A&A names Kosnik to finance post

August 20, 1994|By Kim Clark | Kim Clark,Sun Staff Writer

Alexander & Alexander Services Inc. announced yesterday that it hired an executive known for reorganizing troubled companies as its new chief financial officer.

The financially strained New York-based insurance company, which has large operations in Maryland, said that Edward F. Kosnik would take over as executive vice president and CFO on Monday.

Mr. Kosnik, 49, was not available for comment yesterday. But in a printed statement, company Chairman Frank G. Zarb said he was "pleased to have an executive with [Mr. Kosnik's] breadth of experience join our management team."

"Ed has played a leadership role in helping his previous companies deal with challenging business environments," Mr. Zarb said.

Mr. Kosnik most recently served as chief executive officer of Rye Brook, N.Y.-based JWP Inc., a mechanical contractor and computer reselling company. He resigned the top spot at JWP in February, as that company filed for bankruptcy court protection.

Before that, he was chief financial officer of Penn Central Corp., then spun off the company's electronics manufacturing division, Sprague Technologies Inc., and served as president of that company from 1987 to 1992.

Those familiar with his performance at the three companies had mixed reviews of Mr. Kosnik.

Wayne Teetsel, an analyst who followed JWP Inc., said he was not impressed with Mr. Kosnik's work at the deeply troubled mechanical and service company.

Mr. Kosnik joined JWP as chief financial officer in 1992, when the company was already overwhelmed by debt, hemorrhaging cash and wracked by allegations of accounting improprieties.

Although Mr. Kosnik moved quickly up to CEO, settled lawsuits and was able to replace an involuntary bankruptcy filing with a pre-packaged voluntary one, JWP's stock is nearly worthless today, and its bonds are selling for about 20 cents on the dollar, Mr. Teetsel said.

But one of his former employees said Mr. Kosnik improved and expanded operations at another company.

Peter W. Maden, vice president of what is now the Vishay-Sprague Inc. plant in Sanford, Maine, said Mr. Kosnik improved the prospects of the 1,000-employee plant.

Mr. Kosnik took Sprague out of Penn Central, which wasn't really focused on electronics manufacturing, reorganized the company, and eventually sold it to Vishay, which specializes in electronics, Mr. Maden said.

He said Mr. Kosnik decentralized the operation, sold off some divisions and improved profitability. As a result, the core operations have expanded, Mr. Maden said.

Mr. Maden described Mr. Kosnik as a private, not particularly gregarious man, who is quick to screen out poor performers and clean up balance sheets.

"He's not a bad guy," Mr. Maden said of Mr. Kosnik.

He said he wasn't surprised that Mr. Kosnik, who has served as chief executive officer twice before, agreed for a No. 2 position at A&A. Each other time he moved up from CFO, Mr. Maden noted.

Mr. Kosnik's hiring is the latest in a series of moves to bring in new management and restructure A&A.

The company's troubles started in November when A&A 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.

Since then, the company, which has about 650 employees in Maryland, replaced its board chairman, and in June hired a new president, Mr. Zarb, the former vice chairman of Travelers Inc.

And the company halved its dividend, signed a letter of intent to sell a division and sold a $200 million stake to American International Group Inc.

The restructuring has been financially painful.

In the second quarter, Alexander & Alexander reported a net loss of $2.2 million on sales of $335 million, compared with net income of $13.1 million on sales of $342 million a year earlier.

A&A's stock rose 25 cents yesterday after the announcement, to close up at $20.25.

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