Chief Executive Officers of insurance companies are selecting insurance experienced independent directors and expanding their role as Independent Directors. Independent Directors are called upon to find new growth opportunities for the insurance company. Acquiring another insurance company, acquiring another insurance product line, purchasing a managing general agency or a wholesale broker helps the CEO grow his insurer.
Independent Directors may be appointed by the private equity firm/asset manager/institutional investor when they acquire 8.3% of the stock of the insurance company. The equity insurance stock analyst usually has no operational insurance experience and must rely on models to formulate buy or hold or sell recommendations.
Expanding the role of an Independent Director may include:
– Evaluating potential acquisition opportunities
– Visiting Standard & Poor’s, Moody’s, Fitch, and A.M. Best Company regarding the financial rating of the insurance company
– Negotiating the Fronting Agreement for the Captive Insurance Company
– Negotiating with the Executive Recruiter on the selection of a CEO for the perpetuation plan
– Evaluating the selection of an insurance and reinsurance litigation attorney
– Visiting a retail insurance broker
– Evaluating asset management company
– Selecting the independent auditor of firms such as Price Waterhouse, DeLoitte, KPMG, Ernst & Young, and BDO accountants
– Evaluating the performance of the reinsurance broker
– Critiquing the actuarial report
– Selecting another director
Chief Executives are expanding the role of the Director.
Written by Andrew Barile, MBA, CPCU / abarile@abarileconsult.com
