Two top executives at California’s State Compensation Insurance Fund have resigned.
State Fund President and CEO Tom Rowe and Chief Financial Officer Dan Sevilla will resign from State Fund, the board of directors for California’s largest worker’s compensation provider announced on Friday following a closed session meeting.
“Rowe and Sevilla will step away from overseeing day-to-day operations immediately but will remain available for advice and consultation until the end of the year,” San Francisco-based State Fund said in an announcement.
It was not immediately know why the men stepped down, and the announcement came as a surprise to some.
“Certainly many people were surprised in the room when the board chair made that announcement,” said Jennifer Vargen, senior vice president of marketing and communications for State Fund, who was quick to point out the board was “very complimentary” of both men as they made the announcement.
Vargen couldn’t say why the decision was made, and she said the board hasn’t made that known.
“No reason was given,” she said.
Pressed about motives for the command change, Vargen replied: “These are voluntary resignations.”
A call seeking comment has been put into Lawrence Mulryan, the board chair. Rowe and Sevilla couldn’t immediately be reached for comment.
Board members contacted for comment weren’t saying much either.
“I can’t really talk about it,” said Bill Zacrhy, vice president of risk management for the Safeway supermarket chain.
Zacrhy indicated that personnel matters are not something he could speak about.
State Fund has been undergoing changes under a transformation plan adopted in 2010, with a massive restructuring that included layoffs and a new deal the required most of the roughly 5,000 brokers and agents the entity deals with to go through one of two wholesalers.
In 2010 State Fund announced its plan to reduce annual operating expenses by around $250 million a year. The restructuring decision followed a detailed review of State Fund’s business, including comparing State Fund to other state funds and specialty companies that write workers’ compens in California.
State Fund also reduced its workforce by more than 3,000 employees through attrition and layoffs.
Vargen referred to that restructuring when talking about the departure of Rowe and Sevilla
“A big transformation of this size is a long journey and it’s got a lot of different phases involved,” she said.
In its announcement the board said it has named Carol Newman, State Fund’s general counsel, as interim president effective immediately, and that it will immediately begin a search for a new CEO. The board named Pete Guastamachio interim CFO.
Newman has been with State Fund since 2008, and has career in insurance spanning more than 30 years. Guastamachio joined is State Fund’s Chief Investment Officer. He joined State Fund in 2009, and has more than 30 years’ experience in the financial world. He previously served as vice president-assistant portfolio manager for Bank of the West, and also served in a variety of positions with Argonaut Insurance.
Before Rowe took the helm of State Fund he was president of TRowe Strategies, and prior to that he served as area president of Arthur J. Gallagher from 2007 to 2008. His executive experience in the insurance industry dates back to 1986 at Fireman’s Fund Insurance Co., where he was senior vice president of national accounts and later president of the company’s commercial insurance division.
Financially State Fund appears to have done well under Rowe and Sevilla
In the statement put out by the board it was noted that over the past few years State Fund reduced annual operating costs since 2009 by more than $260 million dollars, more than 25 percent, and more than $150 million worth of policyholder dividends were declared in the past two years.
State Fund’s annual report for 2012 showed income before dividends totaled $458 million, which was $279 million more than the prior year, and that State Fund expects to achieve annual savings of more than $300 million by the end of 2014.