James V. Rosati, a banking and investment executive and current chairman of the R.I. Airport Corp., has been selected to serve as president and chief executive officer of Beacon Mutual Insurance Co., Rhode Island’s largest workers’ compensation writer.
The naming of Rosati brings to a close a five-month national search for a new president for the 250-employee company. Officials hope it also signals an end to the political battles, executive firings and bad publicity that have haunted the insurer for the past year.
Beacon’s former president and CEO, Joseph Solomon, was fired along with the chief underwriter last April, after an audit headed by former Gov. Lincoln Almond found evidence of possible favoritism for certain large clients and agencies and lavish expenditures.
“Today’s announcement is a major step in the continuing process of restoring faith in The Beacon with our policyholders, regulators, employees and members of the Rhode Island business community,” Carl Hayes, chairman of Beacon’s board, said.
Beacon Mutual is a nonprofit independent corporation created by the state in 1991 to provide workers’ compensation insurance. It controls more than 90 percent of the market.
Rosati will replace Clifford Parent, the vice president of claims, who has served as interim president since Solomon’s departure in April.
Rosati brings more than 25 years of executive management and financial experience to the insurer. He has been an investment banking partner with the merger and acquisition firm Riparian Partners in Providence since 2002.
Since 2003, Rosati has also been chairman of the board of the R.I. Airport Corp. The public agency with assets of over $530 million oversees Rhode Island’s six state-owned airports including T.F. Green Airport.
From 1994 to 2002, Rosati served as chief executive of the Cookson Group’s Worldwide Telecommunications Division. While in this position, Cookson became a worldwide market leader in fiber optic telecommunications systems.
Rosati also served as a chairman, president and chief executive officer of Old Stone Bank from 1991 to 1993. He served as executive vice president of the bank from 1984 to 1991.
He has been on the board of the Providence Mutual Fire Insurance Co. since 1993.
The appointment met with praise from Gov. Donald Carcieri, a critic of Beacon management, and someone who has worked with Rosati.
“During our time together at Old Stone Bank and Cookson America, I came to recognize that Jim is one of the most talented managers I have ever worked with. He has demonstrated great success managing companies with billions of dollars in assets and thousands of employees and customers. As someone with tremendous standing in the business community, Jim will be able to restore Beacon’s reputation,” Carcieri said in a statement.
Carcieri has played a role in the management overhaul of Beacon. He opposed some of the legislative moves taken by the insurer under Solomon and he has pressured the company to revamp its board and top management ever since the Almond Committee audit was released.
While Carcieri has named several new Beacon board members, he has also tried unsuccessfully to remove others.
The board consists of four members appointed by the governor, three representing policyholders, the director of the Department of Labor and Training, and the company’s chief executive officer.
Meanwhile, the Carcieri Administration’s Department of Business Regulation has been working on a market conduct examination of Beacon.
Rosati acknowledged that Beacon’s problems are not all resolved. He vowed to cooperate with DBR in its exam and “address any issues raised in their report in an open and transparent manner.”
In his statement, Rosati acknowledged the employees, agents and policyholders who have stood by the insurer during the past year “under adverse and stressful conditions.”
“We will turn the corner and demonstrate that this company will operate in an equitable and professional way,” he promised. “All policyholders need to feel confident that their policies are being priced fairly and competitively.”
Rosati joins a company where the current board and interim president had already begun to change the tone and patch up relations with Carcieri, the DBR and policyholders.
When Solomon was president, the company was at political odds with Carcieri. The Solomon management team lobbied to reduce the governor’s appointments to Beacon’s board and also sought authority to expand the company beyond the state’s borders, moves Carcieri opposed.
Current Beacon management says those politics are behind the company and they have no interest in fighting with the governor.
“Governor Carcieri has been a critic of Beacon during the course of the year, and for many reasons rightly so,” Hayes, chairman of the Beacon board, told Insurance Journal in an interview before the new president was named. “Our approach to the governor is that we want him to be an advocate for Beacon. We want to demonstrate the changes that are happening down here, and we want his support. That is our philosophical approach with this governor. He is going to be in place for five years and we want to work with him.”
In September, interim CEO Parent sent a letter to policyholders in which he stressed that the company was busy implementing the recommendations that came out of the Almond Committee audit and was cooperating with the DBR market conduct exam. Parent told policyholders that in addition to searching for a new chief executive, the company had also been redesigning its pricing policies, reviewing internal audit and finance functions and establishing an internal ethics and compliance function.
The turmoil at the top and the bad publicity have apparently not hurt Beacon’s everyday operations or business. In an interview with Insurance Journal before the executive search had been completed, Hayes and Parent pointed out that while for all of 2005 before any controversy the company retained 91 percent of its accounts, for 2006 through the end of September, the retention rate was still 91 percent.
“We’re the type of company where policies do leave us and come back to us. It’s that type of business. I think all insurance is like that. People move and try another carrier. But we’re not seeing a large loss of business,” Parent said.
Hayes, chairman of the Beacon board, maintained that despite all the turmoil, the company has been running smoothly.
“One thing that is interesting during the past year when there has been intense review of Beacon, there has been no question about the excellent claim service, the excellent service that all the policies get. Because of that, people stay here for the claims processing; they stay here for the service; they stay here because it’s a Rhode Island company, and they know it’s right around the corner. Yes, certainly some are troubled by some of the things that have happened here this year. But nobody’s questioned the service they’ve been getting. We believe our customer base will stay with us because of that. That’s the foundation at least,” Hayes said.
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