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

By Ross Kerber

BOSTON (Reuters) - 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.

(Reporting by Ross Kerber; Editing by Chizu Nomiyama)