20th Century Names New President : Melville Windle, General Counsel, Takes the Helm

In 1986, 20th Century Industries named Neil H. Ashley as the new president and chief operating officer of the Woodland Hills insurance concern. Ashley, then 63, a lawyer by trade and 20th Century’s general counsel, had joined the company three years earlier after a long stint at another insurance company.

Now Ashley, 66, is about to retire. So 20th Century, the holding company for 20th Century Insurance, last week announced his successor: Melville P. Windle, 63, a lawyer by trade and 20th Century’s general counsel who--you guessed it--joined the company three years ago after a long stint at another insurance company.

That’s just coincidence, said Louis W. Foster, 20th Century’s 76-year-old founder, chairman and chief executive. Foster is still 20th Century’s guiding force, although he leaves the day-to-day operations of the auto and home insurer to the company’s president.

But one thing is for sure: the selection of Ashley and now Windle as consecutive presidents at their relatively late ages shows 20th Century has yet to choose a long-term successor to Foster to lead the company into the 21st century.

Companies such as 20th Century that are headed by one person for decades run the risk of not having a strong management team waiting in the wings when that person finally leaves. Indeed, in the mid 1980s, 20th Century was criticized by some analysts for lacking management depth.

But Foster responded by hiring Windle and others and promoting some executives from within. And he said last week that Windle’s appointment as president will enable 20th Century to continue grooming several younger executives to one day head the company.

“I agree wholeheartedly that when you get to the point where you’re just a drag on the institution, you should make room, and God knows I’ll do that,” said Foster, who also owns 9% of 20th Century’s stock. But for now, he said, “I don’t think I interfere. If anything, I give them a slap on the back of encouragement.”

In the meantime, Windle plans “to continue things as they are until I have the opportunity to get my feet settled in.” But he does not plan to be an idle, short-term caretaker. “I didn’t come here to work and then leave at 65,” he said. “I fully intend to stay maybe another five, six, seven years.”

And he’ll have plenty to keep him busy. Tops on the list: Proposition 103, the insurance reform measure passed by California voters last November that could be a major drag on 20th Century’s profitability.

A key provision of the proposition calls for insurers to roll back premiums to 20% below the levels of November, 1987. Last Friday, however, 20th Century joined other insurers in asking the state insurance commissioner to keep its current rates intact.

But Proposition 103 carries other ramifications that could uniquely hamper 20th Century because of its unique operating style.

The company has always insured only good drivers and offered low rates in return. It will not insure Porsches and certain other sports cars, because statistics show that such cars often are used for speeding and could end up in accidents. Those finicky requirements keep a lid on 20th Century’s claims costs. Also holding down costs is 20th Century’s refusal to use media advertising or agents; nearly all of its business is handled by phone or mail.

20th Century, which also has offered homeowners insurance since 1982, operates mostly in Southern California and insures 800,000 vehicles and houses.

The strategy has made 20th Century one of California’s biggest and fastest growing insurers. In 1988, 30 years after Foster started the company in a one-room office, 20th Century earned $58.5 million on revenue of $622.1 million.

But Proposition 103 is about to change 20th Century’s habits. The measure also mandates that insurance companies accept customers who have one traffic ticket and an as-yet undetermined number of accidents, Windle said. At present, such a driver probably would not get 20th Century’s coverage, although the company last year set up a new division, called 21st Century, that accepts some of these “standard risks” and charges a higher premium.

Windle said it appears Proposition 103 means 20th Century will be forced to offer standard-risk drivers its normal coverage. But the question is: Will 20th Century also offer them its normal low price, when in fact 20th Century views such drivers as being riskier, thus potentially more expensive to cover and a threat to its earnings? Or could 20th Century somehow enroll them, but at higher prices?

“I won’t speculate on that,” he said, adding dryly, “It’s an interesting challenge.”

He acknowledged, however, that 20th Century’s customer list “is going to change, and I won’t deny that we’re a little unhappy about that. But 103 was passed by the voters and we’ll live with it.”

Windle came to 20th Century because he was unhappy with the prospect of retiring at age 65. A native of Huntington, W.Va., he moved near Pittsburgh as a teen-ager when, as World War II broke out, his father sought work building ships. After a stint in the Air Force, the younger Windle earned a law degree at the College of William and Mary, briefly practiced family law in Norfolk, Va., and joined Nationwide Insurance Co. as a claims attorney in 1956.

A decade later, Windle joined Transamerica Insurance and served in various management positions both on the East Coast and in Los Angeles. By the early 1980s, Windle was Transamerica’s general counsel.

But changes in Transamerica’s management, and a mandatory retirement age of 65, prompted Windle to look elsewhere. He’d known Ashley, and saw that someone could keep working at 20th Century past 65. (20th Century also has a mandatory retirement age of 65, but its board of directors can make exceptions, Foster said.) So when Ashley was elevated to president in 1986, Windle replaced him as general counsel.

Besides sorting out the impact of Proposition 103, Windle has other goals. Before he leaves, he wants to see 20th Century grow to $1 billion in revenue. To accomplish that, he also wants to lead 20th Century’s expansion into Northern California within in the next few years.

But he said 20th Century’s low-rate, preferred-driver, no-agent style is “something you don’t want to tinker a helluva lot with.” For now, that also goes for its personnel.

“It’s an unusual group of people,” Windle said of 20th Century’s work force. “They’re more like a family than a business, and Lou Foster is the head of the family.”

And when might Foster eventually step down? Foster said he does not know, but allowed that “for the first time in my business career, I’m thinking about it.”