The best risk manager in the entire animal kingdom isn’t Advocate Health Care’s Scott H. Beckman, recently anointed as the risk manager of the year by one industry publication.
Nor is it former Risk and Insurance Management Society Inc. president Lance Ewing, vice president of risk management for Harrah’s Entertainment Inc. Neither is it RIMS president Janice Ochenkowski, managing director at Chicago real estate and investment powerhouse Jones Lang, LaSalle.
In fact, the best risk manager who ever lived isn’t a member of RIMS, or the Federation of European Risk Management Associations, or any risk management organization at all – never has been and never will be.
This über-risk manager shuns the stoplight, and you won’t find this superstar sitting at RIMS video booths holding court on enterprise risk management. The world’s best risk manager scoffs at lifetime achievement awards, keynote addresses and Powerpoint presentations. In fact, the world’s No. 1 risk manager’s never even been to school, can't even read.
That’s because the best risk manager who ever lived is an ugly beast that goes by the name Crocodylus Niloticus, otherwise known as the Nile crocodile, according to South African author and naturalist Gert Cruyagen, the keynote speaker on the closing day of the annual RIMS convention.
Crocodylus Niloticus is the complete risk management package, in the eyes of Cruyagen. He, or she, has camouflage, speed and agility, knows how to fight back, works well with others, is armed to the teeth in thick, tough body armor, overwhelms adversaries, knows when to retreat to safe havens, and sits at the top of the food chain with no predator to worry about.
Crocodylus, who was around during the time of dinosaurs, can weigh more than a ton. They can live to more than 100 years old.
Now what risk manager wouldn’t want Crocodylus as a mentor? Forget bestowing risk manager of the year titles to the industry's usual suspects. Crocodylus Niloticus deserves to be the only risk manager of the year, every year, forever.
Friday, May 2, 2008
Session: INS Private Equity. HCR ManorCare, Claims and the Carlyle Group
General liability and workers’ compensation claims have not increased since the private equity firm Carlyle Group took over HCR ManorCare, according to Bruce Helberg, risk management director of HCR ManorCare.
“We’re early in the process but I’ve not seen an increase in incident reports from a general liability or workers’ compensation standpoint at all,” said Helberg.
Carlyle took over the 60,000-employee hospital chain in July 2007 for $6.3 billion. It borrowed heavily to do so, and Carlyle ordered a review of the HCA ManorCare’s insurance programs.
The transaction serves as a cautionary tale for other private equity deals and their implications for risk management.
Now that HCR ManorCare, an operator of nursing homes and rehabilitation centers, is a private company, it is still not clear what kind of risk compliance documentation, for example, the company is responsible for releasing.
“No one had a clue as to what could be released and when, so we had to work with the underwriters and keep them at a comfort level. and we’re still not comfortable as to what we can release to underwrites,” said Helberg. “That causes issues with self-insured workers’ comp states.”
Helberg also said that HCR ManorCare, which is self-insured in nine states, has had high self-insured retentions for about eight years. The company was likely to stick with that strategy for the moment,” he said.
“Where the captive came into play on the excess layers, we did go out and buy reinsurance for those layers, and we’ll continue the captive this year but we’ll probably lay off more (risk).”
Whether the HCR ManorCare deal deserves more or less attention from risk managers remains to be seen. But one trend is clear, and it is that private equity deals are more popular than they used to be because they are very profitable for investors, said James R. Lash, executive risk practice leader for Hylant Group Inc.
In the first quarter of this year, there were a total of 221 completed buyouts in the United States and a total of 355 completed buyouts worldwide. Last year, there were a total of 1,162 completed private equity buyouts in the United States and 2,155 buyouts worldwide in 2007.
Not all private equity takeovers succeed, of course, and the landscape is littered with the remains of busted deals: Alliance Data, Harmon International, Advanced Semiconductor, Clear Channel, Sallie Mae and United Rentals.
When that happens, it’s up to the broker to help sort out the insurance programs, the experts said. “If you’re a broker, you’ve got your work cut out for you when these deals happen,” said Lash. “There are a whole bunch of things that affect the broker side.”
Lash said most of the private equity takeovers are friendly, as was the case with HCR ManorCare.
There are more than 1,700 private equity firms operating in the United States. Among the best known are Blackstone Group, Carlyle Group, KKR, Bain Capital and Cerberus, which took over Chrysler last year.
“We’re early in the process but I’ve not seen an increase in incident reports from a general liability or workers’ compensation standpoint at all,” said Helberg.
Carlyle took over the 60,000-employee hospital chain in July 2007 for $6.3 billion. It borrowed heavily to do so, and Carlyle ordered a review of the HCA ManorCare’s insurance programs.
The transaction serves as a cautionary tale for other private equity deals and their implications for risk management.
Now that HCR ManorCare, an operator of nursing homes and rehabilitation centers, is a private company, it is still not clear what kind of risk compliance documentation, for example, the company is responsible for releasing.
“No one had a clue as to what could be released and when, so we had to work with the underwriters and keep them at a comfort level. and we’re still not comfortable as to what we can release to underwrites,” said Helberg. “That causes issues with self-insured workers’ comp states.”
Helberg also said that HCR ManorCare, which is self-insured in nine states, has had high self-insured retentions for about eight years. The company was likely to stick with that strategy for the moment,” he said.
“Where the captive came into play on the excess layers, we did go out and buy reinsurance for those layers, and we’ll continue the captive this year but we’ll probably lay off more (risk).”
Whether the HCR ManorCare deal deserves more or less attention from risk managers remains to be seen. But one trend is clear, and it is that private equity deals are more popular than they used to be because they are very profitable for investors, said James R. Lash, executive risk practice leader for Hylant Group Inc.
In the first quarter of this year, there were a total of 221 completed buyouts in the United States and a total of 355 completed buyouts worldwide. Last year, there were a total of 1,162 completed private equity buyouts in the United States and 2,155 buyouts worldwide in 2007.
Not all private equity takeovers succeed, of course, and the landscape is littered with the remains of busted deals: Alliance Data, Harmon International, Advanced Semiconductor, Clear Channel, Sallie Mae and United Rentals.
When that happens, it’s up to the broker to help sort out the insurance programs, the experts said. “If you’re a broker, you’ve got your work cut out for you when these deals happen,” said Lash. “There are a whole bunch of things that affect the broker side.”
Lash said most of the private equity takeovers are friendly, as was the case with HCR ManorCare.
There are more than 1,700 private equity firms operating in the United States. Among the best known are Blackstone Group, Carlyle Group, KKR, Bain Capital and Cerberus, which took over Chrysler last year.
Subscribe to:
Posts (Atom)
