Gerken Giving Way as Chief Executive of Pacific Mutual

Setting the stage for the eventual passage of leadership to a younger generation, Pacific Mutual Life Insurance Co. said Wednesday that Walter B. Gerken, chairman of the Newport Beach insurance company since 1975, will step down as chief executive officer on Monday.

Replacing Gerken will be Harry G. Bubb, Pacific Mutual’s 61-year-old president and chief operating officer. Gerken, 64, continues as chairman but may relinquish that post next year. Pacific Mutual has a policy requiring executives to retire at 65.

Gerken, who joined Pacific Mutual in 1967 as a financial vice president, was named the company’s president in 1972 and was elected to the posts of chairman and chief executive three years later. Bubb joined the company in 1949 as a sales representative. In 1972, he was named a senior vice president and in 1975 was elected president and chief operating officer.

In a telephone interview Wednesday, Gerken said that Bubb will lead Pacific Mutual until 1990, when he reaches 65. Although insiders have speculated that Thomas Sutton, a Pacific Mutual executive vice president since 1984, is being groomed for the top job, Gerken said no decision has been made.

While Sutton “certainly is an outstanding candidate,” there are others, Gerken said, noting that the decision must be made by the company’s board of directors anyway. “It’s a fluid situation,” he said.

Although Gerken said the company’s retirement policy was “a key part” of his decision to step aside, he will continue to be active in Pacific Mutual’s day-to-day operations, at least for another year. It is “uncertain” whether he will remain as chairman beyond that time, said Robert Haskell, a Pacific Mutual spokesman.

Gerken, who maintains a rigid personal exercise program and is heavily involved in local civic and business affairs, said that even if he retires next year, he will continue to maintain his busy schedule.

“If my wife has her way, she will have me cut back a bit,” he said. “I intend to be an active kind of person and not vegetate.”

As previously reported, Pacific Mutual--the largest mutual life insurance company based in California and the 27th largest nationwide--had net earnings of $15.4 million during 1985, down 38% from $25.3 million in 1984. Assets at the end of 1985 were $4.6 billion, up 24.3% from the year before.

At year’s end, the company had more than $27 billion of life insurance in force and more than $15 billion in investment funds under management for outside clients.

Mutual life insurance companies are essentially cooperatives, technically owned by their policy holders.

Founded in Sacramento in 1868, Pacific Mutual wrote its first policy on the life of Leland Stanford, California governor, U.S. senator and the company’s first chief executive. Stanford died unexpectedly in 1893. The $11,784 that Pacific Mutual paid to Stanford’s widow enabled the university that bore the Stanford name to overcome the financial difficulties it was experiencing at the time.