Business memo 07/08/02

Life, health insurers suffer profit plunge

The net profit of the nation's life and health insurers plummeted by $11.1 billion, or 42 percent, in 2001, as the industry earned $15.3 billion compared to $26.4 billion in 2000.

That's according to research by Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds and stocks.

The profit declines are due to two factors, Weiss said: a $4.2 billion capital loss on the sale of invested assets and a $5.6 billion decline in net operating income.

Insurers reporting the largest declines in income during 2001 were Northwestern Mutual, Prudential, Swiss Re Life and Health and Hartford Life.

U.S. consumers trim their spending in May

WASHINGTON -- Consumers, key players in the economic recovery, trimmed their spending in May for the first time in six months, buying fewer cars and other big-ticket items.

The Commerce Department reported last week that spending edged down by 0.1 percent in May, after rising by a solid 0.6 percent in April.

The pullback came as free financing and other incentives to motivate car buyers were scaled back and unusually cold weather chilled shoppers' appetites to hit the malls and buy seasonal merchandise, economists said.

Analysts consider sale of Apple shares unusual

SAN JOSE, Calif. -- Twice within the last two years, Apple Computer Inc. executives sold company stock worth millions of dollars just weeks before Apple warned of disappointing financial results. Each earnings warning sent shares tumbling.

While the sales could have an innocent explanation, analysts consider them unusual because at no other point during the period did any other clusters of large sell-offs by Apple executives occur.

Big stock sales among executives are common, especially in the high-tech sector, where stock options are often a major part of compensation.

But insider-trading analysts consider the Apple executives' sales unusual because the people involved, though they were mostly exercising stock options, tend to be less active stock sellers.

Few airlines sought loans after Sept. 11

WASHINGTON -- Less than half of the major U.S. airlines sought government-backed loans under a program created to help the industry recover from the Sept. 11 terrorist attacks.

Of the country's 11 largest passenger airlines, only four -- America West, American Trans Air, United Airlines and US Airways -- asked the Air Transportation Stabilization Board to lend them money to keep flying.

The loan program required airlines to provide detailed information and let the government buy stock in their companies, a provision modeled after the Chrysler bailout.

Labor market conditions improve in state in May

Unemployment in Missouri decreased substantially in May, dropping by half a point to 4.5 percent from 5 percent in April. The state also experienced a much greater seasonal improvement than expected, resulting in a four-tenths of a point decrease to 4.8 percent in its seasonally adjusted unemployment rate.

The nation's seasonally adjusted unemployment rate in May was 5.8 percent, down two-tenths of a point from April's figure of 6 percent.

"While we are encouraged by these statistics, we continue to closely monitor the state's labor market conditions," said Joseph L. Driskill, director of the Missouri Department of Economic Development. "The May decrease could indicate a return toward more normal unemployment rates following an increase typical of late recessions or early recoveries, or it may only be a temporary phenomenon."

Non-farm payroll employment data are not showing much sign of recovery. However, employment did increase by 4,700 jobs between April and May, concentrated in seasonal industries like retail trade and amusement and recreation services. But gains were generally smaller than the typical May seasonal increase.

On a seasonally adjusted basis, employment dropped by 5,500 jobs, to 2,687,600. The only industries showing seasonally adjusted gains were in the service sector, particularly personal services, engineering and management services and private educational services.

-- From staff, wire reports