Scottish Re Group ( SCT) plummeted nearly 75% Monday after the Bermuda-based reinsurance company announced that CEO Scott E. Willkomm had resigned and that the firm expects to post a loss of about $130 million for the second quarter. The insurer also eliminated its quarterly dividend and hired two Wall Street firms to explore a possible sale. The insurer named Paul Goldean, executive vice president and general counsel, as interim CEO. Scottish Re also hired Goldman Sachs ( GS) and Bear Stearns ( BSC) to assist with "evaluating strategic alternatives.'' Richard Sbaschnig, an analyst at Oppenheimer & Co, in a research note, expressed doubt about Scottish Re's ability to continue as a going concern, in downgrading the stock to a sell from a buy. Shares dropped $11.80, or 73.75%, to $4.20 recently. CNA Surety Corp. ( SUR) gained after the Chicago-based insurer swung to a second-quarter profit. The company earned $19.5 million, or 45 cents a share, compared with a loss of $11.9 million, or 28 cents a share, a year ago. The Thomson Financial consensus estimate had the insurer earning 40 cents a share. The turnaround at the firm stems from a combination of expense cuts and higher premium revenue. The year-ago quarter also included a $26 million after-tax charge for setting up a reserve to cover losses related to a large national contractor. In the quarter, the firm cut expenses by 30% to $79.5 million. Gross premiums increased 12% to $119.3 million. Contract surety gross premiums increased 17.8% to $78.8 million, primarily because of increased demand as a result of the strong construction economy and growth in contract size due to cost inflation within the construction industry. Shares fell 82 cents, or 4.71%, to $18.22 in recent trading. GMH Communities Trust ( GCT) slipped after the Newtown Square, Pa.-based property management company filed its delayed financial results for 2005.
In the fourth quarter, the company earned $3.8 million, or 10 cents a share, on revenue of $68.4 million. Funds from operations, a common way of measuring the performance of a real estate investment trust, totaled $16.4 million, or 22 cents a share. Wall Street analysts were looking for 23 cents a share. For all of 2005, the company posted income of $6.1 million, or 18 cents share, on revenue of $224.2 million. Funds from operations for the year totaled $45.3 million, or 69 cents a share. "We look forward to getting back on track with our SEC reporting obligations and the timely release of results of operations to our shareholders," Gary M. Holloway Sr., chairman, CEO and president, said in a statement. "The first half of 2006 required that we devote substantial attention to ensuring that our financial results are reported accurately, identifying weaknesses in our internal control over financial reporting, and placing an effective remediation plan into action." Shares dropped 55 cents, or 4.29%, to $12.27 recently. Bank of America ( BAC) said Chief Executive Officer Kenneth D. Lewis started a 10b5-1 plan covering the exercise of 4.1 million options to buy shares of the nation's second-largest bank over the next five months. After paying taxes and acquisition costs out of the exercise proceeds, Lewis will retain all of the shares and receive no additional cash. Lewis owned 6.6 million shares as of Dec. 31. The option exercises are scheduled to begin in late August and occur monthly through December. Lewis signed the plan after Bank of America reported second-quarter earnings on July 19 and after the board declared the third quarter dividend on July 26. Shares slipped 31 cents, or about one-half percent, to $51.35 recently.