Wednesday, May 23, 2018
Politics

Citizens Insurance CEO helped his boss sell his business, then got $100,000 in raises

TALLAHASSEE — The chief executive of Citizens Property Insurance Corp. assisted the chairman of Citizens' board in selling his company at a time when that board member was granting raises to the CEO.

Citizens chief executive Barry Gilway confirmed he acted as a go-between for Christopher Burr Gardner, who was trying to sell his longtime Winter Park insurance agency, and a Chicago businessman who became its buyer.

According to emails obtained by the Times/Herald, Gilway sent Gardner's contact information to Rick Gulliver, president of HUB International Limited, a Chicago insurance brokerage.

"Thanks — calling Chris today," Gulliver wrote Gilway two days later.

Gilway said he and Gulliver became close associates nearly two decades ago when he was in charge of insurance operations for Zurich Canada. Gilway had more than four decades of senior level insurance industry experience when he joined Citizens in 2012.

"This is called Networking 101," Gilway told the Times/Herald. "I don't think I did him any favors. All I did was make an introduction. It should be of no concern."

Gilway said Gardner asked him to put him in touch with Gulliver, and he said, "I told Chris that I'd be more than happy to provide you with an introduction. . . . I was the one who made the initial contact."

Gardner sold his agency, Kuykendall Gardner Risk & Insurance, to HUB in October 2014. Terms of the acquisition were not disclosed.

Three months later, in January 2015, Gardner, who as the board chairman of Citizens is listed as Gilway's supervisor, approved a $50,000 pay increase for Gilway.

That brought Gilway's annual salary to $500,000 a year. Gilway received another $50,000 raise six months later, bringing his salary to $550,000.

That's more than four times higher than the authorized salary for Gov. Rick Scott, who accepts a salary of a dollar a year.

Gilway, whose salary is set solely by Gardner, has not received a pay increase since 2015.

In email responses to Times/Herald questions, Gardner wrote, "I asked Barry to put me in touch with Rick Gulliver, who is the founder of HUB. Barry provided Rick my contact information and then had no further involvement in the transaction."

Gilway's actions brought criticism from Democratic state Sen. Gary Farmer of Lighthouse Point, who closely follows insurance issues.

"State agency heads don't broker private deals, as far as I know," Farmer said.

Farmer, a trial attorney and member of the Senate Banking & Insurance Committee, has questioned an arrangement under which Gilway terminated his employment contract with Citizens last year and became an "at will" employee.

By doing so, Gilway noted that he voluntarily gave up certain perks at Citizens, such as annual performance bonuses and a rental apartment in Tallahassee. (The CEO lives in Jacksonville.)

But under his new status, Gilway also no longer must undergo a public evaluation and salary review by Citizens' nine-member board of directors.

"Ignoring the board, placing it in the hands of one man, and that man happened to get assistance from Mr. Gilway on selling his insurance agency?" Farmer asked. "That sure looks fishy. It sure smells fishy."

Farmer's law firm has sued insurance companies, including Citizens, on water damage claims, and the senator and Citizens have been at odds over proposed legislative fixes to skyrocketing damage claims.

Farmer calls Gilway's $550,000-a-year salary excessive, especially at a time when Florida homeowners who are Citizens' customers face rising premium increases.

Three of Gilway's senior assistants at Citizens earn more than $300,000 a year each. Fourteen others are paid more than $200,000 a year each, including vice presidents for claims mitigation, human resources and vendor management.

"I am somewhat alarmed at the level of compensation some members are receiving," Gardner wrote to Gilway on March 8, 2016.

Today, however, Gardner calls Gilway's salary "appropriate" when compared to salaries of top executives at private insurance companies.

"During his initial contract negotiations, Barry was assured his compensation, which included a bonus provision and annual merit review, would be in the $550,000 range within a few years," Gardner wrote in an email to the Times/Herald. "Although his salary is well below market value, I believe that it is appropriate to maintain it at that level."

Citizens is the so-called insurer of last resort for property insurance in Florida; the annual hurricane season begins June 1.

It is a state-run government insurance program that writes policies for homeowners and business owners who are unable to obtain coverage in the private market.

Formed in 2002, Citizens is financed by the premiums paid by nearly 500,000 policyholders, down from a peak of about 1.5 million.

Citizens writes the second highest number of residential policies in Florida, behind private insurer Universal Property and Casualty Co.

Nearly half of those policies are in Miami-Dade and Broward, where rates have been rising steadily in large part because of a steep increase in lawsuits arising from water damage claims.

"The horizon is looking a little darker," Gilway wrote to Gardner last year, referring to soaring water damage claims.

Contact Steve Bousquet at [email protected] Follow @stevebousquet.

     
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