Magazine article American Banker

Bisys Rating Cut over Restatement, Insurance Moves

Magazine article American Banker

Bisys Rating Cut over Restatement, Insurance Moves

Article excerpt

Shares of Bisys Group Inc. were downgraded Tuesday after the financial outsourcer and life insurance wholesaler warned that it would restate its earnings going back to 2001.

The New York company also said Monday that it would triple a charge it reported in its most recent statement to correct bad estimates on commission receivables in its life insurance division.

It further said it would delay the formal filing of its results for its fiscal third quarter, which ended March 31 (it announced those results in April). But it affirmed its estimate of a fourth-quarter profit of 16 cents to 18 cents a share.

The brokerage firm Robert W. Baird & Co. downgraded Bisys to "neutral" from "outperform," largely on worries that more bad news might be looming.

"While we believe new management brings an important higher level of scrutiny to the business, we are cautious until we are assured that all issues -- and their future impact -- have been identified," wrote analyst Carla N. Cooper in a note to clients. "Management is new to the insurance business and we harbor concerns that additional issues may impact future estimates."

Russell P. Fradin joined Bisys as president and chief executive in February. He succeeded Dennis Sheehan, who announced in October that he would step down for medical reasons.

For its fiscal third quarter Bisys took a pretax charge of $24.7 million to correct overestimates of projected commissions in its life insurance business. …

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