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Executive profile: Thomas Motamed of CNA Financial

Tom MotamedInsuranceFinanceChicago RestaurantsCNA Financial CorporationJ. Patrick Gallagher Jr.

Thomas Motamed, fresh out of law school, found the legal profession too dry.

So at a friend's suggestion, he tried another field he thought might be more interesting: peddling life insurance.

But that got old fast.

"I really didn't like sitting around kitchen tables at night telling people, 'When you die, your spouse is going to be living in a refrigerator box by the railroad tracks if you don't buy insurance,'" Motamed said. "It didn't come out exactly that way, but that was the message."

After a year of selling life insurance, he joined Chubb Corp. — which sold property and casualty insurance — and went on to work at the New Jersey-based company for 31 years, eventually landing the No. 2 job as vice chairman and chief operating officer.

Then, in 2008, conglomerate Loews Corp., controlled by New York's billionaire Tisch family, came calling. It needed a new CEO to run its Chicago-based CNA Financial subsidiary, which sells property and casualty insurance to businesses.

Motamed took the job and moved into the red tower at 333 S. Wabash Ave. in January 2009. He planned to stay until 2014, but, thanks to a renegotiated contract, will stay through 2016. His total compensation each of the past two years has been more than $10 million.

Under Motamed's leadership, revenues are up as the company has made a bigger effort to serve such industries as technology and financial services, and the company's credit rating has been upgraded. It has resumed its cash dividend and also has made an underwriting profit in four of the past five years, the exception being the year that Superstorm Sandy hit the Northeast.

"It was a great choice by Loews to pick him to run CNA," said Pat Ryan, former CEO of Aon who now heads Ryan Specialty Group.

CNA profits also have been helped by cost cutting. More than 700 Chicago-area jobs have been shed since Motamed, 65, took the helm. That represented about a quarter of its local workforce, many of them information technology jobs that were outsourced.

His early years: The son of an Iranian immigrant father and an Irish mother, his parents married young and divorced when Motamed was only 1.

His father, who got full custody, "was in college all day and would come home at night," Motamed recalled. Then his father went to medical school, worked as an intern and a resident and went on to become a surgeon.

"My grandmother wanted me more than he wanted me," Motamed said. He described his grandmother as "very supportive," and said he was essentially raised by his father's parents in Garden City, N.Y., on Long Island.

Motamed earned a biology degree at Adelphi University in Garden City. He was the captain and most valuable player on the lacrosse team. The athletic field is named for him.

"I had a full college career and didn't spend a lot of time in the library," Motamed said.

That may have derailed his family's expectation of him getting into medical school and to follow in the footsteps of his father, grandfather, who was a surgeon to the shah of Iran in the 1940s, and great grandfather. An aunt was a radiologist.

His career path: Motamed held 14 jobs in his first 18 years at Chubb, many lateral moves, and in departments such as claims, legal, training, field operations and marketing.

"That's how you really learn things," he said. Most people today can't do what he did, he said, because the rise in dual-income couples makes it more difficult to move.

How he became CEO of CNA Financial: Loews CEO Jim Tisch, whose company owns about 90 percent of CNA stock, said Motamed had been on his radar since conducting the search that led to the hiring of the guy Motamed would replace.

"We were ready to go out and hire a headhunter when one director sitting next to Tom" at an industry event "asked Tom if he might be interested in the CNA job," Tisch recalled. Motamed said he met with Tisch on and off for five months.

"I thought it was an opportunity to take a brand name that was tarnished and turn it around or polish it," Motamed said. Motamed told Business Insurance magazine in 2009 that as he looked at CNA he didn't think it had a "real growth strategy, and there certainly was room for improvement on the profitability side."

His hiring was announced in May 2008, but because of a one-year noncompete and long-term incentives he'd forfeit if he violated it, Motamed wasn't supposed to join CNA until June 2009.

By the fall of 2008, Tisch decided he didn't want to wait until then. Chubb released Motamed from certain noncompete restrictions that allowed him to join CNA on Jan. 1, 2009.

What Tisch liked about Motamed: "He knows the industry and business inside and out," including claims, underwriting, marketing and legal, adding that he also knows almost everyone in the commercial property and casualty insurance business.

Tisch tells of how one relatively large insurance brokerage had a "grudge" against CNA. So Tisch arranged for the head of that brokerage and Motamed to meet in Loews' New York office.

"I felt like I was at a meeting of two Mafia dons," Tisch recalled.

"I could see by the way that Tom patted the back of the head of this guy as they embraced that said to me, 'These guys have known each other a long time, there's a lot of history there, but business is business, and they like each other but don't really like each other, but they'll make it all work out,'" Tisch recalled. "We've been doing lots of business with the firm ever since."

Motamed barely had his name on the door at CNA, Tisch said, when he began visiting its branch offices.

"The first branch office he went to, he spoke about the need for underwriters to get out of the office and go see customers," Tisch said. "After he visited the first branch, you can be sure it was all over the company that this is the new focus of the CEO."

Tisch made his expectations clear for Motamed.

"The goal for him is to make the company as profitable as possible," Tisch told Leader's Edge, a trade publication. "That's objective one, two and three."

Patrick Gallagher, chairman and CEO of Itasca-based insurance brokerage Arthur J. Gallagher, said he likes the fact Motamed is "not a hired-gun financial guy."

Motamed also knows the importance of helping brokerages like Gallagher get the right coverage for their customers, Gallagher said.

In a May meeting with employees who serve the technology industry, Motamed laid out his philosophy. "There are a lot of competent people, but deep expertise sells," said Motamed, who told workers that CNA was a "good company becoming a great company."

Motamed also encouraged employees to get out and visit customers and ask, "What do you expect from me?"

"If they know you, it's hard to fire you on the renewal," he said.

Chicago-based insurance broker Mesirow Financial didn't have much of a relationship with CNA until Motamed joined the company, said Mesirow CEO Richard Price, who knew Motamed when he worked at Chubb.

"Having access to senior leadership at large insurance companies is difficult, and when you get face-to-face meetings it makes all the difference in the world," Price said.

Motamed knows how to cultivate personal relationships at a time when others at his pay grade begin to surround themselves with layers of people, said Jim Hackbarth, CEO of commercial brokerage Assurex Global in Columbus, Ohio.

Hackbarth recalls his first meeting with Motamed, then No. 2 at Chubb.

"He pulls out his business card and puts his mobile and home phone number on it, and says, 'If you ever need anything, call me,'" Hackbarth recalled. "Even though we had a business relationship, it's highly unusual for someone in that position to offer that kind of contact."

If he were to call Motamed on his cellphone, Hackbarth said he's sure he'd get a return phone call within 30 minutes.

Before Motamed joined CNA, the brokerage industry was concerned about the company's future. "Tom has come in and totally turned around that company," Hackbarth said.

The mess he was greeted with: In October 2008, CNA announced a $331 million net loss and suspended the dividend on common stock. It also said the current CEO would retire at year-end, five months earlier than planned. Loews said it would inject $1.25 billion into CNA Financial after it posted a third-quarter loss on hurricane-related costs, as well as $423 million in realized investment losses. Like other insurers, CNA derives part of its earnings from investing the money it takes in from policyholders. Its investments had included Fannie Mae, Freddie Mac, Washington Mutual, American International Group and securities issued by banks in Iceland. CNA stock lost a third of its value on Oct. 27, 2008, its biggest decline in at least 28 years. As of the close that day, it was down 65 percent for that year.

How he prepared to put CNA back on track: Before starting as CEO, Motamed read many internal reports, each hundreds of pages long, but decided not to have a strategy until he spoke with employees.

"In three months, I had a good idea" of changes needed, he said. By May or June he had a plan that called for more U.S. offices and beefing up sales to industries CNA historically hadn't served beyond its strengths of health care and construction.

What has changed: Motamed has grown the number of U.S. offices to 41 from 32 and expanded its presence in Europe through an acquisition. Offices weren't doing their own profit-and-loss statements; now they do. CNA "was not an efficient company" when he arrived, Motamed said.

When Motamed became CEO, there were 2,743 workers in Chicago. At the end of 2013, there were 1,981.

The number of CNA workers overall has fallen 22 percent to 7,017 under Motamed.

CNA has about 250 vacant positions it is looking to fill, of which about 100 are in the Chicago area.

"We're bringing in better people, and when you have better people, you don't need two mediocre, you just need one good one," Motamed said.

What hasn't changed: The media isn't allowed into CNA's annual shareholder meetings; Motamed said that's not his call. Nor does CNA have any women on its board. No vacancies have opened since he became CEO, Motamed said.

The Motamed file

Title: Chairman, chief executive of CNA Financial Corp., which sells property and casualty insurance to businesses.

Age: 65

Total annual compensation: More than $10 million

"I pulled out an old income tax return from seven years ago," he said. "I made $8 million seven years ago and I wasn't the CEO, so it wasn't like I came here for the money."

Boss: CNA is 90 percent owned by New York-based Loews, a conglomerate controlled by New York's billionaire Tisch family.

Family: Two daughters, three grandchildren, and a 2-year-old yellow lab named Deacon. He was first married in 1973, separated in 1978 and divorced three years later. He met his current wife, Chris, a former nurse, in the Hamptons one summer after the head of Chubb's law department played matchmaker. They got engaged on Groundhog Day so Motamed could easily remember the date; married 30 years.

Motamed's father is 86 and still practices medicine in California. Motamed has six half-brothers and half-sisters on his father's side. He also has four half-brothers and half-sisters on his mother's side. The family is having a "family dysfunctional reunion" in July and, as the oldest child, Motamed is leading the planning.

After his parents split up, Motamed didn't see his mother until he was in college. "When she died, I met the rest of the Irish family at an Irish wake," Motamed said.

Favorite Chicago restaurants: Coco Pazzo, Merlo on Maple

Pre-office routine: Arises at 4:45 a.m. to read emails on his iPhone. Drives 1.2-miles to work.

Latest book: Pat Conroy's "The Death of Santini"

Homes: A condo in the city; a stone farmhouse in Bucks County, Pa.; a home on Kiawah Island, S.C.; a rental in downtown Charleston, S.C.; and a condo in Charleston overlooking the Cooper River.

Religion: Episcopalian

Politics: Although his office features a photo of him with former Chicago Mayor Richard Daley, Motamed prefers Republicans. "I love President Bush. I loved his father. I don't like the guy now."

Advice to investors: Don't invest in something "you really don't understand inside out."

"If I put it in insurance terms, if I don't understand it, I really don't want to insure it."

Motamed bases his advice partly on a personal investment gone bad. He and his wife lost $2.2 million with UBS, prompting them to file a complaint. "The short story was they represented something that wasn't true."

Motamed proudly says he won $2.2 million plus interest in 2010 after arbitration.

Copyright © 2014, The Baltimore Sun
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