Swensen's Inc. said Wednesday that three directors have resigned because of the ice cream company's inability to secure insurance covering the board against lawsuits by customers and shareholders.
The Phoenix-based company, which operates 390 ice cream stores in the United States and 14 other countries and sells packaged ice cream to supermarkets, becomes the latest victim of a problem affecting a number of firms, especially banks. Soaring premiums and deductibles have pushed insurance coverage beyond the pocketbooks of many companies.
Swensen's insurance broker, Marsh & McLennan Cos., wasn't even able to "get a quote for a premium," said Larry Fields, a Swensen's spokesman. "Unfortunately, a lot of people don't feel comfortable sitting on boards unless they have that protection."
The resignations of Mary B. Galvin, Ira C. Herbert and Fred Krimm leave the company with two directors--Patrick J. Doughty, president, and the company's largest stockholder, Karl Eller. Eller, an Arizona-based businessman with interests in retailing, holds about 62% of the company's stock.
In an unrelated development, the company reported that a $1.98-million charge against third-quarter earnings resulted in a net loss of $1.9 million on revenue of $2.9 million for the period ended Sept. 30. That compared to net income of $169,000 on revenue of $3.1 million in the same period of 1984.
The company said the provision resulted from the write-down of "doubtful long-term notes receivable" from the 1983 sale of some company-owned stores.