The CEO, CFO and deputy chairman of Baldwin & Lyons have all abruptly retired, and the property/casualty specialty insurer has retained an independent legal counsel to review issues the company said had been raised by their departures.
For now, the Indiana-based company is disclosing few details. However, letters from two of the departing executives point to a conflict with the board’s executive chairman over the company’s direction 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, which debuted in 1930, focuses on coverage areas including trucking and public transportation.
Cryptically, 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 noted 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 added that the board authorized an independent committee from among its membership “to conduct a comprehensive governance review,” and the independent council will assist both that and an investigation into issues raised within the executives’ written notices of retirement.
Baldwin & Lyons wasted little time in appointing both 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. 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.
A search is underway for a permanent CFO, with both internal and external candidates to be 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.
A Battle for Control
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.”