2014 Power Broker

Real Estate

Going the Extra Mile, Every Time

Morgan Anderson, CPCU, ARM Area Vice President Arthur J. Gallagher, Irvine, Calif.

Morgan Anderson, CPCU, ARM
Area Vice President
Arthur J. Gallagher, Irvine, Calif.

Insurance makes things happen, and those in the real estate business know that well. One of Morgan Anderson’s clients was taking an aggressive approach to growing its office portfolio. But it couldn’t be done without an insurance program in place that would allow it to be nimble.

The company needed to be able to add properties quickly at a predetermined rate, regardless of their location within the country. Adding a new policy for each acquisition was becoming cumbersome.

Anderson took the time to gain a full understanding of the company’s business goals, and was able to create a coverage program, inclusive of catastrophic property limits, that allowed the client to acquire properties quickly and efficiently, saving them significant amounts of both time and money.

Clients emphasized how Anderson has helped them avoid missteps.

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“We have a lot of moving parts in terms of real estate and lending,” said one investment client. “He helped us realize we were grossly unprotected in many regards, and in other areas, we really didn’t need to think about it as much as we thought we had to, which relieved some of the pressure and also costs for us.”

Anderson wows clients with his willingness to go the extra mile and get things done.

“We’re always fire drill first and let’s solve it later,” said a client, “and he’s never missed a beat.”

Focusing on the Sweet Spots

Ryan Barber Managing Director Marsh, New York

Ryan Barber
Managing Director
Marsh, New York

An extremely large corporation had grown their real estate portfolio dramatically in Tier 1 wind areas, making their Cat risk profile a serious challenge for the marketplace to underwrite. As a result, the company’s premiums had increased by more than 30 percent.

When the organization put out an RFP, Ryan Barber, managing director at Marsh, got to work. Utilizing the resources of the natural catastrophe modeling team, Barber was able to determine that less than 2 percent of the portfolio locations were driving 80 percent of its loss expectancy. Barber developed a strategy to carve out just a sliver of the company’s locations and place them in a stand-alone program with a carrier that priced wind capacity based upon site-specific loss expectancies developed by their field engineers on the ground, rather than Cat models.

Using this approach, the master program’s wind loss expectancy plunged by 80 percent, and the client would be able to secure more competitive pricing for its master program while the stand-alone program could be placed with a single carrier.

Barber’s ingenuity and strategic thinking won him the business. The client executed Barber’s proposal, resulting in multimillion-dollar savings for the company.

One thing that fuels Barber’s success is his relationship with carriers around the world and his understanding of what makes them tick.

“Not only does he know the right placement people, but he knows all of their sweet spots,” said Sarah Shepard, risk management associate for Robert M. Currey & Associates Inc.

Expertise Across the Spectrum

Alexandra Glickman Area Vice Chairman Arthur J. Gallagher, Glendale, Calif.

Alexandra Glickman
Area Vice Chairman
Arthur J. Gallagher, Glendale, Calif.

A former client reached out to Alexandra Glickman to tell her about his new REIT venture: acquiring single family homes for renters.

Glickman, area vice chairman at Arthur J. Gallagher, started asking questions, and over the course of the conversation, she walked him through all of the property, liability, PLL and professional exposures he didn’t even realize he was facing.

His need for help was urgent — his program couldn’t respond to the assets he was about to close.

Glickman and her team didn’t waste a single moment. They created a complete property and casualty program in less than a week that responded to all of the company’s needs, including portfolios in wind-exposed and flood-exposed areas.

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As a result of Glickman’s expertise and relationships, the client has been able to quintuple its portfolio in less than four months.

“What I really like about Alex is that she’s really conversant across the whole spectrum of insurance,” said the CFO of the REIT. He knows he can come to Glickman about anything, whether it’s D&O, E&O, cyber insurance or any other potential exposure, he said.

Another client with more than several billion dollars in assets was in the middle of structuring its IPO when a new lender gave it a rude surprise: The company had to bind a substantial amount of additional wind, flood and quake capacity — and it had four hours to do it. Relying on her reputation and her long-standing market relationships, Glickman got it done.

Summed up one client: “I know she’s got my back.”

Tenacity in Action

Tandis Hassid Nili, ARM Vice President Aon, New York

Tandis Hassid Nili, ARM
Vice President
Aon, New York

Tandis Hassid Nili is tenacious. “She does not give up or give in,” said one client, the vice president of risk management for a multifamily REIT. And that’s exactly why clients are thrilled to have Nili, a vice president at Aon, stepping up to the plate for them.

One client of Nili’s was interested in acquiring some foreign properties in order to expand its operations. The company had obtained a primary liability policy locally, but there were quite a few problems left to solve. For starters, the policy was in Spanish. On top of that, the local broker had never explained the terms and conditions of the policy. The client called Nili for help.

The broker quickly grabbed a Spanish-English dictionary and got on the phone with the local brokerage firm. With some persistence, she was able to translate the terms and conditions of the policy. Unfortunately those terms weren’t acceptable to the global umbrella underwriter, who refused to attach the umbrella policy over the local policy.

Nili gave herself a crash course on the local liability market. In doing so, she learned that locals perceived American companies as having deep pockets, and were eager to sue American companies and their contractors. Even if the company contracted its operations to third parties locally, the company would still not be able to fully avoid liability.

With a better grasp of the liability picture, Nili went back to the global umbrella underwriter to negotiate a solution. Thanks to Nili’s efforts, the company was able to secure the limits it needed to grow its operations.

Calm in the Eye of Any Storm

Robin Reyes, CIC Senior Vice President Marsh, Dallas

Robin Reyes, CIC
Senior Vice President
Marsh, Dallas

One of Robin Reyes’ many strengths is her ability to forge strong relationships.

When the real estate division of a large banking client was looking for a consulting partner to work with them on construction loans and refinancing of permanent buildings, they selected Reyes, senior vice president at Marsh, and her team on a trial basis.

Within months, the client was so pleased with what they saw that they engaged Reyes’ team to teach their younger risk analysts about insurance and the coverages the real estate division needed. The head of the real estate division soon extended those introductions to his clients for other services.

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When another client decided to do an RFP for all lines of coverage, Reyes found herself competing against 11 other brokers to keep the business. Fortunately, Reyes had leverage — a strong relationship with the risk manager of the trust. In the end, not only was she able to keep the business, but the client gave her its property and pollution business as well.

A month later, Reyes proved the client had made the right choice by negotiating a 10 percent savings across all lines at renewal.

Reyes has tremendous industry knowledge, which clients find comforting. They also appreciate that she is completely unflappable. No matter what’s at stake or what the time frame, she responds with a confident, “It’s not a problem. We’ll get it done.”

“She has always excelled,” said an admiring client.

Foiling Sandy’s Savagery

Alexander Zavala Vice President Willis, New York

Alexander Zavala
Vice President
Willis, New York

Shortly after taking on the account of a large private real-estate developer, Alexander Zavala learned that one of the company’s managed properties — a large condo building in a high hazard flood zone — had no national flood coverage, a potentially devastating exposure.

Zavala, a vice president and client advocate at Willis, spent three weeks going back and forth with the relevant agencies, negotiating and trying to get proper mapping data. Zavala discovered that the client’s prior broker had submitted an application a year earlier, but never followed though in getting the coverage in place.

After weeks of being persistent, speaking to supervisors and driving the process forward, Zavala bound the policy during the first week of October. Three weeks later, Superstorm Sandy hit, and the condo suffered serious damage. Thanks to Zavala’s patience and persistence, the client saved more than $4.5 million.

Another client faced a difficult transition when key members of the risk management team left to pursue other opportunities. The department was left in a state of flux, but its insurance needs were still pressing. Zavala worked with the interim group to help shore things up and fill in the gaps; he also worked to onboard the new risk management team as seamlessly as possible.

“Without the help of Willis and Alex, we would not have achieved a smooth transition to our current risk management department,” said Celia Seigerman-Levit, director of risk management and insurance for The Related Cos. “We look at them as an extension of our department.”

BlackBarFinalists:

Brian Eure Senior Vice President Willis

Bryan Eure
Senior Vice President
Willis

Alex Schafer Account Executive Aon

Alex Schafer
Account Executive
Aon

James Clark Vice President Harden & Assoc.

James Clark
Vice President
Harden & Assoc.

Kathleen Felderman Managing Principal EPIC

Kathleen Felderman
Managing Principal
EPIC

Michael Feinberg Executive VP Willis

Michael Feinberg
Executive VP
Willis

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 and 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]