Safeco Restructures At The Top
CEO McGavick to be supported by three co-presidents
Seattle-based Safeco announced a new leadership structure last week to take it through what the company terms its post-turnaround phase.
Current Safeco Chairman and Chief Executive Officer Mike McGavick will head a three-person "office of the president" that will include:
o Michael LaRocco as co-president responsible for product underwriting and claims.
Christine Mead as co-president responsible for service, technology and finance.
A new, yet-to-be-named co-president responsible for marketing, sales and distribution.
The new structure will take effect on Nov. 3. "Now that the turnaround is behind us, our greatest challenge is to accelerate organic, profitable growth within our company," said Mr. McGavick.
The announcement follows Safeco's recent sale of its life and investments business and the redefinition of its property-casualty insurance company serving drivers, homeowners, and small- and medium-sized businesses.
The moves came after years of sharp underwriting losses that led to the hiring of Mr. McGavick in 2001 to refocus the company. In the second quarter of this year, Safeco reported income per diluted share nearly double the prior year's result. It was also the ninth consecutive quarter the company beat analysts' estimates.
Standard & Poors analyst Polina Chernyak sees the restructuring as a logical outgrowth of Safeco's new focus on personal lines and small-commercial business. "They have to match the structure with the business model, which is what they are doing right now," she said.
While Ms. Chernyak said the current turnaround was a major accomplishment, she did note that the period of underwriting losses was during the soft market and the new direction benefited from the firming of property-casualty prices the past several years.
The company's sale of the life business did pose a risk of putting the company's fortunes solely into the hands of one sector, which can be dangerous, she said. "But at the same time it was good for senior management to focus on the company's core competencies," she added.
Reproduced from National Underwriter Edition, October 1, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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