Three senior executives of specialty transportation insurer Baldwin & Lyons have abruptly retired and the insurer said it has retained independent legal counsel to review issues raised by their departures.
For now, the Indiana-based company is disclosing few details about the resignations of the firm’s chief executive officer, chief financial officer and deputy chairman. However, letters from two of the departing executives point to a conflict with the board’s executive chairman over the company’s direction, recent hirings and business practices.
Baldwin & Lyons announced on May 19 that Chief Executive Officer, Chief Operating Officer and President Joe DeVito; Deputy Chairman Gary Miller; and Senior Vice President and Chief Financial Officer G. Patrick Corydon had retired after 31, 51 and 38 years with the company, respectively.
The company noted in its announcement that it “retained an independent legal counsel to conduct a comprehensive governance review, including a review of certain matters brought to the board’s attention in connection with the retirements of…DeVito, Miller and Cordyon.”
At the same time, Executive Chairman Steven Shapiro thanked the executives “for their many years of service” and said in prepared remarks that the insurer’s succession plan is in force.
In a May 15 regulatory filing, Baldwin & Lyons elaborated further, noting that the three executives retired “due to their disagreement with respect to the company’s recent leadership changes, overall strategy and other matters.” The filing said that the board authorized an independent committee from among its membership “to conduct a comprehensive governance review,” and that the independent counsel will assist both that and an investigation into issues raised within the executives’ written notices of retirement.
Baldwin & Lyons immediately named permanent and interim replacements. W. Randall Birchfield, executive vice president of sales and underwriting, is the insurer’s new CEO and has joined the board of directors. Birchfield joined the company in September 2013 as vice president of Underwriting. Prior to joining Baldwin & Lyons, he was with Allstate Insurance Co., Farmers Insurance Co., American International Group and Progressive Insurance Co.
Michael Case, senior vice president of Claims & Legal, general counsel and secretary, has the added title of COO; and Douglas Collins, assistant vice president and director of Accounting & Finance, is interim chief financial officer.
The company said a search is underway for a permanent CFO, with both internal and external candidates being considered for the job.
Baldwin & Lyons said little else. But DeVito and Miller’s resignation letters, which the company included in a recent regulatory filing, add a few more wrinkles.
DeVito’s May 15 resignation letter and two follow-up letters suggest he had major issues with Shapiro and the board’s plans for the company, as well as what he perceived as diminished leadership resulting from Shapiro’s actions.
Among DeVito’s concerns expressed in his initial letter:
- That Shapiro’s nomination to executive chairman and subsequent actions he took “have significantly reduced my authority, and thereby my ability, to properly and appropriately run the company.” DeVito wrote that he believed Shapiro gained that position “not due to any qualifications or background that would merit the appointment but rather as a result of his family’s ownership of stock.”
“Absent that, he would not have been considered to be the person primarily responsible for the strategy and operations of our great company,” DeVito wrote.
- DeVito also took issue with Shapiro’s hiring choices, as well as some business decisions made under Shapiro’s chairmanship.
“Since the time of [Shapiro’s] assignment to Executive Chairman,…the company has become much more deeply engaged in a series of ever increasing and deepening related-party transactions, including insurance and investment activities, that have generated a series of inquiries, both internal and external. If we have any issues here, it puts the entire enterprise at risk, including our A.M. Best rating, major program customer and market value of the company,” DeVito wrote. “If there is even the hint of a problem, the rating goes down, we lose the largest program we have, and investors will flee. It is my strong recommendation that the board should immediately hire an independent counsel to investigate and report findings and action regarding all related-party transactions, both current and planned.”
Miller’s resignation letter, dated May 16 and addressed to DeVito, was much more brief. He explained that he would retire effective June 1, due to “the board’s recent changes in management and authority and the resulting changes in the company’s direction, culture and business practices.”
Shapiro has been lead director of Baldwin & Lyons since 2010 and was first elected to the board in 2007. He was elected executive chairman last October. Shapiro has been vice president of SF Investments (now New Vernon Wealth Management), a broker/dealer in securities since 1991, and is a principal and chief investment officer with New Vernon Investment Management. He has been a member of the Investment Committee and the co-chair of the Strategic Planning Committee at Baldwin & Lyons. Shapiro served on the board of directors of First Mercury Financial Corp. until its sale in February, 2011.
The insurer, which debuted in 1930, focuses on trucking and public transportation risks. Its subsidiaries include Protective Insurance Co. with licenses in all 50 states and all Canadian provinces; Sagamore Insurance Co., which is currently licensed in 47 states and authorized on an excess and surplus lines basis in Florida; Protective Specialty Insurance Co., specializing in E&S coverages and B&L Insurance, Ltd., which is domiciled and licensed in Bermuda. The insurance subsidiaries serve various specialty markets, including large fleet trucking and public transportation liability, transportation industry independent contractors, professional liability, property and casualty reinsurance, private passenger auto and small fleet trucking insurance.
Hollmer is editor of CarrierManagement.com, where this article originally was published.
Baldwin & Lyons CEO Joe DeVito’s resignation letter:
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