Son of Amwest’s Chairman Is Appointed New President

Amwest Insurance Group, ending any speculation about who will eventually succeed its 70-year-old chairman, Richard H. Savage, replaced its president and chief operating officer with Savage’s son, John E. Savage.

John Savage, 37, replaced Gary R. Peterson, 55, who had been Amwest’s president since 1984. Peterson is now executive vice president overseeing Amwest’s marketing efforts and branch offices, and he remains president of Amwest Surety, one of the company’s main subsidiaries.

John Savage’s new role includes, among other things, overseeing Amwest’s underwriting business. Amwest also gave its chief financial officer, Robert C. Goodell, the added position of executive vice president in charge of finance, claims, data processing, training and other divisions.

Richard Savage said in an interview that Peterson had not been demoted, noting that it had long been planned that his son would one day run the business.

“He’s not being eased out,” Savage said of Peterson, adding that Peterson’s salary would not change. (Peterson said his salary is about $164,000 a year. His cash compensation, including salary and bonuses, totaled $206,000 in 1988, according to the most recent proxy statement.)

The Savages and certain board members began discussing the changes three months ago, and “the more we talked the more we decided it would be a good time to start on this program at the beginning of this year,” Richard Savage said.

Peterson said he was not surprised at the change, “which obviously is to get John Savage, who is the owner’s son, from a lesser position to running the company. This is as good a time as any.” Peterson said he planned to stay at Amwest.

Although a publicly held concern, Amwest in many ways is a Savage operation. Richard Savage, a former narcotics police officer and bail-bond salesman who organized Amwest in 1970, and his family still owns about 40% of Amwest’s stock.

Amwest sells bail bonds and other so-called surety bonds, which guarantee the performance of the policyholder, such as a building contractor, to a third party. If the policyholder does not fulfill its obligations, Amwest has to step in and make good on the bond’s amount.

For most of the 1980s, Amwest could do little wrong financially. Its profit and revenue climbed steadily each year, and in 1988 it earned $3.6 million on revenue of $25.8 million.

But 1989 did not go Amwest’s way. Some disputed claims and the uncertainty of Proposition 103, the insurance rate-cutting initiative that has forced Amwest to set aside cash in case it has to pay rebates, cut its profit for the first nine months of last year by 16%. And in the fourth quarter, Amwest estimated that it lost between $750,000 and $1 million, which will leave a full-year profit of between $1.3 million and $1.6 million--less than half what it earned the previous year. Its actual 1989 results have not yet been released.

Richard Savage said the rocky year did not contribute to Peterson’s removal as president. “Peterson didn’t do a bad job in 1989,” he said.