Jim Prieur makes a great choice for Conseco Inc. CEO, analysts say. But whether his hiring bodes well for the company's Carmel headquarters is a different question.
Conseco Chairman Glenn Hilliard said last week that Prieur will live in Chicago when he joins the company next month.
His predecessor, William Kirsch, also is a Chicago resident. But unlike Kirsch, Prieur is moving there. He's coming to Conseco from Canada-based Sun Life Financial. Most recently, he worked out of Sun's Toronto and Hong Kong offices.
Hilliard cautioned against reading too much into where Prieur will live. He said the decision was Prieur's and not part of a push to move the company's headquarters to Chicago.
"That's just a whole separate issue that'll be developed at the right moment whenever it's appropriate to do it," he said. "Right now, I think everybody's comfortable with the locations the way they are."
Many of Conseco's top executives travel between Carmel and Chicago. The cities are home to the company's main operating units. Conseco Insurance Group is based in Carmel; Bankers Life and Casualty Co. is based in Chicago.
How long they continue to trek between the two cities remains to be seen. Hilliard emphasized that a headquarters change hasn't been discussed and isn't on the agenda of Prieur, who could not be reached for comment.
"It isn't on the table, but I think I would not rule out a headquarters decision somewhere in the next five years as a possible topic," Hilliard said.
Conseco, one of Indiana's five Fortune 500 companies, employs 4,000, including 2,300 in Carmel and 600 in Chicago.
Hilliard said the focus of Conseco executives is growing the business, not a headquarters shift.
Some analysts say Conseco picked the right CEO to achieve that goal.
"My sense is that it was perhaps somewhat of a surprise to the company that they were able to find a candidate of this caliber," said Jukka Lipponen, who covers Conseco for New York-based Keefe Bruyette & Woods.
Conseco picked Prieur (pronounced "preer") earlier this month from a list of five finalists to replace Kirsch, the company's fourth CEO since founder Stephen Hilbert resigned in 2000.
Kirsch, who used to represent Conseco for the Chicago law firm Kirkland & Ellis, resigned in May. He lasted less than two years after taking the CEO post with no insurance industry experience.
In contrast, Prieur brings 27 years of experience just with one company to the job. Hilliard said he was "pleasantly surprised" by Prieur's interest and liked his deep industry knowledge and long tenure with one company.
"Those are the big factors, if you just look at his resume, that would sort of jump out at you," the chairman said. "Then as you get to know the man, it's things like his integrity."
Prieur, 55, started with Sun Life in 1979. He worked his way up the executive ranks, becoming president and chief operating officer by 1999. He also has served as general manager for U.S. operations.
"He knows the U.S. industry really, really well," Hilliard said.
Prieur, who became a U.S. citizen, had been based in Hong Kong for the past year and was working to find a leader for Sun Life's Asian operations when Conseco called.
Hilliard said he was impressed with Prieur's focus on that task, which included several long flights to meet with candidates, while he was interviewing with Conseco.
Hilliard also likes how Prieur relates to people. When the new CEO met some of Conseco's management, someone asked if he planned to live in Carmel.
Prieur replied that he has worked from multiple offices before and, with today's technology, "it doesn't matter where you live," according to Hilliard. He said the CEO then showed his sense of humor by remarking, "Like most of us, I'm going to live where my wife tells me I'm going to live."
Hilliard said Prieur chose Chicago because some relatives and friends live there.
"He was really upfront and yet very comfortable," Hilliard said. "That could have been, for the wrong person, I think, an awkward question.
"He absolutely understood why people were sensitive to it."
Location, location, location
Former Conseco board member John Mutz would prefer a locally based CEO for the company.
That would give the city another community leader to participate in efforts like United Way drives and to motivate other executives to become involved, noted Mutz, a former Indiana lieutenant governor who sat on Conseco's board from 1997 to 2003.
It also would give the Carmel headquarters a daily leadership presence.
"My experience is the old axiom of management by walking around works," he said. "You need to do that."
Prieur isn't the only Conseco leader with a long commute to headquarters. Scott Perry, the chief operating officer of Bankers Life, is based in Chicago, as is Anthony Zehnder, executive vice president for corporate communications.
Of Conseco's 13 executive officers, six have offices in both Carmel and Chicago, Zehnder said. Five have offices only in Carmel and two are based only in Chicago.
Hilliard said he had headquarters people scattered in several cities before retiring as chairman and CEO of Atlanta-based ING Americas in 2003.
"In today's world, there is some advantage by having everybody in one location, but there also are advantages in having members of your leadership team in each of the locations," he said, noting that Prieur probably will spend a couple of days each week in Carmel.
The analytical view
In picking Prieur, the board passed over the interim CEO, James E. Hohmann, who was instead promoted to president and chief operating officer.
The pair make a strong team, according to an Aug. 9 report from Fix-Pitt Kelton analyst Yaron Shashoua titled "Two Jims Are Better Than One."
Prieur will boost credibility with customers and shareholders, while Hohmann will provide continuity in dealing with the insurer's ratings agencies.
The company has strived to an A-level rating upgrade for its main insurance units since it emerged from bankruptcy in September 2003. The upgrades would make it easier for Conseco to compete for insurance customers.
Upgrades also might give Conseco stock a lift. After the company exited bankruptcy, Conseco shares debuted at $20. They topped $25 this spring, then fell after the company this month lowered its earnings forecast.
Shares closed at $20.71 Aug. 23.
Some analysts had predicted that an upgrade from New Jersey-based A.M. Best Co. would arrive this summer. But Morgan Stanley analyst Nigel Dally wrote in a recent report that Best might put off a decision until it reviews third-quarter numbers.
Dally wrote in a separate report that Prieur "may well be a strong CEO," but he believes most investors preferred Hohmann.
Hohmann and Prieur had similar qualifications, Hilliard said, but Prieur had the edge in experience. Hohmann, 50, had been president and CEO of XL Life and Annuity, a U.S.-based unit of Bermuda's XL Capital Ltd., before joining Conseco two years ago as chief administrative officer.
Hilliard said Conseco needs deep insurance experience at the top.
The company hired Kirsch in 2004 because it was still fragile following bankruptcy and wanted the stability that came with hiring an insider. At the time, Kirsch was serving as the company's general counsel.
He praised Kirsch for helping the company lower costs and boost efficiency, which leads to improved products and customer service.
"I think it's not apparent, but we made more progress in those directions in the last couple years than we've probably either given credit for or taken credit for," Hilliard said.
Now, Conseco needs an industry-savvy executive to push growth. With Hohmann and Prieur, Hilliard believes it has two.
"We had no real successor in place had we chosen Jim Hohmann, and now we've got two top guys any company in the industry would be lucky to get," Hilliard said.