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Saturday, Aug 13, 2022

Packed Life

Newport Beach-based Pacific Mutual Holding Co. is the largest private company based in Orange County, a distinction it’s grown into with the help of two boards of directors.

The boards are ultimately responsible for keeping the company’s 770,000 policyholders satisfied. That means guiding management along to meet financial guarantees made on insurance policies, annuities and other products.

Pacific Mutual’s policyholders are beneficiaries of the company’s earnings, which are reflected in the form of interest credits on policy cash values that members can withdraw.

The company structure looks complex at first glance, with three legal entities that were created in reorganization in 1997. The operation as a whole now accounts for more than $116 billion in total assets, $6 billion in operating revenue, and $800 million in annual profits.


Here’s how it breaks down: Parent Pacific Mutual holds all the stock of Pacific LifeCorp, which in turn holds the stock of Pacific Life Insurance Co.

The boards of Pacific Mutual and Pacific LifeCorp—which total 20 seats and 13 members, including seven who serve on both—together oversee Pacific Life Insurance. They meet jointly to provide overall guidance, review transactions, and establish and instill corporate values.

The directors are veterans of various industries. Most come from California, and one is from Nebraska, the state of Pacific Mutual’s “legal domicile” and its primary regulator since 2007.

Well-known executives with ties to Orange County account for about half the seats on the boards.

“This board is very well balanced,” said William Thompson, retired Chief Executive of Newport Beach-based Pacific Investment Management Co., and a director of Pacific LifeCorp. “We’ve got people with financial expertise, technology expertise, and people who have run their own companies. Some have been involved in philanthropy and education. I’ve always been impressed by the type of people who have served.”

Thompson joined the board in 2003, but his relationship with the company goes back to 1993, when he became chief executive of Pimco, then a subsidiary of Pacific Mutual. Pimco spun off as a public company in 1994, and was acquired by Germany-based Allianz SE in 2000.

“Certainly my financial experience in the markets can be beneficial,” said Thompson, who now chairs the Investment, Finance and Financial Market Risk Committee of the board. “More importantly, though, I ran a company as a CEO. At Pimco we focused a lot on the type of culture you can build in a company, the sort of pride you can have, the kind of people you can hire. I think I bring a wide range of perspectives to the company.”

Long View

Being part of a mutual holding company structure—one that counts policyholders as owners—allows the company to take a long-term view of the company’s operations with less concern over short-term earnings or share-price movements, according to Pacific Life Chief Executive James Morris, who is among the Business Journal’s OC 50, the annual listing of the county’s most influential individuals.

So Morris and the boards answer to policyholders rather than shareholders.

“As members, they are entitled to vote at annual or special members’ meetings, as well as elect the holding company’s board of directors,” Morris said.

The newest board member is Chris Furman, who took a seat on the Pacific LifeCorp board in May. He is chief executive of Brea-based food manufacturing and distribution company Ventura Foods LLC. He spent 23 years in leadership roles with PepsiCo Inc. prior to Ventura.

“I’m walking in with my eyes wide open,” Furman said. “For me, [there] has been a lot to learn, coming in from outside the finance industry. But there is a similarity, like appealing to consumer preferences. It might be in the insurance sector, but you’re still looking at what the consumer is impacted by, [considering] a number of different macroeconomic factors. Pac Life has a great brand. At PepsiCo, we did a lot of work on the marketing side in terms of brand-building.”

Furman said he values the open flow of communication between directors and company executives.

“There’s a fair amount of challenge back and forth, in the form of question, checking their thinking, making sure they analyze opportunities in an appropriate way,” he said.

The candor is appreciated, according to Morris.

“I have spent my entire career in one industry, and essentially with just one company,” Morris said. “I highly value the perspectives that each member of our board provides from their diverse experiences.”

Asia Vets

The boards of Pacific Mutual Holding Co. and Pacific LifeCorp each have 10 seats. Here’s a list of their members, with an asterisk to denote directors with seats on both boards.

Douglas Abbey*; Mariann Byerwalter; Dwight Decker; Christopher Furman; John Gottschalk; Julia Gouw; James Morris; Susan Prager; J. Michael Shepherd; Thomas Sutton; William Thompson; Khanh Tran; Dean Yoost

Some directors, including Thompson, who served as chairman of Salomon Brothers Asia Ltd. prior to joining Pimco, count years of experience abroad.

Another Asia vet is Dean Yoost, who’s been a director of Pacific LifeCorp since 2007.

“I’ve spent half my career at PricewaterhouseCoopers in Asia,” Yoost said. He retired in 2005 after working at the accounting firm for 32 years, most recently as managing partner in Orange County. He also serves on the boards of three other companies: Costa Mesa-based Emulex Corp., Union Bank in San Francisco, and St. Louis-based Belden Inc.

“I bring the international perspective to all four situations,” he said. “All of them have significant global presence.”

Pacific Life through its reinsurance arm, Pacific Life Re, reaches international markets, including the United Kingdom, Ireland and Singapore. The division saw $495 million in revenue for 2011, making up more than 7% of the total. The company expects the reinsurance business to account for about 13% of 2012 revenue.

Other locally based directors are Pacific Life’s President Khanh Tran and retired Chairman and Chief Executive Thomas Sutton, as well as Dwight Decker, retired chief executive of Newport Beach-based chipmaker Conexant Systems Inc.

“It’s not a clubby group of friends,” Thompson said. “Most people on the board didn’t even know each other before becoming part of the group. I really like that.”

So far, so good.

Pacific Life’s operations kept busy and continued to grow last year, introducing a number of new products, such as its first index annuity product that’s tied to the Standard & Poor’s 500 Index. The company ended 2012 as “one of the top three companies in the industry in sales” on a number of fronts, including indexed universal life and variable universal life policies, according to Morris, who expects to “report strong financial results” for the year after the financials are approved mid-March.


Growth in Pacific Mutual’s various arms have come despite a challenging environment for the insurance industry, marked by low interest rates amid a slow recovery from the recent financial crisis.

“I feel like we had a very experienced ship as we went through that crisis,” Yoost said. “I find Pacific Life challenging in that the industry is challenging. We make decisions today in the insurance business, and you don’t know if you made the right decisions until 20 years later. The decisions are big, and they play a big role. The board, in our case, works very well together. We’ve got some very thoughtful people, experienced people.”


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