Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 30, 1994 TAG: 9401280031
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
His predecessor as president, Joseph Stephenson, was forced out last June amid criticism by the company's independent agents that ranged from his personal style to the company's inability to launch new competitive products.
The general agents, who are free to refuse to sell the company's policies, in an extraordinary move last spring sent a nine-page letter to the board and then made it public.
And in a move that threatened the confidence of customers as well as the agents, Best Insurance Reports lowered its rating of Shenandoah Life from A+ to A.
Clark, in interviews last week, said he is working quickly to mend both situations.
He hasn't "spent a whole lot of time" reviewing company files of the dispute with the 900 general agents. Instead, Clark has been calling and meeting them.
What he's learned, Clark said, is that the agents are no different from those of any other insurance company: "They'd like to see a good, clear plan of direction for the company."
So Clark said he intends to put forth a plan that establishes the kinds of products, the service and the marketing program the company will follow.
Such a plan, he said, will "help the agents grow. They want to grow with the company; I want to find ways to help them do that."
Shenandoah Life, he said, will have a very positive program committed to the success of the company, its agents and the community at large.
Independent agents can place their customers with any insurer they choose, Clark noted. "The company has to make itself attractive" in order to attract quality agents.
In dealing with the agents and other employees, Clark is acting as he did in his previous job as president of Meridian Life Insurance Co. of Indianapolis, Ind.
You work with people, Clark explained. You listen and understand. You learn what will help the agents, employees, policyholders and the company itself.
Clark's technique of listening seems to be paying off already with the Shenandoah Life General Agents Association.
Stephen B. Shane of Columbia, S.C., president of the association, had talked to Clark several times by phone and was due to meet with him face-to-face for the first time this weekend.
Clark left Saturday for St. Petersburg, Fla., and a meeting with 45 agency heads and top producers. The meeting, billed as "Taking Care of Business," will last through Wednesday.
Shane is "very much looking forward" to working with Clark.
"I was very impressed by the things he said over the phone," he noted.
Also, Shane said, "I'm impressed by what I heard about a changed atmosphere in the home office. I attribute that to his initial leadership position."
Clark, who turned 48 this month, strides purposefully along corridors inside Shenadoah Life's headquarters on Brambleton Avenue - usually in shirtsleeves - with his hands folded behind his back. He looks like a stereotypical general, plotting his next campaign.
A dapper man, he wears suspenders decorated with portraits of Einstein and a shirt with his monogram embroidered on the cuffs.
He has a relaxed manner but speaks rapidly.
His theory of management, he said, starts with a good plan.
Then, he said, "you have to involve everybody in getting there." It's critical, he said, that people in a company understand the rationale behind the plan and how you plan to get there.
After a plan and expectations, he said, people need good support and help in reaching the goals.
Finally, he said, you hold people accountable. "I have the most fun watching people be successful," Clark said. He likes to give good people the opportunity of performing well.
One of his initial projects is an attempt to simplify the company's organization, the chart for which fills most of the long table in the board room.
Clark has been meeting with department heads to discuss functions under their control in the preexisting organization chart which has a horizontal, flattened structure.
The goal of the discussions, he said, is to get the right functions under the right people.
Ratings have haunted Shenandoah Life, along with many insurance companies, in recent years and Clark also is considering a new strategy on ratings by outside agencies.
Because of the 1991 insurance crisis, financial planners and insurance agencies put great emphasis on these letter ratings. Consumers are told by the media to buy only from those companies with the very top ratings.
Last year, as the business of ratings grew more competitive, A.M. Best Co. restructured its grading system for its Insurance Reports publication.
In the process, it downgraded 172 insurers or about 30 percent of the companies it rates. That included 66 which had been rated A+ or "superior" such as Shenandoah Life. Of the 66 companies, 60 of them went to an A or "excellent" rating. That's where Shenandoah Life stands today.
"Shenandoah Life got caught with a lot of other companies," Clark said. Best changed its methodology and its rating criteria.
Best said at the time of the change that "the distinction provided through movements of ratings [particularly among the highest classifications] should not be construed as indicating the emergence of severe financial problems for a particular company."
A recent issue of The Insurance Forum, an industry publication, said that "most of the companies whose ratings were lowered from A+ to A or from A to A- did not experience a reduction in their financial strengths. Rather, Best apparently changed [its] criteria in order to reduce substantially the percentage of companies in the A+ category."
Even so, Clark conceded, the change is difficult for consumers, policyholders and agents to understand and accept.
Although Shenandoah Life has not yet reported its 1993 results - they will be announced at its annual shareholders meeting on Feb. 18 - Clark said the financials will show that the company did better than the previous year - a long-term trend. Its surplus, an insurance company's equivalent of capital or total worth, also has grown over the years.
The other rating companies - Standard & Poor's, Duff & Phelps and Moody's - all charge insurance companies about $30,000 for each annual survey compared to the $500 fee by Best.
Despite the high cost, Clark said he is looking at the possibility of paying for a rating by another company, probably Standard & Poor's.
Clark said he would like to see Shenandoah Life presented in a top category by more than one source. That would reinforce the company's position with consumers, he said.
Weiss Research Inc. rates insurers without charge. It makes money by selling its reports to consumers, and it is known for the extreme conservatism of its ratings.
Weiss rates Shenandoah Life as B or "good," which is a high rating for Weiss.
Weiss looked at Shenandoah Life as recently as Dec. 22.
Shenandoah, said a Weiss spokeswoman, offers good financial security and has resources adequate to meet a variety of adverse economic conditions.
But, in the event of a severe recession or a major financial crisis, Weiss said, the assessment should be reviewed to ensure the company retains adequate financial strength.
In an earlier report dated last May, Weiss added that Shenandoah Life:
Has good capitalization in relation to its exposure to investment risk. Capital is a cushion against the impact of a severe recession or other similar crisis.
Has good profit performance based on the results of the past five years.
Exercises strong premium-writing restraint in terms of the level of its obligations to policyholders. "It carries $3.56 of premium for every dollar of capital and surplus which means it is not likely to receive more claims than it can afford to pay."
Follows an investment strategy "which we consider fair in terms of its emphasis on safety and liquidity."
Has fair results on the Weiss stability test.
In summary, Weiss awarded Shenandoah Life a grade of B, its fifth highest rank.
Clark said Shenandoah Life is in no instance rated average or poor. It is always in the category of good, safe life insurance companies, he pointed out.
Last year's results can be made public only after auditing and filing with the State Corporation Commission. But already Clark is calling them "quite positive."
Recent years, he said, have been period of growth for growth in earnings and surplus.
The company's assets, he said, exceed $600 million.
Clark is defining a strategic plan for Shenandoah Life.
"We want to grow the company profitably," he said. The company wants to define the markets it should be in and "be very good at what we do."
Shenandoah Life, he said, should be a leader in good life insurance protection.
To these ends, the company is examining how it does things. Clark said he is listening to managers, employees groups and agents on methods of better delivering results.
If you want to succeed, Clark said, you take the best ideas from employee groups because they know the proper direction for the company to grow.
"I've been very pleased with the kinds of feedback we've been getting. It's very helpful," Clark said. He finds it rewarding to meet with employees in small groups.
This is in sharp contrast to criticism leveled just months ago against his predecessor. The general agents labeled him "authoritative" and said the company lacked good planning to successfully launch new products.
Shenandoah Life sells group life and health plans to corporate customers. To individuals, it markets life, health and annuity policies.
Clark said Shenandoah Life is in the process of reviewing its policies, looking for areas of improvement. It is seeking to develop new products and enhance its existing products.
Clark, who started his job with the new year, is "pleased to be here" and excited about all the activity. He "can't wait for the chance to implement things to help the company grow."
In his personal life, Clark says he misses his home and family. He is living in an apartment in Roanoke while his family remains in Indianapolis so his daughter to compete her last semester of high school.
His daughter has been accepted by two colleges and his son, who is a senior at Duke University, has affirmative replies from three medical schools. Each is still waiting to hear from more schools before deciding about the future.
Clark has attended a meeting of the Roanoke Regional Chamber of Commerce and will seek out ways to support the business community.
The Roanoke Valley is beautiful, he said, and he is committed to helping this part of Virginia "grow and grow well."
But some of his activities must wait until he settles down six months or so in the future.
Right now, he is putting in 12-hour days in a new job.
"There's a tremendous demand on my time to listen and learn," Clark said.
Keywords:
PROFILE
by CNB