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The Once and Future C&F - Xerox, the Accidental Savior
backstop future reserve development. People had to be moved into the new companies. Reserves and surplus had to be reallocated. Reinsurance had to be unwound. Systems had to be sorted. It was a lot to get done in a short window. The biggest innovation was the invention of the run-off company. The Resolution Group was C&F’s “bad bank” — analogous to some of the Savings & Loan restructurings of the prior decade. Having a group dedicated to handling the sins of the past allowed the ongoing operating companies to focus capital, expense dollars and management attention on their primary businesses instead of on ancient claims or uncollectible reinsurance. And it made the companies much more palatable for potential buyers. Being the first of its kind helped with the regulatory approvals; the next guys in line got a lot more scrutiny. The six ongoing companies were designed to “place C&F in a strong position to capitalize on strengths in the marketplace, better serve customers and maximize value to Xerox shareholders,” as Xerox explained it. Those companies were: • Crum & Forster (1992 net written premium [NWP] of $700 million), a national P&C insurance writer for individual commercial accounts that operated primarily through a select retail network of independent agents. • Industrial Indemnity (1992 NWP of $400 million), a San Francisco– based company focused on workers’ compensation insurance nationwide. • Coregis (1992 NWP of $300 million), a new Chicago-based business specializing in professional liability, governmental agencies, non-profit organizations and tailored industry group programs.
Future C&F CEO Marc Adee (left) joins Coregis as part of the Actuarial Team with Peggy Cheng (center) & Lynn Golas (right).
wonder whether some people might have viewed me the same way as I saw Jay. More on that later.) To signal a Spartan, no-nonsense tone, Jay decommissioned the palatial executive wing of his predecessor in favor of an open bullpen seating arrangement — and then he got to work. The documentation of C&F’s restructuring — into the Talegen holding company, plus seven subsidiaries — takes up five feet of shelf space in the C&F library. This reflects the magnitude and audacity of the plan — and indicates the multitude of moving parts. Insurance companies are regulated by their domiciliary states, so the unwinding of the balance sheets required multiple, coordinated regulatory approvals. The regulators wanted C&F to get customers to sign off on having their policies moved to new balance sheet companies. Xerox had to agree to
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