S&P: No Rating Action on HRH After Lockhart Resignation

May 31, 2005

Standard & Poor’s Ratings Services has indicated that it is not taking any rating action on insurance broker Hilb, Rogal & Hobbs as a result of the company’s announcement that its president and chief operating officer, Robert Lockhart, has resigned (See related article).

“In a Form 8-K filed yesterday, the company stated that the resignation followed a review of the company’s business practices,” said S&P. “This review determined that beginning in 1998, an employee in the company’s Hartford, Conn., office arranged or attempted to arrange for payments to be made to the company–or by the company–in connection with the placement of professional liability insurance policies for three different organizations, which might have been improper.”

S&P noted that “HRH has been reviewing its business practices over the past year in conjunction with broad investigations of anticompetitive practices throughout the insurance and insurance brokerage industry. As a result of the internal review, the company has terminated the employee involved with the placement of the professional liability insurance and placed another on administrative leave pending the findings of ongoing investigations.”

S&P said it did not “believe that the financial implications of this development will be material to the rating.” However, the rating agency expressed concern “that the absence of a President and COO could lead to management challenges over time.”

The rating agency said it would “continue to monitor the situation closely for any further developments that could affect the rating.”

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