Executive Business Briefing

Here is a look at more of Tuesday's top business stories:

U.S. lending exposure to foreign borrowers declines

WASHINGTON, July 2 (UPI) -- The Federal Reserve Board said U.S. banks' lending exposure to foreign borrowers totaled $540.15 billion in March, down from $563.78 billion in December.

The latest figures on foreign loans, including derivative and foreign exchange products, with U.S. banks were contained in a quarterly survey of 78 banks conducted by the Federal Financial Institutions Examination Council and distributed by the Fed.

Of the total loans outstanding, excluding fluctuations in currency and derivatives values, $315.75 billion had maturities of less than one year, $70.18 billion had maturities of 1 to 5 years, and $74.47 billion had maturities of more than five years.

Of the total, $413.46 billion was owed to the five largest money center banks.

Residents of Germany had the largest outstanding borrowings at $102.77 billion, while the United Kingdom had borrowings of $52.51 billion, and Japan had borrowings of $21.91 billion.

Within Latin America, Brazil had outstanding borrowing of $26.75 billion, followed by Mexico with borrowings of $23.72 billion and Argentina with borrowings of $8.08 billion.

Executive trust remains favorable

WASHINGTON, July 2 (UPI) -- A new poll conducted by the Gallup Organization and the global financial services firm UBS showed the overwhelming majority of American employees continue to trust in the corporate executives who run the companies for which they work.

However, employees do not feel the same about corporate executives running other corporations, according to the Gallup/UBS employee outlook index which measures employee confidence and its role as one of the key indicators of the future direction and well being of the U.S. economy.

The report showed most employees are becoming somewhat less confident about the business outlook for their companies.

The Gallup/UBS employee outlook index declined for the second consecutive month in June, falling to 66 from 69 in May and 72 in April.

In June, 89 percent of the nation's employees surveyed said that they have a great deal, or a moderate amount, of trust in the executives running their companies.

This is essentially the same percentage as in April. Also in June, 89 percent of employees said they have a great deal, or a moderate amount, of trust in the people who handle the finances and accounting at their companies.

Virtually the same percentage took this position in April.

When asked their opinion of corporate executives, 87 percent say that the people who run the companies for which they work are honest and ethical. Only 54 percent said that they believe most corporate executives to be honest and ethical.

Similarly, 82 percent said that the people who run the companies for which they work are good leaders, while 67 percent believe that most corporate executives are good leaders.

And, 73 percent said that the people who run the companies for which they work are worth the money they earn, while 41 percent believe that most corporate executives are worth the money they earn.

Dennis Jacobe, Gallup's chief economist, said, "I believe that for the future of the U.S. economy, it is extremely important that employees continue to have a great deal of trust and confidence in the leaders of their companies, and that they remain highly engaged in their work."

Cincinnati Financial to record catastrophe losses

CINCINNATI, July 2 (UPI) -- Insurer Cincinnati Financial Corp. said it expects its property casualty insurance units to record catastrophe losses in the second quarter, largely due to an April storm, that will hurt after tax earnings by 18 cents a diluted share.

The company estimated the second quarter catastrophe losses would hurt by about $45 million before taxes, compared with pretax losses of $35 million, or 14 cents a diluted share on an after tax basis, in the same period last year.

Analysts on Wall Street were expecting the company to post earnings in the second quarter of 38 cents a share, according to Thomson Financial/First Call.

Cincinnati Financial also said it expected $35 million in losses greater than $1 million in the quarter, compared with $21 million last year.

The company said wind, hailstorms and associated floods during April, May and June, mostly in the Midwest and mid-Atlantic states, are the reason for the expected catastrophe losses.

The largest event was $22.8 million for a late April storm affecting policyholders across 13 states.

Five other storms contributed to the loss total, including three June events with preliminary loss estimates totaling $15.6 million, Cincinnati Financial said.

John J. Schiff, chief executive officer, said, "We dispatched storm teams to Kearney, Neb., and to Mason City, Iowa, to assist our local field claims representatives. We are in the business to pay claims promptly, fairly and personally, and our claims teams have done a good job of delivering on that promise.

"Business growth and rising loss severity continue to lead to higher total large losses. When we also experience higher frequency of these larger losses, the impact on our quarterly combined ratio can move outside the range that we have been experiencing," Schiff said.

"As we continue our efforts to ensure adequate pricing to compensate us for the risks we accept, we believe that over the longer term we will be able to maintain the ratio of larger losses to the total business in an acceptable range," he added.

Cincinnati Financial plans to report its second quarter results July 25.