Best’s News & Research Service - October 03, 2012 03:06 PM (EDT)
Hawaii Employers' Mutual Names Former Employers Holding President as New CEO
HONOLULU //BestWire// - Hawaii Employers' Mutual Insurance Co. has tapped the president and chief operating officer of Employers Holding Inc. to fill the shoes of its retiring chief executive officer.
Martin J. Welch was also named senior underwriting executive of the workers' compensation insurer by HEMIC's board of directors, following what the insurer called "a long and carefully executed succession process."
"We considered an array of well-qualified candidates but Marty stood out," retiring CEO Bob Dove said in a statement.
Welch has more than 30 years experience in workers' comp and commercial property/casualty insurance, according to HEMIC. Employers Holding, where he was COO, is a publicly traded workers' comp specialty carrier based in Nevada. Prior to this position, he spent 25 years with the former Wausau Insurance organization, serving in various underwriting, marketing, management and executive roles, HEMIC said.
HEMIC is a private mutual insurance company formed in 1996 by the Hawaii State Legislature and governor to provide a market for employers seeking workers' compensation coverage, according to BestLink, A.M. Best's online financial system (www.ambest.com/bestlink). The company serves as a competitive market participant, as well as the insurer of last resort in Hawaii.
Although HEMIC is the state's insurer of last resort, the company's combined ratios have outperformed its peers on both a five and 10-year basis, according to BestLink. This is primarily due to disciplined underwriting, conservative reserving practices and substantial reserve releases. However, in recent years the company's underwriting results have been negatively impacted by significant declines in premium volume driven by premium rate reductions, competition and reduced payroll due to the economic impact on the exposure base.
Dove was a participant at a 2011 A.M. Best Co. webinar, "State of the State Compensation Funds and Workers' Compensation Markets." During it, he said his state has seen significant loss-cost decreases that led to rate decreases, but they moderated in the third and fourth quarters of 2010 (Best's News Service, June 10, 2011). He had said payrolls have stabilized, but there had been no significant growth. Hawaii is also an active captive domicile, and Dove had said when premiums start to rise, more businesses will look for alternatives to paying premiums, such as captives.
During the webinar, Dove said his philosophy is not to exceed a combined ratio of 100, but his company projected a 104 for 2011. "Those extra four points hurt, but they're necessary in this marketplace," he said. The company had a 2011 combined ratio of 108.3, but a five-year average of 93, according to BestLink. HEMIC had a net income of $8.2 million in 2011.
"Our volume is off significantly but that is due to the role we play and the underwriting and pricing discipline that we have to employ if we’re going to be prepared to step back in when the industry becomes less aggressive," Dove said during the webinar.
Hawaii Employers' Mutual Insurance Co. currently has a Best's Financial Strength Rating of A (Excellent).
(By Rick Cornejo, managing editor, BestWeek: rick.cornejo@ambest.com)