Hanover CEO to exit after 16 months
Grant Welker
The Hanover Insurance Group's Worcester campus.
The Hanover Insurance Group on Oct. 10 announced Joseph Zubretsky is resigning from his position as its president and CEO, accepting an executive position at a California healthcare firm 16 months after he took over leadership of Worcester's largest publicly traded company.
John Roche, who is the president of Hanover's personal and commercial lines Agency Market division, will take over as the company's president and CEO after Zubretsky leaves on Nov. 3.
Zubretsky, 60, has accepted a position as president and CEO of California managed care company Molina Healthcare, which had $14 billion in revenues last year. He leaves after taking over as Hanover CEO in June 2016 from Frederick Eppinger, who served in the role for 13 years. Hanover had $5 billion in annual revenues last year.
Declining profits
Zubretsky's departure comes after the company announced in February its annual profits from 2016 were half of what they were in 2015 -- $155 million vs. $332 million. In its most recent earnings report, in August the company said it netted $78 million in profits for the second quarter, although it warned in October its third quarter losses from natural disasters like hurricanes Harvey and Irma could total $225 million.
In February, Zubretsky announced his planned overhaul of the Hanover organizational structure -- called Hanover 2021 -- to combine the company's small commercial, middle market and personal lines business into one division called Hanover Agency Markets -- which Zubretsky's successor now runs -- as well as expanding its specialty unit covering companies with unusual risks like power plants. The company cut 160 jobs in August.
Zubretskey's total compensation in 2016 was $7.6 million, according to the Hanover's filings with the U.S. Securities and Exchange Commission.
Not sign of anything bigger
New York City financial services analyst firm Keefe, Bruyette & Woods interpreted Zubretsky's resignation as nothing more than an exciting job opportunity for him.
The news, the equity research firm said, probably doesn't signify an impending sale, even though insurance giant American International Group (AIG) is interested in acquiring a profitable yet smaller account-focused domestic commercial insurer.
“Theoretically, it may make sense to connect these dots [about a possible sale to AIG], but we think the most likely explanation is that the Molina job presented Mr. Zubretsky with a very attractive opportunity in the health insurance industry where he 'grew up,'” the research firm said, citing Zubretsky's former role at health insurer Aetna.
Despite the unexpected leadership change, KBW said Hanover 2021 should still be in play.
Replacement named immediately
The immediate announcement of Roche as Zubretsky's replacement comes in stark contrast to eight-month executive search launched after Eppinger announced his retirement in September 2015.
Roche, 54, joined the Hanover in 2006, starting as vice president of underwriting and product management for commercial lines. He served as president of business insurance and field operations from 2013 to 2016 before becoming president of Agency Markets. His total compensation in 2016 was $1.3 million, according to SEC filings.Roche has 30 years experience in the insurance business, working for St. Paul Travelers Cos., Fireman's Fund and Atlantic Mutual. He is a graduate of the University of Connecticut.
He wasn't available to be interviewed for this story.
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