Natural gas producers: Another angle in the fracking fracas
A fracking-created boom in U.S. natural gas production has energy companies looking to sell overseas, setting up a potentially sensitive election year issue. More than half a dozen companies, including Dominion Resources (D), Sempra Energy (SRE), and Freeport LNG, have applied to the Energy Dept. for permission to sell abroad, where gas prices are higher. Some congressmen, including Edward Markey (D-Mass.), ranking member of the House Natural Resources Committee, say they’re concerned that exporting would raise U.S. energy prices and hamper efforts to achieve energy independence. The gas companies say there is more than enough supply to satisfy the domestic market.
Charles Schwab: Bringing index funds to 401(k)s
Charles Schwab (SCHW) is offering employers a new, low-cost 401(k) plan. The new retirement package lets employees invest in mutual funds that track a market index and don’t have the fees typically associated with actively managed funds. Schwab plans to combine the index funds with investment advice to help workers boost their returns. Retirement plan fees have come under increased scrutiny from regulators and plan sponsors. Schwab is also working on a 401(k) package made up of index-based exchanged traded funds.
American Airlines: The first route cuts in bankruptcy
American Airlines (AMR) will end its service to New Delhi on Mar. 1 as the carrier begins trimming routes in bankruptcy. Flights between Chicago and New Delhi have been unprofitable, in part because of high fuel prices and global economic weakness. On Feb. 9, the carrier will also stop flying between Burbank, Calif., and its hub in Dallas-Fort Worth. American has been evaluating routes since its parent, AMR, sought Chapter 11 bankruptcy protection on Nov. 29 and says it may trim more.
Insurers: Raising rates after a stormy 2011
Allstate (ALL), Travelers (TRV), and State Farm are among insurers raising homeowners’ rates after damage from natural disasters surpassed industry projections. Near-record-low interest rates cut income from investments for insurers last year, while tornadoes, floods, wildfires, and Hurricane Irene increased claims costs in the U.S. Allstate, the No. 2 U.S. home insurer, boosted prices for its namesake brand of home policies by 5.6 percent in the nine months through Sept. 30 and has said more increases are coming.
Hostess Brands: It’s Chapter 22 for Twinkies
Hostess Brands, the maker of Twinkies and Wonder Bread, fell back into bankruptcy about three years after completing a restructuring. The Irving (Tex.) company has $1 billion in assets but also $1 billion in debt, much of it in pension obligations. Hostess, owned by a group of investors led by private equity firm Ripplewood Holdings, intends to renegotiate pension plans and contracts with its unions. Ding Dongs and other goodies will be available while Hostess restructures, thanks to a $75 million bridge loan from debtors.