Sharply improving company fortunes do not always fatten the wallet of property-casualty executives, according to a new study from Morgan Stanley.

Property-casualty analyst William Wilt attempted to correlate 2005 executive pay–as gleaned from proxy statements–to company performance and other factors. He noted, however, that not all corporate moves or events that could have affected compensation were factored into the study of compensation of the five top executives at the seven companies in his coverage universe.

Chubb CEO John Finnegan's expense initiatives have resulted in executive compensation trending steadily lower, even as the company has improved its reserve, profitability and stock price, Mr. Wilt wrote.

The company's compensation packages were down 17 percent, compared with an 18 percent growth in net income, 16 percent growth in ROE and a 30 percent total return growth. “The company is focused on expenses and then some,” Mr. Wilt wrote.

Pay at two of the nation's largest personal lines insurers showed some inconsistencies.

“We were somewhat surprised to see even recent compensation levels at Progressive some two-to-three times greater than at Allstate,” Mr. Wilt wrote.

But while net income, revenue growth and return on equity figures were down at both Allstate and Progressive, the latter “delivered a nice total return and its ROE remained best in class.”

At Safeco, compensation remained generous in comparison to Allstate and Progressive last year. “Safeco continued to show strength in its turnaround story, though compensation was down in 2005 after doubling in 2004,” Mr. Wilt noted.

St. Paul Travelers executives enjoyed a good year, although compensation at the company has been a bit volatile. “The merger integration started to click, and the company still made a couple of billion dollars despite the catastrophes and another asbestos charge,” he wrote.

Special Reports /

P-C Exec Pay Not Always Tied To Results

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