Magazine article Risk Management

High Rate of Turnover for Insurance CEOs

Magazine article Risk Management

High Rate of Turnover for Insurance CEOs

Article excerpt

One in seven CEOs in the insurance industry left their position ill 2002--the third highest departure rate among all sectors, behind only telecommunications (15.8 percent) and utilities (15.6 percent), according to a Booz Allen Hamilton study. This is a significant change from the five years studied between 1995 and 2002, when insurance had one of the lowest turnover rates at 8 percent. In 2001, it was only 4.5 percent.

In nearly half of these successions, performance forced the CEO out of office. Many of these executives may have been victims of high expectations created by their own success, however, since insurance CEOs who later departed actually performed better for their shareholders in their first two years with 11.1 percent total shareholder returns, while other CEOs could offer only 4 percent.

Overall, financial services firms were the safest for CEOs with an overall 8.6 percent succession rate in 2002 and a five-year average of 6.6 percent. But among them, insurance company CEO succession rates are the highest and most variable. …

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