James D. Wehr, New CEO At Phoenix, Takes Helm In Rough Seas
April 17, 2009
The company headquartered in Hartford's landmark boat-shaped building may be taking on some water, but the new CEO of The Phoenix Cos. doesn't see it running aground.
On the contrary, James D. Wehr, who took office Thursday as president and chief executive of the struggling company, believes there's plenty of life left in the 158-year-old life insurer. Wehr, 51, the company's former investment chief, succeeds Dona D. Young, who retired.
"I'm not Pollyanna," Wehr said in an interview Thursday. "I'm not coming into this with wild-eyed optimism. I'm coming into it with enthusiasm and excitement about the opportunity and the potential for this company, but very realistic about all of the risks and challenges this company faces."
The company, which posted a $726 million net loss for 2008, is reeling from multiple ratings downgrades, shrunken sales and a deflated stock price. Phoenix said Feb. 27 that it would cut "approximately 25 percent" of its 1,100 employees companywide "or more than 250 positions," but then major distributors, including State Farm, suspended sales because of the downgrades.
That would suggest it's more likely the cut will exceed 25 percent. Wehr wouldn't speculate on any new number but said Phoenix positioned it as "at least" a 25 percent reduction all along.
"We're not completely shut out or shut off" when it comes to sales, Wehr said. Phoenix is selling through other channels, such as smaller registered investment advisers, though at "much lower" volume than a year ago, he said, adding it is "consistent with what we would expect given the current environment and given our ratings."
The tough times mean Phoenix expects its charitable giving nationwide will be $1.9 million this year, down from $2.7 million in 2008.
The company has no current plan to sell and lease back its headquarters or move out of Hartford, and Wehr noted that it's not a good time for real estate deals. But he also said every strategic and operational option "needs to be on the table because when you're trying to manage expenses as aggressively as we are, you have to consider all the alternatives."
Wehr dismissed some people's notion that Phoenix is in "runoff" — just winding down its business.
"I don't see us that way," Wehr said. "We are developing new products, we are evaluating new distribution channels. We are spending an awful lot of time and attention with existing policyholders and annuitants to convince them Phoenix is still a good partner."
Phoenix is pointing to its low debt to capital ratio, lack of any debt maturing before 2032, and "a very strong and liquid investment portfolio," Wehr said.
He wouldn't disclose how many customers have cashed out of policies or annuities but said, "We're not seeing anything at this point that alarms us. We are not seeing anything that is unmanageable from our perspective."
Wehr, a 6-foot-3 former basketball and rugby player, is reaching out to employees, too, telling them in a memo Thursday he will hold informal "town meetings" with them to "keep current with your issues, ideas and concerns."
People who know Wehr called him personable, approachable, and collaborative. Wehr, of South Windsor, who beams over his three offspring in their 20s and golden retriever puppy, Georgia, has described himself as resilient, tough-minded and "optimistic by nature."
Phoenix faces serious challenges, but "challenges present opportunities," he said. "I'm looking at this as an opportunity to steer this company in the right direction in a very challenging environment."
"We are spending an awful lot of time and attention with existing policyholders and annuitants to convince them Phoenix is still a good partner."
Reprinted with permission of the Hartford Courant.
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