NU Online News Service, July 6, 3:30 p.m. EDT

The task of John Wortman, who has announced his retirement, was not an easy one when he was hired as the new chief executive of Louisiana's homeowners insurer of last resort.

Upon Mr. Wortman's arrival in April 2007, Louisiana Citizens Property Insurance Corp. was in "great turmoil," said Louisiana Insurance Commissioner Jim Donelon. The insurer was plagued by news of misappropriations, mismanagement, a failing policy and claims system, and thousands of claims left from hurricanes Katrina and Rita.

Not to mention, Citizens was overgrown. Following Katrina and Rita in 2005, the state-run insurer had more than 170,000 policies by early 2008.

Mr. Wortman hired a new management team and "spent the next year overhauling Citizens from top to bottom to ensure a stable property insurance market of last resort," said Mr. Donelon.

New computer systems, application and underwriting procedures, catastrophe management plans, and a depopulation program are all due to Mr. Wortman, said Mr. Donelon.

"All these things–they don't get accomplished without a lot of hard work from a lot of people," said Mr. Wortman, who ran a consulting firm prior to joining Citizens. "I am very pleased and proud. I believe the competitive market is better than it was."

Citizens now has 127,000 policies after three rounds of offerings to the private insurance market as part of the depopulation program. The insurer closed 63,640 of 66,490 Katrina claims, paying out about $1.37 billion.

The insurer also has more money thanks to Mr. Wortman, according to Mr. Donelon. In refinancing some bonds, Mr. Wortman saved Citizens $15 million per year and then used his reputation in the insurance industry to get a bond that allowed Citizens to pursue the appeal of a class-action lawsuit against it, Mr. Donelon said.

This was one of the most important contributions Mr. Wortman made, Mr. Donelon said, noting that if Citizens had not been able to appeal the class action suit, policyholders would have been assessed to help pay for the damages.

Mr. Wortman said he will remain with Citizens until a successor is named to make certain of a smooth transition.

Special Reports /

Retiring CEO Of La. Residual Insurer Credited With Turnaround

Related Stories

Recommended For You