model-year 911 Carrera S coupes in the United States as interference between a coolant line and fuel line may cause the latter to become disconnected, according to documents filed with NHTSA. A fuel leak could lead to vehicle stalling or a possible fire, according to NHTSA documents.

Porsche said in documents filed with NHTSA that it was not aware of any accidents or injuries related to this issue.

Porsche will replace the fuel line and the recall is expected to begin in April, NHTSA said.

GM CEO sees European losses continuing for 1-2 years

SAN FRANCISCO – Thu Mar 8: General Motors Co. chief executive Dan Akerson said it may be two years before its European division is back in profit as the continent sheds over-capacity the same way the U.S. industry had to over the past half decade.

The world’s largest automaker has lost money in Europe for the last 12 years.

“I think it’ll be a good year or two before we can achieve profitability in Europe again,” Akerson said at an on-stage interview conducted in San Francisco on Wednesday night.

European sales had been recovering before the continent became gripped by fears of debt defaults in the middle of last year, Akerson said at the Commonwealth Club of California, a non-profit public affairs forum.

“People stopped buying. I can see it every day in the sales reports,” said Akerson, who was born in California and studied at the London School of Economics.

Industry-wide, Akerson believed there were between seven and 10 excess car plants in Europe and other executives estimate there is 20 percent over-capacity there.

He emphasized that a deal with France’s PSA Peugeot Citroen announced last week was merely an alliance and that each carmaker had its own problems to solve.

GM announced last week that it would halt production of the Chevy Volt plug-in electric car for five weeks and temporarily lay off 1,300 U.S. workers.

But Akerson, arguing that a two-week production shutdown last year for its popular Cruze compact car did not generate as much concern, dismissed the worries surrounding the Volt as political.

“Sometimes I feel bad for President Obama,” Akerson told reporters, saying the Volt was in the works long before Obama’s election, yet it was seen as his car due to the government’s 27 percent stake in GM after its bailout. “It’s not the Obama car.”

Akerson had said earlier that, while it was not up to him, his ideal outcome would be for the government to, for example, sell off the stake steadily over 10 quarters because he believed uncertainty about it was weighing on GM’s share price.

Obama’s re-election campaign often touts the auto sector bailout as one of the Democrat’s major accomplishments as president, seeking to draw a contrast with Republican White House contender Mitt Romney, who opposed it.

GM posts weaker-than-expected fourth-quarter

DETROIT – General Motors Co. posted a weaker-than-expected fourth-quarter profit as disappointing performance overseas offset strong results in North America.

“We obviously have work to do still and a long way to get to the objectives we ultimately want to get to,” GM CFO Dan Ammann told reporters.

“We clearly have work to do in Europe. We have work to do in the South America business. Frankly, we have work to do all around the company in terms of cost opportunity,” he added.

Ammann said GM has not gone far enough in cutting costs in its European operations, but declined to provide a 2012 financial forecast for a unit that the No. 1 U.S. automaker has struggled to return to profitability. Overall, GM expects 2012 sales to top the $150.3 billion it saw in 2011 and its market share to remain flat.

Net income attributable to common shareholders was $500 million, or 28 cents a share, compared with $500 million, or 31 cents a share, in the year-ago quarter.

Excluding one-time items, GM earned 39 cents a share, two cents below analysts’ average forecast in a poll by Thomson Reuters I/B/E/S.

Sales in the quarter rose 3 percent to $38 billion, compared with the $38.21 billion analysts had expected.

For 2012, GM expects to raise vehicle prices and contain cost inflation, but the sale of more cars than trucks will hurt profit margins.

GM said its U.S. defined pension plans earned asset returns of 11.1 percent last year, but they ended the year $13.3 billion pension shortfall in pension funding compared with $11.5 billion in 2010. GM expects returns of 6.2 percent in 2012 due to a greater shift to fixed income investments.

Maryland’s first solar EV charging station at GM plant to be installed

FREDERICK, Md. ― TimberRock Energy Solutions Inc. has commissioned the state’s first solar EV charging station at General Motor’s Allison Transmission plant in White Marsh, Md., with partner Standard Solar Inc. to support the project execution.

Standard Solar and TimberRock worked with General Motors to design a 10kW system with four level 1 (120V) charging stations and four level 2 (240V) fast charge stations.  The system offers covered parking for EV drivers underneath an attractive solar canopy.

General Motors is making significant investments in the White Marsh facility.  “We have recently completed a roof-mount solar system and have also broken ground on an expansion program so as to produce EV motors in Maryland, said Rob Threlkeld, GM real estate and facilities manager – Green Initiatives.  “TimberRock’s solar EV charging solution was a natural complement to these other investments and we’ve already begun work on other projects with TimberRock.”

The system’s anticipated energy production is 12,500 kW-hrs per year, enough energy to fully power a fleet of six Chevy Volts.  The environmental benefits of doing so are significant with 12 fewer tons of CO2 gas per year released into the atmosphere.  In addition to charging EVs, the system also ties directly to the building so that when the charging stations are not in use, the energy can be utilized throughout the building.

According to TimberRock CEO Brent Hollenbeck, “The introduction of production EVs has exciting and positive implications for our dependence on foreign or polluting sources of energy. However, if the vehicles are charged via grid-provided electricity — often from coal-fired power plants — the benefits are mitigated.  Solar-based EV charging makes sure that only renewable, local electricity is used to charge clean vehicles.”

UAW expects GM contract deal after ‘much progress’

DETROIT ― The United Auto Workers union has made “much progress” toward reaching a new contract with General Motors Co. to replace a deal on wages and benefits that expires just before midnight on Wednesday, a senior union official said.

“We are confident that we can reach an agreement that will meet many of the goals we set at the beginning of negotiations,” UAW Vice President Joe Ashton said in an electronic update on negotiations for the 49,000 union-represented workers at the top U.S. automaker.

The comments from Ashton represented the most upbeat assessment from the union since negotiations entered a more intensive phase over the past week.

Ashton said the union’s goal was to reach a tentative contract deal with GM, rather than face arbitration.

The union was barred from calling a strike at GM under the terms of the automaker’s restructuring in its 2009 bankruptcy funded by the Obama administration.

“Our negotiations with management have reached a critical stage as we near the expiration of the national agreement,” Ashton said.

A day earlier, Ford Motor Co and the UAW agreed to extend their contract to allow for the union to reach an initial deal with GM or Chrysler Group LLC.

Negotiations in Detroit between GM and Ashton’s UAW negotiating team broke off around 11 p.m. on Tuesday night, a person familiar with the talks said.

Talks continued at Chrysler late the night on Tuesday. The union’s Chrysler negotiating team said it was working “tirelessly” to reach a deal in an update on its Facebook page.

In these talks, which will set wages and benefits for about 113,000 workers for the next four years, the companies are focused on keeping labor costs down. The UAW is angling for more auto production jobs in the United States as well as one-time bonuses because of the industry’s improved profitability.

The negotiations are being watched by investors as an indication of how much Detroit has changed since the steep downturn and sharply tighter financing that almost forced GM and Chrysler out of business in late 2008 and threatened Ford.

GM Chief Executive Dan Akerson and Vice Chairman Steve Girsky have been involved in the GM talks over the past week, people with knowledge of the proceedings have said.

Chrysler Chief Executive Sergio Marchionne left the Frankfurt auto show on Tuesday night to return to Detroit, a source said.

If the deadline is not met, the union and the company teams would have to agree to extend the current contracts, which is seen as a routine matter, analysts have said.

GM has about 49,000 UAW-represented workers, Ford has about 41,000, and Chrysler, controlled by Italy’s Fiat SpA, has about 23,150.