2014 Power Broker


The Environmental Imperative

Jennifer Lester Senior Vice President Marsh, Chicago

Jennifer Lester
Senior Vice President
Marsh, Chicago

There may be no clearer example of insurance as an enabler of commerce than the dynamics of environmental insurance.

Jennifer Lester’s knowledge of environmental coverage was the key to her client securing work providing building operations and management services for Chicago’s Union Station, the third-busiest rail terminal in the United States.

The age of Union Station presented substantial challenges. It opened in 1925 and hazardous substances were very likely to be disturbed during the course of the client’s work. This in turn could endanger the more than 130,000 commuters and Amtrak passengers who pass through the terminal on a daily basis.


Lester successfuilly crafted a contractor’s pollution liability policy that satisfied all contract requirements and provided coverage for the client’s work.

One client, which had acquired a division spun off from a supermarket, benefited from Lester’s work in getting underwriters comfortable with the properties’ historic environmental exposures.

Lester was also kept busy within the last year by providing last-minute insurance options for a nationally acclaimed real estate and asset management company. The work involved devising solutions for new construction projects, building renovations and real estate transactions.

“She was professorial … in instructing us in exactly what we were buying and what would be covered, what some of the definitions meant in the policy,” said one admiring client.

Breakneck Delivery

Steve Manz Senior Vice President Marsh, Detroit

Steve Manz
Senior Vice President
Marsh, Detroit

It may sound a little extreme, but this is how one client described the work of Marsh’s Steve Manz in the past year.

“Steve has done a terrific job for us,” a client said. “He’s gone the extra mile to meet our needs on a very different risk — he’s broken necks to do a good job this year.”

Another client put it less graphically. “He doesn’t waste our time. Some people spend too much time on sales and end up adding little. Steve is not that kind of broker—he is very professional.”

With a background in environmental engineering consulting and environmental remediation, Manz is well-suited to communicate with clients and underwriters the nuances of environmental exposures and coverages. His niche knowledge of construction exposures allowed him to craft a renewal for a construction client that reduced the overall premium 30 percent from the expiring program. This with a policy that covered the client for a range of pollutants, including mold and legionella.

For another client, Manz streamlined the process for getting coverage for new locations from weeks to a matter of days, which allowed the client to make advantageous business decisions in real time. While streamlining the process, Manz also found several deficiencies in the policy structure and worked with the carrier to make needed corrections.

Across the board, clients said Manz excelled at customer service, a key attribute in a Power Broker®. “He really understands the dynamics of our business,” said a client.

No Delay in Coverage

Adrian Pellen, CRM Director Aon, New York

Adrian Pellen, CRM
Aon, New York

Governmental agencies are utilizing innovative public-private partnerships to replace their aging civil, transit and social infrastructure. But there can be significant environmental risks on such projects, particularly delay costs to remediate unexpected contamination. Such exposures generally are excluded.

To address this significant gap in coverage, Aon’s Adrian Pellen worked with an environmental carrier to modify its pollution legal liability policy to provide coverage for equipment rental costs, consulting and other expenses in connection with a delay arising out of the discovery of a pollution condition. This coverage extension has been offered to more than a dozen projects, including several public-private partnerships.


One real estate development firm became aware that a redevelopment site likely had underground oil and gas storage tanks, but Pellen was able to obtain a comprehensive insurance program that protected both the client and its lender. It’s a situation Pellen has handled deftly more than once. “Once again, Adrian was able to come in relatively quickly to take care of our needs,” the client said. “We got a pretty good insurance program, with good pricing and really good coverage — no fuss, no muss and everything taken care of.”

“Adrian Pellen is always one step ahead of you — you don’t need to constantly request information,” said a real estate investment trust client.

“He’s excellent,” said a construction firm client. “We’ve done a lot of work together and worked closely with him and his team, and we can really count on their responsiveness.”

Getting the Markets to Pay Attention

Thomas Swartz Senior Vice President Marsh, Houston

Thomas Swartz
Senior Vice President
Marsh, Houston

Environmental Liability Transfer Inc. had one particularly challenging deal last year for a former solvent recycling company, including liabilities for properties no longer owned or operated by the seller.

Thomas Swartz was able to not only obtain third-party liability coverage for known conditions, but also first-party coverage, which is very seldom granted on complex sites. “Tom Swartz is extremely skilled at bringing comfort to our clients who are requesting insurance, by educating them about the policies, the exclusions and the covered items,” said Randall Jostes, ELT’s president and CEO.

For Niagara Worldwide, a demolition, salvage and real estate company, Swartz was able to acquire relatively broad coverage on a complex 100-year-old paper mill site, despite the fact that the site had not been thoroughly assessed. He obtained third-party liability coverage and even retained some cleanup coverages through the creative use of endorsements, which restricted the discovery of contaminants through voluntary Phase II assessments.

“Tom Swartz is probably one of the more sincere experts in this industry that I know,” said Eric Spirtas, president of Niagara Worldwide. “He’s always available to consult; he always has his phone on to talk and give advice on the whole spectrum of insurance.”

“He gets the markets to pay attention to my clients,” said George von Stamwitz, a partner at Armstrong Teasdale. “He can get a product wrapped around a difficult environmental risk, which is the case more often than not as we’re dealing with pre-existing conditions in a wide variety of settings.”

Making the Difficult Possible

James Vetter Managing Director Marsh, Philadelphia

James Vetter
Managing Director
Marsh, Philadelphia

A private equity firm was acquiring the global assets of a chemical company, including plants with both known and suspected pollution conditions. When another broker couldn’t secure on-site cleanup coverage, the firm went to James Vetter and his team.

Vetter worked with the client to draft a summary of the risks, including a tabular analysis regarding specific concerns and financial materiality. Vetter then convinced the client to present their case to carriers.


“At the end of the meeting, one of the carriers commented that it was the best discussion and presentation of risk that they had ever been involved in,” the client said. “All carriers agreed that this greatly helped them in their understanding and ability to underwrite the risk.”

Vetter was able to secure coverage that included on-site cleanup for all but two sites, and the exclusions for known conditions were significantly minimized. On- and off-site coverage was afforded in addition to business interruption.

“Jim Vetter is outstanding,” the private equity client said. “We had signed up a transaction with assurance that we could get environmental liability insurance for unknown environmental conditions of chemical manufacturing facilities around the world, but that turned out to be inaccurate. Jim did an outstanding job of marketing the opportunity, revisiting the application for insurance and we got it done on time.”

“With Jim Vetter, Marsh brought a true subject matter expert to us, for an exposure that was difficult to get our arms around,” a client said. “He helped push this over the finish line.”

Covering the Known and the Unknown

Max West Senior Vice President Aon, Chicago

Max West
Senior Vice President
Aon, Chicago

A U.S. manufacturer was acquiring a U.K. company whose site had more than a 100 years of industrial use, and Max West had just five working days to obtain a quote. West told the London carrier that both known and unknown pollution conditions could be insured since operations would not change. Four days later, West was able to secure $10 million in protection, including coverage for any future cleanup costs.

West had another client, a law firm that was helping a Japanese company buy a U.S. manufacturer with sites that had “long environmental histories” — but the seller did not want to let the buyer perform any environmental testing prior to the acquisition. West helped the buyer secure environmental insurance that would allow them to test the soil and groundwater after the acquisition, and would cover them for cleanup costs and environmental third-party liabilities. West helped the carrier customize the policy to cover “the kitchen sink” for 10 years.

The buyer “had some pretty unprecedented demands about wanting a lot of unknown environmental liabilities and conditions to be covered,” said West’s law firm client. “They also wanted the ability to do subsurface testing, which seemed to be over-the-top. But Max was able to get it all. At the end of the day, the cost of the environmental policy, which complemented the reps and warranty policy, was a small fraction of the overall insurance cost — I was really blown away.”

“Max did a terrific job obtaining coverage for a known environmental pollution condition that typically is not insurable,” a law firm client said.


LBR_ResponsiblityLeaderBLUE_logo-175A Friend of the Water

Max West first became interested in the environment when, as a young man windsurfing off of Hayling Island in Great Britain, he became ill due to an accidental sewage spill.

After graduation, he took a position with AIG as an environmental underwriter and a career was born.

These days, West makes his mark by being a tireless advocate for his clients.

“I have a tremendous desire to win and manage the expectations of the client,” West said.

“I think some insurance brokers sit on data and submissions. I understand how important environmental insurance is to making a deal happen. I will never let environmental insurance get in the way of making a deal happen. They will never be waiting for me,” West said.

West regularly networks with environmental attorneys and consultants both to educate himself and to provide better professional contacts for his clients.

On the nonprofit side, West is a supporter and a board member of the Friends of the Chicago River. He also recently assisted his home town of Glenview, Ill., by finding an environmental solution that allowed affordable housing to be maintained on Chicago’s North Shore.

“Deals would not happen and litigation would not be settled without environmental risk transfer,” West said.

BlackBar Finalists:

Cristin Bullen Senior Vice President Marsh

Cristin Bullen
Senior Vice President

Brian Lu Associate Director Aon

Brian Lu
Associate Director

Keith Montone Asst Vice President Willis

Keith Montone
Asst Vice President

Jack Palis Vice President Marsh

Jack Palis
Vice President

Peter Pantalone Director Aon

Peter Pantalone

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.


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.


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?


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.


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.


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]