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Citizens Goes for Downsizing Experience in Picking New President

June 12, 2012 - 6:00pm

Barry Gilway has been called an insurance industry dynamo," valuating strategic acquisitions and opportunities for Zurich North America, W.R. Berkley Corp. and Crum & Forster.

More important for those overseeing Florida's insurer of last resort, Gilway has experience both running a large firm and reducing the size of a company that had overextended itself.

Mr. Gilway has lived through many instances where he probably had to face significant consequences if he were to mishandle risk, and that I think is a fundamental difference in handling risk in the public sector and handling risk in the private sector, said Don Glisson Jr., a member of Citizens Property Insurance board of governors.

On Wednesday, Gilway, 66, the president and chief executive officer of Mattei Insurance Services Inc., a managing general underwriter for specialty property and casualty programs, was offered the chance to replace Scott Wallace as president and chief executive officer of the state-backed Citizens Property Insurance Corp.

Wallace stepped down in April after nearly six years at Citizens.

If hired, a big part of any success Gilway has in Florida will be judged on how he makes the insurer of last resort smaller, in terms of homeowner policies, and makes the agency once again the one to turn to only when no others will offer coverage.

If we cant provide a product that is less competitive than the private market, then we have to make decisions to make our produce less competitive in other ways, Gilway said.

"No company will come into the marketplace unless they have some level of comfort that they can earn a reasonable return on capital for their investors.It doesnt relate to just insurance, it relates to any privately owned company. The attraction has to be rates -- getting appropriate rates to a level, frankly, where we can attract private industry."

With nearly 1.4 million policies, Citizens is expected to consider a proposal this summer to raise premiums by nearly 30 percent statewide -- exceeding a 10 percent cap now in place -- in an effort to depopulate its rolls.To shed coastal coverage, rates could be doubled.

Gilway, who lives in Baltimore and said he is looking forward to the move, was selected over Glenn Pomeroy, CEO of the California Earthquake Authority.

Board members praised both finalists but swayed toward Gilway due to his experience heading larger organizations, noting that Pomeroy manages 55 at the growing CEA, while Gilway has at one time overseen 2,500 employees.

Gilway also got credit for his private experience, including having to downsize Maryland Casualty after it had become overextended.

Tom Grady, the interim president and an applicant for the post, was not added to the list of finalists.

In March, Grady, a former state representative, stepped down as the commissioner of the Florida Office of Financial Regulation to take over at Citizens Property Insurance Corp., the state-backed insurer of last resort.

It remains to be seen if Gilway will be as ambitious as Grady to fulfill Gov. Rick Scotts desire to reduce the size of Citizens.

Policyholders of Florida founder Sean Shaw took a cordial approach to Gilways hiring.

We are hopeful that Mr. Gilway will work with consumer advocates to implement balanced, responsible policies and shun the political motivations that have threatened both policyholders and our delicate housing recovery, Shaw stated in a release. We are ready to sit down and finally have the adult conversation that Floridians deserve.

Other finalists for the job included Scott Donovan, executive vice president of Odyssey America Reinsurance Corp., and Richard Palczynski, founder of Seatower Insurance Consulting Services.

Gilway has been with Mattei for three years, with his resume including the prior two years as a strategic consultant with Mystic Capital Advisors Group and 16 years as an executive with Zurich North America. While at Zurich, he served as chief executive officer of the Zurich Canada, Maryland Insurance Group and Maryland Casualty Insurance Co. units.

Gilway boasted to the board during the nearly hourlong interview Wednesday that he has faced similar challenges to what Citizens has before it, but admitted that the situation in Florida would be the most complicated hes addressed in his career.

Gilway added that he has ideas on how to address the problems facing Citizens, but wanted to withhold his comments until he had more time to educate himself by meeting with state legislative leaders, Gov. Rick Scott, individually with the Citizens governing board, and managers at Citizens.

Gilway did say that Citizens needs to bring some adequacy among the touchy issues of differing rates that vary by county, particularly in the heavily populated areas of Miami-Dade, Broward and Hillsborough counties.

Rates are not adequate within those counties, and the struggle Citizens has is that if rates were taken to full adequacy in those counties it has the potential of absolutely destroying both home building and retail sales, Gilway said.

There clearly has to be a mechanism in place to get rates to a much more adequate level. The solution cant all be assessments; both recouping the Citizens surplus after a major storm or recouping the Florida windfall pool.Yet we have to get rate adequacy.

Reach Jim Turner at or at (772) 215-9889.

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