Pacific Mutual Announces New Leadership, Management Structure

Pacific Mutual Life Insurance announced Wednesday that President Thomas C. Sutton will take over as chairman and chief executive of the Newport Beach firm on Jan. 1, upon the retirement of Harry G. Bubb.

In addition, directors promoted William D. Cvengros to the newly created positions of vice chairman and chief investment officer.

Sutton, 47, and Cvengros, 40, represent the youngest leadership team in Pacific Mutual’s 121-year history.

“While I am proud of Pacific Mutual’s development in recent years, I am confident that Tom and Bill will build on that foundation,” said Bubb, who turns 65 in December and will remain on the company’s board as chairman emeritus.

Pacific Mutual is the largest life insurer in California and 25th largest in the nation with more than $25 billion of life insurance in force and $27 billion in assets under its management.

With the new leadership will come some structural changes.

Instead of being run by a chairman-president team, Pacific Mutual will be in the hands of Sutton, who will have overall responsibility for operations. The position of president will be abolished.

Bubb served as president of Pacific Mutual during Walter B. Gerken’s 11-year tenure as chairman. Bubb succeeded Gerken two years ago, and Sutton was named president.

The new positions for Cvengros point out the growing importance that investments and asset management have become at Pacific Mutual.

Cvengros has been executive vice president of the company’s Asset Management Group. In his new position, he will continue to oversee the group as well as all other investment and pension matters.

“There’s been a growing emphasis on asset management,” Sutton said. “That business area has produced about 60% to 70% of our gross revenue and about half our net income over the last two or three years.”

That doesn’t mean the company’s other major business areas--personal financial services and employee benefits--have been sliding, he said. Those areas also have grown as recent laws have given insurers authority to bring out new products, such as variable universal life insurance, which lets policyholders pick where they want their premiums invested.

Pacific Mutual also opened itself up to new working arrangements.

Last year, it formed a first-of-a-kind joint venture with Mutual Life Insurance Co. of New York (MONY) to manage administration and claims processing for both companies’ group insurance operations. The idea was to plug the red ink pouring from those operations, and Pacific Mutual has said the effort has been successful. Sutton said he will continue to look for such opportunities.

Sutton believes that the industry is “a little bit too passive” and needs to be “pro-active in crafting solutions” to societal problems. “Doing that over the next 10 years is critical,” he said.

Most significant, he said, is the inability of a large segment of the population to obtain health insurance. The traditional approach--offering it through employers--is not enough, he said.

“A risk pool involving all insurance companies would have to be created as part of any solution for people who cannot qualify for health insurance,” Sutton said. “The problem is everyone is passing the buck. Even the federal government is passing on responsibility to the states.”

But nothing will change, he said, until the major underlying problem--”exploding” health-care costs--are brought under control.

For Cvengros, Pacific Mutual is looking worldwide for investment opportunities as well as for investors.

“We think managing money today must take into account, in one form or fashion, international assets and the impact of international investors,” Cvengros said. “To be one of the major players, you need to have a global perspective.”