General Motors took the first step toward a new public offering last week with the filing of a massive Form S-1 with the SEC. While exact terms of the offering are not known yet, Barron’s has estimated that the IPO transaction may be worth $15 billion and would result in a market capitalization of $60 billion. With the United States Treasury owning over 60 percent of the company, the IPO represents a partial exit strategy for Uncle Sam and an opportunity for GM to shed the “Government Motors” stigma that has negatively impacted consumer perceptions. However, aggressive pension plan assumptions could still sink the company in the long run. Read this article for more information.
Last week, Munich Re announced strong investment returns but warned that low interest rates could impact results going forward. In an interesting interview with The Financial Times, Nikolaus von Bomhard, CEO of Munich Re, explains the challenges facing insurers due to easy monetary policies that have sent interest rates to record lows in many developed countries. Mr. von Bomhard expressed some support for a low rate policy intended to boost the economy but he sees broader implications, some of which are not widely discussed. Read this article for more details.