2017 Power Broker

Fine Arts

Making It Easy

Kristina Marcigliano
Senior Account Executive
DeWitt Stern, New York

Susan Jaffe, director of Guernsey’s auction house, may deal with a $10 million collection of guitars one day or a $25 million glass piece by Picasso or rare star rubies on other days.

Regardless of the type of valuable — or its storage and transportation needs — she counts on Kristina Marcigliano to give her the best advice and procure the best coverage.

“We are constantly hitting her with quite a range of needs and she’s always been very responsive,” said Jaffe. “Each collection that we handle has a different set of requirements.”

Marcigliano helped another auction house combine insurance programs during a merger to ensure there were no gaps. In the end, she secured higher limits at a lower premium for the merged company, and developed a jewelry insurance solution for consigned items. A director at the company praised Marcigliano and her colleagues for making the “process smooth and easy. There was no hassle.”

Marcigliano makes “the crazy insurance world a lot simpler than it actually is.”

Auction houses have many complex issues dealing with valuation, security and transport, said Kenneth McKenna, executive vice president and CFO of Doyle Auction House.

“We are not exactly your typical situation,” he said. “Kristina is very creative.”

This year, she created a hybrid policy that covers fine art items, furniture, jewelry and precious metals, including very high transit limits for jewelry coverage that allows the auction house more flexibility when pieces have to be transported.

Overcoming Challenges

Lynn Marcin
Senior Vice President
Aon, Washington, D.C.

In negotiating lender loan agreements, galleries have a mounting problem with “absolute liability creeping into contracts [regardless of insurance coverage],” said Joan Elisabeth Reid, chief registrar of Walters Art Museum. “It’s a major issue.”

Lynn Marcin at Aon subsidiary Huntington T. Block provided the museum with the contract language needed to successfully negotiate a very complex exhibition. “She’s there for everything we need.” said Reid.

“Some lenders make outlandish requests now, and Lynn works so hard to figure out what is a viable request and what we should absolutely not agree to,” said Patty Decoster, head of collections management and registration at Kimbell Art Museum. “[Marcin] is really good at knowing when a line can be crossed and when we should not agree to it, at getting everything she can for the lender from the underwriter but fabulous at protecting the Kimbell from going too far.”

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“When you are trying to wrangle 50 lenders and shipping venues, and determine coverage needs in transit and on premises, and transit to the next institution, it can be nerve-wracking,” said Melanie Harwood, senior registrar at the Baltimore Museum of Art. “Lynn is good at being calm and saying, ‘This is what you can do,’ “ and coming up with the best solution possible.

“We do nothing but give her challenges. That’s our job and she fields them very well,” Harwood said.

A Mentor to the Art World

Deborah Peak
Vice President
Aon, Washington, D.C.

Because of its active lending program to museums in the United States and around the world, the Nelson-Atkins Museum of Art depends on Deborah Peak at Aon subsidiary Huntington T. Block to review the various foreign insurance policies and foreign government indemnity contracts.

It’s a complicated process, especially when the museum deals with different museums in different countries on different projects — all at the same time.

“That can be a little tricky,” said Julie Mattsson, exhibitions registrar at the museum. “Debby has been able to help make that more seamless than it certainly started out to be.”

And not that Mattsson ever forgets when international policy premiums are due, but Peak is always on top of it, and offers to expedite the process at the last minute, she said.

“Sometimes premium costs are pretty high so people don’t want to pay super early, but that means pretty often we get down to the wire,” Mattsson said.

Susan Leidy, deputy director of the Chrysler Museum of Art, said Peak “has been a mentor to many of us. She is absolutely phenomenal. She’s worked with major museums all over the world and she brings that experience to us.

“She’s not prescriptive. She doesn’t say, ‘You have to do this.’ She has a way of educating the client to do the right thing because it benefits everybody. She’s been doing this for a long time in a very low key, solid and professional way. Sometimes that doesn’t get recognized and it should get recognized.”

A Home Run Every Time

Mary Pontillo
Vice President
DeWitt Stern, Charlottesville, Va.

Paris Photo, a prestigious photography collection, was one of the many cultural events that were ordered closed following the terrorist attacks in Paris last year.

Knowing her fine arts clients could one day face a similar situation, Mary Pontillo worked with London to develop event cancellation expense coverage. It’s just one of the ways she works for her clients to expand coverage and stay competitive.

“We have unique art insurance requirements that are not what most people in the world have,” said Sharon Ullman, COO of the Robert Rauschenberg Foundation, who praised Pontillo’s work. Whether it’s shipping 67 containers of artwork to China or protecting a $35 million 191-panel artwork, Pontillo “made sure we were covered from here to there. We just call and say, ‘Here’s a new one for you.’ She makes it easy.”

Arlie Sulka, owner of Lillian Nassau LLC, renowned specialists in original Tiffany Studios lamps, said, “When you get good coverage from someone who is so knowledgeable about the industry and that you trust that much, you just don’t want to let that relationship go. Mary hits a home run every time.”

Added a gallery director, “Mary Pontillo is remarkable and she invested a considerable amount of time going through every page of [our] policy.”

“It’s the driest of subjects but she is very passionate about it,” she said, “And she is passionate about fine arts. That allows her to stand out in the industry.”

Always Available

Anne Rappa
Senior Vice President
Aon, New York

Anne Rappa at Aon subsidiary Huntington T. Block “is always available for my weird questions,” said Bianca Cabrera, registrar at Galerie Lelong.

Fine art insurance is complicated because pieces are “literally moving all over, all of the time, so we always need quick information,” she said. “She’s always willing to talk me through scenarios when we are not quite sure how things may play out.”

Recently, one of the artists associated with the gallery called in a panic because it was the night before the artist had to ship artwork created on a major public commission, and the contract-required insurance had never been procured, she said.

“Anne helped me set that up in a few hours to make sure that the piece was covered,” Cabrera said. “It was a huge, monumental piece, and it wasn’t a little amount of coverage we needed.”

Rappa recently authored a roadmap to help educate university risk managers about the complications involved in identifying, valuing and protecting their fine art and rare book collections. Angela Moss, director, office of risk management at Wayne State University, took advantage of that guidance.

“We never had a fine art policy before,” Moss said. “If we would have had a loss over $10,000, we would have suffered the loss.” The policy covers high-value items without needing to list each one or get appraisals. “Anne is a partner,” she said.

Making a Difference

Casey Wigglesworth
Account Executive
Aon, Washington, D.C.

When doing a $25 million upgrade to a museum, a public sector risk manager realized there were major coverage gaps at an associated facility owned by the public entity but operated by a nonprofit organization.

A dispute over which group was responsible to cover the historic artifacts and other items could not be resolved until Casey Wigglesworth at Aon subsidiary Huntington T. Block came on the scene. She worked with both groups to ensure proper valuation of items and policies to protect them.

“The result was she was able not only to get all parties to work together, which had never worked together, but she was also able to clearly see what each party had to do to get the right cover,” said the public sector risk manager.

Kelsa Coker, treasurer and general manager of Ely Inc., a service provider to museums and galleries, said Wigglesworth is “very responsive to my crazy requests. We are a small business and I look for responsiveness. I need someone to respond almost immediately so I can take care of clients who can be quite needy at times.”

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Regardless of the time or request, Wigglesworth “is just there for me and makes me feel comfortable with what I am offering to my clients. She gives me piece of mind.”

“Casey takes us through what needs to be done to make sure we are properly insured,” said Marilyn Sohi, head registrar, permanent collection, Madison Museum of Contemporary Art, including being available for questions about security, valuation, shipping and storage.

Finalists:

Blythe Hogan
Director, Global Fine Art Practice
Aon, Atlanta

Emily Weiss
Senior Account Executive
DeWitt Stern, New York

 

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]