Deals & People March 29, 2009

Barclays to Wrap Up iShares Bidding

Private equity consortiums pursuing Barclays' iShares investment unit have until Sunday to submit binding bids, unnamed sources told Reuters.
Reported by

According to Reuters, a source indicated that a consortium, including San Francisco-based Hellman & Friedman and London headquartered Apax Partners, plans to submit a bid of around $5 billion. The Hellman & Friedman-led consortium entered into talks for iShares before other parties, the sources said, and is seen as a frontrunner by others, despite a recent widening of interest in the company.

Analysts and media reports have variously put the value of iShares — the index-tracking investment arm of Barclays Global Investors — at between $4.3 billion to $7.2 billion.

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A deal could be concluded next week, before the Tuesday deadline to join the British government-backed scheme designed to protect bank assets against potential future losses, according to Reuters.

Barclays said it does not need to raise any fresh capital after Britain’s Financial Services Authority subjected the bank’s finances to “a detailed stress test”.

Fund company The Vanguard Group and Goldman Sachs are also pursuing iShares, according to media reports.

Data & Research March 29, 2009

Retiree Health Care Estimate Jumps 6.7%

The latest Fidelity Investments retiree medical expense estimate is that a 65-year-old couple retiring in 2009 will need approximately $240,000 to cover the cost of medical care – a 6.7% hike over the comparable 2008 figure.
Reported by

A Fidelity news release said the figure has skyrocketed by 50% since the $160,000 estimate issued in 2002.

Fidelity said the jump in the retiree health care cost estimate from 2008 to 2009 can be attributed to a number of factors including higher costs (e.g. for doctor’s visits, diagnostic tests); increased expenses associated with new technology; and general price inflation (see “Retiree Health-Care Costs $225,000“).

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“American households, already under strain from the difficult economy, are facing another challenge to their financial security in retirement as medical costs continue to rise steadily,” said Brad Kimler, executive vice president of Fidelity’s Consulting Services business, which calculated the retiree health care cost estimate, in the announcement. “With employee-sponsored retiree health care coverage on the decline nationwide, it is imperative that today’s workers begin to set aside money themselves for medical expenses in retirement as part of their overall retirement strategy.”

The announcement said the 2009 figure continues to assume individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program Medicare. It also assumes life expectancies of 17 years for a male and 20 years for a female

The Fidelity estimate takes into account cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance) and considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Medicare.

The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.

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