Insurance broker delays statement

June 07, 1994|By Bloomberg Business News Sun staff writer Timothy J. Mullaney contributed to this article.

NEW YORK -- Alexander & Alexander Services Inc.'s directors continued to meet into yesterday evening, putting off until at least today an expected announcement of a new chief executive.

The world's second-largest insurance broker, which has most of its administrative operations in Owings Mills, may also announce a cut in its common stock dividend, analysts said.

More than eight hours after the company asked that trading be delayed at 9:30 a.m. pending a "significant" company statement, an Alexander & Alexander spokesman said the board was still working and that there would be no announcement until today.

The length of the delay had some analysts saying the announcement may be more complicated than a new chief executive or a cut in the dividend.

"It's fairly unusual that a pending announcement would take more than seven hours," said David Lewis, an analyst with Robinson Humphrey in Atlanta. "The board may be looking at the overall picture and where it will go, as well as a chief executive decision."

Cathy Seifert, a security analyst with Standard & Poor's Corp., said in a report that she wouldn't be surprised if the company announced a sale, "possibly of the entire company."

Ira Zuckerman, an analyst at SBS Financial Group in Westport, Conn., said the chief executive appointment has been pending for weeks.

Mr. Zuckerman declined to speculate on the size of a possible reduction in the dividend, now 25 cents a quarter.

"The company is paying out a dollar a year and doesn't appear to be earning enough to justify it," Mr. Zuckerman said.

Another analyst said the move was not likely to have a major impact on Alexander & Alexander's stock price.

The company, which employs 850 people in Owings Mills and at a sales office in downtown Baltimore, reported a first-quarter loss of $4.4 million, or 15 cents a share, primarily because of lower-than-expected revenue in its North American risk-management operations and insurance services.

Alexander & Alexander stock closed at $16.375, up 50 cents, on Friday. The stock did not trade yesterday.

The first-quarter loss was just the latest problem for the broker, which has had to restate its earnings, reorganize a key division and attempt to replace its chief executive, all since last fall.

Chairman Robert Boni told shareholders last month that he interviewed five candidates for chief executive in early May.

Chief Executive Tinsley Irvin, 60, stepped down April 1, after sharp declines in profits since he became chief executive in 1987. He had served as chairman until January, when he was replaced by Mr. Boni.

The company in January separated the roles of chairman and chief executive as well as having the six-member executive committee of the board oversee company policy and management controls.

The job of chairman had been separate from that of chief executive officer until Mr. Irvin assumed both titles in 1988.

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