Ackermann Named in CFO's Suicide Note

By Mark E. Ruquet

It is reported that Zurich Insurance Group is investigating whether former Chairman Josef Ackermann put undue pressure on Chief Financial Officer Pierre Wauthier after Ackermann's named appeared in the suicide note left by Wauthier.

Wauthier, 53, was found dead in his home Monday, which led to Ackermann's resignation this week. 

In resigning, Ackermann said he was leaving to avoid damaging the company's reputation after the family made allegations that he was partly responsible for Wauthier's death. No additional information was released yesterday explaining why the family was making those allegations. Today, reports say Ackermann was named in the note.

During a conference call with investment analysts, company executives went to great lengths to assure investors that the insurer is financially sound and Wauthier's death did not reflect negatively on the company's finances. One report says Ackermann does not seek confrontation, but does get deeply into the details, especially at a company he believed needed to be shaken up.

If Ackermann intended to shake up Zurich, he has succeeded. 

Zurich's Chairman Resigns After CFO's Suicide

Zurich's Chairman Josef Ackermann resigns

by Mark E. Ruquet

Zurich Insurance Group’s Chairman, Josef Ackermann, has resigned after the company’s Chief Financial Officer Pierre Wauthier committed suicide.

“The unexpected death of Pierre Wauthier has deeply shocked me,” Ackermann said in a statement.

Ackerman, 65 years old, said he resigned to avoid damaging the company’s reputation, saying he believes the Wauthier family holds him partly responsible for the CFO’s death. Even though the allegations are unfounded, Ackerman said he sees “the possibility of a continued successful Board leadership to the benefit of Zurich called into question.”

Reports say no reason has been given why the Wauthier family would hold Ackerman responsible for his death.

Wauthier, 53 years old, was found dead earlier this week in his home in Switzerland. Wauthier joined Zurich in 2006, becoming CFO in 2011.

Zurich named Board Vice-chairman Tom de Swaan acting-chairman.

Earlier this month, the carrier, considered the third largest in Europe, reported net income dropped 17 percent for the first half of this year compared to last, to $1.85 billion. The drop reflected insurance losses from flooding in Europe and tornadoes in the United States costing close to $200 million, along with other large losses and continued decline in investment income.

Aside from the losses, the company has seen tumult within its management ranks. Reuters notes that Zurich’s general insurance head, Mario Greco, left last year to become head of Italian insurer Generali and Kevin Hogan, head of its life insurance arm, left two weeks ago to become AIG’s head of consumer insurance.

Ackerman, who joined Zurich last year, was head of Deutsche Bank for a decade in which the bank saw considerable growth. Despite its success, the bank became embroiled in controversy during the Great Recession that included a number of lawsuits from customers and official investigations, reflecting negatively on Ackerman’s tenure. Last year, the bank paid more than $200 million to settle allegations that it misled the Department of Housing and Urban Development about the quality of mortgages that eventually defaulted.

Sixth Named Storm in Atlantic Basin Leaves 13 Dead

In case you missed it, the sixth named storm of the Atlantic Hurricane season is history, lasting less than 24 hours after forming off the coast of Mexico, but flooding from heavy rains left 13 dead.

Tropical Storm Fernand formed 25 miles east of Veracruz, Mexico, Sunday afternoon over the Western Bay of Campeche with maximum sustained winds of 45 mph.  The storm brought heavy rains to Eastern Mexico on Monday and dissipated over Mexico by the late afternoon.

The National Hurricane Center said rainfall over Veracruz and the surrounding area would amount to as much as 8 inches with isolated maximum amounts of close to 15 inches. Officials warned the rains could cause flash floods and mudslides.

Sadly, the worst fears came true. NBC News reported Fernand caused 13 deaths across Mexico from heavy rains.

While Mexico is primed for insurance growth, penetration remains low. Lloyd’s says Mexico is worth $20 billion in premium, but that represents only 2 percent of GDP. Insurance losses will amount to insignificant, but that will be of little comfort to the families whose loved ones were lost.   

I found it a little odd watching the news about the wildfires in Idaho and seeing fire trucks speeding off with such stalwart insurance names as Liberty Mutual and AIG emblazoned on the side panels. I remember reporting some years ago on the fire protection service the insurers of High Net Worth individuals were offering their customers as an endorsement to their Homeowners policies. This was the first time I saw footage of them in action, but it was the reaction of television reporting on it that most intrigued me.

The Beaver Creek fire has burned since Aug. 7. According to the most recent update around 11 a.m. EST from InciWeb, the blaze has consumed more than 108,000 acres of grass, sagebrush and timber and spread through the resort communities and luxury homes around Sun Valley and Ketchum. As of last night, firefighters contained 30 percent of the wildfire, an improvement from the 9 percent early Tuesday.

While large wildfires typically gain attention, this particular one is noteworthy because it threatens the multi-million homes of celebrities. According to a report from NBC News, the fires are approaching the vacation homes owned by such notable Hollywood stars as Tom Hanks, Bruce Willis and others.

This is where the insurance companies’ fire services come in. For example, American International Group offers Wildfire Protection Unit under its Private Client Group where a fire unit will go to a home and spray foam or other fire retardant chemical to protect the house. Certainly, other insurers offering these services are doing the same.

These services to High Net Worth clients are not new. What is surprising is the reaction of the mainstream press and others. They have gone to some length explaining this special service—making it sound as if the carriers are doing this out of their own self-interest or some sense of magnanimity. The truth is insurers are not doing this free of charge. One reason this service may have gone little noticed in the past is that there has not been such a concentration of exposure to draw attention. While few may have made much note of the private firefighter service before, I’m certain the insurer’s customers have—and to have this coverage must bring some sense of comfort.  Nevertheless, I’m sure even wealth does not erase the anxiety any homeowner feels over the possible loss of a home.

For the hotshots on the front lines defending the greater populace, this extended service has to aide their efforts. The fire service notes, “Multiple insurance companies with structure protection clauses provided engines to clients and coordination with the team [of firefighters].” This comes at a time with the nation’s resources stretched thin with more than 35 fires throughout the West.  

Ironically, this service harkens back to the early days of fire insurance where customers put a plaque on the outside of their home to show they were insured, informing a local fire service they paid for them to come to save their home. No plaque and you were out of luck. We are past those days of narrow self-interest—but wealth still has its privileges.

Photo: U.S. Forest Service.