Med Mal Exec Retiring Amid Controversy

Mr. Cheeseman was recently the target of harsh criticism from investors after the East Lansing, Mich.-based firm reported financial losses and reserve additions. (See NU, Dec. 1, page 12.) In the third quarter, the insurer lost $77.1 million, which included a $43 million reserve increase.[@@]

During a Nov. 13 conference call, the insurer's largest investors expressed their desire for Mr. Cheeseman's departure. "We really don't understand why you're still around," said one investor, whose sentiment was echoed by many others.

Oldwick, N.J.-based A.M. Best downgraded AP Capital to "B-double-plus (very good) from "A-minus" (excellent) following the announcement of the third-quarter loss.

Devin Inskeep, a financial analyst with Best, noted that the downgrade was mainly a reaction to the insurer's reserve adequacy problem. He also said that Best will be meeting with AP Capital management later this month to discuss the company's plans.

On Nov. 21, AP Capital retained the New York investment banking firm Sandler O'Neill & Partners, L.P. to explore potential options?possibly a sale of the company?an option favored by several investors who spoke during the conference call.

"The company would like to thank Bill for his many years of dedicated service to the company," said AP Capital chairman Dr. Thomas Berglund. "Bill was responsible for growing the company from its inception as a small mutual insurer into a publicly-traded corporation, and his many contributions are deeply appreciated."

Mr. Cheeseman's successor has not been named.