T.Rowe results should get boost from $100 mln insurance recovery

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By Ross Kerber | BOSTON

BOSTON T. Rowe Price Group Inc. recently disclosed an insurance agreement to recover $100
million after it made a proxy voting error, which should help
the Baltimore fund manager’s results due to be reported next
week.

In a securities filing earlier this month T. Rowe Price of
Baltimore said it has recognized the insurance recovery in its
fourth-quarter results, to be reported next week, offsetting a
$166 million operating charge it took in the second quarter.

T. Rowe Price’s investment team had opposed a $25 billion
private buyout of Dell Inc in 2013, concerned the deal
undervalued the computer maker. But in a rare blunder, T. Rowe
Price mistakenly voted clients shares “for” the merger.

After a court dispute, T. Rowe Price made payments to
clients to compensate them for the difference in valuation that
other investors who opposed the deal were able to pursue.

The company is due to report fourth quarter results on Jan.
26. Analysts surveyed by Thomson Reuters I/B/E/S on average
expect the company to report earnings of $1.38 per share.

In a research note on Thursday Jefferies analyst Daniel
Fannon raised his fourth-quarter earnings forecast for the
company to reflect the insurance agreement. He estimated it will report earnings of $1.50 per share, up from his previous
estimate of $1.23 per share.

T. Rowe Price said in the Jan. 4 securities filing that
remaining insurance claims tied to the Dell matter could result
in an additional recovery of up to $50 million. Such money would
be recognized in the period that agreements are reached with
carriers, T. Rowe Price said.

A spokesman for T. Rowe Price, Brian Lewbart, said on Friday the claim is still pending. He declined to name the company’s
insurers.



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