2018 Power Broker

Hospitality

Your First Call

Terence Bohan
Senior Broker
Aon, San Francisco

Carriers want to know that a company is mitigating its risk. Terence Bohan knows this, and he makes sure his clients do, too. Bohan uses his industry knowledge, including his perspective from his former role on the carrier side, to guide his clients through renewals, claims or just about anything they need.

Bohan and his Aon team devised a unique risk management solution for Boyd Gaming Corporation while trying to lower rates that had increased after Hurricane Katrina losses.

They split the Boyd portfolio into two separate programs: One program would encompass all the assets in Nevada, while the other program would cover the remainder of the Boyd assets throughout the Gulf Coast and central United States.

This strategy enabled the risk manager to maintain key relationships, especially in London, but introduced competition that helped drive savings to the tune of 25 percent.

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Bob Berglund, vice president, benefits and insurance, said, “The mitigation is attributable to Terence.”

Another client, Lauren Young, managing director, chief risk officer, and chief compliance officer, PCCP, LLC, gave Bohan the highest recommendation.

“When we suffered damage during Hurricane Harvey and had questions about our coverage, it was clear that the fastest way to get an answer was to call Terence,” Young said.

“He knew our policy in and out and was helpful in explaining everything clearly.”

The Strength of the Bulkhead

Ryan Davidge
Vice President
Aon, Pembroke, Bermuda

Aon’s VP of Property Ryan Davidge is like a bulkhead. The sailors among us know that the bulkhead strengthens the boat. Located below deck, it’s not visible to all, but those in the thick of things understand that this element of the ship helps keep them safe.

“Ryan always has his client’s best interests at heart, and he has a depth and breadth of industry knowledge that is well-respected in our circle,” said one client.

Davidge was tapped by the organizer and sponsor of the 35th America’s Cup to be its local broker in Bermuda.

The temporary “event village” had specific insurance requirements —property, marine D&O, P&I, WC, hull, cargo, AD&D and liability to name a few. But no one person was in charge of procuring all the insurance. For Davidge, this meant a lot of last-minute calls.

The sponsor struck up a sponsorship and coverage deal with a local insurer. But both the insurer and the race sponsor soon realized that they needed an intermediary.

Davidge stepped in and never looked back. He pulled together a number of insurance lines, including property, marine liability, D&O and workers’ comp. Transportation issues, for instance Bermuda’s location 640 miles off the coast of North Carolina, made logistics and coverage considerations complex and demanding.

So successful was Davidge’s handling of the Bermuda event’s insurance needs that his colleagues in New Zealand called him to advise on how to handle the next America’s Cup event.

Mr. Go-To

Gerald Levine, CPCU
Managing Director
Beecher Carlson, Waterford, Conn.

When asked about what he finds exceptional about Gerald Levine’s work, Andrew Lee, vice president, architecture and construction, The Lam Group, responded, “Do you have a day and a half for me to tell you?”

On the top of Lee’s list is the tremendous savings Levine helped him achieve with a recent package.

“Gerry was able to negotiate coverage for us and the contractor together, so we saved a lot of money and reduced our risk,” Lee said.

“He is our 100 percent, trusted go-to person. We don’t sign anything until it has gone by Gerry’s desk.”

Lee also described a property loss on a building that was just about to open. “Gerry put a package together quickly to get it resolved, and he even managed getting people in for some of the repairs, so we were not taken advantage of,” Lee said.

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Thayer Thompson, general counsel and VP-commercial, Virgin Hotels North America, said that when their partners meet Gerry and see what he does for Virgin, they sometimes switch to him for their brokerage needs.

“Gerry Levine is an absolutely amazing broker. We’ve worked with him for five or six years, and he is simply the best. Some of our partners have hired him as well.

“I can’t imagine a better advocate on insurance for our business than Gerry. He is incredibly responsive, 24/7, very knowledgeable and very proactive. He has a great team.” 

Risk Never Sleeps

Christian Ryan
Managing Director
Marsh, Dallas

Christian Ryan’s client philosophy is simple; colleagues and clients first — 24/7 — and never forget that clients’ risks can’t wait and don’t sleep. This philosophy has served him well, and more importantly, it’s served his clients best.

When a large gaming client merged with another large gaming company, Ryan and his team reviewed both risk programs and made recommendations for the structure of the merged programs.

Company size and different risk philosophies, including different retentions, limits and overall structures, made combining their coverage challenging, but Ryan’s team was able to recommend a program while also reducing millions of dollars of costs and volatility.

Another client, Sam Makani, director, portfolio strategy and reporting, Solid Rock Group, experienced Ryan’s expertise firsthand.

“Christian is very familiar and experienced with the various options for property insurance for hotels — both big and small. He has a breadth of knowledge with a depth of industry contacts to align clients’ interests with the proper carriers.

“He and his team have provided guidance on various property and supplemental policies for our portfolio, including earthquake, wind and cyber insurance,” Makani said.

Additionally, Ryan and his London team crafted Marsh’s exclusive PRIME Hospitality and Gaming property facility, including manuscript language around booking cancellations, broader loss of attraction language and other ancillary but important features. 

Over the Moon

Ronald Sung
Assistant Vice President
Aon, Chicago

Ronald Sung postponed his honeymoon so he could attend a strategic client meeting last year. Not a dentist appointment or a ballgame — his honeymoon. If that’s not dedication and exemplary customer service, we’ll never know what is.

“Ron acts with the customer in mind,” said hospitality risk manager Michael Dougherty.

“Ron provided several different solutions to restructure our professional/cyber liability product this past year and some of the options were drastically different than what was done in the past,” Dougherty said.

“Ron walked us through each of the solutions and explained the unique advantage of each option. He not only helps clients find the right product, but he further helps by working to adapt the product, so it can be a closer solution for his clients.”

And this was simply one example.

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“Ron has been excellent,” said another client. “I talk to him at least once a week and he goes above and beyond for us. He’s very collaborative. He’ll walk me through things and he’ll make presentations to our carriers,” she said.

Sung worked with that client on a confidential program that will help cell phone carriers place emergency 911 calls more accurately.

“We had a lot of details to think about and a lot of risk to identify,” said the client. “We couldn’t do this without Ron.”

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]