5 QUESTIONS WITH JAMES R. MALONE
Aug 11, 2008
Corporate specialist to head Citizens
BY BEATRICE E. GARCIA
Miami Herald–August 11, 2008
James R. Malone can tell you about airplane maintenance, printing, even manufacturing luxury outdoor furniture.
He has made a career out of helping distressed firms get their acts together, whether it be navigating restructuring, downsizing or bankruptcy.
His new task — leading the board of Citizens Property Insurance — is somewhat atypical. The state-run insurer isn’t in crisis mode. But it has been through plenty of change in the past four years and more is ahead. After expanding exponentially to become Florida’s largest insurance company, it has diversified in the past year, offering multiperil policies and more commercial coverage. And ahead, there are lawmakers and critics who would like to see Citizens shrink and return to being the insurer of last resort.
Based in Naples, Malone takes over this month as chairman of the board of governors for Citizens. Bruce Douglas, who led the board for four years, is retiring.
Chief Financial Officer Alex Sink, who recommended Malone for this job and has known him for 15 years, says his experience running large public and private organizations should benefit Citizens.
”His commitment to good governance and transparency will serve the citizens of Florida very well,” she said.
In his office in Naples last week, Malone talked with The Miami Herald about his expectations for his new role at Citizens and his experience in the business world.
Q: What is your take on Citizens right now?
A: I have the advantage of being new. I can claim some level of not knowing the proper answer to that. To the best of my knowledge, this is not a crisis situation by any stretch of the imagination. In terms of a corporate or organizational or structural crisis, that’s not the case here.
Q: You’ve dealt with a variety of industries during your career. But insurance, not so much. Is there an advantage or disadvantage here?
A: I think overall it becomes an advantage. In different industries and businesses that I’ve worked with in the past, it gives me the ability to come in and ask questions without a bias.
It allows me the ability to go into places without fear of having an agenda or having an association that could be [seen as] self-dealing or having an industry bias going in. I think that has been true of virtually every industry I, or we as a company, have been involved in.
I am also less bound by the traditions, whether it be aerospace or printing or the glass container industry.
It’s always good to have a core group of knowledgeable people around you. Part of the trick of this situation is to be certain to have the ability to ask the right questions of the right people.
In the case of Citizens and the people, we have the right people. They know the answers. They have a base of experience. And with support from a different point of view, that generally makes for a good mix.
Q: Insurance is a pocketbook issue for almost every homeowner in Florida. People can get really worked up about it, especially when rates are climbing and claims aren’t handled properly. Bruce Douglas certainly took a lot of heat from upset policyholders. Can you face the angry masses?
A: One of the things I’ve learned from the different business experiences I’ve had is that sometimes you can have angry employees, angry shareholders or lenders. You can have a whole bunch of different constituencies that from time to time have a legitimate difference of opinion.
Certainly policyholders are customers for Citizens and they have a right to be dealt with integrity and speed and empathy. That is what basically makes for a good customer relationship.
Now am I so naive as to think that everyone will absolutely always agree when a check gets written when they have a claim? Of course not. It’s just the nature of the beast. The person getting the check wants it to be higher and the person writing the check wants it lower.
I hope to be fair and legal and moral and ethical. That’s the standard that we’ve got to have when we write that check. But there will be disagreements. I understand that. Those people [after a catastrophe] are in a very stressful situation in their life.
Q: Most business schools don’t offer courses such as Turnarounds 101. How did you make a career of coming in and fixing broken companies?
A: To the best of my knowledge, no one does this on purpose. It’s not a career path I had initially chosen. I was like a lot of people. My first major in college was astronomy. I quickly figured out that I wouldn’t be able to make a living as an astronomer. Besides that, I wasn’t particularly very good at it. That stopped quickly after a semester.
But somehow early in my career, I got involved in dealing with these more difficult situations, and we were successful at it. We progressed in different industries, and we were able to blend into different situations that required some level of urgency or required bringing people together to solve a problem.
Q: Did you raise your hand for this job?
A: I didn’t raise my hand. Frankly, I didn’t know that the situation was out there or the importance that it had.
CFO Sink called and asked about my interest and what contribution my experience might bring. She felt, and presumably the governor and the other people who are part of the selection for [Citizens’] board, that my experience might be useful to Scott [Wallace, Citizens’ president] and his staff as they drive the organization forward.