Risk Manager Profile

Insuring the Towers

Shari Natovitz lost hundreds of former colleagues on 9/11. Now she manages risk for a vital piece of New York’s skyline.
By: | May 1, 2016 • 10 min read

Shari Natovitz, the director of risk management for Silverstein Properties, is a Jersey girl. She grew up in Fair Lawn, N.J., which is less than 20 miles from Lower Manhattan.

Children in her family were not coddled.

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B-plus on your English paper? Not good enough.

A-minus in Trigonometry? Meh.

“You had to bring home an A,” Natovitz remembers as she spoke with R&I on the 46th floor of 7 World Trade Center in Lower Manhattan on a windy March morning.

“My brother and I were in the same elementary school, about two and a half years apart. I remember sitting in front of this little black and white television, with our macaroni and cheese, and ‘Jeopardy’ would be on.”

The dynamics of the house were such that the two siblings would play along, competing against one another for allowance money. The home was devoid of gender bias.

“I grew up playing baseball, softball and football out in the street. My mom ran track and field, so I ran track and field,” Natovitz said.

These days, Natovitz manages a $100 million-plus insurance program for one of the highest profile projects in the nation, the resurrection of the World Trade Center in Lower Manhattan.

In place of the seven buildings that were either destroyed or heavily damaged by terrorists in 2001, a new set of towers is rising.

Natovitz manages risk for four of them with one assistant; not to mention her responsibilities for additional Silverstein Properties holdings.

Is she intimidated by the scope and responsibility of her job? No, she is not.

Natovitz says she has the background and the passion to meet those challenges.

“Her demands are very high and she wants everyone else to be prepared.” —Tim Egan, senior vice president, property broking, Willis Towers Watson

Before joining Silverstein, Natovitz spent decades as a construction broker with Marsh, its predecessor Johnson & Higgins, and later with USI. It was at the conclusion of bidding on the broking work for part of the WTC rebuild — when Natovitz was the East Coast construction practice leader for USI — that Silverstein offered her the job of risk manager.

“I have an extremely strong brokerage background and believe in transparency and negotiations to secure a mutually acceptable outcome. Because I grew up in the Johnson & Higgins system, it was a much more consultative than transactional approach, which was really what was needed to organize this and set a solid foundation for the transition to risk manager,” she said.

The passion stems from the fact that Natovitz, like many insurance veterans, lost friends and colleagues in the inferno of 9/11.

“I was a Marsh/J&H person for 20 years and left the company in late 2000, and was a part of the construction group. The construction group was meeting at the North Tower that day,” she said.

Marsh & McLennan lost 295 people in the attack.

“For me, it became very personal and life-affirming.  It wasn’t a job, rather a mission, and a tremendous desire to be a part of and contribute to the rebuild,” she said.

The Program

Managing risk for the rebuild of the World Trade Center is, perhaps needless to say, complex and demanding. When Natovitz took the job in 2005, she had several obstacles to overcome. Perhaps the most forbidding barrier was that insurance carriers were reluctant to offer cover.

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“What did surprise me when I got here, stunned me, were the number of markets in 2005 that did not want to do business with our company; absolutely floored me,” she said.

A number of factors played into that reluctance.

Discord over who should rebuild the towers and how they should be designed generated headlines in many New York newspapers.

“They weren’t flattering headlines. They weren’t truthful. Not unusual in the world, but frustrating,” she said.

“What did surprise me when I got here, stunned me, were the number of markets in 2005 that did not want to do business with our company; absolutely floored me.” — Shari Natovitz, director of risk management, Silverstein Properties

There was also the fact that the WTC was twice a target for terrorists. First came the 1993 attempt to bring down both towers by exploding a truck bomb in a garage of the North Tower.  Then there was the 2001 attack via two hijacked commercial jetliners that did bring them down.

Thus, two terror attacks on one site’s loss run.

“Nobody else in the U.S. had that experience,” she said.

Natovitz said that going forward she and her brokerage team needed to showcase the re-engineering and security of the new structures — including life safety — that made this a different and more robust project.

The coverage of the Silverstein buildings lost or damaged in the 2001 attack was also in dispute at the time and wouldn’t be settled until 2007, with a number of carriers eventually agreeing to pay the company $4.55 billion.

Natovitz also began her task dealing with four different insurance brokerages. Within a year or two, banking on her own deep experience as a broker, she had seen enough to put the entire program in the hands of Willis, now Willis Towers Watson.

“Willis didn’t get anything they didn’t deserve,” she said.

Insuring the safety of those building the World Trade Center towers ranked high in the minds of the Silverstein Properties risk management team.

Insuring the safety of those building the World Trade Center towers ranked high in the minds of the Silverstein Properties risk management team.

Natovitz said she was impressed by the way Tim Egan — a WTW senior vice president, property broking — solved problems for her on a property placement for 7 World Trade Center.

“That made me feel like they were the broker who best understood the market challenges and lack of  market identity and could best lead us through that,” she said.

The insurance program for the operational buildings was fragmented.

The coverage for each property was being placed separately, under the name of each building, as opposed to one comprehensive program.

“There was no understanding of the collective premium that was being put in the marketplace. This not only affected the quality of coverage, but also the buying power,” she said.

She was also impressed with the assertion that $6 billion in needed builders’ risk capacity could be developed and had confidence in the plan put together by Neil Kent, a WTW builders’ risk placement leader.

A prior broker told Natovitz, a Maryland resident, that she didn’t understand the New York market (she had worked for her first 10 years in the New York market) and stated that the capacity needed to protect the project was unobtainable.

A year and a half into her new position, the redesign of the Freedom Tower and responsibility for it — which formerly fell into Natovitz’s risk management portfolio — transferred to the Port Authority.

Natovitz met with Silverstein Properties management to explain why they needed their “own dog in the hunt” for limited capacity. That preferred bloodhound was what we now know as Willis Towers Watson.

With her WTW team, Natovitz set about creating an owner-controlled insurance program, known as an OCIP, for the construction of 2 WTC, 3 WTC and 4 WTC and a builders’ risk and terrorism program that required $6 billion in capacity, which was a hard sell.

The solution to the builders’ risk capacity challenge was to break the risk into three $2 billion risks, and pull the terror and fire following risk out and put that in a captive.

“We knew that $6 billion of construction capacity was not available in the market. But we knew that there was $2 billion available in the market,” WTW’s Kent said.

The captive option for terrorism needed to be explained to management.

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“Among the real estate community there was a lot of differing opinions as to whether it was a viable risk transfer option,” Natovitz said, “but over the past 10 years, it has become an option that many have adopted to address capacity/aggregation issues.”

Be on Your Toes

Neil Kent and Tim Egan said Natovitz expects everyone that works with her to be very well-prepared.

“I think she reads everything and knows everybody,” said Kent.

“Her demands are very high and she wants everyone else to be prepared,” Egan said.

Tim Egan, senior vice president, property broking, Willis Towers Watson

Tim Egan, senior vice president, property broking, Willis Towers Watson

“This is a very important project to everybody, and I think everybody feels the same way. She’s done a lot of things to bring this project to the front and center,” he said.

“Certain risk managers, when you deal with them, you learn from them how they see this. I don’t think there is a better example of that than Shari in that respect,” Kent added.

Natovitz and her risk management partners at WTW are also very conscious of the importance of maintaining long-term relationships with carriers.

Throughout the recent coverage history of the WTC, from the terror attacks through the rebuild, transparency and buy-in from senior insurance carrier management occupied a place of utmost importance.

“The key to all of this was never operating in a vacuum with the marketplace,” said Ray Blackton, an executive vice president with Willis Towers Watson.

“When Shari first took the job, one of her big concerns was that her company was not really known by the markets or had a misconception of the markets. Our first plan was high-level meetings with the most senior people of the organizations before any submission ever went out on the Trade Centers,” Blackton said.

There are now more than 50 carriers/carrier profit centers, including the domestic and international markets, on the Silverstein Properties program overall.

“Everybody’s a key to the placement, but Lexington, Munich Re, Zurich, Swiss Re and Starr really provide a significant part of the capacity, along with XL Catlin and Chubb,” she said.

Through high-stakes insurance settlement litigation, political squabbling and the flooding from Superstorm Sandy, keeping an eye on the long-term and the value of respectful relationships remained of paramount concern.

“We have enjoyed a great working relationship with Shari over the years,” said George Stratts, president, property and special risks for AIG.

Neil Kent, builders’ risk placement leader, Willis Towers Watson

Neil Kent, builders’ risk placement leader, Willis Towers Watson

“And as with any good relationship or partnership, it’s honest, it’s open. And one of the things that I think we have appreciated from Shari is seeing both sides of an issue. How do you see multiple points of view so that we arrive at the best answer for all parties?” he said.

That came into play when there were World Trade Center construction delays. The delays meant that Silverstein was paying insurance premiums for two years when there was no exposure.

Natovitz went to her brokers and asked them to approach the markets to adjust the premium for the two years without any exposure and move the term forward to represent the new schedule.

“I knew this would be a difficult request, but wanted to work out a solution to continue coverage with the same carriers for the completion of the project without the financial burden of paying for an extra two years with no construction taking place.

“In addition, we were now only going to build two of the three towers,” she said.

“The carriers were very fair in their responses and almost one-third of the casualty program was returned, with the knowledge that the coverage would be placed with those same insurance partners down the line. We have continued the placement through 2019 with these partners,” Natovitz said.

New York’s Brilliant Place

No American citizen could look out from the 46th floor of  7 World Trade Center and not be moved.

The view is stunning. The human drama that unfolded over time in New York and that’s reflected in its skyline is profound.

Then there is our more recent history. Brutal attacks of terrorism, grief and a remarkable recovery.

“I can always say I worked on the World Trade Center project when it was being built and operational,” said WTW’s Tim Egan.

“I think it’s the most important thing I’ve done in my career,” he said.

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“When you get to the core of what we do as risk and insurance professionals, it’s making good and helping restore and being part of that restoration process,” said AIG’s Stratts.

“That rebuilding process has been a way to affirm what we do as a profession and also honor the suffering that took place,” he added.

“Everybody who is on this placement through not even two or three degrees of separation knows somebody whose name is on that memorial,” Natovitz said.

“This is part of reinvesting and honoring them in the future.” &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

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]