New Beginnings for 119-Year-Old Pacific Mutual : Gerken Stepping Out After 12 Years at Top; 5 Given Promotions
In a smooth and expected transition, Harry G. Bubb will replace Walter B. Gerken as chairman of Pacific Mutual Life Insurance Co., the state’s largest life insurance firm, the Newport Beach company said Thursday.
Bubb, 62, who took over Gerken’s post of chief executive officer last year, will add the new post on Sept. 1 when Gerken, following longtime company policy calling for retirement at age 65, steps down after 12 years at the top.
At the same time, Thomas C. Sutton, 45, executive vice president for individual insurance operations, will take over Bubb’s duties as president of Pacific Mutual, the nation’s 24th-largest life insurance company. Sutton will also become a director.
The company’s board of directors, which made the changes at a special meeting Wednesday, also promoted three other executives: Harold T. Joanning, 60, to executive vice president for finance and administration; Arthur M. Kesselhaut, 52, to Sutton’s current position, and Glenn S. Schafer, 37, to senior vice president and chief financial officer.
Under Gerken’s tenure, Pacific Mutual nearly quadrupled its size, hitting $5.5 billion in assets at the end of 1986, compared with $1.4 billion when he took over as chairman and chief executive officer in August, 1975. The company’s gains from operations--the equivalent of net income--soared to a record $30.8 million in 1983 but have since fallen to $9.3 million last year, down from the $12.1 million in gains during his first full year at the helm.
Higher sales costs, higher policy reserves for future benefits, pension fund adjustments and competition caused the lower earnings in the last few years.
The company also has $30.7 billion in life insurance in force, more than three times the amount of 12 years ago.
“I am proud of the company’s growth while I was here, and I anticipate even greater progress will be made in the years to come,” Gerken said.
Gerken, who turns 65 Aug. 14, said he favors mandatory retirement for top management because the 119-year-old company can better attract top-quality executives by letting them realize “that the top spot is attainable.”
Going Fishing--for a While
“No one should be indispensable,” he said in an interview Wednesday before leaving for fishing on Crab Lake near a home he owns in northern Wisconsin.
But Gerken does not plan to while away his retirement years on Crab Lake--which, he joked, “was named after me.”
He will remain on the board and head the company’s executive committee, which reviews investment policy and transactions monthly. He has also been named a Regents professor and will teach at UC Irvine’s graduate school of management this coming academic year. He also has a consulting contract with the company that will allow him to act as an emissary for Pacific Mutual to the outside world.
“I put a lot of time and effort into outside affairs,” he said. “A lot of my involvement should inure to the benefit of the company.”
Indeed, Gerken has a laundry list of civic, cultural, educational, business and political activities he has engaged in over his 20-year career with Pacific Mutual.
Headed L.A. United Way
He is, for instance, a director or trustee on the boards of United Way of America, Orange County Performing Arts Center, California Nature Conservancy, Hoag Memorial Hospital Foundation Presbyterian, W.M. Keck Foundation, Carter Hawley Hale Stores Inc., Whittaker Corp., Southern California Edison Co. and Times Mirror Co., owner of the Los Angeles Times.
He was chairman and remains a director of United Way of Los Angeles, Occidental College and the California Business Roundtable. He was co-chairman of the publicity commission for the Los Angeles Olympics.
He has also held board seats on the Los Angeles World Affairs Council, the Automobile Club of Southern California, Wesleyan University and KCET, the public broadcasting channel in Los Angeles.
