Aviation broker David Ekes remembers very well the moment months of hard work flew out the window.

It was 30 minutes before the autumn 2010 renewal meetings between Southwest Airlines Co. and the London insurance markets when the Willis aviation practice brokers and Southwest Airlines’ risk manager Chris Thorn received news that would have unnerved a lesser team of professionals.

The group was standing in the foyer of Willis’ global headquarters in London when Southwest’s treasurer turned to them and said the company would announce in five minutes its purchase of AirTran Airways.

At that moment, practically every line of the renewal documentation the Southwest risk management team held in their briefcases became meaningless. The team had carefully prepared its renewal pitch on what had been Southwest’s traditional business model, one which stressed organic growth, not growth through acquisitions.

And now, the Southwest team was going to announce the acquisition of an Orlando, Fla.-based low-cost competitor for $1.4 billion.

“It was humorous to the market,” said Ekes, an executive vice president for global aviation for Willis.

“We told them, ‘Look we spent weeks preparing this thing and I guess you can use this as a coaster now,’ ” Ekes said.

It may have been shocking and humorous, but to the quick-witted Thorn and his longstanding team of brokers, the acquisition of AirTran was also an insurance opportunity.

“The one thing in business in good times and bad they need accountants, so all of a sudden, I became an accountant.” − Chris Thorn, senior manager, payments and risk, for Southwest Airlines

“We knew that this was going to be a great opportunity to try to save some money on our aviation placement,” Thorn said.

In short order, Thorn and his risk management partners created the first savings for the merged airline. AirTran and Southwest went into the market as a joint placement. That resulted in lower pricing for both sets of risk exposures.

AirTran, which was founded back in 1992 as ValueJet Airlines, had grown into an airline serving 25 million passengers a year to and from 70 cities coast to coast. At the time of the merger in 2010, Air Tran was offering 700 flights a day, and employing more than 8,500 people. Its safety record was very good.

“It also helped that AirTran was a very good risk as well,” Thorn said.

Southwest, with more than 3,300 flights a day, 37,000 employees, and 88 million passengers carried in 2010, remains the pre-eminent success story in the low-fare airline category.

“The only reason their rates were higher than ours was that they didn’t have our size and they didn’t have the long history we had,” Thorn said.

Southwest, founded in 1967 as Air Southwest Co., did have year after year of good results to show for itself, and its underwriters well knew that. But that day in the Willis foyer was saved for another reason that has less to do with numbers that can be set down on a page.

Savings were achieved because of the intangibles that Chris Thorn brings to his work. As much as anything else, his long-time brokers said, he is a risk manager that has a deep understanding of the strategic value of relationships.

“I would argue that really pays off in the long term,” said Garrett Hanrahan, CEO of Willis Global Aviation, Americas.

“When something happens or there is a loss, those insurers or those brokers, or whomever is involved in the transaction take great pride at the end of the day that Chris and Southwest Airlines get exactly what they deserve,” Hanrahan said.

It’s true that in the successes that Chris Thorn has achieved, he has two brands working for him: the respected brand of Southwest and the brand and reputation of Chris Thorn, which he has built in 12 years as an aviation risk manager.

That reputation is built on having smarts, but not hitting people over the head with how smart he is, on being a great listener, and on placing a premium on long-term relationships and getting long-term value.

“Some people, when you interact with them, they need to prove to the other party that they know something,” said Peter R. Taffae, a Los Angeles-based directors’ and officers’ specialist and managing director of Executive Perils Inc.

Peter Taffae, managing director, ExecutivePerils

“He has never been that way. He is a great listener and he asks great questions that always get to the heart of the issue,” Taffae said.

The Beginnings

Like many who have ended up in positions of responsibility in insurance and risk management, Thorn didn’t set out to become a risk manager.

His father headed up the accounting department at the University of Arkansas in Fayetteville, Ark. When Chris went off to school, he didn’t think he wanted to follow in his father’s footsteps. He initially had his heart set on engineering.

But calculus has a way of deterring people, intimidating them perhaps, and Chris, like many of us, didn’t take to that discipline. So he headed for a business degree. But there, another twist of fate occurred that would change his flight path.

He was an undergraduate in Fayetteville on Oct. 19, 1987, when Black Monday struck. The crash of the U.S. and global stock markets that wiped more than 20 percent from the value of the Dow Jones Industrial Average by the end of that month had a domino effect on young people who were graduating with business degrees.

“I saw all of these folks who had job offers have them taken away, and that had a huge impact,” Thorn said.

Thorn was about to get one of his great first lessons in pragmatism. Yes, he had told himself he wasn’t keen on doing what his father did, but that’s what he ended up doing.

“The one thing in business in good times and bad they need accountants, so all of a sudden, I became an accountant,” Thorn said.

Thorn turned a senior year internship in the accounting department at Tyson Foods into a job offer from Coopers & Lybrand, then one of the Big Eight accounting firms. But he preferred working as part of a company’s internal accounting team to working as an accounting service provider, so he eventually went back to working at Tyson Foods.

He was five years into his job as an internal auditor at Tyson when a friend who was relocating to Dallas told him about a job interview she had at Southwest Airlines. The company was looking for an internal auditor and did she know anybody? She knew somebody.

Southwest Airlines’ Chris Thorn depends on solid, long-term relationships

Thus it was that in 1996, Thorn packed his bags for Dallas, where he spent a year and half in the internal auditing department at Southwest, before moving over to the fixed assets department.

In 2000, Southwest’s then-treasurer Laura Wright was looking to create a full-time risk management position. There was Thorn, already putting his analytical accounting skills to work for the company. He applied for the job of risk manager and got it.

In doing so, he had already put himself on his current path, using his relationships with his brokers to learn the business. “I did know the brokers because of working with them as the manager of fixed assets accounting and I knew that they were very friendly and knowledgeable and willing to help me,” Thorn said.

Thorn and Innovation

He was also looking for a challenge and a challenge was what he got.

Within a year of Thorn becoming an aviation risk manager, terrorists would fly commercial jets into the World Trade Center and the Pentagon, and aviation insurance would be turned upside down.

At dawn on Sept. 11, 2001, the global aviation premium stood at just under $2 billion, Thorn said. Before the day was over, the reserves had shot up to $4.5 billion. War risk coverage, which for the most part had been thrown in for free as a policy endorsement, was cancelled immediately for all airlines, worldwide.

“That becomes very problematic because it’s not coverage that you want to have it’s coverage that you are required to have,” Thorn said.

Thorn and his fellow aviation risk managers banded together and with the help of their general counsels, drafted language for war risk hull and liability coverage backed by the U.S. government. That coverage became part of the Air Transportation Safety and System Stabilization Act, which was passed by Congress before the end of September 2001.

Southwest’s lead insurer at the time had attempted to reinstate a layer of war risk coverage that was priced at $1.25 per revenue passenger mile. Perhaps unintentionally, the formula penalized an airline like Southwest, which flies tens of millions of passengers relatively shorter distances. Average aircraft trip length is 658 miles, or 1 hour, 55 minutes, according to the airline.

“All it was was an allocation on all the airlines in the world to collect a large sum of cash quickly to pay these claims,” Thorn said.

Southwest replaced the incumbent carrier as lead and instead took on a carrier that it felt better understood its business model.

That replaced carrier has proven to be the exception in Chris Thorn’s long risk management tenure at Southwest.

“We have pretty much had a longstanding partnership with all of the insurance companies that we have worked with,” Thorn said. And he has had to innovate at times to keep those relationships.

When the credit crunch threatened to wreck AIG in 2008, Thorn and his brokering partners came up with a solution to keep AIG as a carrier on Southwest’s program.

Dubbed the “supercontinuity option,” their innovation, for pennies on the directors’ and officers’ premium dollar, gave the insured the option of switching directors’ and officers’ coverage to a backup carrier if the primary carrier on the insured’s first directors’ and officers’ layer suffered a crippling ratings downgrade. The solution was designed specifically to address AIG’s instability at the time.

“I felt it allowed us to stick by AIG and we have a very good relationship with AIG to this day,” Thorn said.

Greg LeJune, partner and president of commercial property/casualty of Catto & Catto LLP, an Assurex Global partner based in San Antonio, Texas, recalls the same sense of reasonableness governing Thorn when Southwest sought to resolve a business loss claim due to Hurricane Katrina at the New Orleans airport.

“We could only get so far with real data and we had to settle the claim based on some assumptions,” LeJune recalled. He said Thorn allowed him to go forward and settle a sizable claim where others might have balked due to the absence of hard data.

“He was reasonable,” LeJune said.

“He understood that there were going to be limitations on the facts,” he said.

LeJune’s partner said the fact that Thorn didn’t set out to be in risk management must be aiding him.

“He didn’t come into the job with some preconceived notions about how he was supposed to do the job,” said Jaimie Hayne, the CEO of Catto & Catto.

“I felt it allowed us to stick by AIG and we have a very good relationship with AIG to this day.” − Chris Thorn, senior manager, payments and risk for Southwest Airlines

“We were really able to work together and work on that relationship and figure out where each other’s strengths and weaknesses are and it has worked out beautifully,” Hayne said.

The roots of Thorn’s abilities as a problem solver, Hayne said, may be his understanding and compassion for his fellow professionals, and their personal and professional limitations.

“At the end of the day it’s Chris’ view that everybody is trying to do the right thing. It’s just helping everybody get to that spot,” Hayne said.

“He realizes that everybody has got struggles and everybody has people that they report to, and because of his experience he understands the political dynamics between companies and the decision making process,” Hayne said.