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Business Briefs

Reported by Star-Bulletin staff & wire

Monday, June 12, 2000

State Farm returns $8.7 million to isles

State Farm Mutual Automobile Insurance Co. said today it will refund $8.7 million in premiums paid by its Hawaii auto insurance customers.

The largest U.S. auto and home insurer said, nationwide, it will return slightly more than $1 billion to its auto policyholders for 1999. The Bloomington, Ill.-based insurer said policyholders in 49 states, the District of Columbia and three Canadian provinces will receive the dividend announced today. It said the dividend amount eclipses the previous high of $892 million paid to policyholders in 35 states and the District of Columbia in June 1998. However, Hawaii customers overall will receive less this year since the distribution for 1998 included $11.3 million for Hawaii customers.

Travel firm extends call centers' hours

Cheap Tickets Inc. said today that it is extending the hours of its call centers, which sell its discounted airline tickets and other travel products.

The Honolulu-based company said the call centers' hours have been extended to 20 hours daily from 16 hours on weekdays and 12 hours on weekends. The new hours are 1 a.m. to 9 p.m. Hawaii time.

The extended hours are in response to increased demand and also help the company prepare for the third quarter, usually its busiest period, Cheap Tickets said.

Cheap Tickets, which also sells travel products over the Internet, said gross bookings through its call centers accounted for 62 percent of overall bookings at the end of the first quarter of 2000.

Home Depot stock falls on forecast

ATLANTA -- Home Depot Inc.'s fiscal second-quarter same-store sales may miss forecasts for an increase of 7 percent after rising interest rates hurt demand for home-improvement products, an analyst said.

Shares of Home Depot, the largest U.S. home-improvement chain, fell $2.19 to close at $46 on the New York Stock Exchange.

In earlier trading today, the stock tumbled as much as 6.6 percent to $45.

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Of Mutual Concern

News for mutual fund investors

Liberty Financial to buy Acorn Funds' parent firm

BOSTON -- Liberty Financial Companies Inc., the financial services arm of Liberty Mutual Insurance Co., said today it would pay up to $450 million in cash to acquire Wanger Asset Management LP and its flagship Acorn Funds.

The Boston based Liberty, which has assets under management of more than $67 billion, said it will pay $280 million immediately and up to $170 million over five years if Wanger achieves certain earnings objectives.

The total price represents about 5 percent of Wanger's $8.8 billion in assets under management, which analysts consider a rich price. Chicago-based Wanger is investment adviser to three mutual fund families, including the Acorn Family of Funds, a variable annuity insurance trust and offshore funds. Asset management is a highly profitable and growing business for life insurers, who are struggling to compete for a share of the retirement savings market. In the first quarter, Liberty Mutual's operating profit from asset management rose to $67.1 million from $60.8 million a year earlier.

McGraw-Hill sues Vanguard Group

NEW YORK -- McGraw-Hill Cos., parent of Standard & Poor's, sued the Vanguard Group, claiming the U.S. mutual fund giant used S&P's indexes and trademarks without its permission.

The suit, filed last week in U.S. District Court in Manhattan, charges Vanguard with breach of contract, trademark infringement and unfair competition in connection with the Valley Forge, Pa.-based company's proposal to add tradable shares to five mutual funds. It seeks an order blocking Vanguard from using S&P's trademarks and indexes for the new shares, plus damages. Vanguard rejected the accusations as "baseless."

Vanguard, which oversees $540 billion, introduced the exchange-traded shares last month, trying to appeal to the active traders it has long shunned. The hybrid securities contain a pool of stocks like mutual funds that can be swapped in real time like equities. The most popular exchange-traded fund tracks the Nasdaq 100 with the ticker "QQQ." About $40 billion in U.S. exchange-traded funds trade on the American Stock Exchange. S&P claims Vanguard's plan violated a 1988 license agreement. Vanguard's new securities represent new share classes of five of its current funds -- four of which track S&P indexes, including the biggest, the $105 billion Vanguard 500 Index Fund.

Magellan Fund's assets fall to $100.9 billion

BOSTON -- Fidelity Investments' Magellan Fund, the closely watched and for the most part closed fund, saw its assets under management fall to $100.9 billion in May, the mutual fund group reported today. Once the largest U.S. fund, Magellan saw its assets under management decline by more than $5 billion in May from $105.9 billion at the end of 1999.