Wall Street Journal
Ullico's Finance Chief Quits in Protest of Its Management
Wall Street Journal Staff Reporter Tom Hamburger contributed to this report
Thursday March 6, 1:18 PM
WASHINGTON -- The chief financial officer of Ullico Inc. has stepped down, criticizing top management for an "unwillingness to face the financial crisis" confronting the union-owned financial-services company, Thursday's Wall Street Journal reported. "Your failure to act ... puts the survival of Ullico in greater and greater jeopardy with each day that passes," John Grelle wrote Ullico's president and board in his resignation letter last week. "There is precious little time left and the absence of any written real actionable plan could cause the demise of Ullico in the relatively near future."
The company has seen ongoing operating losses at its life and property/casualty insurance subsidiaries as well as substantial operating deficits in each of the past two years in several of its business lines. Mr. Grelle said proposals he developed to help shore up the finances were largely ignored. He declined to respond to requests for comment on his letter.
Ullico President Robert Georgine, former head of the Building Trades division of the AFL-CIO, rejected Mr. Grelle's criticism, saying that the company was developing a clear plan to resolve current financial difficulties. In a letter responding to Mr. Grelle, he said he has brought in an outside consultant to develop a "Corporate Action Plan" within 30 days.
Days after the exchange, A.M. Best Co. downgraded Ullico's life-insurance divisions from B-plus (very good) to B (fair) due in part to "the limited financial flexibility of the parent holding company."
In addition to the downgrade, Ullico is facing stepped-up state and federal investigations into its operations, particularly the lucrative stock deals offered exclusively to top officers and board members. The Labor Department is investigating whether Ullico board members enriched themselves with the questionable stock deals at the expense of several unions and their pension funds. A federal court hearing is set for next week as the Labor Department seeks company documents.
Wall Street Journal Staff Reporter Tom Hamburger contributed to this report.