2014 Power Broker

Employee Benefits

A Reassuring Presence

James Bernstein Principal Mercer, Cincinnati

James Bernstein
Principal
Mercer, Cincinnati

The HR director for a company providing oil and gas drilling services was on the road, meeting with employees to discuss changes to their health insurance, including the introduction of high-deductible plans.

One session did not go well. Upset, the director called James Bernstein at midnight and discussed her concerns about the lack of clarity in the materials she had available. By the time she woke up the next morning, Bernstein had sent her a fresh set of PowerPoint slides.

“That’s his devotion. He lives and breathes it. I really could not do this without him,” said the HR director, who lauded Bernstein’s attention to detail and simultaneous grasp of the big picture. “I’ve got 10 balls in the air, and he will make sure I don’t drop one of them. Through emails, through meetings, he is on top of things.”

And Bernstein, a principal at Mercer, also follows up, whether it’s with insurance carriers or with other consultants inside Mercer, said another client, Josée Nadon, pension and benefits director for TransForce, a Montreal-based trucking company.

Bernstein helped the company’s U.S. subsidiaries align benefits and comply with the Affordable Care Act.

“Believe me, it wasn’t a tea party,” Nadon said. “He had a lot of work, and even though the task is extremely big, he’s always on top of things and he gets involved very closely with us.”

Bernstein has also been a reassuring presence, clearly translating complicated U.S. law to Canadian executives, she added. “He’s a good teacher.”

Meeting Global Challenges

Christopher Chao Senior Vice President Aon Hewitt, New York

Christopher Chao
Senior Vice President
Aon Hewitt, New York

Overseas trips are less turbulent for clients of Christopher Chao, who specializes in placing group policies for business travel. Over the past year, he has opened new insurance markets for the risk and responded — often on short notice — to businesses sending workers into some of the world’s most dangerous countries.“I’ve always said that he makes my life easy,” said the risk manager at an international food company with a growing volume of business in the Middle East.

Over the years, Chao, senior vice president at Aon Hewitt, has helped the company secure better coverage while keeping rates competitive, she said. He is readily available between renewals as well.

The company calls on Chao when it sends employees into countries where coverage for war-related injuries is excluded. Although the company buys back the coverage, it has to get it underwritten separately before each trip. Chao often has only a few days to get coverage quoted and bound, the risk manager said. 

“It’s challenging,” she said. “But every time, he’s come through.”

Another client, active in 140 countries, counted on Chao to develop a global program that covered employees around the world. Corporate outposts had been operating under individual contracts for coverage of business travel.

“I really feel that he took it upon himself to make sure we had the best available program,” said an HR manager at the company, who worked with Chao to develop the coverage.

Minimizing Disruptions

Kim Clark Account Director Arthur J. Gallagher, Bingham Farms, Mich.

Kim Clark
Account Director
Arthur J. Gallagher, Bingham Farms, Mich.

Before he could get the flexible health plan he wanted, the HR executive at a Midwestern manufacturer had to find a broker flexible enough to meet the challenge. That broker was Kim Clark, account director at Gallagher Benefit Services.

“Even though this was a small unit, under 100 lives, she was willing to take the time to dig into this thing and figure out a way to make it work,” said the HR executive.

The company, which makes equipment for the food industry, had both hourly and salaried employees covered under a low-cost, union-based health plan. With Clark’s help, the company moved both groups to a company-sponsored plan with more options.

“The reaction I got from the other brokers I was talking to was, ‘Well, we just can’t find anything that’s going to compete with what the union has,’ and we were able to compete,” the HR executive said.

Over the past year, Clark has untangled similar knots for other clients. The Ypsilanti Community Utilities Authority in Michigan, for example, had to comply with the Affordable Care Act at the same time it was implementing a state law that required public-sector employees to pay a share of their health insurance premiums.

Clark helped develop a health plan, as well as other benefit plans, that minimized the disruption, said Kimberly Robinson, HR director for the authority, which has 112 employees and serves water and wastewater needs in Ypsilanti and surrounding areas.

Exceeding Expectations

Joel Davidowski Executive Vice President HUB International, Los Angeles

Joel Davidowski
Executive Vice President
HUB International, Los Angeles

Tom Ruby often heard Joel Davidowski speak at industry conferences — and Ruby always came away with great ideas to enhance employee benefits at KLM Royal Dutch Airlines, where he is director of HR.

Last year, Ruby got a chance to return the favor. He invited Davidowski, executive vice president at HUB International, to bid on helping KLM and its parent company, Air France, align health plans for their roughly 800 employees and 500 retirees in the United States.

Up against incumbent brokers, Davidowski won the job last July, and had a plan in place by Sept. 1.

“I think he impressed the team with his marketplace knowledge and forward thinking,” Ruby said. “He tends to talk not only about today, but also about how you start to plan today for two to three years out. We were talking about aligning benefit plans. He was already talking about what steps we should take to prepare for Obamacare.”

The airlines are working with Davidowski and HUB to develop a wellness program. “What I’ve had in terms of service has really exceeded expectations, and I know that Air France also feels the same way. We’re quite satisfied.”

So is Alan Edrick, CFO and executive vice president of OSI Systems Inc., a Los Angeles-based security and health care company with 5,500 employees. Davidowski has helped the company hold down insurance premiums, despite recent losses.

A Persuasive Ally

Doug Derks Area Vice President Arthur J. Gallagher, Bingham Farms, Mich.

Doug Derks
Area Vice President
Arthur J. Gallagher, Bingham Farms, Mich.

When Kevin Phillips asked teachers to accept sweeping changes to their health insurance, he had a persuasive ally on his side of the bargaining table: Doug Derks, who combines expertise in health coverage with experience in school administration.

“With his knowledge, he can kind of help guide districts through what is the best solution for them, and I think there’s a trust factor there, knowing that he has sat in their seats,” said Phillips, the assistant superintendent of finance for East Grand Rapids Public Schools in Michigan.

Derks, area vice president at Gallagher Benefit Services, also understood teachers’ concerns, Phillips said, and he sat in on negotiating sessions with their representatives.

The broker’s efforts helped convince teachers to drop their union plan and enroll in a growing self-funded health insurance pool serving school districts and municipalities in western Michigan, Phillips said. “He’s done a great job of selling that idea,” he said, noting that the pool’s expansion helps spread the risk.

Derks achieved similar results for Vicksburg Community Schools, also in Michigan, according to Stephen Goss, the district’s assistant superintendent. “That’s a pretty large feat, to convince teachers to leave their union-supported health plan,” Goss said, praising Derks’ communication skills.

“He’s able to explain complex concepts in a way that people can understand, especially people that don’t deal with employee benefits every day,” Goss said.

In Capable Hands

Tracy Dieterich, CRPS Senior Vice President Wells Fargo, Houston

Tracy Dieterich, CRPS
Senior Vice President
Wells Fargo, Houston

Some CFOs might have stayed quiet. But even though he was new to his job, Kevin Boyle Sr. did not hesitate to add Tracy Dieterich’s name to the mix.

“The mix” was a pool of brokers competing for a high-stakes opportunity: assisting a private equity firm, Symphony Technology Group, in creating a single health insurance plan for 3,000-plus employees at six portfolio companies.

“I was putting my reputation on the line,” said Boyle, who was then barely a month into his job as CFO at one of Symphony’s companies, SIGMA3, a Houston-based software and engineering services firm. But Boyle had worked with Dieterich, senior vice president at Wells Fargo, in the past and knew his reputation was in capable hands.

Dieterich ultimately was selected to carry out the project, one that had seldom been tried in the private-equity world. Through the course of 2013, Dieterich and his team mapped out a plan and overcame numerous challenges, including the addition of new portfolio companies along the way. Dieterich also had to grapple with internal concerns about changes to existing plans and broker relationships, Boyle said, noting that Dieterich handled them well.

“He is a genuine person. You can feel the empathy, the passion, the concern,” Boyle said. “He places himself in the role of CFO, HR administrator and employee. He crafts a solution with all those different parties in mind.”

The plan took effect in 2014 and is expected to deliver seven-figure savings per year.

A Steady Hand

Robert Ditty Partner Mercer, Atlanta

Robert Ditty
Partner
Mercer, Atlanta

A health system in the Southeast entrusted Bob Ditty with a total health plan replacement in 2013. Throughout the nerve-wracking operation, Ditty kept a steady hand, minimizing the impact of the change and delivering a competitive, cost-effective plan that was launched in early 2014.

The new plan, which includes high-deductible policies and health savings accounts, replaces a traditional HMO and point-of-service product, said a benefits director at the health system, which employs more than 10,000 people at multiple locations.

“It’s just been remarkable how well this whole process went,” she said, praising Ditty’s skill in explaining the changes, setting timelines for achieving them and collaborating closely with the health system’s HR administrators. “If I had to do something like this all over again, he’s the kind of guy I would want to be on my team.”

Ditty also proved valuable last year to DSM Services USA, a life sciences and materials sciences company based in Parsippany, N.J.

Ditty worked to ensure DSM’s managers and employees understood changes stemming from the Affordable Care Act, said Lauren Gibbon, DSM’s senior benefits director for North America. “Our benefits department is very lean, so we depend on Bob and his team to provide us with quick and accurate answers.”

Thanks to Ditty’s knowledge of both the law and the company, DSM adopted a long-term approach to managing rising health costs, Gibbon added.

Planning for Change

Perry Dorgan Senior Vice President Aon Hewitt, Edmonton, Alberta, Canada

Perry Dorgan
Senior Vice President
Aon Hewitt, Edmonton, Alberta, Canada

Major changes are coming to the government-backed prescription drug coverage enjoyed by senior citizens in Alberta — and to the benefit plans that help retirees pick up costs that aren’t covered.

“It’s going to be a very tumultuous time,” said Daniel Mulloy, chief administrative officer and executive director of the Alberta Retired Teachers’ Association, which offers health and wellness benefits to nearly 10,000 members. “They’re all going to be looking for answers.”

For Mulloy, many of the answers have been coming from Perry Dorgan. The Aon Hewitt senior vice president guides the association in developing plans to absorb what could be higher costs for prescription drugs. The association expects to cover its members’ deductibles under the government plan, Mulloy said.

The association also relies on Dorgan to ensure members gain from their prescription drug benefits, and that coverage keeps pace with changes in the pharmaceutical world.

“He is looking at the inputs into our plan that may have negative or positive effects, and trying to plan for those impacts, so we can be proactive in addressing them,” Mulloy said. Dorgan also has an eye on his future client relationships, ensuring that junior team members get hands-on experience.

“From a succession planning perspective, it’s giving me and our board … a good comfort level that Perry is committed to sharing his expertise and fostering growth in others,” a client said.

A Company Resource

Winfield Evens, CFA Director of HRO Investment Strategy Aon Hewitt, Lincolnshire, Ill.

Winfield Evens, CFA
Director of HRO Investment Strategy
Aon Hewitt, Lincolnshire, Ill.

The goal was higher participation in the company’s 401(k) plan. The advice from Winfield Evens was to be more aggressive in getting there. He recommended automatic enrollment of employees with a contribution set at 8 percent of their salaries.

“We knew it was aggressive, but we were comforted by the fact that Win helped us make the business case,” said a benefits manager at the company. And it has worked, as have other suggestions by Evens.

The company now boasts a 401(k) participation rate of 90-plus percent, the manager said. “A big part of that is the counsel we’ve gotten from Win in terms of different communications strategies.”

Evens has also helped clients manage the back office. He has been a driving force in Aon’s creation of DC Nexus. The web-based program is designed to deliver greater transparency, insight and control of retirement plans, in an effort to assist companies as they face increasingly rigorous expectations for fiduciary oversight.

“We think it will not only help us manage fees but also monitor fund performance more thoroughly and timely,” said one company’s benefits specialist.

Another company is looking forward to using DC Nexus after being impressed by what Evens has done since being hired as a consultant in 2012.

“The guy’s been terrific,” said a benefits manager at the company. “He’s a resource I would not hesitate to go to, even if I were to bring something outside the box, so to speak, to him.”

Focus on Client Satisfaction

Scott Fullerton, FSA, EA Partner Aon Hewitt, Lincolnshire, Ill.

Scott Fullerton, FSA, EA
Partner
Aon Hewitt, Lincolnshire, Ill.

A financial executive at a global mining company had no trouble picking a single actuarial services provider out of the three that had been serving the company’s nearly two dozen retirement plans.

He chose the team led by Scott Fullerton, a partner at Aon Hewitt. “He’s been very involved and very supportive,” said the executive.

The executive especially appreciated Fullerton’s commitment to the account. He worked for the company while a service contract was being negotiated, a process that took longer than expected.

“He didn’t put the financial aspect first. He put client satisfaction first,” the executive said. “He’s always asking during the year about what they are doing well, what they can improve, and what we’d like to see them change.”

Fullerton’s service-oriented approach includes learning everything he can about the companies he serves. In the past year, he started asking one client to share her department’s objectives.

“He always finds one or two items that he has been able to assist me with that I wouldn’t have thought to go to him on,” the client said. “He continues to review the list throughout the year, to continue to check on progress and see if there is anything his team can do to assist us.”

At another company, Fullerton offered valuable guidance during a transition to new ownership. “He’s very professional, of course, and he’s very personable,” said Sandra Graham, benefits analyst at Canon USA Inc.

Building Consensus

John Hanson, FSA, EA Partner Aon Hewitt, Minneapolis

John Hanson, FSA, EA
Partner
Aon Hewitt, Minneapolis

When Farm Credit Foundations in St. Paul, Minn., a shared services organization handling the HR needs of 45 rural lenders, needs help building consensus, Cindy Burkel, the organization’s vice president of employee benefits, calls John Hanson, Aon Hewitt’s Minneapolis Market Retirement Practice leader. “He takes complicated subjects and makes them very easy to understand,” Burkel said. “There have been many times over the course of our tenure together where he’s taken a tenuous situation and really tried to help figure out how can we turn it around so people feel comfortable.”

Most recently, Hanson guided Farm Credit Foundations as it lowered risks for its four defined-benefit plans, Burkel said. “John did a great job tying together liabilities and investments, and calling out long-term strategies,” she said.

Hanson’s advice is grounded not only in knowledge of pensions, but also knowledge of his clients’ operations. In some cases, he might even advise a client not to act.

Hanson, for example, recently weighed a technical change to the company’s pension plan, a change other companies have been making. The move would have had some positive financial impact but was rejected because it would have created a heavier administrative load.

“Quite frankly, the thing I like about him is he’s not always trying to sell,” said John Kita, executive vice president and CFO of A.O. Smith, a Milwaukee-based manufacturer. “That’s probably one of the biggest differences I see with John. He knows us, and if he doesn’t have a strong recommendation, he’ll say so.”

Dealing with Disruptions

Tim McDonald Vice President Aon Hewitt, Pleasant Ridge, Mich.

Tim McDonald
Vice President
Aon Hewitt, Pleasant Ridge, Mich.

A company’s needs often get lost in translation. But with Tim McDonald as a go-between, even the most daunting projects come together.

Over the past year, McDonald, vice president, Health and Benefits, Aon Hewitt, has helped a large manufacturer in the Midwest build its first-ever employee health clinic — and explain the company’s vision to potential vendors.

“Tim has impressed me with his ability to understand thoroughly what we’re trying to do and serving as that liaison to say, ‘We say this, but mean that,’ ” said a project manager in the company’s health group, who acknowledged that his company can be a difficult client. “His knowledge and understanding of us as a company has impressed me because that is an area that a lot of consultants will struggle with.”

McDonald also doesn’t hesitate to push back, the project manager said. “We don’t want a yes man or yes person. We want someone that pushes us and grounds us, and Tim does a great job of understanding what’s out there in the market.”

McDonald’s expertise in onsite clinics steered another client through a potentially disruptive transition between vendors. The client, a health care services and manufacturing company in the Midwest, wanted to keep the clinic’s staff through the change, said a company benefits director. McDonald helped develop retention strategies that worked.

“We didn’t lose anybody,” the benefits director said, noting that McDonald also was instrumental in helping her win internal approval for the transition.

A Client Advocate

Laurie Miller Area Senior Vice President Arthur J. Gallagher, Rockford, Ill.

Laurie Miller
Area Senior Vice President
Arthur J. Gallagher, Rockford, Ill.

Laurie Miller was something of a shock absorber for companies on the bumpy road of health insurance in 2013. The Gallagher Benefit Services executive handled complicated claims, wrung out lower premiums and kept clients up to date on changes sparked by the Affordable Care Act.

“It’s been a good year for us,” said an HR administrator at a food manufacturer in the Midwest who has worked with Miller. “Whenever I have an issue, whether it be with a renewal or with claims or coverage, she and her team address it head-on. They immediately follow up with me.”

Just as often it’s Miller who reaches out. “In the past, I’d be the one reading up on changes in health care, and I was going to the brokers with suggestions,” the administrator said, adding that Miller turned the tables, ensuring the company met its deadlines under the ACA. “That’s the role of a really good broker.”

Client advocacy is another role in which Miller shines. She helped negotiate a 14 percent premium decrease last year for Southern Imperial Inc., said Sherrie Sisco, the company’s HR director. Southern Imperial manufactures display products for the retail industry and employs about 330 people. Miller also pitched in to handle an unexpected cluster of life-insurance claims, Sisco said. “She’s the ultimate professional, and she’s someone you can really trust. There’s so much to worry about in HR and deal with on a daily basis. It’s nice to know you have a broker who is watching out for you.”

Complicated Plan Designs

Mark Swanson, FSA, EA Partner  Aon Hewitt, St. Louis

Mark Swanson, FSA, EA
Partner
Aon Hewitt, St. Louis

Executives at a nonprofit Catholic health care system in the Midwest did not want a standard 401(k) plan for their 35,000-plus employees. They wanted a custom plan that rewarded longer-term employees but one that also boosted contributions for the system’s lowest-paid workers.

“It’s something that you just don’t see out there,” said an HR executive at the system. But with Mark Swanson’s input, the system was able to design a plan and roll it out smoothly as a replacement for an existing cash balance retirement program.

“He knows us probably better than any consultant we work with,” the executive said of Swanson, a partner at Aon Hewitt.

The conversion to a new retirement plan was not the only complex challenge faced by Swanson in 2013. He also assisted organizations in reorganizing and streamlining pension plans following significant mergers.

In one case, he helped a consolidated health system trim nearly $8 million in annual accounting expenses and simplify administration. In another case, he counseled HR executives involved in the $30 billion merger of two pharmacy benefits providers, Express Scripts Inc. and Medco Health Solutions. St. Louis-based Express Scripts sought advice on handling a defined-benefit plan inherited from Medco.

“Mark is very good at educating in a practical, results-oriented way with HR and finance and legal, and bringing it altogether,” said Dorie Ramey, a vice president with Express Scripts.

Aligning with Corporate Goals

Andy Vetor Principal MJ Insurance, Indianapolis

Andy Vetor
Principal
MJ Insurance, Indianapolis

Jenny Burke can solve most benefits puzzles with a phone call to Andy Vetor.

“He is always the first person I reach out to whenever I need anything, because I know he’ll get it done,” said Burke, global wellness and benefits specialist at Interactive Intelligence, an Indianapolis-based company that develops routing software for call centers. It has roughly 1,200 employees in the United States and 500 overseas.

Over the past year, Vetor, executive vice president, Employee Benefits, MJ Insurance, pitched in to handle a rare life insurance claim for Interactive, straightened out customer service glitches at the company’s onsite health clinic, and worked directly with employees to steer them through medical coverage issues, Burke said.

“It’s an extreme level of customer service that I don’t think we’d find with any other broker,” she said.

Vetor also keeps an eye on the big picture, she added. “Every year, he asks for our corporate goals and objectives to ensure that his practice is in line with us. He always wants to understand where the business is going.”

Heidi Morris appreciates Vetor’s ability to come up with creative designs for health insurance that are competitive and cost effective. He has proposed ways, for example, to address areas where costs are rising, said Morris, corporate HR manager for ILPEA Industries, a plastics manufacturer based in Scottsburg, Ind.

A Trusted Business Partner

Jill Watson Area Vice President Arthur J. Gallagher, Houston

Jill Watson
Area Vice President
Arthur J. Gallagher, Houston

Susan Welbes usually faces little resistance when she recommends a benefits broker for The Woodlands Township, a municipality near Houston, where she serves as HR director. But the last election brought an insurance executive to the board of supervisors — and increased scrutiny of the township’s agreement with Jill Watson and Gallagher Benefit Services.

With the services up for bid, the scrutiny lasted through four board meetings, Welbes said.

“Jill came to every single one of those meetings and stood right there with me and answered every question that was asked and, at the end, it was a unanimous vote to continue with Gallagher,” said Welbes, who has been impressed by Watson’s dedication to the township’s account.

“There have been times when I’ve had to reach out to her on weekends or at night because I’ve had an employee who’s had just a really horrible accident, and she’s been there to help me with that,” Welbes said.

Just as important in an era of limited government finances, Watson has kept a lid on medical premiums, Welbes said. The Woodlands’ costs in 2014 are up a modest 3 percent while coverage remains the same, she said. “I talk to my peers and nobody can say that.”

Another client described Watson as a trusted business partner who helped keep his company in compliance with the Affordable Care Act.

“She’s really what every broker ought to be,” he said.

Embracing Challenges

Jan Wigen, CEBS Principal Mercer, Spokane, Wash.

Jan Wigen, CEBS
Principal
Mercer, Spokane, Wash.

At religious institutions, the mandate in the Affordable Care Act calling on insurance policies to cover contraception has been a prescription for trouble. Institutions have to balance the demands of faith with the expectations of their employees.

Jan Wigen, a principal at Mercer, helped a Catholic college on the West Coast stay on the right side of the law, while adhering to its beliefs and preserving options for its employees.

“She really is a superstar,” said an HR administrator at the college, who has worked with Wigen for a decade. Wigen helped the college secure separate contraceptive coverage through its insurer — without having to pay for it itself — and worked to ensure the potentially controversial issue was explained clearly to employees.

“Jan was just a relentless advocate in the process to ensure I had the tools, the communication, the separate cards for contraception, that would allow us to manage and mitigate the impact,” said the administrator, who praised Wigen’s embrace of the challenge.

She knew how critical it was to the university,” he said. “She’s got the same level of commitment as if she were an employee.”

Wigen’s commitment won over Cyndi Tefft, senior manager of benefits and HR information systems at RealNetworks, a Seattle-based digital media services company with about 450 employees in the United States.

“I can always count on her to be on the leading edge of what’s happening,” Tefft said.

Persistent and Effective

Kevin Wiskus Executive Vice President Hays Cos., Indianapolis

Kevin Wiskus
Executive Vice President
Hays Cos., Indianapolis

Employees at the American Legion Auxiliary national headquarters in Indianapolis liked their health insurance. But they didn’t get to keep it, said Donna Parrott, HR director for the nonprofit, which employs 36 people.

Kevin Wiskus, executive vice president at Hays Cos., who previously was area vice president at Gallagher Benefit Services, strove to preserve the Legion’s health benefits after the organization’s insurer cancelled the plan. He also worked to hold down costs for the organization and close gaps in other coverage, Parrott said.

Last year, for example, he quickly added the Legion’s volunteer vice president to its travel life insurance policy after employees discovered the executive was not covered. “I feel that he truly cares even though we’re a small organization with a small number of employees,” Parrott said.

“He’s going to bat for us even though our rates increased overall just 3 percent. He wants to get those down even lower.”

Wiskus also has been mindful of the Legion’s fiscal constraints as he negotiated health insurance premiums, Parrott said. He was able to find a health plan for the organization that was about 10 percent less expensive than what it paid the prior year.

One client attributed Wiskus’ skill in blunting premium hikes to his previous experience as an underwriter.

“On top of it, he’s doggone persistent,” said the client.

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]