Cover Story

Evan Greenberg

A Risk & Insurance® exclusive interview, with insights from Peter Zaffino, John Keogh, Greg Case and Hank Greenberg.
By: | May 1, 2014 • 10 min read

Evan Greenberg oversees a company with $95 billion in assets, operating in 54 countries.

So one might think the president, CEO and chairman of ACE Limited would be stretched to capacity leading global strategy and directing execution.

Despite the vast reach of ACE, however, Greenberg’s appetite for detail is so keen that he could show up just about anywhere.

Peter Zaffino, the president and CEO of Marsh, said he has walked into a room anticipating a meeting with ACE practice leaders or regional managers and found Greenberg at the table.

It doesn’t matter the topic, the audience or the geography. If he can, those who know and observe him say that Greenberg will dive into the layers and seek to understand the topic as well as anyone in the room.

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“He is tireless in his pursuit and it is quite impressive,” said Zaffino.

“His mind is never at rest and it is almost always thinking about our company and our industry,” said John Keogh, ACE’s chief operating officer and vice chairman.

“There is an unbelievable capacity I have noticed in him to seek more information, whether it is company information or more information about the world.”

This May marks 10 years since Evan Greenberg became the president and CEO of ACE. He added the title of chairman in 2007.

In March, Risk & Insurance® sat down with Greenberg in an exclusive interview to discuss his career and personal interests.

Disciplined Underwriting

One might never encounter anyone quite like Evan Greenberg. His intensity, drive and intelligence are immediately apparent.

In conversation, Greenberg displays depth and range and is as animated in discussing his views on leadership and international politics as he is talking about what he treasures in his personal life.

A primary focus of Greenberg’s is the art and science of underwriting.

John Keogh, COO of ACE Limited

John Keogh, COO of ACE Limited

“This is a company of underwriters,” Greenberg said when asked about some of the keys to ACE’s success.

“We are managed by underwriters. All of senior leadership has a very strong underwriting background. We don’t take that lightly.”

ACE’s results support that statement.

From 2009 through 2013, the company recorded an average combined ratio of 91.4. In 2013, a record year for the company, ACE recorded a combined ratio of 88 and $3.8 billion in net income.

Those are superior results. You get them through vigilance, Greenberg will tell you.

“You know that you have to be standing on this business with two feet at all times,” Greenberg said.

“ACE prides itself on being a superb underwriting company, able to attract very smart and passionate underwriting talent,” said Greg Case, the president and CEO of global brokerage Aon plc.

“They are good at deploying their talent around a client where solutions are needed for risks that are difficult to transfer through conventional underwriting,” he added.

“A true leader is someone who recognizes the need for top talent and Evan has surrounded himself with an exceptional leadership team that is completely aligned.” — Greg Case, president and CEO of Aon plc.

Greenberg admits that his expectations are high and that he can sometimes be difficult.

“When I know it’s the right thing, I won’t compromise, even though it may be painful,” Greenberg said, in talking about what he demands of himself and the people that work for him.

“Evan can be demanding but it is always demanding from the point of view of being informed,” John Keogh said.

“He’s somebody you respect because usually what he wants out of you is no more than what he expects out of himself.”

ACE grew significantly in the past five years. It increased net premiums by nearly 30 percent and doubled its market value.

As the company grows, Keogh said its leaders keep a sharp eye out for the impediments of bureaucracy.

The company recently catalogued the number of committees it has to make sure they serve a purpose. Instead of bureaucracy, the focus at ACE is on individual accountability.

“We want to be a meritocracy,” Keogh said.

“We want to reward people and promote them based on what they have done, not based on the politics of who they know or who dislikes them,” he said.

Greenberg said he is loyal to those who prove themselves.

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Keogh said the loyalty Greenberg engenders can be seen in how few upper level executives leave ACE.

“I have been here eight years and there has been very little turnover in the most senior ranks of the company,” Keogh said.

“Not only has he recruited top talent, he has also developed and advanced existing talent,” Marsh’s Zaffino said.

“A true leader is someone who recognizes the need for top talent and Evan has surrounded himself with an exceptional leadership team that is completely aligned,” said Aon’s Greg Case.

“Quite frankly, ACE moves as fast as any company that I interact with,” Zaffino said.

“And this has really been driven by Evan’s leadership. He carefully thinks through the strategy, decides to execute and then moves very quickly,” he said.

John Keogh said Greenberg pushes to get the details he needs to make decisions.

“He is definitely very involved in that company, he is not just some big picture guy,” said Cliff Gallant, an insurance analyst with Nomura Securities.

“Having a highly respected management team beneath him depends on having a guy who can press them and push them. That comes from many years of experience. Certainly his pedigree is unique. There is no one who has quite got his resume,” Gallant said.

As the result of an environment where frankness is encouraged and the need for bureaucracy challenged, ACE is earning a reputation as a company that makes careers.

“If you are a senior manager at ACE, you are asked to do a lot and you are asked to know a lot,” said Gallant.

“All of the executives that I hear about coming out of ACE, are highly respected industry-wide.”

Natural Leader

Evan Greenberg started his insurance career at AIG working for his father, Hank Greenberg, but nothing was handed to him there, his father recalls.

Hank Greenberg, the chairman and CEO of the Starr Cos.

Hank Greenberg, the chairman and CEO of the Starr Cos.

“I ran the company in such a way that I treated everybody the same,” Hank Greenberg said.

“Nobody got special privileges and that’s what made AIG what it was at the time,” he said.

Hank Greenberg said Evan Greenberg took full advantage of his background and went on to distinguish himself through his own hard work.

“He has done a great job,” Hank Greenberg said.

“In many companies, the higher the individual goes, the less they are involved in the business and that has never been true in the Greenberg family.” — Hank Greenberg, chairman and CEO of the Starr Cos.

“I’m very proud of what he has achieved. He certainly has demonstrated that he has the skills, the insight and the maturity to lead a big company.”

Not many insurance leaders earn the same degree of praise from Hank Greenberg.

“In many companies, the higher the individual goes, the less they are involved in the business and that has never been true in the Greenberg family,” Hank Greenberg said.

Evan Greenberg is also an industry leader, sources said, someone who is willing to address global regulatory and economic issues.

For example, he returns time and again to the topic of global financial services regulation and the shortcomings of Solvency II, the European-based financial regulation regime which he views as unnecessarily costly and bureaucratic.

Greenberg is vocal on the importance of the renewal of TRIA, and on the need for a strong U.S. foreign policy.

Few insurance leaders are making public statements like that these days, said Paul Newsome, an analyst with Sandler O’Neill.

“The industry over the last several years lost a number of leaders who would come out and make political comments that would have impacts for the industry,” he said.

“I wouldn’t say it’s completely unique, but he is definitely one of a relatively small number of individuals running big companies who will publicly take positions,” Newsome said.

“He is very comfortable taking his positions on key issues to public forums in an effort to encourage an industry-wide focus, and I have always found him to be willing to listen to opposing points of view,” said Aon’s Case.

Case said that is true not only for regulatory topics but in the area of innovation.

“Evan is right about the need for continued innovation — it is what clients expect from our industry,” Case said.

A Unique Path

After high school, Greenberg eschewed the beaten path and took to the road.

“I spent three and a half years living in a lot of different places and doing a lot of different jobs,” Greenberg said.

“And I learned a few things. I learned it’s not so bad to have nothing,” he said.

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He also learned that anyone who takes their job seriously can find themselves in the work.

“It’s something that someone has the discipline to find, or not,” he said.

After getting his start at AIG, Evan Greenberg rose through the ranks, eventually becoming president and COO from 1997 through 2000 before leaving to join ACE in 2001.

Hank Greenberg says going over to ACE was a good move for Evan.

“Evan decided at one point that he wanted to strike out on his own and I don’t blame him for that,” Hank Greenberg said.

“I think it was the right thing to do. He did it and he has done very well at it,” Hank Greenberg said.

R5-14p26-28_Greenberg.inddA big reason Evan Greenberg does so well in insurance is because he loves the business, numerous sources said.

“As the magnitude, complexity and speed of risk continue to grow, the leadership roles in our industry become even more challenging,” said Greg Case.

“But whenever Evan and I meet or talk on the phone, you can tell he is really enjoying what he is doing,” Case said.

ACE’s John Keogh said that’s also evidenced by the speed at which Evan Greenberg works and how much he packs into a day.

“You have to love what you are doing to be that committed, day in and day out, the way I observe him,” Keogh said.

“You know I think there is no substitute for hard work,” Greenberg said.

“There is no substitute for truly knowing your craft and loving it. To really know it, you have to love it.”

If you don’t have a genuine passion for what you are doing, he said, those who report to you can tell.

In Private

Evan Greenberg is as multi-faceted as the company he runs. He expresses a love of nature and activities that require quick and precise action.

He is an avid skier and horseback rider.

“I am a curious cat and my natural state is not at rest,” he said.

“I love nature and animals. When I am not working in an urban environment you will find me in nature,” he said.

And he’s a blues rock fan.

“I think Gary Clark Jr. is the best guitarist on the planet today,” he said.

Greenberg places a great emphasis on family. In his New York office, family photographs line the book shelves.

“I don’t have the need for lots of friends,” Greenberg said.

“But I have a real need for my wife and children. I love my family and I love spending time with them,” he said.

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John Keogh said that Greenberg picks his spots when it comes to charity work and other activities outside the workplace.

“He will not do something unless he can give it his full energy and attention,” Keogh said.

Despite the high position he holds in business, Greenberg sees himself as “just a guy,” someone who can relate to anybody.

“I believe most people want to live their life with a sense of dignity and a sense of pride,” he said.

“And what you do, not what you may think you do, is the key to life.”

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Black Swan: EMP

Chaos From Above

An electromagnetic pulse event triggered by the detonation of a low-yield nuclear device in Earth’s atmosphere triggers economic and societal chaos.
By: | July 27, 2017 • 9 min read

Scenario

The vessel that seeks to undo America arrives in the teeth of a storm.

The 4,000-ton Indonesian freighter Pandawas Viper sails towards California in December 2017. It is shepherded toward North America by a fierce Pacific winter storm, a so-called “Pineapple Express,” boasting 15-foot waves and winds topping 70 mph.

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Normally, Pandawas Viper carries cargo containers. This time she harbors a much more potent payload.

Unbeknownst to U.S. defense and intelligence officials, the Viper carries a single nuclear weapon, loaded onto a naval surface-to-air missile, or SAM, concealed below deck.

The warhead has an involved history. It was smuggled out of Kyrgyzstan in 1997, eventually finding its way into the hands of Islamic militants in Indonesia that are loosely affiliated with ISIS.

Even for these ambitious and murderous militants, outfitting a freighter with a nuclear device in secrecy and equipping it to sail to North America in the hopes of firing its deadly payload is quite an undertaking.

Close to $2 million in bribes and other considerations are paid out to ensure that the Pandawas Viper sets sail for America unmolested, her cargo a secret held by less than two dozen extremist Islamic soldiers.

The storm is a perfect cover.

Officials along the West Coast busy themselves tracking the storm, doing what they think is the right thing by warning residents about flooding and landslides, and securing ports against storm-related damage.

No one gives a second thought to the freighter flying Indonesian colors making its way toward the Port of Long Beach, as it apparently should be.

It’s only at two in the morning on Sunday, December 22, that an alert Port of San Diego administrator charged with monitoring ocean-going cargo traffic sees something that causes him to do a double take.

GPS tracking information indicates to him that the Pandawas Viper is not heading to Long Beach, as indicated on its digital shipping logs, but is veering toward Baja, Calif.

Were it to keep its present course, it would arrive at Tijuana, Mexico.

The port administrator dutifully notifies the U.S. Coast Guard.

“Indonesian freighter Pandawas Viper off course, possibly storm-related navigational difficulties,” he emails on a secure digital communication channel operated by the port and the Coast Guard.

“Monitor and alert as necessary,” his message, including the ship’s current coordinates, concludes.

In turn, a communications officer in the Coast Guard’s Alameda, Calif. offices dutifully alerts members of the Coast Guard’s Pacific basin security team. She’s done her job but she’s about an hour late.

At 3:15 am Pacific time on December 22, the deck on the Pandawas Viper opens and the naval surface-to-air missile, operated remotely by a militant operative in Jakarta, is let loose.

It’s headed not for Los Angeles or San Diego, but rather Earth’s atmosphere, where it detonates about 50 miles above the surface.

There it interacts with the planet’s atmosphere, ionosphere and magnetic field to produce an electromagnetic pulse, or EMP, which radiates down to Earth, creating additional electric or ground-induced currents.

The operative’s aim is perfect. With a charge of hundreds and in some cases thousands of volts, the GICs cause severe physical damage to all unprotected electronics and transformers. Microchips operate in the range of 1.5 to 5 volts and thus are obliterated by the billions.

As a result, the current created by the blast knocks out 70 percent of the nation’s grid. What began as an overhead flash of light plunges much of the nation into darkness.

The first indication for most people that there is a problem is that their trusty cellphones can do no more than perform calculations, tell them the time or play their favorite tunes.

As minutes turn to hours, however, people realize that they’ve got much bigger concerns on their hands. Critical infrastructure for transportation and communications ceases. Telecommunication breakdowns mean that fire and police services are unreachable.

For the alone, the elderly and the otherwise vulnerable, panic sets in quickly.

Hospital administrators feverishly calculate how long their emergency power supplies can last.

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Supermarkets and other retailers anticipating one of their biggest shopping days of the year on that Monday, December 23, instead wake up to cold homes and chilling prospects.

Grocery stores with their electricity cut off are unable to open and product losses begin to mount. Banks don’t open. Cash machines are inoperable.

In the colder parts of the United States, the race to stay warm is on.  Within a day’s time in some poorer neighborhoods, furniture is broken up and ignited for kindling.

As a result, fires break out, fires that in many cases will not draw a response from firefighting crews due to the communication breakdown.

As days of interruption turn into weeks and months, starvation, rioting and disease take many.

Say good-bye to most of the commercial property/casualty insurance companies that you know. The resulting chaos adds up to more than $1 trillion in economic losses. Property, liability, credit, marine, space and aviation insurers fail in droves.

Assume widespread catastrophic transformer damage, long-term blackouts, lengthy restoration times and chronic shortages. It will take four to 10 years for a full recovery.

The crew which launched the naval surface-to-air missile that resulted in all of this chaos makes a clean getaway. All seven that were aboard the Pandawas Viper make their way to Ensenada, Mexico, about 85 miles south of San Diego via high-speed hovercraft.

Those that bankrolled this deadly trip were Muslim extremists. But this boat crew knows no religion other than gold.

Well-paid by their suppliers, they enjoy several rounds of the finest tequila Ensenada can offer, and a few other diversions, before slipping away to Chile, never to be brought to justice.

Observations

This outcome does not spring from the realm of fiction.

In May, 1999, during the NATO bombing of the former Yugoslavia, high-ranking Russian officials meeting with a U.S. delegation to discuss the Balkans conflict raised the notion of an EMP attack that would paralyze the United States.

That’s according to a report of a commission to assess the threat to the United States from an EMP attack, which was submitted to the U.S. Congress in 2004. But Russia is not alone in this threat or in this capability.

Wes Dupont, vice president and general counsel, Allied World Assurance Company

North Korea also has the capability and the desire, according to experts, and there is speculation that recent rocket launches by that country are dress rehearsals to detonate a nuclear device in our atmosphere and carry out an EMP attack on the United States.

The first defense against such an attack is our missile defense. But some experts believe this country is ill-equipped to defend against this sort of scenario.

“In terms of risk mitigation, if an event like this happens, then that means the best risk mitigation we have has already failed, which would be our military defense systems, because the terrorists have already launched their weapon, and it’s already exploded,” said Wes Dupont, a vice president and general counsel with the Allied World Assurance Company.

The U.S power grid is relatively unprotected against EMP blasts, Dupont said.

And a nuclear blast is the worst that can occur. There isn’t much mitigation that’s been done because many methods are unproven, and it’s expensive, he added.

Lloyd’s and others have studied coronal mass ejections, solar superstorms that would produce a magnetic field that could enter our atmosphere and wipe out our grid.  Scientists believe that an EMP attack would carry a force far greater than any coronal mass ejection that has ever been measured.

An extended blackout, with some facilities taking years to return to full functionality, is a scenario that no society on earth is ready for.

“Traditional scenarios only assume blackouts for a few days and losses seem to be moderate …” wrote executives with Allianz in a 2011 paper outlining risk management options for power blackout risks.

“If an event like this happens, then that means the best risk mitigation we have has already failed … because the terrorists have already launched their weapon, and it’s already exploded.” — Wes Dupont, vice president and general counsel, Allied World Assurance Company

“But if we are considering longer-lasting blackouts, which are most likely from space weather or coordinated cyber or terrorist attacks, the impacts to our society and economy might be significant,” the Allianz executives wrote.

“Critical infrastructure such as communication and transport would be hampered,” the Allianz executives wrote.

“The heating and water supply would stop, and production processes and trading would cease. Emergency services like fire, police or ambulance could not be called due to the breakdown of the telecommunications systems. Hospitals would only be able to work as long as the emergency power supply is supplied with fuel. Financial trading, cash machines and supermarkets in turn would have to close down, which would ultimately cause a catastrophic scenario,” according to Allianz.

It would cost tens of billions to harden utility towers in this country so that they wouldn’t be rendered inoperable by ground-induced currents. That may seem like a lot of money, but it’s really not when we think about the trillion dollars or more in damages that could result from an EMP attack, not to mention the loss of life.

Allianz estimates that when a blackout is underway, financial trading institutions, for example, suffer losses of more than $6 million an hour; telecommunications companies lose about $30,000 per minute, according to the Allianz analysis.

Insurers, of course, would be buffeted should a rogue actor pull off this attack.

Lou Gritzo, vice president and manager of research, FM Global

“Depending on the industries and the locations that are affected, it could really change the marketplace, insurers and reinsurers as well,” said Lou Gritzo, a vice president and manager of research at FM Global.

Gritzo said key practices to defend against this type of event are analyzing supply chains to establish geographically diverse supplier options and having back-up systems for vital operations.

The EMP commission of 2004 argued that the U.S. needs to be vigilant and punish with extreme prejudice rogue entities that are endeavoring to obtain the kind of weapon that could be used in an attack like this.

It also argued that we need to protect our critical infrastructure, carry out research to better understand the effects of such an attack, and create a systematic recovery plan. Understanding the condition of critical infrastructure in the wake of an attack and being able to communicate it will be key, the commission argued.

The commission pointed to a blackout in the Midwest in 2003, in which key system operators did not have an alarm system and had little information on the changing condition of their assets as the blackout unfolded.

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The commission’s point is that we have the resources to defend against this scenario. But we must focus on the gravity of the threat and employ those resources.

Our interconnected society and the steady increase in technology investment only magnify this risk on a weekly basis.

“Our vulnerability is increasing daily as our use of and dependence on electronics continues to grow,” the EMP commission members wrote back in 2004.

But “correction is feasible and well within the nation’s means and resources to accomplish,” the commission study authors wrote. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]