CalPERS-backed developer goes bankrupt

LandSource Community Developers, a giant real estate developer backed by the California Public Employees' Retirement System, filed for Chapter 11 bankruptcy. LandSource missed a $1.24 billion debt payment after the assessed value fell on 15,000 acres of undeveloped land it owns north of Los Angeles. (AP in The San Jose Mercury News) California is home to eight of the top 10 highest-risk U.S. housing markets, with one out of every 20 homes on notice of possible foreclosure. The state legislature hasn't made much progress on a slew of bills to address the crisis. "It's going to take some state going first, doing something meaningful," said housing lawyer Ellen Seidman. (Los Angeles Times, free registration)

British insurance broker buys U.S. rival

Britain’s Willis Group, the world’s No. 3 insurance broker, agreed to buy smaller U.S. rival Hilb Rogal & Hobbs for about $2.1 billion, including taking on $400 million in debt. It is the industry’s biggest merger since top broker Marsh & McLennan purchased Sedgwick Group in 1998. (Reuters) Buying Hilb Rogal will expand Willis’ U.S. business by about 50 percent. The merger was made possible by an agreement last week between the New York State attorney general and the top three brokers, allowing them to buy smaller rivals. More consolidation is expected. The agreement “opens up the domestic M&A game for the global brokers,” said Citigroup analyst Keith Walsh. (The New York Times)

Lehman Brothers seeks $6 billion after big loss

Investment bank Lehman Brothers said it expects to post a $2.8 billion quarterly loss, its first loss since going public in 1994, and said it will raise $6 billion in a stock offering. Lehman said it will issue both common and convertible preferred stock to bolster its capital base. The loss was much worse than forecast. ( Lehman said it sold $130 billion worth of assets last quarter, including mortgages and real estate, as it moves to avoid the fate of Bear Stearns. “ Although Lehman is very different than Bear, there’s one similarity,” said UBS analyst Glenn Schorr, “and that’s what could undo all the other positives: perceptions can become reality.” (Bloomberg)

The price of executive safety

Occidental Petroleum spent $774,756 to keep its CEO safe last year, installing an alarm system and hiring round-the-clock guards; Valero Energy, worth more than four times Occidental, spent $239 on its CEO’s security. Executive protection is a growing business, and how much a board approves for security depends on factors like the safety of the area, a CEO’s tenure, and the assessment of security advisers. Of 247 companies examined, Oracle is spending the most—$1.7 million last year to protect founder and CEO Lawrence Ellison. “It’s almost like an arms race as directors demonstrate how critical their chief executive is to the company,” says pay consultant Mark Borges. (The Wall Street Journal)