Alexander & Alexander chairman steps down

January 18, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

The chairman and chief executive of Alexander & Alexander Services Inc. announced his retirement yesterday, taking the fall for a prolonged earnings slump at the New York-based insurance brokerage company, which has its operations headquarters in Owings Mills.

Tinsley H. Irvin, 60, said he will step down immediately as chairman but will stay on as chief executive while the company seeks a replacement.

In a statement, the company said Mr. Irvin had agreed to step down because "in order to . . . effect improvements in operations and earnings, significant changes in leadership of the company are necessary."

The new chairman will be Robert E. Boni, the retired chief executive of steel manufacturer Armco Inc.

Mr. Boni, who has been on the Alexander & Alexander board for five years, is credited with fixing problems at an Armco insurance subsidiary, company spokesman Gary Sullivan said.

"Everyone agreed there has been progress, but Mr. Irvin and the board agreed it's time to accelerate the pace of change," Mr. Sullivan said. Mr. Irvin, who has been with Alexander & Alexander since 1953, will also remain as director.

Alexander & Alexander said it has decided to separate the roles of chairman and chief executive, so the company's next day-to-day leader will not also hold the top spot on its board. In addition, the company said its board's executive committee will "assume added responsibilities for oversight of company policy and management controls."

Mr. Sullivan said the change is expected to have little immediate impact on operations in Maryland. The company employs 850 people in Owings Mills and at a sales office in downtown Baltimore.

The news provoked little immediate reaction yesterday on Wall Street, where Alexander & Alexander stock closed up 25 cents, at $19.50.

Ira Malis, an insurance analyst for Alex. Brown Inc. in Baltimore, said Alexander & Alexander has been hampered by a disastrous 1982 acquisition of a United Kingdom insurance brokerage and underwriting firm.

In addition, the property-casualty business has been in an unremitting slump since before Mr. Irvin became chief executive in 1987.

"Not one day he's been running the company has there been a good insurance market," Mr. Malis said.

But the analyst said it was clear that the company, which has been rumored as a takeover target as its stock price has fallen more than 50 percent since 1986, had to do something. Rivals such as Marsh & McLennan Cos. were coping with the down market much more effectively, he said.

The weak profits in the core business translated into recent losses at the corporate level. The company earned $68.4 million in 1987, but by 1992 the bottom line was a $94.1 million loss for the year.

The company earned $19.2 million in the first nine months of 1993.

Mr. Alexander said the company had taken a number of steps to reverse its decline, including getting out of the insurance underwriting business, which is riskier than brokerage.

But other problems continued to dog the company. In November, it fired five executives and was forced to restate its earnings for the past 2 1/2 years because the company's consulting unit had failed to establish proper reserves for uncollectible bills.

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