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The Once and Future C&F - Xerox, the Accidental Savior
The Paul Allaire Years Remembered In her book Where You Are Is Not Who You Are , Ursula Burns, who later became CEO of Xerox, provides an insider’s vantage point from earlier in her career. She recalled observing Paul Allaire working through problems at C&F: “I remember going through one incredibly intense situation with Paul, which had to do with Xerox’s insurance businesses, which had been brought on to diversify its interests. One of the company’s business lines was reinsurance, which covered the risk of other insurance companies. We faced a string of pretty complicated insurance liability cases involving the health effects of building materials, which, if lost, would have created a financial crisis for Xerox. We could have lost the whole company, but Paul pulled us through.”
with investment income and timely capital gain harvests to show positive net income in most years — really, a poster child for the magic of cash- flow underwriting. So Xerox could say that they were “making money” in insurance even though the P&C insurance industry was having issues. Technically true. But Xerox is not really admitting they have a problem. They restructured C&F. They brought in management consultants. They got out of personal lines to focus on their “core strength” in commercial lines. They looked for efficiencies. They did lay-offs. And they kept growing: by the end of the 1980s, C&F was the 14th largest P&C company in the US, having doubled in size since the acquisition. Meanwhile, at the corporate level, Paul Allaire took over as Xerox’s CEO in 1990. If there was a succession battle between the copier faction and the financial services camp, the copier team won: the 1990 annual report boldly stated that Xerox was now “The Document Company.”
While this is not exactly admitting the problem with financial services, it is a signal that changes are on the way. Early in 1990, Stuart Ross (who had been CFO of Xerox) took over the company’s insurance and other financial services. “Under Stu’s leadership, the group of businesses is undergoing careful scrutiny and strategic re-evaluation,” read the announcement from Allaire.
Xerox Annual Report, 1990.
Paul Allaire (image credit AP Photo/Mario Suriani).
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