CFO Consulting Partners Reaches Its 14-Year Milestone

January 30, 2020 By CFO Consulting Partners

In 2006, David DeMuth and Allan Tepper formed CFO Consulting Partners. We focused on addressing the senior-level accounting and finance needs of companies whose accounting firms could no longer adequately address these needs due to independence issues. Eric Segal joined the partnership in 2009 to extend its capabilities to Financial Services and Insurance. Our firm began by providing fractional CFO services and that continues as a core service today. Over time, we added new capabilities including: M&A buy and sell-side services, private equity services, management and supervision of assurance processes, finance and accounting process improvement, finance transformation, SEC, regulatory and BOD/internal reporting.

Over the years, we built expertise in a broad range of industries, including banking, FinTech and other financial services businesses, business services, manufacturing, healthcare, technology, real estate and nonprofit.

As we reflect on what we have achieved since our inception, some notable accomplishments stand out:

We have developed significant expertise in helping companies achieve their business and accounting & finance goals, including buying and selling businesses, raising capital, strengthening internal controls, improving cash flow management and developing growth plans.
Clients have benefited from our all-senior-level financial management team who have “been there, done that.” Our people have held CFO or Controller positions in large and small companies, most are CPAs from major firms and have advanced degrees.
Clients have been aided by our firm-wide team approach to problem solving. Clients have access to the expertise of all of our team members to diagnose and solve problems.
Clients have prospered from having a boutique firm that moves quickly and has the depth of knowledge and experience to meet their needs.
Finally, we are proud to say that our clients recognize us as the “go-to” firm for CFO services provided to the community banking industry.

As we celebrate our 14^th year, we want to thank our clients, referral sources, partners and team members. We simply wouldn’t exist without your support.

We look forward to continuing to serve the needs of small and midsized companies, and we are proud of the benefits we offer to our clients.

Thank you.

Allan Tepper, Sr. Managing Director, CFO Consulting Partners

atepper@cfoconsultingpartners.com,

(646) 650-2028 x701

David DeMuth, Sr. Managing Director, CFO Consulting Partners,

ddemuth@cfoconsultingpartners.com

609-309-9307 x700

Eric Segal, Managing Director, CFO Consulting Partners

esegal@cfoconsultingpartners.com

609-309-9307 x702

Eric Segal, a Partner and Head of Our Financial Institutions Practice, Explains the New Accounting Standard for Loss Reserves (CECL)

September 17, 2018 By CFO Consulting Partners

This video can be viewed using this link.

Newsletter – June 2017

June 27, 2017 By CFO Consulting Partners

Insurance Company Credit Rating Advisory Practice, Part 2

Marc Liebowitz, CFO Consulting Partners LLC

There are three primary drivers of insurance credit ratings:

Risk adjusted capital levels
Operating results
Market profile which is the overall evaluation of strategies, products, underwriting strength and risk diversification.

In a previous article, we covered risk adjusted capitalization. Click here for the first article in the series. In this installment, we review how credit rating agencies evaluate operating results and market profile. Our focus is on the A.M. Best Company (AMB) and Kroll Bond Rating Agency (KBRA) methodologies as these agencies are most relevant to the mid-market insurance company ratings universe. The AMB and KBRA rating methodologies are available through their respective web sites:

A.M. Best’s Credit Rating Methodology
Global Insurer & Insurance Holding Company Rating Methodology

To measure the relative strength of a group’s operating results, analysts, develop a view of overall earnings power and compare those estimates to peer group averages and industry norms. The major components of this analysis are:

Comprehensive evaluation and trend analysis of financial outcomes, returns, and ratios
Development of multi-year projections and stress testing those forecasts
Review of key metrics for the consolidated organization and for individual business segments
Analysis of earnings by product and of investment portfolio earnings by asset type
Comparison of company specific results against peer group and industry-wide aggregates

Benchmarking comparisons are influential parts of the earnings analysis and management teams that demonstrate an understanding of key strategic and operational business elements which are apparent from this analysis are more likely to achieve their desired ratings outcome.

The market profile is a qualitative evaluation of a company’s spread of risk, revenue composition, and management strength. Given the qualitative nature of this analysis, management should provide a clear view of strategic plans and other elements which can provide a full picture of the company and how management approached the competitive landscape in its key markets.

A clear presentation of management’s plans to grow the company and improve operational efficiencies is essential to getting the appropriate rating for an organization. Sometimes there are areas where the goals of management and credit agencies are at odds. For example, a strategy to grow revenues and build the bottom line can be seen by the credit agency as a plan to add risk to the balance sheet. CFO Consulting Partners can work with the clients on how to best communicate the benefits of strategic actions and review strategies to mitigate the perceived risk.

Newsletter – May 2017

May 24, 2017 By CFO Consulting Partners

Insurance Company Credit Rating Advisory Practice

CFO Consulting Partners has begun to work with insurance companies to help maximize a company’s rating potential. This article is the first of a two-part series which will discuss the credit rating process for insurance companies. Here we discuss how ratings firms look at capital levels, and how management can demonstrate effective capital management strategies. A subsequent article will review the roles of: operating results, market profile, and additional analytic considerations in the ratings process.

Marc Liebowitz, CFO Consulting Partners LLC

There are generally five Security and Exchange Commission (SEC) registered Nationally Recognized Statistical Rating Organizations (NRSRO), otherwise known as rating agencies, which follow the U.S. insurance industry: A.M. Best Company (AMB) and Kroll Bond Rating Agency (KBRA) are the primary providers of credit ratings to the mid-market segment of the industry. The three larger NRSROs: Fitch, Moody’s and Standard & Poor’s (S&P), tend to focus on the industry’s larger companies.

AMB and KRBA provide two types of ratings on insurance companies, debt and policy issuer strength ratings. Debt ratings are an indication of the insurer ability to meet their interest and principal obligations on specific bonds, a policy issuer strength rating considers the likelihood of a failure to honor a company’s insurance policy liabilities. For policy liability ratings AMB issues Financial Strength Ratings (FSR), and KBRA issues Insurance Financial Strength (IFSR) ratings. Insurance companies seek policy issuer strength ratings for several reasons, for example, ratings are required by insurance agents, by reinsurance brokers and companies, and to insure bonded construction projects. Also, ratings are utilized by boards and other stakeholders as a third-party evaluation of operations and capital adequacy.

There are three primary drivers of insurance credit ratings: risk adjusted capital levels, operating results, and market profile (the overall mix of products, underwriting strength, and risk diversification). These factors form the foundation of the rating and are quantified and evaluated relative to rated peer groups and to industry averages. Enterprise Risk Management (ERM) practices, management quality, and other qualitative factors are also considered and may raise or lower the rating.

AMB uses a proprietary capital model, Best Capital Adequacy Ratio (BCAR), details of AMB’s methodology can be reviewed here: Best’s Credit Rating. AMB is in the process of updating its BCAR model – the most significant change will be the incorporation of scenario modeling of an insurance company’s loss factors at various confidence levels. The revised BCAR model is currently open to public comment before it goes into production, likely prior to year-end 2017.

KRBA’s capital strength assessment uses the National Association of Insurance Commissioners (NAIC) Risk Based Capital (RBC) model. KRBA details their capital adequacy approach within their rating methodology here: Global Insurer & Insurance Holding Company Rating Methodology

Rating agencies look at companies differently than management and other stakeholders – investors, employees, etc. Therefore, as part of any rating review or update management must be able speak to the agency’s perspective and clearly demonstrate management’s understanding of the company’s capital position, how it is managed through existing risk management programs, and how and why it will change going forward. Analysts expect management’s knowledge to extend beyond the results of the agencies capital modeling. Accordingly, management should present a forecast which considers the unique and proprietary aspects of the company’s strategy and operations. The ratings team will also want to discuss the programs in place to manage the company’s long-term solvency. All information presented by management will be distilled and compared to peer groups composed of comparable firms. Also, rating agency analysts cannot, due to SEC rules, provide guidance to companies on how to improve ratings.

To achieve rating upgrades, or to maintain a rating, management should plan to continuously improve risk management programs and strategies, create clear and achievable forecasts, and effectively communicate the various actions taken to maintain capital adequacy and manage the company’s risk profile. It’s critical for management to understand the agencies expectations prior to engaging discussions presenting material at an annual review.

Merchants Bancshares in South Burlington, Vt., hires Eric Segal as Interim Principal Financial Officer.

January 25, 2016 By CFO Consulting Partners

Merchants Bancshares in South Burlington, Vt., has named an interim principal financial officer after its chief financial officer resigned.

Thomas Meshako resigned from the $2 billion-asset Merchants to “pursue other interests,” according to a regulatory filing Friday.

Merchants will pay Meshako $110,000 in severance. Meshako, who was 54 at the time of Merchants’ proxy statement in April, had been CFO since November 2014. He was previously the finance director at the $5.9 billion-asset Brookline Bancorp in Boston.

Merchants hired Eric Segal as interim principal financial officer, principal accounting officer and treasurer. Segal, 58, will serve in these roles while Merchants searches for a permanent replacement. Segal is head of the banking and financial institutions practice at CFO Consulting Partners in New York.

Merchants also retained CFO Consulting Partners for advice on its acquisition of Nuvo Bank & Trust in Springfield, Mass., which was completed last month.

Merchants announced in November that its president, Geoffrey Hesslink, would succeed Michael Tuttle as chief executive.

The company reported net income in the first nine months of last year of $10.3 million, up 7% from a year earlier.

CFO Consulting Partners in the News

October 20, 2010 By CFO Consulting Partners

First National Bank of Chester County (West Chester, PA): Eric Segal was recently named the Interim CFO and Principal Accounting Officer for this $1.3 billion bank. Some of Eric’s principal roles are to restate and/or issue applicable SEC reports (such as 10-Q’s, 10-K’s) and to produce documents that meet certain bank regulatory requirements. First Chester is in the process of merging with Tower Bancorp. “Being an interim CFO for a company in the process of being acquired is a typical role provided by CFO Consulting Partners,” says Eric. See http://www.implu.com/releases/2010/20100304/37637/implu_viewer for more information.

NYS Society of CPAs (NYSSCPAs): Allan Tepper has been named Chairman of the Banking Committee of the NYSSCPAs for the 2010/2012 years. Allan has been a member of the NYSSCPAs for over 25 years and a Banking Committee member since 2008. Please visithttp://viewer.zmags.com/publication/5fb9dae8#/5fb9dae8/8 for more information.

Financial Executives Networking Group: Marc Engel has been named Chairman of the Internal Audit Special Interest group. He was previously Chairman of the Litigation Services Committee at the New York State Society of CPAs. Seehttp://www.crainsnewyork.com/article/20100328/FREE/303289992 for more information.

AccountingWeb: Marc Palker has recently written an article, “A day in the Life of an Interim CFO” that was published in the AccountingWeb.com. Marc covers such topics as SEC reporting, cash management, and biggest challenges. See http://www.accountingweb.com/topic/accounting-auditing/day-life-interim-cfofor more information.

Accountant/Attorney Networking Group: On Thursday October 14, 2010, Marc Palker was elected Executive Vice President of this group. This is a networking group for Accountants and Attorneys. See www.aangny.org for more information.

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