Page - 47
The Once and Future C&F - Xerox, the Accidental Savior
CHAPTER 4 Xerox, the Accidental Savior
L ike lion taming, running an insurance company requires that you respect the particular animal you are working with: both have some hair on them - and both bite. There are definite benefits for those who take the time to deeply understand the nature of the beast. If you are not paying attention, you’ll probably get eaten alive. This is especially true if you just bought a large, complex insurance company. Here’s an excerpt from the 1983 Xerox annual report: “The acquisition of C&F, a leading property and liability insurance company, represents a major change in the overall structure of Xerox, as well as a great opportunity. We believe C&F will broaden the base of our business, ensure greater stability in our performance, and enhance our growth potential. Crum & Forster is a premier company. It has what many consider the best management team in its industry and has a reputation for high quality underwriting and service. Therefore, the acquisition of C&F will divert neither capital nor day-to-day attention from our basic business.” Bobby Russell had reason to be enthusiastic: “Xerox is a top quality company and will provide us with a structure within which we can pursue exciting new opportunities.” Furthermore, he was happy that C&F would
maintain its independence: “Xerox is not in the insurance business and never has been. So it’s not like putting two insurance organizations together, which always brings on a substantial amount of duplication. C&F has the total insurance ball, and our job is to keep doing what we’ve been doing — only better and more of it.” Xerox CEO David Kearns seemed equally pleased, noting that “the C&F purchase would put Xerox in another growth business because financial services is one of the few businesses with a growth potential as exciting as our own information industry.” While P&C insurance can technically be lumped in with other financial services, industry insiders in 1983 would not have been thinking of insurance as a growth business — and certainly not as exciting as information technology, which was on the cusp of exponential growth. But these two opening statements highlight the asymmetric nature of any insurance company acquisition. Russell was happy to have dodged a bullet: he cashed out and looked to be taking a valedictory lap. Kearns was blandly looking forward to some profitable growth — without realizing he had signed up for an unbounded liability hole that would put a drag on Xerox resources for decades.
Made with FlippingBook Digital Proposal Creator