Humana Names CEO McCallister Chairman After Resignation of Co-Founder’s Son

Health insurer Humana Inc. has named long-time Chief Executive Officer Michael B. McCallister chairman of the company's board of directors, effective immediately, after David A. Jones Jr. resigned from the post.

Jones, the founder and managing director of Chrysalis Ventures, a Louisville, Ky.-based venture capital firm, will remain on the board, Humana (NYSE: HUM) said. Jones, the son of a founder of Humana, served as chairman since April 2005.

"The board has known of the possibility of this move for some time" said Jim Turner, a spokesman for Humana. "It was well planned."

Humana's board also voted to establish a lead independent director position, and named Kurt J. Hilzinger to serve in that spot until April 2012.

David A. Jones and Wendell Cherry co-founded the Louisville-based Humana in 1961. The elder Jones served as chairman until his retirement in 2005, when his son assumed that post.

<p>Humana is the second-biggest seller of Medicare Advantage plans for seniors in the United States. Second-quarter net income had increased 20.7% to $340 million, while total revenues rose 9.5% to $8.6 billion. It has about 10.3 million medical members.

Health-reform legislation signed into law by President Barack Obama in March contained $202 billion in cuts in payments to Medicare Advantage, America's Health Insurance Plans said at that time. Under the law, payments to MA plans in 2011 are frozen at 2010 levels (BestWire, March 23, 2010). The major cuts would be phased in starting in 2012.

"I am grateful for my board colleagues’ vote of confidence and I look forward keenly to fulfilling the additional responsibility of board chairman with their superb counsel and support," said McCallister, in a statement. McCallister has served as CEO and a member of the board since 2000.

During the afternoon of Aug. 27, Humana's stock was trading at $48.76 a share, up 0.91% from the previous close.

Humana Health Plan Inc. currently has a Best Financial Strength Rating of A- (Excellent).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)