N.O.-based Pan-American Life Insurance Co. cuts back in 2005

New Orleans CityBusiness, Mar 20, 2006 by Greg LaRose

Like many New Orleans businesses, Pan-American Life Insurance Co. measures its status in pre- and post-Hurricane Katrina terms. But company downsizing was set in course well before the Aug. 29 storm.Pan-Am started 2005 with 481 employees and ended with 341. Most positions were eliminated when Pan-American sold its investment arm, Pan-American Financial Advisors, to Atlanta-based FSC Securities Corp.

FSC acquired Pan-American's 130 registered advisers. Terms of the deal were not released. Pan-American also ceased selling coverage plans for funeral and burial expenses.We felt like we had to make the company smaller and put it on the right footing before we could begin to grow it again. Our revenues went down by design, said Pan-American CEO Jose Suquet. Neither one of those businesses fit into our strategy or had enough scale, especially PAFA.The cost of downsizing - and $6 million in Katrina- related expenses - led to Pan-American annual revenues sliding 28 percent to $320.5 million.The reorganization for Pan-American included going to the capital markets for the first time in its 95- year history. Through a $50-million surplus note, the company has a war chest to pursue acquisitions in Latin American markets, said Suquet.Pan-American will convert from a mutual insurance company to a mutual holding company to add more capital. The change means policyholders will have shares of a parent company instead of the insurance company. Suquet says the move will give the company more flexibility on capital markets with its board dictating financial moves rather than policyholders.Suquet said the company returned to its 601 Poydras St. headquarters the week before Thanksgiving. Damage to the 28-story building was limited mostly to the top floor, which includes Suquet's office. Renovation should be finished by June, he said.Pan-American put its 680,000-square-foot building up for sale in August but it's off the market now, said Suquet. The insurance company also co-owns the adjoining Hotel InterContinental. Other hurricane-related changes for Pan-American include outsourcing information technology. Mainframe backups are now in Dallas, where roughly 200 employees were able to work immediately after the storm. Other segments of the company established temporary operations in Philadelphia, Valley Forge, Pa., Houston and Baton Rouge. We had just formalized our disaster recovery plan during the summer, said Suquet. We never thought we'd get a chance to implement it as quickly as we did.