1 00:00:00,440 --> 00:00:04,440 Speaker 1: Look ahead, imagine more, gain insight for your industry with 2 00:00:04,480 --> 00:00:08,480 Speaker 1: forward thinking advice from the professionals at Cone Resnick. Is 3 00:00:08,520 --> 00:00:11,559 Speaker 1: your business ready to break through? Find out more at 4 00:00:11,640 --> 00:00:19,279 Speaker 1: Cone resnick dot com slash Breakthrough. This is Masters in 5 00:00:19,360 --> 00:00:23,840 Speaker 1: Business with Barry Ridholts on Bloomberg Radio. This week on 6 00:00:23,880 --> 00:00:27,400 Speaker 1: the podcast, we have a special and unusual guest. His 7 00:00:27,560 --> 00:00:30,800 Speaker 1: name is Ross buck Mueller. He's the founder and CEO 8 00:00:31,640 --> 00:00:36,000 Speaker 1: of the Pure group of insurance companies. I don't usually 9 00:00:36,040 --> 00:00:40,440 Speaker 1: think about insurance companies, and I certainly hadn't gone out 10 00:00:40,560 --> 00:00:43,240 Speaker 1: and said, hey, let's find someone from the insurance industry. 11 00:00:43,840 --> 00:00:46,320 Speaker 1: I don't get a lot of PR pitches that I'm 12 00:00:46,360 --> 00:00:51,440 Speaker 1: remotely interested in. But when uhuh, someone had contacted me 13 00:00:51,479 --> 00:00:53,440 Speaker 1: and said, hey, are you interested in speaking with the 14 00:00:53,479 --> 00:00:57,040 Speaker 1: founder of Pure, I said, hey, that's my insurance company. 15 00:00:57,560 --> 00:01:01,400 Speaker 1: Person was really no one ever really heard of us 16 00:01:01,400 --> 00:01:04,280 Speaker 1: in the media. Well I did. I I heard of 17 00:01:04,319 --> 00:01:06,720 Speaker 1: you because I was unhappy with one of your competitors, 18 00:01:06,720 --> 00:01:11,200 Speaker 1: and my brother, who's an insurance agent, recommended I look 19 00:01:11,240 --> 00:01:14,240 Speaker 1: at this company and and I thought they were really interesting, 20 00:01:14,400 --> 00:01:19,320 Speaker 1: terrific and competitive. So I I had coffee with the 21 00:01:19,319 --> 00:01:22,760 Speaker 1: the founder. His name is Ross talked to them about 22 00:01:23,000 --> 00:01:25,480 Speaker 1: who they were, how they came about, and I thought 23 00:01:25,480 --> 00:01:31,640 Speaker 1: it was really a surprisingly fascinating tale, certainly much more 24 00:01:31,720 --> 00:01:35,919 Speaker 1: fascinating than we typically expect from the world of insurance. 25 00:01:35,920 --> 00:01:41,120 Speaker 1: So we discussed how he uh came up with the concept, 26 00:01:42,040 --> 00:01:46,399 Speaker 1: why he left A I G Financial in order to 27 00:01:46,400 --> 00:01:50,200 Speaker 1: to launch this insurance company. And really they've been an 28 00:01:50,240 --> 00:01:54,520 Speaker 1: extremely successful entity, much faster growth than the rest of 29 00:01:54,560 --> 00:01:58,120 Speaker 1: the insurance industry. There over six hundred and fifty million 30 00:01:58,160 --> 00:02:01,280 Speaker 1: dollars in premiums and they're growing forty percent a year. 31 00:02:01,360 --> 00:02:05,520 Speaker 1: That that's a pretty astonishing number. So, with no further ado, 32 00:02:05,920 --> 00:02:11,440 Speaker 1: here is my conversation with Ross Buck Mueller of Pure Insurance. 33 00:02:14,560 --> 00:02:18,880 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. 34 00:02:19,480 --> 00:02:22,160 Speaker 1: My guest today is a gentleman you may not be 35 00:02:22,240 --> 00:02:25,080 Speaker 1: aware of, but you should be. His name is Ross 36 00:02:25,080 --> 00:02:28,200 Speaker 1: Buck Mueller and he is the founder of the Pure 37 00:02:28,400 --> 00:02:32,360 Speaker 1: Insurance Group of companies. UH. He has a storied background 38 00:02:32,360 --> 00:02:37,000 Speaker 1: in the insurance industry. UH. He began his career at Chubb, 39 00:02:37,040 --> 00:02:40,320 Speaker 1: where he spent more than a decade working the fields 40 00:02:40,360 --> 00:02:43,840 Speaker 1: before he moved to A I G where he launched 41 00:02:44,000 --> 00:02:47,160 Speaker 1: the A i G Private Client Group and built it 42 00:02:47,160 --> 00:02:50,360 Speaker 1: it into a billion dollar business. He was president of 43 00:02:50,400 --> 00:02:53,080 Speaker 1: the Private Client Group for more than six years. He 44 00:02:53,160 --> 00:02:56,359 Speaker 1: has been recognized by Cranes New York in its annual 45 00:02:56,919 --> 00:03:00,880 Speaker 1: forty under forty feature UH looking at Rising Stars of 46 00:03:00,919 --> 00:03:03,720 Speaker 1: New York, as well as being the winner of the 47 00:03:05,480 --> 00:03:09,959 Speaker 1: Ernstein Young Entrepreneur of the Year Award. Ross Buck Mueller, 48 00:03:10,040 --> 00:03:14,160 Speaker 1: Welcome to Bloomberg. Thanks Berry. We don't really have a 49 00:03:14,160 --> 00:03:18,600 Speaker 1: lot of people from the insurance industry in the studio, 50 00:03:18,840 --> 00:03:21,800 Speaker 1: and I think a lot of people, uh don't really 51 00:03:21,800 --> 00:03:25,720 Speaker 1: think about insurance until they need it. But you've been 52 00:03:26,160 --> 00:03:29,679 Speaker 1: plowing those fields for a long time and you identified 53 00:03:29,720 --> 00:03:34,600 Speaker 1: a number of interesting anomalies, not not only an underserved 54 00:03:34,680 --> 00:03:39,080 Speaker 1: niche in the insurance industry, but an under utilized corporate 55 00:03:39,080 --> 00:03:42,720 Speaker 1: structure that that made your company is more competitive. Let's 56 00:03:42,760 --> 00:03:45,960 Speaker 1: let's start with that underserved niche. How did you first 57 00:03:46,000 --> 00:03:49,760 Speaker 1: identify the niche either at a I G or at 58 00:03:49,800 --> 00:03:54,520 Speaker 1: Pure Well for starters, the high net worth area, which 59 00:03:54,520 --> 00:03:57,400 Speaker 1: is we focus on serving successful families, is the only 60 00:03:57,440 --> 00:04:00,680 Speaker 1: business I've been in. Right out of college, got a 61 00:04:00,760 --> 00:04:03,600 Speaker 1: job as an underwriter at chub in the personal insurance area. 62 00:04:04,160 --> 00:04:06,880 Speaker 1: And uh. So on one level, discovering high net worth 63 00:04:07,040 --> 00:04:10,680 Speaker 1: was well, it's where I fell into. UM. But as 64 00:04:10,720 --> 00:04:13,920 Speaker 1: time went on, UM, you know what we began to see, 65 00:04:14,040 --> 00:04:16,160 Speaker 1: or I certainly did along with some colleagues who joined 66 00:04:16,160 --> 00:04:20,040 Speaker 1: me at Pure, were some some inefficiencies in the way 67 00:04:20,080 --> 00:04:23,240 Speaker 1: that market had operated. Even as we brought more competition 68 00:04:23,279 --> 00:04:27,320 Speaker 1: to it, there was more chance for inefficiency. But um, 69 00:04:27,560 --> 00:04:30,839 Speaker 1: really it was this question of an alignment of interest. UM. 70 00:04:30,880 --> 00:04:32,920 Speaker 1: You know, if you if you look back ten or 71 00:04:32,960 --> 00:04:37,640 Speaker 1: fifteen years ago, there began a movement where both in 72 00:04:37,640 --> 00:04:40,719 Speaker 1: the insurance world and and particularly in the wealth management world, 73 00:04:41,040 --> 00:04:45,440 Speaker 1: were alignment of interest, the elimination of conflicts, UH, the 74 00:04:45,480 --> 00:04:50,400 Speaker 1: improvement of transparency. They all became important, either forced by 75 00:04:50,480 --> 00:04:53,960 Speaker 1: regulators who were saying you better behave better or demanded 76 00:04:53,960 --> 00:04:56,760 Speaker 1: by consumers who said, I want to be treated with 77 00:04:56,760 --> 00:05:00,000 Speaker 1: this sense of trust that I know you're gonna behave well. 78 00:05:00,720 --> 00:05:04,240 Speaker 1: And we were able to look at the natural conflicts 79 00:05:04,279 --> 00:05:09,040 Speaker 1: between policy holders and shareholders and design a business that 80 00:05:09,120 --> 00:05:13,200 Speaker 1: would create this alignment. And uh, and that's what we've done. 81 00:05:13,400 --> 00:05:16,159 Speaker 1: So so let's address that conflict. A lot of big 82 00:05:16,200 --> 00:05:20,560 Speaker 1: insurance companies are publicly traded, which you are suggesting, and 83 00:05:20,600 --> 00:05:23,560 Speaker 1: I think most of our listeners know UH have a 84 00:05:23,560 --> 00:05:28,799 Speaker 1: fiduciary obligation to their shareholders. But as a mutual structure, 85 00:05:28,839 --> 00:05:32,560 Speaker 1: where the policy holders are technically the owners of the company, 86 00:05:33,040 --> 00:05:35,520 Speaker 1: there is no such conflict. Is that a fair way 87 00:05:35,560 --> 00:05:38,039 Speaker 1: to describe it? Well, I think in the simplest terms, 88 00:05:38,080 --> 00:05:40,960 Speaker 1: it is. But but you know it, and and our 89 00:05:41,080 --> 00:05:44,240 Speaker 1: form takes a bit of a hybrid structure. UM. We 90 00:05:44,240 --> 00:05:48,320 Speaker 1: think it takes the best aspects of mutuality, UM A 91 00:05:48,360 --> 00:05:51,880 Speaker 1: low cost of capital because our policy holders contribute to 92 00:05:51,920 --> 00:05:56,159 Speaker 1: build up the strength of the company. UM and UM 93 00:05:56,320 --> 00:05:59,920 Speaker 1: looks at some of the challenges that that mutuals have had. 94 00:06:00,240 --> 00:06:04,160 Speaker 1: Capital flexibility, the ability to compete with larger companies, and 95 00:06:04,160 --> 00:06:06,880 Speaker 1: and an entrepreneurial environment. You know, maybe the best and 96 00:06:06,920 --> 00:06:08,960 Speaker 1: most talented people want to work in a place where 97 00:06:08,960 --> 00:06:12,200 Speaker 1: they feel like they can flourish. And sometimes the older 98 00:06:12,279 --> 00:06:15,360 Speaker 1: mutual companies weren't seen as that we weren't the same 99 00:06:15,400 --> 00:06:19,680 Speaker 1: stock option grants in the same exactly exactly, UM, and 100 00:06:19,760 --> 00:06:22,279 Speaker 1: I think I and I think that that UM some 101 00:06:22,400 --> 00:06:26,640 Speaker 1: of the great mutual companies were terrific stewards of the 102 00:06:26,839 --> 00:06:30,479 Speaker 1: capital and the risks that their policy holders presented to 103 00:06:30,520 --> 00:06:34,680 Speaker 1: them UM, but perhaps weren't weren't run with some of 104 00:06:34,680 --> 00:06:38,320 Speaker 1: the modern ideas of corporate culture and environment, So beyond 105 00:06:38,320 --> 00:06:41,359 Speaker 1: the rewards UM, you know, the environment might not have 106 00:06:41,400 --> 00:06:44,120 Speaker 1: been as dynamic. So in any event, we looked at 107 00:06:44,200 --> 00:06:48,039 Speaker 1: this and said, if we could create UM a business 108 00:06:48,080 --> 00:06:51,680 Speaker 1: that really embraced mutuality, transparency, the alignment of interest, the 109 00:06:51,680 --> 00:06:55,280 Speaker 1: elimination of conflicts, of lower cost of capital, of focus 110 00:06:55,400 --> 00:06:58,279 Speaker 1: on the policy holders, do it in a way that 111 00:06:58,320 --> 00:07:02,000 Speaker 1: it was entrepreneurial. Boy, we thought we'd have something terrific, 112 00:07:02,040 --> 00:07:04,680 Speaker 1: and that's what we've done. But some of these conflicts 113 00:07:04,720 --> 00:07:07,680 Speaker 1: are not sinister. They're simple, right, that that shareholders want 114 00:07:07,680 --> 00:07:10,080 Speaker 1: premiums to be higher and policy holders want them to 115 00:07:10,120 --> 00:07:13,520 Speaker 1: be lower. You know, so as a mutual, how much 116 00:07:13,600 --> 00:07:16,960 Speaker 1: lower are your premiums relative to the to the big 117 00:07:17,000 --> 00:07:20,600 Speaker 1: players in your space? Well, so I think the reciprocal 118 00:07:20,640 --> 00:07:24,120 Speaker 1: structure probably gives us a ten to fifteen percent advantage 119 00:07:24,760 --> 00:07:27,520 Speaker 1: in part because you know, insurance companies need to cover 120 00:07:28,240 --> 00:07:30,840 Speaker 1: the cost of the claims and the cost of your expenses, 121 00:07:30,880 --> 00:07:33,640 Speaker 1: but also the cost of capital UM and when your 122 00:07:33,680 --> 00:07:37,600 Speaker 1: capitalists free contributed by policy holders year after year, that 123 00:07:37,720 --> 00:07:41,040 Speaker 1: certainly reduces the burden to the need to return the 124 00:07:41,280 --> 00:07:43,760 Speaker 1: The other part, though, that I think is just as important, 125 00:07:43,800 --> 00:07:46,520 Speaker 1: is when you start a company from scratch and you 126 00:07:46,600 --> 00:07:50,000 Speaker 1: have this idea of what you want to do. We 127 00:07:50,000 --> 00:07:53,160 Speaker 1: were we have been able to select our our members, 128 00:07:53,160 --> 00:07:56,760 Speaker 1: our policy holders carefully. So if you only ensure those 129 00:07:56,760 --> 00:07:59,600 Speaker 1: people who are more responsible, who are less likely to 130 00:07:59,600 --> 00:08:03,520 Speaker 1: make claim aimes, who appreciate what you're offering, UM, you 131 00:08:03,520 --> 00:08:05,880 Speaker 1: can do it at a lower cost. So I'd say 132 00:08:05,880 --> 00:08:10,640 Speaker 1: on average, our members report savings North. I'm Barry Rioults. 133 00:08:10,760 --> 00:08:13,880 Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My 134 00:08:13,960 --> 00:08:16,880 Speaker 1: special guest today is Ross buck Mueller. He is the 135 00:08:16,960 --> 00:08:21,680 Speaker 1: founder of Pure Group of insurance companies. Previously, he was 136 00:08:21,800 --> 00:08:25,640 Speaker 1: the creator of the A I G Private Client Group. 137 00:08:25,760 --> 00:08:27,960 Speaker 1: Let's let's talk a little bit about that. You're working 138 00:08:28,440 --> 00:08:31,040 Speaker 1: as a youngster at chub, you're there for a dozen years. 139 00:08:32,360 --> 00:08:36,000 Speaker 1: How did a I G come a knocking well? I 140 00:08:36,040 --> 00:08:39,560 Speaker 1: was so I was in London, UM building out a 141 00:08:39,679 --> 00:08:42,640 Speaker 1: UK high net worth practice and and and a few 142 00:08:42,640 --> 00:08:46,720 Speaker 1: other things, and UM, you know the first thing that 143 00:08:46,800 --> 00:08:50,600 Speaker 1: happened was is we were hosting our chairman at the time, 144 00:08:51,080 --> 00:08:54,880 Speaker 1: UM and two companies in the United States, Continental and 145 00:08:54,960 --> 00:08:58,520 Speaker 1: Sienna had merged and they both had a consumer business. 146 00:08:59,280 --> 00:09:01,959 Speaker 1: And we're hosting our chairman for a dinner with some 147 00:09:02,320 --> 00:09:06,840 Speaker 1: uh European executives and they uh, they said to him, 148 00:09:06,880 --> 00:09:09,240 Speaker 1: so I see this merger, what is this going to mean? 149 00:09:09,280 --> 00:09:13,199 Speaker 1: And and he reflected and said, We've never had competition 150 00:09:13,240 --> 00:09:15,480 Speaker 1: and we never will. Boy, I was sitting at the 151 00:09:15,520 --> 00:09:17,439 Speaker 1: dinner saying I'd like to compete against a company that 152 00:09:17,480 --> 00:09:21,360 Speaker 1: doesn't think they'll ever have competition. Um. And about sixty 153 00:09:21,400 --> 00:09:22,760 Speaker 1: days later I got a call from a I G 154 00:09:22,920 --> 00:09:24,839 Speaker 1: saying they're exploring getting into the business and when I'd 155 00:09:24,840 --> 00:09:27,960 Speaker 1: be willing to have a conversation and so, um, you know, 156 00:09:28,000 --> 00:09:30,800 Speaker 1: I flew over from from London at the time and 157 00:09:30,800 --> 00:09:33,839 Speaker 1: and uh, um you know, I had breakfast with Evan, 158 00:09:33,880 --> 00:09:36,040 Speaker 1: at lunch with Hank and met everybody in between, and 159 00:09:36,080 --> 00:09:39,120 Speaker 1: that would be Hank Greenberg and Evan Evan Greenberg as well. Yes, sorry, 160 00:09:39,120 --> 00:09:41,400 Speaker 1: so at the time, who are running the company? And 161 00:09:41,400 --> 00:09:45,320 Speaker 1: and um, uh you know I'll never forget. You know, 162 00:09:45,440 --> 00:09:47,920 Speaker 1: at the time, I was thirty four years old. Um, 163 00:09:48,240 --> 00:09:53,439 Speaker 1: Hank with seventy four chairman and uh. And he turned 164 00:09:53,440 --> 00:09:55,280 Speaker 1: to me, and he said, you better take this job 165 00:09:55,320 --> 00:09:58,840 Speaker 1: because you're getting too old at thirty four. Well, and 166 00:09:58,960 --> 00:10:00,600 Speaker 1: his point was a good and you know, I had 167 00:10:00,600 --> 00:10:02,720 Speaker 1: just been married for a couple of years. You know 168 00:10:02,800 --> 00:10:05,800 Speaker 1: today we have two kids. We were expecting our first child. 169 00:10:06,280 --> 00:10:08,520 Speaker 1: And his point of view was that that you know, 170 00:10:08,600 --> 00:10:10,520 Speaker 1: you're not going to be able to take risks, or 171 00:10:10,559 --> 00:10:12,800 Speaker 1: you may not be willing to take risks, you know, 172 00:10:12,920 --> 00:10:17,400 Speaker 1: real soon when you're like exactly and and and so 173 00:10:17,559 --> 00:10:19,560 Speaker 1: you know, for twelve years at CHUB, I'm being told, 174 00:10:19,600 --> 00:10:21,400 Speaker 1: you know, calm down, young man, your day will come. 175 00:10:21,440 --> 00:10:24,280 Speaker 1: And here's this guy telling me that I better take 176 00:10:24,320 --> 00:10:26,880 Speaker 1: it now because I'm gonna start losing my my courage 177 00:10:26,920 --> 00:10:29,800 Speaker 1: to to take risk. And so, um, it was the 178 00:10:30,000 --> 00:10:32,560 Speaker 1: it was an absolute great decision and I and I 179 00:10:32,600 --> 00:10:36,240 Speaker 1: loved every minute of how hands on was Hank Greenberg 180 00:10:36,240 --> 00:10:40,080 Speaker 1: at seventy four at a I g oh, you know 181 00:10:40,200 --> 00:10:43,640 Speaker 1: he he was. He was hands on in that he 182 00:10:43,760 --> 00:10:46,439 Speaker 1: was there to help you at any at every turn. 183 00:10:46,679 --> 00:10:48,600 Speaker 1: You know. Um. In my case, you know, he had 184 00:10:48,600 --> 00:10:51,280 Speaker 1: a I think we still use rolodexes back then, but 185 00:10:51,360 --> 00:10:53,679 Speaker 1: he had a great one. And and if you're getting 186 00:10:53,679 --> 00:10:55,480 Speaker 1: into the high net worth business, and you have Hank, 187 00:10:56,320 --> 00:10:58,520 Speaker 1: you know, behind you. That's a great tail wind to 188 00:10:58,520 --> 00:11:00,360 Speaker 1: to meet a lot of people who could who could 189 00:11:00,360 --> 00:11:02,440 Speaker 1: help your business. And so he was helpful in that. 190 00:11:02,840 --> 00:11:06,440 Speaker 1: But most importantly he created a clear sense of accountability. 191 00:11:06,559 --> 00:11:09,600 Speaker 1: It was your business, and so his help was there, 192 00:11:09,640 --> 00:11:11,560 Speaker 1: his involvement was there. But let let there be no 193 00:11:11,640 --> 00:11:14,840 Speaker 1: doubt that that good or bad, it was your business. 194 00:11:15,040 --> 00:11:16,839 Speaker 1: And and uh, you know, we got to about a 195 00:11:16,840 --> 00:11:18,520 Speaker 1: half a billion dollars in the first few years when 196 00:11:18,559 --> 00:11:21,320 Speaker 1: I was there before I left, and and you know, 197 00:11:21,360 --> 00:11:24,000 Speaker 1: the business continues to perform. Well, I take pride, you know, 198 00:11:24,080 --> 00:11:26,480 Speaker 1: eleven years after having left, it's still a good business. 199 00:11:26,679 --> 00:11:30,720 Speaker 1: You know. So this was the pre crisis days. This 200 00:11:30,840 --> 00:11:32,840 Speaker 1: was in the early two thousand. When did you start 201 00:11:32,880 --> 00:11:36,120 Speaker 1: at a all right? And you were there until oh 202 00:11:36,240 --> 00:11:38,560 Speaker 1: January of o six we started pure alright, so you 203 00:11:38,640 --> 00:11:42,520 Speaker 1: were almost seven years and that was all right before 204 00:11:42,520 --> 00:11:45,640 Speaker 1: everything hit the fan. What was a I G like 205 00:11:46,360 --> 00:11:48,839 Speaker 1: in that period? Those were really as big as a 206 00:11:48,920 --> 00:11:52,559 Speaker 1: I G ever gotten that that that region was just 207 00:11:53,040 --> 00:11:56,520 Speaker 1: they were tremendous then. So I just last week was 208 00:11:56,760 --> 00:11:59,000 Speaker 1: was with a friend who now runs a big company 209 00:11:59,000 --> 00:12:02,480 Speaker 1: and who was there the time and UM and we 210 00:12:02,480 --> 00:12:05,720 Speaker 1: were having this reflection about the good old days as 211 00:12:05,720 --> 00:12:09,400 Speaker 1: it were, and and I think the common theme was 212 00:12:09,400 --> 00:12:13,920 Speaker 1: was winning. You just felt like you had such an 213 00:12:14,040 --> 00:12:18,280 Speaker 1: edge and there was such momentum built around um winning. 214 00:12:18,320 --> 00:12:22,560 Speaker 1: And I think everybody throughout the organization, UM, you know, 215 00:12:22,920 --> 00:12:26,000 Speaker 1: embraced that idea that that that we were and could 216 00:12:26,080 --> 00:12:29,000 Speaker 1: do great things and and and win and and people 217 00:12:29,040 --> 00:12:32,320 Speaker 1: took great pride in in in winning. And so I 218 00:12:32,320 --> 00:12:34,640 Speaker 1: think that was the first notable thing. I mean, I 219 00:12:34,640 --> 00:12:37,360 Speaker 1: I was I was long gone by by the two 220 00:12:37,360 --> 00:12:41,040 Speaker 1: thousand eight issues, but um, you know, that was a 221 00:12:41,040 --> 00:12:43,160 Speaker 1: really important part of the culture. There was winning. When 222 00:12:43,200 --> 00:12:46,640 Speaker 1: you say winning, where there our fps where the proposals 223 00:12:46,679 --> 00:12:50,520 Speaker 1: that you were competing against some other companies, uh like? 224 00:12:50,840 --> 00:12:53,120 Speaker 1: And what how often did it feel like a I 225 00:12:53,240 --> 00:12:55,880 Speaker 1: G was if it's between you and who was the 226 00:12:55,920 --> 00:12:58,840 Speaker 1: next closest competitor back then? Well again, I think that 227 00:12:58,920 --> 00:13:01,559 Speaker 1: in the insurance industry my recollection and now we're going 228 00:13:01,600 --> 00:13:04,080 Speaker 1: back a bit, but the market capitalization of a I 229 00:13:04,200 --> 00:13:07,840 Speaker 1: G was bigger than the cumulative market capitalization of just 230 00:13:07,880 --> 00:13:11,480 Speaker 1: about all other publicly traded insurers. So it was it 231 00:13:11,600 --> 00:13:13,440 Speaker 1: was everybody, you know, I mean it was a two 232 00:13:13,840 --> 00:13:16,480 Speaker 1: billion dollar market cap back I want to say sixty 233 00:13:17,240 --> 00:13:19,120 Speaker 1: people something like that. Yeah, maybe even more than that. 234 00:13:19,200 --> 00:13:22,520 Speaker 1: So so winning was the existing businesses were getting stronger 235 00:13:22,559 --> 00:13:25,120 Speaker 1: all the time. New businesses like mine were entering and 236 00:13:25,160 --> 00:13:30,239 Speaker 1: making an impact. They were acquiring Sun America, American General, um, 237 00:13:30,280 --> 00:13:32,800 Speaker 1: you know. And there was a certain sense of confidence 238 00:13:32,920 --> 00:13:37,240 Speaker 1: and purpose um, you know, and and pride um you know. 239 00:13:37,320 --> 00:13:38,800 Speaker 1: And it was it was a great deal of fun. 240 00:13:38,880 --> 00:13:42,880 Speaker 1: And boy did I learn a lot. So when when 241 00:13:42,920 --> 00:13:45,840 Speaker 1: you left, oh so you left in oh six, I 242 00:13:45,880 --> 00:13:47,800 Speaker 1: assume after that period of time you had a nice 243 00:13:48,040 --> 00:13:50,240 Speaker 1: fat slug of stock and you got to liquidated at 244 00:13:50,240 --> 00:13:54,199 Speaker 1: all before everything at the right. Wouldn't that be good 245 00:13:54,240 --> 00:13:56,000 Speaker 1: if we could have done that? But you know, listen, 246 00:13:56,000 --> 00:13:58,440 Speaker 1: I mean I guess I'll put that out as I 247 00:13:58,480 --> 00:14:00,520 Speaker 1: was loyal to the company and I believed the company, 248 00:14:00,559 --> 00:14:02,600 Speaker 1: even though you know, I set up a different business. 249 00:14:02,640 --> 00:14:05,640 Speaker 1: But I I did hold probably a little more than 250 00:14:05,679 --> 00:14:08,839 Speaker 1: I should, to say the least, although a I G 251 00:14:09,480 --> 00:14:15,120 Speaker 1: has certainly recovered. At the time of the crisis, I 252 00:14:15,120 --> 00:14:17,880 Speaker 1: would have bet a hundred million dollars that they would 253 00:14:17,960 --> 00:14:23,239 Speaker 1: never repay sixty six billion dollars in aid, but apparently 254 00:14:23,840 --> 00:14:26,840 Speaker 1: they just about have. There's some tax waivers that probably 255 00:14:27,400 --> 00:14:29,960 Speaker 1: gives them a little wriggle room, but they more or 256 00:14:30,000 --> 00:14:32,800 Speaker 1: less repaid the vast majority of that, which is an 257 00:14:32,800 --> 00:14:38,920 Speaker 1: astonishing accomplishment considering how much money was involved. Absolutely so uh, 258 00:14:39,200 --> 00:14:42,200 Speaker 1: looking looking at what you built at A I G. 259 00:14:42,560 --> 00:14:46,960 Speaker 1: How similar or different is Pure relative to to that 260 00:14:47,240 --> 00:14:52,640 Speaker 1: model of servicing the high net worth individual. Interestingly enough, 261 00:14:52,680 --> 00:14:55,360 Speaker 1: it it's about as different as you could get. And 262 00:14:55,400 --> 00:14:58,000 Speaker 1: so for to have the same guy build both companies 263 00:14:58,280 --> 00:15:00,400 Speaker 1: and to look at it now, you know, But but but 264 00:15:00,560 --> 00:15:03,480 Speaker 1: I think it reflects both a i G strength and 265 00:15:03,880 --> 00:15:07,440 Speaker 1: what Pure's purposes At the time. You know, we had 266 00:15:07,440 --> 00:15:09,600 Speaker 1: the biggest balance sheet in the industry at a i G. 267 00:15:09,840 --> 00:15:12,720 Speaker 1: And so for us to take on extraordinary risks for 268 00:15:12,760 --> 00:15:15,920 Speaker 1: people who had art collections in the billions of dollars, 269 00:15:15,960 --> 00:15:19,640 Speaker 1: and to to extend limits to help people ensure what 270 00:15:19,760 --> 00:15:22,440 Speaker 1: might have seen uninsurable at the time, you know that 271 00:15:22,520 --> 00:15:26,400 Speaker 1: made sense. You start a business from scratch, and you're 272 00:15:26,440 --> 00:15:29,640 Speaker 1: now trying to operate a company where you're carefully selecting 273 00:15:29,640 --> 00:15:32,840 Speaker 1: the most responsible people and pulling them together in the 274 00:15:32,880 --> 00:15:37,080 Speaker 1: most efficient way. Um, very different things, very very different things, 275 00:15:37,120 --> 00:15:40,200 Speaker 1: and so the common the expertise was common, but other 276 00:15:40,280 --> 00:15:42,800 Speaker 1: than that, it was very different business. I'm Barry Ridhults. 277 00:15:42,960 --> 00:15:46,320 Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My 278 00:15:46,400 --> 00:15:49,560 Speaker 1: special guest this week is Ross buck Mueller. He is 279 00:15:49,600 --> 00:15:54,400 Speaker 1: the founder and CEO of Pure Group of insurance companies, 280 00:15:55,200 --> 00:15:59,280 Speaker 1: a specialty companies servicing high net worth individuals. And and 281 00:15:59,400 --> 00:16:02,920 Speaker 1: let's talk a little bit about the rest of the 282 00:16:02,960 --> 00:16:06,680 Speaker 1: industry and what what they get wrong. What does the 283 00:16:06,720 --> 00:16:11,960 Speaker 1: insurance industry sort of missed the ball with. Yeah, well, again, 284 00:16:12,000 --> 00:16:14,360 Speaker 1: I've been in the business for almost thirty years and 285 00:16:14,400 --> 00:16:16,720 Speaker 1: so I'm I'm a bit of a fan of the industry, 286 00:16:16,760 --> 00:16:19,240 Speaker 1: and I like to think that as a group we 287 00:16:19,320 --> 00:16:21,400 Speaker 1: do more good than bad. But I don't mean what 288 00:16:21,480 --> 00:16:25,120 Speaker 1: they do that's bad. Yeah, so you obviously spotted a 289 00:16:25,360 --> 00:16:28,360 Speaker 1: niche because because Pure has has really blown up to 290 00:16:28,440 --> 00:16:33,000 Speaker 1: be you're doing over half a billion absolutely. So what 291 00:16:33,040 --> 00:16:36,280 Speaker 1: I was gonna say is is I think I think where, um, 292 00:16:36,320 --> 00:16:39,680 Speaker 1: where we see as you have two big issues. One 293 00:16:39,800 --> 00:16:44,360 Speaker 1: is there still remains inefficiencies in this market. Um. You know, 294 00:16:44,720 --> 00:16:48,160 Speaker 1: in in nineteen seven, I joined a job out of 295 00:16:48,200 --> 00:16:51,680 Speaker 1: out of college. I went through an underwriting training program 296 00:16:52,320 --> 00:16:55,520 Speaker 1: and UM. I came back to the New York branch 297 00:16:55,600 --> 00:16:58,480 Speaker 1: where I was set to be an underwriting trainee UM 298 00:16:58,520 --> 00:17:03,600 Speaker 1: and they introduced a product called Masterpiece UM and at 299 00:17:03,640 --> 00:17:05,679 Speaker 1: that time, master Piece was coming to New York. This 300 00:17:05,760 --> 00:17:08,080 Speaker 1: was within a couple of months of me joining the 301 00:17:08,119 --> 00:17:13,800 Speaker 1: company UM and we looked at the first release of 302 00:17:13,840 --> 00:17:17,040 Speaker 1: the product and it had a flaw that if you 303 00:17:17,080 --> 00:17:19,760 Speaker 1: were to insure a New York City apartment where you 304 00:17:19,800 --> 00:17:22,800 Speaker 1: wanted to insure the fixtures and fittings or the marble 305 00:17:22,840 --> 00:17:26,120 Speaker 1: floors of the mahogany walls, UM that they would sell 306 00:17:26,160 --> 00:17:28,119 Speaker 1: it deductible from a hundred dollars all the way up 307 00:17:28,160 --> 00:17:30,640 Speaker 1: to the highest deductibles of tens of thousands of dollars. 308 00:17:31,080 --> 00:17:33,960 Speaker 1: And no matter what deductible you picked, the price was 309 00:17:34,000 --> 00:17:37,919 Speaker 1: the same because they put the deductible credit in the 310 00:17:37,920 --> 00:17:40,600 Speaker 1: wrong place in the algorithm, I mean, a silly little mistake. 311 00:17:41,000 --> 00:17:43,119 Speaker 1: So here I was a two year old trainee and 312 00:17:43,119 --> 00:17:45,720 Speaker 1: I wrote a memo saying, you know this is this 313 00:17:45,840 --> 00:17:49,320 Speaker 1: is wrong And anyway, two thousand and sixteen, it's still 314 00:17:49,359 --> 00:17:52,800 Speaker 1: the same. So if you're a Chubb insurance policy holder, 315 00:17:52,920 --> 00:17:55,280 Speaker 1: call up and say I want the lowest possible deductible 316 00:17:55,680 --> 00:17:59,199 Speaker 1: and your policy won't you for for this additions and 317 00:17:59,200 --> 00:18:02,440 Speaker 1: alterations cover virgin in apartments. But but I guess my 318 00:18:02,520 --> 00:18:04,679 Speaker 1: point is it's such a it's a very inefficient market. 319 00:18:04,920 --> 00:18:07,879 Speaker 1: It there there are lots of little quirks, all of 320 00:18:07,920 --> 00:18:12,760 Speaker 1: them can be rationalized. UM, but it's inefficient. And uh 321 00:18:12,760 --> 00:18:14,800 Speaker 1: so I think that the inefficiencies and there are many, 322 00:18:14,920 --> 00:18:18,679 Speaker 1: and part of the charm of our businesses. This is 323 00:18:18,720 --> 00:18:21,760 Speaker 1: all we do, and we have looked at these inefficiencies 324 00:18:22,000 --> 00:18:24,359 Speaker 1: and found ways to make things work. Whether that is 325 00:18:24,400 --> 00:18:27,400 Speaker 1: the way jewelry insurance is over priced. So let's let's 326 00:18:27,400 --> 00:18:29,320 Speaker 1: talk about that, because I would I know there's a 327 00:18:29,320 --> 00:18:33,560 Speaker 1: tremendous amount of information asymmetry. It feels like as a customer, 328 00:18:34,440 --> 00:18:37,320 Speaker 1: people don't necessarily know what's going on with things like that. 329 00:18:37,840 --> 00:18:41,520 Speaker 1: Talk to us about the jewelry writers and how it's 330 00:18:41,560 --> 00:18:44,840 Speaker 1: typically done and how you approach it. Well. For for 331 00:18:44,840 --> 00:18:49,280 Speaker 1: for starters, the coverage is typically restrained on their homeowners policy. 332 00:18:49,440 --> 00:18:52,440 Speaker 1: You can't make a claim for much jewelry to buy 333 00:18:53,480 --> 00:18:57,480 Speaker 1: a writer or scheduled personal property policy UM. That is 334 00:18:57,520 --> 00:19:02,040 Speaker 1: priced to make massive offense for the insurer. UM. And 335 00:19:02,080 --> 00:19:04,199 Speaker 1: in our case, we provide more cover in case you 336 00:19:04,240 --> 00:19:06,960 Speaker 1: forgot to ensure something, and the stuff that you intentionally 337 00:19:06,960 --> 00:19:09,359 Speaker 1: want to ensure, your more higher valued items are a 338 00:19:09,440 --> 00:19:12,119 Speaker 1: much lower price. But but so part of this is 339 00:19:12,640 --> 00:19:16,120 Speaker 1: an inefficiency, but part of it also is designed for this, 340 00:19:16,119 --> 00:19:20,280 Speaker 1: this rewarding shareholders. You know, the things that people do 341 00:19:20,440 --> 00:19:23,280 Speaker 1: that everybody, even if you're not insurance expert, just no 342 00:19:24,000 --> 00:19:27,480 Speaker 1: are are are wrong? Um. You know, I think we've 343 00:19:27,480 --> 00:19:29,359 Speaker 1: been able to identify in fixed years ago there was 344 00:19:29,400 --> 00:19:32,200 Speaker 1: a mortgage company that said sort of you know, even 345 00:19:32,280 --> 00:19:35,159 Speaker 1: kids know it's not right to treat your new friends 346 00:19:35,160 --> 00:19:38,320 Speaker 1: better than your old friends. Um. But insurance companies will 347 00:19:38,359 --> 00:19:41,280 Speaker 1: still have new business writing companies where the premiums are 348 00:19:41,280 --> 00:19:43,880 Speaker 1: lower if they've never met you, and higher if you've 349 00:19:43,920 --> 00:19:46,520 Speaker 1: been there for ten years, um. And so we just 350 00:19:46,640 --> 00:19:49,479 Speaker 1: dealt with a lot of these issues where products are 351 00:19:49,520 --> 00:19:52,720 Speaker 1: built to be more generous, priced to be more efficient, 352 00:19:53,200 --> 00:19:56,080 Speaker 1: and and principles put in place like treat your loyal 353 00:19:56,119 --> 00:19:58,040 Speaker 1: customers better than you treat somebody you've never met. In 354 00:19:58,040 --> 00:20:00,720 Speaker 1: other words, if you're an existing cost stomer, no one 355 00:20:00,800 --> 00:20:02,600 Speaker 1: is going to come in as a brand new customer 356 00:20:02,800 --> 00:20:07,119 Speaker 1: and get charged a lower exactly lower premium, So I 357 00:20:07,200 --> 00:20:10,000 Speaker 1: was kind of surprised. We bought a house about eighteen 358 00:20:10,000 --> 00:20:13,800 Speaker 1: months ago. I got an appraisal um for the mortgage, 359 00:20:13,800 --> 00:20:17,719 Speaker 1: and then we got the insurance and uh lo and behold. 360 00:20:17,720 --> 00:20:20,600 Speaker 1: Two months after we closed, the insurance company sends us 361 00:20:20,600 --> 00:20:23,920 Speaker 1: a note, Hey, we've reappraised your home and it appraised 362 00:20:23,960 --> 00:20:27,200 Speaker 1: for half a million dollars more than the original appraisal. 363 00:20:27,280 --> 00:20:29,720 Speaker 1: And by the way, here's a bill for another four 364 00:20:29,800 --> 00:20:34,160 Speaker 1: grand I was astonished by it. Um is that standard 365 00:20:34,160 --> 00:20:37,679 Speaker 1: operating a procedure or is that uh was that a 366 00:20:37,720 --> 00:20:40,720 Speaker 1: one off for me? Now you saw the experience the 367 00:20:40,760 --> 00:20:43,600 Speaker 1: way it's probably designed to be seen, which is unfortunate. Right. 368 00:20:44,000 --> 00:20:46,040 Speaker 1: So here's one of the great challenges. If you're with 369 00:20:46,080 --> 00:20:50,280 Speaker 1: a standard company, they will they may overlook real issues 370 00:20:50,320 --> 00:20:53,000 Speaker 1: that would cost more to rebuild, and so when you 371 00:20:53,040 --> 00:20:55,720 Speaker 1: eventually had a claim, they might not have noticed some 372 00:20:55,760 --> 00:21:00,240 Speaker 1: of those features. So the challenges as trying to you know, 373 00:21:00,720 --> 00:21:03,800 Speaker 1: underwrite properly. We want to get these values correct, but 374 00:21:03,880 --> 00:21:06,800 Speaker 1: we can't make it feel like a bait and switch, right, 375 00:21:07,040 --> 00:21:09,040 Speaker 1: and so you know, and simply what one of the 376 00:21:09,119 --> 00:21:11,440 Speaker 1: things we've done is it said if the value goes 377 00:21:11,480 --> 00:21:14,639 Speaker 1: up by more than ten percent, the appraiser cannot make up, 378 00:21:14,840 --> 00:21:17,080 Speaker 1: cannot issue the report. They have to make a phone 379 00:21:17,080 --> 00:21:19,120 Speaker 1: call and go through line by line to make sure 380 00:21:19,160 --> 00:21:21,560 Speaker 1: you agree with what we said, so you don't have 381 00:21:21,640 --> 00:21:26,159 Speaker 1: that shock. UM. And there's lots of of of UH 382 00:21:26,400 --> 00:21:29,280 Speaker 1: practices where the industry has done it the way they've 383 00:21:29,320 --> 00:21:32,239 Speaker 1: done it. They believe they are right. There is some 384 00:21:32,280 --> 00:21:35,480 Speaker 1: goodness in it, but it doesn't sit well with consumers. 385 00:21:35,680 --> 00:21:38,879 Speaker 1: I'm Barry Ridholts. You're listening to Master's in Business on 386 00:21:38,960 --> 00:21:42,600 Speaker 1: Bloomberg Radio. My special guest today is Ross buck Mueller. 387 00:21:42,720 --> 00:21:47,040 Speaker 1: He is the founder, president, chief executive officer at the 388 00:21:47,200 --> 00:21:51,639 Speaker 1: Pure Group of Insurance Companies. You know, I was telling 389 00:21:51,680 --> 00:21:56,199 Speaker 1: someone about today's show and I described Pure because the 390 00:21:56,240 --> 00:21:59,800 Speaker 1: answer is Pure. I'm not familiar with them. The My 391 00:22:00,000 --> 00:22:02,080 Speaker 1: response to that was, well, think of them as the 392 00:22:02,160 --> 00:22:07,040 Speaker 1: Vanguard Group of insurance. How accurate is that? Well? I 393 00:22:07,040 --> 00:22:10,760 Speaker 1: I think that for us, it's a flattering comparison. You know, 394 00:22:10,760 --> 00:22:12,640 Speaker 1: when you look at Vanguard, one of the first things 395 00:22:12,680 --> 00:22:15,760 Speaker 1: they say is is that they're uniquely driven to do 396 00:22:15,840 --> 00:22:20,080 Speaker 1: what's best for investors, and I think we share that value. Now, UH, 397 00:22:20,320 --> 00:22:22,680 Speaker 1: we use independent brokers. They're much more of a direct 398 00:22:22,680 --> 00:22:25,399 Speaker 1: to consumer. You know. We think we are very high touch. 399 00:22:25,840 --> 00:22:30,960 Speaker 1: They're definitely low cost. So operating wise, there's probably some differences, 400 00:22:31,000 --> 00:22:34,080 Speaker 1: but UM, I think we share the value that that 401 00:22:34,520 --> 00:22:37,879 Speaker 1: let's focus on the customer and serve them as the 402 00:22:37,960 --> 00:22:41,480 Speaker 1: most important part of the equation. Cost matter, transparency matters, 403 00:22:41,520 --> 00:22:43,399 Speaker 1: Being on the same side of the table as the 404 00:22:43,400 --> 00:22:46,760 Speaker 1: client matters. That that's what was motivating me to draw 405 00:22:46,840 --> 00:22:50,120 Speaker 1: that comparison. And you're hard pressed to find someone else 406 00:22:50,160 --> 00:22:56,520 Speaker 1: in the insurance industry that at least publicly emphasizes that 407 00:22:56,560 --> 00:22:59,040 Speaker 1: aspect of what they do. Yeah, you know, I think 408 00:22:59,040 --> 00:23:02,439 Speaker 1: that USA has been an inspiration for us in many ways. 409 00:23:02,560 --> 00:23:06,160 Speaker 1: You know, they use the same reciprocal structure, UM, they 410 00:23:06,440 --> 00:23:11,080 Speaker 1: are laser focused on the service to their membership UM. 411 00:23:11,119 --> 00:23:13,119 Speaker 1: You know, and so in many ways, I think we 412 00:23:13,240 --> 00:23:15,920 Speaker 1: view them as as someone to look up to. I 413 00:23:15,920 --> 00:23:17,960 Speaker 1: would say we get most of our inspiration from the 414 00:23:17,960 --> 00:23:20,960 Speaker 1: wealth management industry, where you have real evangelists who are 415 00:23:20,960 --> 00:23:25,840 Speaker 1: out there UM trying to build businesses UM with out 416 00:23:25,840 --> 00:23:28,359 Speaker 1: a focus on short term profits, but focused on this 417 00:23:28,520 --> 00:23:31,000 Speaker 1: long term view. If if I serve my clients, well, 418 00:23:31,600 --> 00:23:34,160 Speaker 1: I will prosper in the Meanwhile, I have no conflict 419 00:23:34,160 --> 00:23:35,720 Speaker 1: that I am just simply going to serve them well, 420 00:23:35,960 --> 00:23:38,640 Speaker 1: and that gives us inspiration. So let's talk a little 421 00:23:38,640 --> 00:23:42,520 Speaker 1: bit about underwriting revenue. How does that EBB and flow 422 00:23:42,600 --> 00:23:45,800 Speaker 1: with the business cycle? How does that change over time? Yeah, 423 00:23:45,800 --> 00:23:47,399 Speaker 1: I mean, I think you have to be careful if 424 00:23:47,440 --> 00:23:51,160 Speaker 1: the market were to become over competitive and you simply 425 00:23:51,320 --> 00:23:56,199 Speaker 1: thought you couldn't underwrite to a to a fair return. Um. 426 00:23:56,240 --> 00:23:57,960 Speaker 1: You know. The good news for us is we operate 427 00:23:58,000 --> 00:24:01,400 Speaker 1: in such an uncompetitive world with two or three other 428 00:24:01,440 --> 00:24:08,480 Speaker 1: companies um, and so we see less um competitive cycles. 429 00:24:08,640 --> 00:24:11,640 Speaker 1: Then then you might see in a commercial insurance where 430 00:24:11,680 --> 00:24:13,879 Speaker 1: there might be dozens and dozens of companies competing for 431 00:24:13,920 --> 00:24:16,840 Speaker 1: the same type of business. So we also looked though, 432 00:24:16,880 --> 00:24:19,440 Speaker 1: at at economic cycles. You know, in two thousand and eight, 433 00:24:19,480 --> 00:24:21,920 Speaker 1: we had a significant amount of business in southwest Florida 434 00:24:22,160 --> 00:24:24,119 Speaker 1: where the economy was hitting it hard, and we had 435 00:24:24,119 --> 00:24:27,320 Speaker 1: to be careful that our membership, you know, was was 436 00:24:27,359 --> 00:24:30,840 Speaker 1: holding up and being resilient in those financial times. These days, 437 00:24:30,840 --> 00:24:35,600 Speaker 1: we're looking at at the massive and frequent hail storms 438 00:24:35,600 --> 00:24:38,040 Speaker 1: in in the center and south of the of the country, 439 00:24:38,040 --> 00:24:40,800 Speaker 1: and is that an anomaly. Is that unusual? We're trying Yeah, 440 00:24:40,840 --> 00:24:42,639 Speaker 1: we're trying to find out what whether it is the 441 00:24:42,680 --> 00:24:45,479 Speaker 1: real uh, the new normal, or whether or not this 442 00:24:45,560 --> 00:24:49,760 Speaker 1: is a cycle. But certainly the cost of replacing roofs 443 00:24:49,920 --> 00:24:52,320 Speaker 1: the last couple of years has has been more than 444 00:24:52,359 --> 00:24:54,479 Speaker 1: we might have anticipated. So let's talk a little bit 445 00:24:54,480 --> 00:24:57,040 Speaker 1: about that. I was reading one of the things that 446 00:24:57,119 --> 00:25:01,440 Speaker 1: you had written, uh, and in two thousand and four 447 00:25:01,480 --> 00:25:05,360 Speaker 1: and two thousand and five we had a huge hurricane cycle, 448 00:25:05,840 --> 00:25:08,680 Speaker 1: and this was right before you launched. How did that 449 00:25:09,119 --> 00:25:11,920 Speaker 1: run of hurricanes, especially on the East coast and most 450 00:25:12,040 --> 00:25:15,320 Speaker 1: especially in Florida, How did that impact your ability to 451 00:25:15,400 --> 00:25:18,840 Speaker 1: launch a company? Yeah, I'm sure it probably helped you. 452 00:25:18,840 --> 00:25:20,720 Speaker 1: You had a couple of factors going on there. So 453 00:25:21,000 --> 00:25:23,040 Speaker 1: one of them was is that in O four to 454 00:25:23,160 --> 00:25:26,040 Speaker 1: five where you had four hurricanes in two thousand and 455 00:25:26,080 --> 00:25:29,000 Speaker 1: four make landfall in Florida, and in two thousand five 456 00:25:29,080 --> 00:25:31,919 Speaker 1: you not only had Wilma and and Rita, but you 457 00:25:31,960 --> 00:25:34,600 Speaker 1: had Katrina, who who you know, obviously did the damage 458 00:25:34,600 --> 00:25:40,639 Speaker 1: in the Gulf. Um and so um insurance companies naturally 459 00:25:41,400 --> 00:25:44,960 Speaker 1: backed off a bit. And we're trying to digest what 460 00:25:45,119 --> 00:25:48,240 Speaker 1: just happened, what's likely to happen in the future, UM, 461 00:25:48,320 --> 00:25:49,960 Speaker 1: And so clearly there was a bit of an opening 462 00:25:50,000 --> 00:25:52,399 Speaker 1: there for us. But the real issue is this is 463 00:25:52,440 --> 00:25:55,240 Speaker 1: we were able to determine that very well built homes, 464 00:25:55,840 --> 00:25:57,920 Speaker 1: and in this case, the newest built homes built to 465 00:25:57,960 --> 00:26:01,480 Speaker 1: the highest standards were far more likely to with withstand 466 00:26:01,560 --> 00:26:04,399 Speaker 1: damage than a home that had been built decades before. 467 00:26:04,720 --> 00:26:07,560 Speaker 1: Go into that, there was something I had read about 468 00:26:07,600 --> 00:26:11,080 Speaker 1: the larger the distance from the four corners of the house, 469 00:26:11,119 --> 00:26:15,240 Speaker 1: the more hurricane resistance the roof is, or something like that. Well, 470 00:26:15,280 --> 00:26:17,879 Speaker 1: you know, listen, I would just say size matters in 471 00:26:17,920 --> 00:26:21,680 Speaker 1: this case, and so UM. For for both engineering reasons 472 00:26:21,680 --> 00:26:24,680 Speaker 1: and just the common sense, these these large homes held 473 00:26:24,760 --> 00:26:28,760 Speaker 1: up very well. UM. There's a terrific group, the Insurance 474 00:26:28,800 --> 00:26:32,119 Speaker 1: Institute for Building and Home Business and Home Safety, that 475 00:26:32,320 --> 00:26:36,480 Speaker 1: is testing damage ability UM down in a facility in 476 00:26:36,480 --> 00:26:38,600 Speaker 1: South Carolina, and we're learning more and more about what 477 00:26:39,240 --> 00:26:43,360 Speaker 1: UM causes damage or what construction helps mitigate damage. The 478 00:26:43,480 --> 00:26:48,600 Speaker 1: newest big homes were withstanding damage far better than UM 479 00:26:48,800 --> 00:26:51,880 Speaker 1: than anything else. And yet when you're building a new 480 00:26:51,920 --> 00:26:55,280 Speaker 1: home in two thousand six and seven, insurance companies were 481 00:26:55,280 --> 00:26:57,439 Speaker 1: already kind of full up of what just happened to 482 00:26:57,480 --> 00:27:00,880 Speaker 1: know four and oh five. So our con sept not 483 00:27:01,200 --> 00:27:04,600 Speaker 1: limited to Florida, was what if we pulled together the 484 00:27:04,640 --> 00:27:07,880 Speaker 1: most responsible owners of the finest built homes and bring 485 00:27:07,920 --> 00:27:10,399 Speaker 1: them together to create their own insurance company. And it 486 00:27:10,520 --> 00:27:13,480 Speaker 1: just so happened that the owners of the finest built 487 00:27:13,480 --> 00:27:15,919 Speaker 1: homes in Florida were being kept out because they were 488 00:27:15,920 --> 00:27:18,359 Speaker 1: all new to the market coming in and people said, 489 00:27:18,640 --> 00:27:22,360 Speaker 1: I'm full already, And so maybe a bit of serendipity. 490 00:27:22,359 --> 00:27:24,160 Speaker 1: And probably when you look at any business that has 491 00:27:24,200 --> 00:27:26,959 Speaker 1: great success, they can look back at some little factor 492 00:27:27,000 --> 00:27:29,280 Speaker 1: that said, boy would have would this business has been 493 00:27:29,040 --> 00:27:33,080 Speaker 1: as successful if the Florida market wasn't uncompetitive for that 494 00:27:33,119 --> 00:27:36,399 Speaker 1: period of time. But the real principle was select carefully 495 00:27:36,560 --> 00:27:38,600 Speaker 1: and we can build a great business. There is a 496 00:27:39,000 --> 00:27:42,400 Speaker 1: metaphor there for being willing to buy stocks when they've 497 00:27:42,480 --> 00:27:45,320 Speaker 1: just gotten crushed in a crisis, like oh aight, O nine, 498 00:27:45,680 --> 00:27:48,320 Speaker 1: You went into Florida right after a huge set of 499 00:27:48,400 --> 00:27:52,720 Speaker 1: hurricanes and found most of your competitors had been scared away. 500 00:27:52,840 --> 00:27:57,680 Speaker 1: That is a tremendous, tremendous opportunity. So let's talk about 501 00:27:57,720 --> 00:28:01,240 Speaker 1: your growth rate. That this opportunity has led to you're 502 00:28:01,240 --> 00:28:03,640 Speaker 1: now doing, is am I reading the numbers right? Five 503 00:28:03,720 --> 00:28:07,440 Speaker 1: hundred million in premiums? Yeah, so in two thousand sixteen 504 00:28:07,480 --> 00:28:09,520 Speaker 1: will do about six d and fifty millions. So we 505 00:28:09,520 --> 00:28:12,000 Speaker 1: did about five hundred last year, and and we'll continue 506 00:28:12,000 --> 00:28:15,760 Speaker 1: to grow more. You're growing almost is it? For seven 507 00:28:15,760 --> 00:28:18,280 Speaker 1: consecutive years? Well for more than that. So since we 508 00:28:18,359 --> 00:28:20,680 Speaker 1: started back, you know, two thousand seven was the first 509 00:28:20,680 --> 00:28:22,840 Speaker 1: full year of writing business, we grew by forty percent 510 00:28:23,000 --> 00:28:26,520 Speaker 1: every year, and and we grew forty percent last year. Um, 511 00:28:26,640 --> 00:28:29,600 Speaker 1: now you know those numbers to put in perspective, we're 512 00:28:29,640 --> 00:28:32,360 Speaker 1: still you know, about a six hundred million dollar business. 513 00:28:33,119 --> 00:28:36,960 Speaker 1: We're in about a fifteen billion dollar niche um with 514 00:28:37,000 --> 00:28:39,560 Speaker 1: only two other competitors Chubb and a I G. Really, 515 00:28:39,600 --> 00:28:42,960 Speaker 1: who are who are in this? So we have been 516 00:28:43,120 --> 00:28:46,520 Speaker 1: in many ways slow and steady building up a business 517 00:28:46,560 --> 00:28:50,800 Speaker 1: that still is undersized within the category. But a year 518 00:28:50,880 --> 00:28:54,520 Speaker 1: that that's an astonishing growth rate for for a decade. Sure, 519 00:28:54,600 --> 00:28:56,000 Speaker 1: and I'm sure if I went back to A I G. 520 00:28:56,160 --> 00:28:58,280 Speaker 1: Mr Greenberg would say so six hundred million part of 521 00:28:58,280 --> 00:29:01,240 Speaker 1: fifteen billions. So you haven't been able to crack it um, 522 00:29:01,280 --> 00:29:04,320 Speaker 1: you know, yeah, well, and that that that's motivational. How 523 00:29:04,360 --> 00:29:08,520 Speaker 1: long can you maintain a growth rate anywhere? Yeah, I 524 00:29:08,560 --> 00:29:10,320 Speaker 1: think for some time now. As I said, it's a 525 00:29:10,320 --> 00:29:13,840 Speaker 1: fifteen billion dollar gosh, our competitors have suggested could be 526 00:29:13,880 --> 00:29:16,200 Speaker 1: a forty billion dollar market, and it's a part of 527 00:29:16,200 --> 00:29:20,840 Speaker 1: the economy that is showing growth the wealthiest Americans. So 528 00:29:21,040 --> 00:29:23,200 Speaker 1: we see plenty of upside. We don't we don't see 529 00:29:23,240 --> 00:29:26,240 Speaker 1: any um, need to slow down. The issue for us 530 00:29:26,320 --> 00:29:31,600 Speaker 1: is managing risk, managing culture, UM, building scale. Luckily, from 531 00:29:31,640 --> 00:29:34,000 Speaker 1: the very beginning we put in sort of scalable systems 532 00:29:34,000 --> 00:29:37,720 Speaker 1: that would allow us to grow well into the future. Um. 533 00:29:37,760 --> 00:29:40,560 Speaker 1: But that's the great challenge. Continue to find great people. 534 00:29:40,960 --> 00:29:44,320 Speaker 1: We launched forty seven college graduates coming in for a 535 00:29:44,320 --> 00:29:47,640 Speaker 1: training program and and they will help us really more 536 00:29:47,680 --> 00:29:52,080 Speaker 1: in eighteen when they're maturing, or they'll you know, um, 537 00:29:52,400 --> 00:29:55,600 Speaker 1: hold on, yeah, it's interesting. I mean, twenty seven out 538 00:29:55,640 --> 00:29:57,600 Speaker 1: of the twenty eight we hired last year are still 539 00:29:57,640 --> 00:30:00,120 Speaker 1: with us. The two thousand ten class, the entire but 540 00:30:00,240 --> 00:30:02,280 Speaker 1: still with us, so so we hope we can keep them. 541 00:30:02,320 --> 00:30:05,320 Speaker 1: So you're actively recruiting kids right out of college, how 542 00:30:05,320 --> 00:30:09,960 Speaker 1: do you find clients. How does the high net worth 543 00:30:10,400 --> 00:30:15,160 Speaker 1: homeowner come across Pure as as an insurer. Yah. So 544 00:30:15,600 --> 00:30:19,640 Speaker 1: we use a network of around seven independent brokers. They 545 00:30:19,720 --> 00:30:23,640 Speaker 1: are fiercely independent. They work for their clients. Uh, they 546 00:30:23,760 --> 00:30:26,800 Speaker 1: put their client's best interest first. They do work with 547 00:30:26,840 --> 00:30:30,760 Speaker 1: other companies UM and UM and so if we don't 548 00:30:30,800 --> 00:30:33,160 Speaker 1: serve them, well they can they can UM you know, 549 00:30:33,200 --> 00:30:35,840 Speaker 1: offer them someone else. But I will tell you that 550 00:30:35,880 --> 00:30:40,840 Speaker 1: after fifty five thousand families have joined UM, it's it's 551 00:30:40,880 --> 00:30:44,240 Speaker 1: really the existing members and their enthusiasm that will lead 552 00:30:44,280 --> 00:30:47,080 Speaker 1: to the next fifty five thousand. So UM, you know 553 00:30:47,160 --> 00:30:50,680 Speaker 1: we have we have principally a channel of independent brokers 554 00:30:51,080 --> 00:30:54,320 Speaker 1: and then we try to UM inspire the enthusiasm of 555 00:30:54,360 --> 00:30:57,640 Speaker 1: our membership to to to grow the next next group. Well, 556 00:30:57,720 --> 00:31:00,160 Speaker 1: full disclosure, I was with one of your competite there 557 00:31:00,240 --> 00:31:03,920 Speaker 1: is not especially happy with them, especially after that big 558 00:31:03,920 --> 00:31:07,360 Speaker 1: increase and h Actually my kid brother referred me to 559 00:31:07,400 --> 00:31:10,360 Speaker 1: you guys, and that's how Pure became my ensure. That's 560 00:31:10,360 --> 00:31:13,120 Speaker 1: how I became aware of you who you were. And 561 00:31:13,520 --> 00:31:16,920 Speaker 1: when one of the people UH in the media group 562 00:31:16,960 --> 00:31:19,520 Speaker 1: for you contacted me, I'm like, oh, I know, Pure Insurance. 563 00:31:19,520 --> 00:31:22,200 Speaker 1: They're might insure. They're like, really, well, thank your brother. 564 00:31:23,480 --> 00:31:26,320 Speaker 1: So so let's talk a little more about about revenues 565 00:31:26,560 --> 00:31:30,880 Speaker 1: and and reserves. How do you maintain that balance between 566 00:31:31,960 --> 00:31:37,240 Speaker 1: pricing premium so you generate sufficient um flows that that 567 00:31:37,360 --> 00:31:40,440 Speaker 1: your reserves are where you want them to be, and 568 00:31:40,520 --> 00:31:43,920 Speaker 1: yet at the same time not overcharging or staying as 569 00:31:43,920 --> 00:31:47,800 Speaker 1: competitive as you can versus the other premium costs that 570 00:31:47,800 --> 00:31:50,440 Speaker 1: that your competitors charge. Yeah, that's it's a it's a 571 00:31:50,440 --> 00:31:52,520 Speaker 1: great challenge. And I think it's also a challenge if 572 00:31:52,560 --> 00:31:55,880 Speaker 1: you hire talented and experienced people who are accustomed to 573 00:31:55,920 --> 00:31:59,320 Speaker 1: working in a stock company, their mentality maybe be different. 574 00:31:59,400 --> 00:32:01,800 Speaker 1: So the first thing we did is we established a 575 00:32:01,840 --> 00:32:06,080 Speaker 1: set of principles that our actuarial and pricing team would 576 00:32:06,240 --> 00:32:09,280 Speaker 1: use to make those decisions. One of them would be 577 00:32:09,600 --> 00:32:12,400 Speaker 1: there are no new business writing companies or in other words, 578 00:32:12,400 --> 00:32:15,480 Speaker 1: the existing members will always pay less than a new 579 00:32:15,560 --> 00:32:19,720 Speaker 1: member and and UM, and that helps guide them UM. 580 00:32:19,760 --> 00:32:22,640 Speaker 1: But clearly we have to manage this business professionally. You 581 00:32:22,640 --> 00:32:25,000 Speaker 1: know that we have to make sure we charge enough, 582 00:32:25,200 --> 00:32:28,200 Speaker 1: and so we lay out UM these principles that guide 583 00:32:28,240 --> 00:32:31,480 Speaker 1: them to seek an adequate rate um, to try to 584 00:32:31,520 --> 00:32:34,040 Speaker 1: be fair amongst the members, so you don't have subsidization 585 00:32:34,120 --> 00:32:36,640 Speaker 1: where some groups are not paying nearly enough and some 586 00:32:36,680 --> 00:32:39,680 Speaker 1: groups are paying too too much. Thank you Ross for 587 00:32:39,680 --> 00:32:42,000 Speaker 1: for being so generous with your time and and spending 588 00:32:42,000 --> 00:32:45,200 Speaker 1: so much time with us. If you enjoyed this conversation, 589 00:32:45,320 --> 00:32:48,320 Speaker 1: be sure and check out our podcast extras, where we 590 00:32:48,400 --> 00:32:51,760 Speaker 1: keep the tape rolling and continue chatting about all things insurance. 591 00:32:52,200 --> 00:32:55,960 Speaker 1: Check out my daily column on Bloomberg dot com or 592 00:32:56,080 --> 00:33:00,000 Speaker 1: follow me on Twitter at rid Halts. I'm Barry rid Halt. 593 00:33:00,320 --> 00:33:03,720 Speaker 1: You've been listening to Masters in Business on Bloomberg Radio. 594 00:33:05,160 --> 00:33:07,640 Speaker 1: Are you looking to take your business to the next level? 595 00:33:07,880 --> 00:33:11,560 Speaker 1: The accounting, tax and advisory professionals from Cone Resnick can 596 00:33:11,600 --> 00:33:16,120 Speaker 1: guide you. Cone Resnick delivers industry expertise and forward thinking 597 00:33:16,160 --> 00:33:21,160 Speaker 1: perspective that can help turn business possibilities into business opportunities. 598 00:33:21,640 --> 00:33:26,120 Speaker 1: Look ahead, gain insight, imagine more. Is your business ready 599 00:33:26,160 --> 00:33:29,160 Speaker 1: to break through? Learn more at Cone Resnick dot com 600 00:33:29,320 --> 00:33:37,080 Speaker 1: slash Breakthrough, Cone Reisneck Accounting, Tax Advisory. Welcome to the podcast, um, Ross, 601 00:33:37,120 --> 00:33:39,320 Speaker 1: Thank you so much for doing this. This is really fascinating. 602 00:33:39,360 --> 00:33:41,880 Speaker 1: There's there's so much stuff we didn't get to that 603 00:33:41,960 --> 00:33:48,240 Speaker 1: I want to talk about um, perhaps most pressing artwork. 604 00:33:48,320 --> 00:33:51,600 Speaker 1: How do you ensure artwork. It's one thing to assess 605 00:33:51,640 --> 00:33:55,240 Speaker 1: the value of a Picasso because there was a recent auction. 606 00:33:55,640 --> 00:33:59,080 Speaker 1: How do you put a value on any of the 607 00:33:59,160 --> 00:34:03,520 Speaker 1: artwork that a high net worth household might have, whether 608 00:34:03,560 --> 00:34:08,319 Speaker 1: it's original sculptures or paintings or what have you. Well, 609 00:34:08,400 --> 00:34:10,960 Speaker 1: valuation is an important part of it. And so we 610 00:34:11,040 --> 00:34:14,279 Speaker 1: have a team of experts who have experience and valuations, 611 00:34:14,320 --> 00:34:16,520 Speaker 1: and then they use a network to make sure that 612 00:34:16,600 --> 00:34:20,040 Speaker 1: we have the right valuations. But it's only part of it. Um, 613 00:34:20,080 --> 00:34:25,160 Speaker 1: you know. So for example, um, a a massive hail 614 00:34:25,200 --> 00:34:29,799 Speaker 1: storm in St. Louis Uh just hit um a wonderful 615 00:34:29,880 --> 00:34:33,760 Speaker 1: sculpture that was in the backyard of somebody's house, knocking 616 00:34:33,800 --> 00:34:37,879 Speaker 1: the toes off of a cherub and and uh um 617 00:34:38,000 --> 00:34:40,280 Speaker 1: and so you have to look at damage ability and 618 00:34:40,280 --> 00:34:44,399 Speaker 1: and um and so uh. From an underwriter's perspective, that's 619 00:34:44,400 --> 00:34:46,800 Speaker 1: not only looking at the risks of outdoor sculptures, but 620 00:34:46,920 --> 00:34:50,480 Speaker 1: understanding transit risk of pieces that are on loan or 621 00:34:50,480 --> 00:34:53,960 Speaker 1: pieces that are moving from house to house, because honestly, 622 00:34:53,960 --> 00:34:57,120 Speaker 1: the the exposure inside of a house installed properly on 623 00:34:57,120 --> 00:35:00,280 Speaker 1: a wall, um you know, isn't isn't that gray eight? 624 00:35:00,480 --> 00:35:03,960 Speaker 1: Once it starts moving, Boy, that's there so so understanding 625 00:35:04,040 --> 00:35:06,680 Speaker 1: value and an understanding exposure. And we've got a group 626 00:35:06,680 --> 00:35:08,560 Speaker 1: of people who have done this for a long time 627 00:35:08,600 --> 00:35:10,880 Speaker 1: and that allows us to be pretty good at it. 628 00:35:10,960 --> 00:35:13,520 Speaker 1: Now I understand you have some interesting artwork in the 629 00:35:13,560 --> 00:35:18,120 Speaker 1: lobby of your offices. How how did that come about? Well, um, 630 00:35:18,160 --> 00:35:23,240 Speaker 1: it's interesting. Is is a member um very prominent family 631 00:35:23,280 --> 00:35:27,440 Speaker 1: here in New York. UM had a glass sculpture UM 632 00:35:27,480 --> 00:35:32,040 Speaker 1: cut from one piece of glass by a a Czech 633 00:35:32,040 --> 00:35:37,520 Speaker 1: Lislovakian artist who um uh had built these beautiful glass 634 00:35:38,080 --> 00:35:42,759 Speaker 1: pieces and they discovered a a tiny crack in it 635 00:35:43,320 --> 00:35:47,520 Speaker 1: UM but it it became um of no value. So 636 00:35:47,600 --> 00:35:49,840 Speaker 1: we we paid the claim in full and there was 637 00:35:49,880 --> 00:35:53,440 Speaker 1: no salvage value that anybody wanted. And our claim department 638 00:35:53,480 --> 00:35:55,399 Speaker 1: we're trying to figure out what to do with this 639 00:35:55,680 --> 00:35:58,759 Speaker 1: massive piece of glass, and we thought if it was 640 00:35:58,800 --> 00:36:02,920 Speaker 1: installed in the reception of our headquarters, it would be 641 00:36:02,920 --> 00:36:05,560 Speaker 1: a reminder for everybody of why we're in business. And 642 00:36:06,800 --> 00:36:09,000 Speaker 1: we did that and then all of a sudden, claims 643 00:36:09,000 --> 00:36:12,120 Speaker 1: people from around the country started saying, well, really this, uh, 644 00:36:12,160 --> 00:36:14,960 Speaker 1: you know, paper was stuck to a painting and it 645 00:36:15,040 --> 00:36:18,760 Speaker 1: pulled off the the the the treatment of the oil 646 00:36:18,920 --> 00:36:22,960 Speaker 1: and UM it it can't be repaired. UM, And that 647 00:36:23,080 --> 00:36:26,920 Speaker 1: became installed. And then a a a print from uh 648 00:36:27,400 --> 00:36:31,560 Speaker 1: Dolly was um was damaged in a in a in 649 00:36:31,680 --> 00:36:34,719 Speaker 1: storage beyond repair and with all its mud stains it 650 00:36:34,840 --> 00:36:37,880 Speaker 1: is on our walls. And then a twelveth century Chinese 651 00:36:37,920 --> 00:36:41,759 Speaker 1: plate was cracked and then reassembled. And so when we've 652 00:36:41,760 --> 00:36:44,560 Speaker 1: had art that has been insured and it has no 653 00:36:44,719 --> 00:36:48,759 Speaker 1: value in salvage, we installed it throughout our offices as 654 00:36:48,760 --> 00:36:50,960 Speaker 1: a reminder for why we're in business, to help people 655 00:36:50,960 --> 00:36:53,880 Speaker 1: pursue their passions of collecting art. The the gallery of 656 00:36:53,960 --> 00:36:59,160 Speaker 1: damage artwork. That's that's pretty funny. Let's let's talk. I'm 657 00:36:59,160 --> 00:37:01,000 Speaker 1: meant to ask you for and I didn't get to 658 00:37:01,080 --> 00:37:06,440 Speaker 1: it about um. One of your capital partners, so XL Capital, 659 00:37:06,960 --> 00:37:09,479 Speaker 1: was this one you launched or a later date picked 660 00:37:09,520 --> 00:37:12,480 Speaker 1: up about ten percent of the company. Is that right? Yeah, 661 00:37:12,280 --> 00:37:16,040 Speaker 1: just in December, and and UM you know to to 662 00:37:16,040 --> 00:37:18,320 Speaker 1: to back up, we've had the same partner from the beginning, 663 00:37:18,360 --> 00:37:21,040 Speaker 1: you know, so Stone Point Capital in two thousand five, 664 00:37:21,440 --> 00:37:25,160 Speaker 1: right before before left, we agreed to UM to build 665 00:37:25,160 --> 00:37:28,640 Speaker 1: this business together. Um, and you know, you think about it, 666 00:37:28,680 --> 00:37:31,000 Speaker 1: We're in the eleventh year with the same private equity 667 00:37:31,040 --> 00:37:35,280 Speaker 1: sponsor and they are just They've been a phenomenal partner 668 00:37:35,320 --> 00:37:37,920 Speaker 1: and nobody pressing you to go public or anything along 669 00:37:37,960 --> 00:37:41,920 Speaker 1: those lines. It's unusual for private equity. They're normally looking 670 00:37:41,960 --> 00:37:43,920 Speaker 1: for some sort of an exit. Yeah, no, and I 671 00:37:43,960 --> 00:37:45,480 Speaker 1: and and so I think that in a in a 672 00:37:45,520 --> 00:37:49,920 Speaker 1: fairly complicated transaction, we did a recapitalization of the holding company, 673 00:37:50,480 --> 00:37:53,000 Speaker 1: so we have a for profit company that manages the 674 00:37:53,040 --> 00:37:56,719 Speaker 1: policy holder own exchange and that's where the investors see 675 00:37:56,760 --> 00:38:00,880 Speaker 1: their returns. UM. And so in a very complicated transaction, 676 00:38:00,920 --> 00:38:04,719 Speaker 1: they brought in KKR to take a minority position. And 677 00:38:04,920 --> 00:38:09,400 Speaker 1: we had received over twenty unsolicited unsolicited inquiries from insurance 678 00:38:09,440 --> 00:38:12,640 Speaker 1: companies who wanted to be in a specialist market. Liked 679 00:38:12,640 --> 00:38:16,760 Speaker 1: our model, like the predictable fee income and the customer 680 00:38:16,840 --> 00:38:21,600 Speaker 1: centric um reciprocal and UM. You know, I have to 681 00:38:21,640 --> 00:38:25,800 Speaker 1: say that that that xcel Um, they were terrific. Mike mcgavick, 682 00:38:25,800 --> 00:38:29,000 Speaker 1: who's the CEO, has been a good friend throughout this process. 683 00:38:29,000 --> 00:38:31,200 Speaker 1: And I think that that the biggest thing we get 684 00:38:31,320 --> 00:38:33,560 Speaker 1: is is for me, is I get to talk to 685 00:38:33,600 --> 00:38:37,239 Speaker 1: Mike probably once a quarter about about culture and challenges 686 00:38:37,280 --> 00:38:41,200 Speaker 1: and leadership and and he's been terrific and and uh um. 687 00:38:41,400 --> 00:38:43,920 Speaker 1: But the other side of it is, in addition to 688 00:38:44,000 --> 00:38:47,520 Speaker 1: buying UH, you know, a single digit equity percentage um, 689 00:38:47,680 --> 00:38:51,200 Speaker 1: they made a very generous commitment to provide additional capital 690 00:38:51,880 --> 00:38:54,520 Speaker 1: as we needed a defined amount, but it can be 691 00:38:54,560 --> 00:38:57,200 Speaker 1: called upon in a contingent capital So you know, if 692 00:38:57,239 --> 00:39:00,560 Speaker 1: there was a either an opportunity for greater growth or 693 00:39:00,600 --> 00:39:04,200 Speaker 1: a crisis where we had to replenish. Excel has given 694 00:39:04,280 --> 00:39:08,120 Speaker 1: us this capital flexibility. That's you know, absolutely terrific for us. 695 00:39:08,120 --> 00:39:10,960 Speaker 1: That that sounds like that's a a good sort of 696 00:39:11,120 --> 00:39:15,800 Speaker 1: partner um to have. So I've covered a ton of stuff. 697 00:39:15,800 --> 00:39:19,800 Speaker 1: There's a handful of questions I wanted to ask that 698 00:39:19,800 --> 00:39:24,320 Speaker 1: that we skipped over or ran out of time earlier. UM, 699 00:39:24,360 --> 00:39:28,080 Speaker 1: I would be remiss if I did not ask, how 700 00:39:28,160 --> 00:39:32,840 Speaker 1: are are your capital reserves invested? That float that the 701 00:39:32,880 --> 00:39:37,480 Speaker 1: insurance company has as the reserves? How do you uh 702 00:39:38,080 --> 00:39:40,279 Speaker 1: deal with that on a day to day or or 703 00:39:40,520 --> 00:39:43,200 Speaker 1: year to year basis? Obviously it has to be somewhat 704 00:39:43,239 --> 00:39:45,520 Speaker 1: liquid in case there's a need for it, it's not 705 00:39:45,520 --> 00:39:49,440 Speaker 1: going into gated funds. On the other hand, the shortest 706 00:39:49,520 --> 00:39:53,200 Speaker 1: term treasuries are yielding nothing. How do you deal with that? Well, 707 00:39:53,560 --> 00:39:55,840 Speaker 1: you know, I think we made the decision that that 708 00:39:56,280 --> 00:40:02,800 Speaker 1: UM short duration, high quality UM, despite the modest yields 709 00:40:03,160 --> 00:40:05,799 Speaker 1: negligible yields, was the right thing. We have enough risk 710 00:40:05,840 --> 00:40:09,360 Speaker 1: in our business with hurricanes and earthquakes and hailstorms UM 711 00:40:09,400 --> 00:40:12,759 Speaker 1: that we wouldn't take enormous amount of investment risk. So 712 00:40:13,160 --> 00:40:17,440 Speaker 1: it's been tough these years to generate meaningful yield and UM, 713 00:40:17,480 --> 00:40:21,680 Speaker 1: but we we like our position. We've got lots of liquidity, 714 00:40:21,719 --> 00:40:25,000 Speaker 1: lots of flexibility, but but surely not as much a 715 00:40:25,080 --> 00:40:28,920 Speaker 1: yield as we'd like. So speaking of that, these low rates, 716 00:40:29,040 --> 00:40:33,600 Speaker 1: what what do these really low fit induced zero interest 717 00:40:33,680 --> 00:40:36,840 Speaker 1: rate policy? What do we won seven something on the 718 00:40:36,880 --> 00:40:40,280 Speaker 1: ten year these days? Uh? And if you're looking short 719 00:40:40,320 --> 00:40:44,120 Speaker 1: at term, it's practically nothing. What do low rates mean 720 00:40:44,200 --> 00:40:48,760 Speaker 1: to the insurance industry in general that normally you're dealing 721 00:40:48,800 --> 00:40:51,320 Speaker 1: with this massive float that used to be a source 722 00:40:51,320 --> 00:40:53,480 Speaker 1: of profit for them. Well, yeah, I mean if you 723 00:40:53,520 --> 00:40:56,200 Speaker 1: think about it, if if if you're trying to return 724 00:40:56,600 --> 00:40:59,040 Speaker 1: on capital, you need to to get investment returns or 725 00:40:59,080 --> 00:41:01,920 Speaker 1: under any returns. If the investments aren't there and you 726 00:41:01,960 --> 00:41:05,800 Speaker 1: need more underwriting returns, that requires you to raise prices. 727 00:41:05,840 --> 00:41:08,520 Speaker 1: So having a lower cost of capital, this is a 728 00:41:08,520 --> 00:41:11,120 Speaker 1: good time to to to be able to take advantage 729 00:41:11,120 --> 00:41:13,120 Speaker 1: of that to some degree. But we buy a lot 730 00:41:13,160 --> 00:41:15,080 Speaker 1: of reinsurance from people who need to see a fair 731 00:41:15,080 --> 00:41:19,920 Speaker 1: amount of return. So um, lower lower interest rates naturally 732 00:41:19,960 --> 00:41:23,880 Speaker 1: would lead to higher prices, and probably competition keeps it 733 00:41:23,920 --> 00:41:27,440 Speaker 1: from being too much higher. That's interesting. You don't really 734 00:41:27,480 --> 00:41:30,719 Speaker 1: hear people talking about some of the secondary impacts of 735 00:41:30,719 --> 00:41:34,040 Speaker 1: low interest rates, but insurance prices may actually be higher 736 00:41:34,080 --> 00:41:37,960 Speaker 1: than they otherwise. Would that that kind of kind of appealing? Um, 737 00:41:38,040 --> 00:41:40,520 Speaker 1: let's talk a little bit about analytics. We we reference 738 00:41:40,600 --> 00:41:44,160 Speaker 1: this during the broadcast portion. What what sort of analytics 739 00:41:44,160 --> 00:41:47,200 Speaker 1: do you run? How significant is that to what you do? 740 00:41:47,960 --> 00:41:52,359 Speaker 1: Would you be consider yourself a big data sort of company? Yes, 741 00:41:52,640 --> 00:41:54,120 Speaker 1: I think we would. I think I think you have 742 00:41:54,239 --> 00:41:56,680 Speaker 1: to be to be successful in the insurance business these days. 743 00:41:56,680 --> 00:42:00,319 Speaker 1: I mean, um, so so from our perspective, and just 744 00:42:00,480 --> 00:42:03,880 Speaker 1: actually made an investment outside of our actual area in 745 00:42:03,920 --> 00:42:07,160 Speaker 1: a in a chief data scientist. UM, and she has 746 00:42:07,160 --> 00:42:10,000 Speaker 1: built a team up that that looks at stuff beyond 747 00:42:10,040 --> 00:42:14,040 Speaker 1: the products, so so on the underwriting and actual real side. 748 00:42:14,200 --> 00:42:17,040 Speaker 1: We we do analytics to understand the people we ensure 749 00:42:17,200 --> 00:42:20,680 Speaker 1: and their behavior and the responsibilities and the risks we take, 750 00:42:20,880 --> 00:42:24,520 Speaker 1: like the likelihood of hailstorm or what type of roof 751 00:42:24,680 --> 00:42:28,680 Speaker 1: is more likely to cause significant damage. But the analytics 752 00:42:28,680 --> 00:42:31,360 Speaker 1: really applying to all aspects of our business. The performance 753 00:42:31,360 --> 00:42:34,000 Speaker 1: of individuals recruiting college kids in the likelihood that they're 754 00:42:34,000 --> 00:42:37,680 Speaker 1: going to succeed UH, the effectiveness of direct mail campaigns 755 00:42:37,719 --> 00:42:40,040 Speaker 1: to UH to how do we make sure we don't 756 00:42:40,520 --> 00:42:43,080 Speaker 1: upset too many people when we appraise your house UM 757 00:42:43,200 --> 00:42:46,120 Speaker 1: using third party data that's available, so that instead of 758 00:42:46,120 --> 00:42:47,800 Speaker 1: a bait and switch, if we could have alerted you 759 00:42:47,840 --> 00:42:50,200 Speaker 1: ahead of time that said, it looks like you're under insured, 760 00:42:50,560 --> 00:42:53,920 Speaker 1: that might have reduced the shock of you know, seeing that, 761 00:42:54,040 --> 00:42:56,839 Speaker 1: and so UM in an event. We I don't think 762 00:42:56,840 --> 00:42:59,759 Speaker 1: there's any part of the business where analytics aren't being used. 763 00:43:00,239 --> 00:43:02,879 Speaker 1: Let's talk a little bit about real estate, because I've 764 00:43:02,920 --> 00:43:06,240 Speaker 1: been watching I'm a real estate junkie to some degree. 765 00:43:06,360 --> 00:43:08,560 Speaker 1: It's it's an area I followed for a long time, 766 00:43:09,239 --> 00:43:12,879 Speaker 1: and parts of the country are just on fire. This 767 00:43:12,880 --> 00:43:15,960 Speaker 1: this past weekend in the New York Times was an 768 00:43:16,080 --> 00:43:20,080 Speaker 1: article about so a lot of people have kind of 769 00:43:20,080 --> 00:43:23,680 Speaker 1: moved away from Manhattan into Brooklyn in this area, and 770 00:43:23,719 --> 00:43:26,400 Speaker 1: they're they're in a one or a two bedroom, but 771 00:43:26,520 --> 00:43:29,440 Speaker 1: the cost difference from a two bedroom in Brooklyn to 772 00:43:29,520 --> 00:43:32,640 Speaker 1: a three bedroom is an order of magnitude jump. And 773 00:43:32,760 --> 00:43:35,680 Speaker 1: so the article in the Times was about a family 774 00:43:35,800 --> 00:43:39,640 Speaker 1: my friend Jonathan Miller always quoted in the Times Appraisal 775 00:43:40,400 --> 00:43:44,000 Speaker 1: uh discussions. Family is looking for a house and it 776 00:43:44,160 --> 00:43:48,400 Speaker 1: was somewhere in Lower Westchester, either like Scarsdale or New 777 00:43:48,480 --> 00:43:51,760 Speaker 1: Rochelle or something like that. And the house was listed 778 00:43:51,880 --> 00:43:56,080 Speaker 1: for I want to say eight and change. And they 779 00:43:56,120 --> 00:43:58,480 Speaker 1: see the house the first day, they make an offer 780 00:43:58,520 --> 00:44:01,720 Speaker 1: for the full listing price, and the sellers say, thanks, 781 00:44:01,880 --> 00:44:03,680 Speaker 1: we'll get back to you. What do you mean, you'll 782 00:44:03,680 --> 00:44:06,239 Speaker 1: get back to us, that's your ask, Oh, we want 783 00:44:06,239 --> 00:44:08,960 Speaker 1: to see what happens. The family comes back and makes 784 00:44:09,000 --> 00:44:12,359 Speaker 1: so maybe it was eight hundred thousand. They offered full ask, 785 00:44:12,440 --> 00:44:15,000 Speaker 1: and they come back at eight fifty eight sixty seven, 786 00:44:15,440 --> 00:44:18,920 Speaker 1: say we want this house at sixty seven. We appreciate it, 787 00:44:18,960 --> 00:44:21,200 Speaker 1: but we have another open house next weekend, the family 788 00:44:21,239 --> 00:44:24,520 Speaker 1: comes back a third and fourth time. Ultimately the house 789 00:44:24,560 --> 00:44:28,560 Speaker 1: went for like a million and sixty seven. And the agent, 790 00:44:28,719 --> 00:44:31,239 Speaker 1: the real estate agent said, we're seeing more and more 791 00:44:31,280 --> 00:44:35,520 Speaker 1: of this because there's so little inventory, especially of quality 792 00:44:35,520 --> 00:44:38,359 Speaker 1: homes like that. What do you guys seeing when you're 793 00:44:38,400 --> 00:44:42,399 Speaker 1: looking at the entire country and and primarily high net 794 00:44:42,400 --> 00:44:46,640 Speaker 1: worth homes the the upper end of the scale. What's 795 00:44:46,640 --> 00:44:50,080 Speaker 1: happening in real estate these days? Well, Barry, I'd also 796 00:44:50,360 --> 00:44:52,479 Speaker 1: be REMISSI if I didn't stop you first and say 797 00:44:52,520 --> 00:44:55,080 Speaker 1: that you don't tell an insurance guy that the country 798 00:44:55,120 --> 00:44:58,759 Speaker 1: is on fire. Because California, we we have we have 799 00:44:58,880 --> 00:45:04,600 Speaker 1: seen that so so figuratively not literally unfortunately, Mart Yes, 800 00:45:04,760 --> 00:45:08,319 Speaker 1: and and literally California is on fire. Right. So so 801 00:45:08,360 --> 00:45:10,560 Speaker 1: this is a set. So you have a decent number 802 00:45:10,600 --> 00:45:12,840 Speaker 1: of clients out. We just started in California in the 803 00:45:12,880 --> 00:45:16,800 Speaker 1: last two years, and so we're we're very we're monitoring 804 00:45:16,880 --> 00:45:19,839 Speaker 1: very carefully, and we're looking out Remember. So, UM, what 805 00:45:19,880 --> 00:45:21,920 Speaker 1: I what I do think on this on this question? 806 00:45:22,160 --> 00:45:26,120 Speaker 1: Um that that description you had of that, um, you know, 807 00:45:26,160 --> 00:45:28,839 Speaker 1: the the million dollar sale for an eight hundred thousand 808 00:45:28,880 --> 00:45:31,640 Speaker 1: dollar listing. I mean, we do see we tend to 809 00:45:31,680 --> 00:45:33,840 Speaker 1: play a little bit higher up that. So the the 810 00:45:33,840 --> 00:45:36,399 Speaker 1: the the average or the the entry level for our 811 00:45:36,440 --> 00:45:39,640 Speaker 1: programs are a million dollars of replacement cost, which on 812 00:45:39,640 --> 00:45:43,120 Speaker 1: a market value could be considerably higher than that. It's 813 00:45:43,120 --> 00:45:47,200 Speaker 1: all you're replacing, is the the actual structure exactly. And 814 00:45:47,239 --> 00:45:49,600 Speaker 1: but but the challenges is that sometimes if it's a 815 00:45:49,680 --> 00:45:52,480 Speaker 1: historic lum that costs, that costs even more because you're 816 00:45:52,520 --> 00:45:55,719 Speaker 1: actually promising to replace all the unique features that they 817 00:45:55,719 --> 00:45:59,600 Speaker 1: may not have a market value. So so while there's 818 00:45:59,640 --> 00:46:03,000 Speaker 1: a limited supply and a great demand for homes at 819 00:46:03,000 --> 00:46:06,160 Speaker 1: a certain point in time, there's also that that argument 820 00:46:06,200 --> 00:46:08,640 Speaker 1: going on right now in Manhattan about whether there's too 821 00:46:08,719 --> 00:46:11,200 Speaker 1: much supply on the ultra high ends side of that 822 00:46:11,280 --> 00:46:13,960 Speaker 1: and they're not moving as much. Um, well, we had 823 00:46:13,960 --> 00:46:17,680 Speaker 1: a run of prices that were almost there. Yeah, I 824 00:46:17,719 --> 00:46:20,200 Speaker 1: have a hundred million dollars. I don't care what I pay, 825 00:46:19,719 --> 00:46:23,560 Speaker 1: let what apartment is worth truly worth a hundred million dollars. 826 00:46:23,560 --> 00:46:26,440 Speaker 1: And now it seems to kind of be reverted as 827 00:46:26,600 --> 00:46:29,439 Speaker 1: as hot as the let's call it one to ten 828 00:46:29,560 --> 00:46:34,040 Speaker 1: million range has been the ten to a hundred million, 829 00:46:34,160 --> 00:46:36,400 Speaker 1: or maybe it's the thirty to a hundred millions seems 830 00:46:36,440 --> 00:46:38,520 Speaker 1: to have cooled off. Yeah. What I would say, though, 831 00:46:38,560 --> 00:46:41,359 Speaker 1: is from our perspective is is these are largely high 832 00:46:41,440 --> 00:46:45,600 Speaker 1: quality problems. It creates more opportunities for us. These are 833 00:46:45,640 --> 00:46:49,480 Speaker 1: folks who are feeling good and wanting to ensure properly. Um. 834 00:46:49,560 --> 00:46:51,560 Speaker 1: The challenges is if you go back to OH eight, 835 00:46:51,600 --> 00:46:53,919 Speaker 1: when it moved in the other direction at a point 836 00:46:53,920 --> 00:46:56,960 Speaker 1: in time where the home would have been worth more 837 00:46:57,000 --> 00:47:00,680 Speaker 1: to them if if it burned down. That that UM 838 00:47:00,920 --> 00:47:03,359 Speaker 1: trying to convince somebody to ensure home for its cost 839 00:47:03,400 --> 00:47:05,399 Speaker 1: to rebuild when they could buy their neighbors for half 840 00:47:05,440 --> 00:47:08,560 Speaker 1: the price. Um. You know, I think that the challenges 841 00:47:08,640 --> 00:47:11,840 Speaker 1: of of real estate movement are so much tougher furnitures 842 00:47:12,239 --> 00:47:14,480 Speaker 1: on the downward cycle than they are on the on 843 00:47:14,640 --> 00:47:18,080 Speaker 1: on a steady or upward cycle. So we're watching it, 844 00:47:18,160 --> 00:47:21,120 Speaker 1: we're seeing opportunities. Um, but we don't get a lot 845 00:47:21,120 --> 00:47:24,520 Speaker 1: of anxiety about the current market outside of places like 846 00:47:24,840 --> 00:47:28,920 Speaker 1: Las Vegas and southern Florida. Uh, there was a brief 847 00:47:28,960 --> 00:47:31,759 Speaker 1: window where hey, your neighbor's house is now half of 848 00:47:31,760 --> 00:47:34,680 Speaker 1: what your house is. But we've seen a lot of 849 00:47:36,480 --> 00:47:41,600 Speaker 1: recovery across all but the worst areas in the country. 850 00:47:41,640 --> 00:47:44,080 Speaker 1: I don't want to say everywhere, but you know, the 851 00:47:44,680 --> 00:47:51,440 Speaker 1: people have described the Sand States as as problematic, Florida, Arizona, Nevada, 852 00:47:51,600 --> 00:47:56,360 Speaker 1: and then the eastern parts of California where the excerpts 853 00:47:56,440 --> 00:48:00,600 Speaker 1: with prices had just gone, you know, lost any correlation 854 00:48:00,680 --> 00:48:04,960 Speaker 1: to reality. But outside of areas like that, it seems 855 00:48:05,040 --> 00:48:08,400 Speaker 1: like a lot of of real estate has recovered. Do 856 00:48:08,440 --> 00:48:10,680 Speaker 1: you still run into those sort of problems? Hey, I 857 00:48:10,719 --> 00:48:12,680 Speaker 1: have to convince you to ensure the full value of 858 00:48:12,719 --> 00:48:15,920 Speaker 1: the home, even though the neighbor's house is considerably cheaper, 859 00:48:16,239 --> 00:48:18,239 Speaker 1: less and less. And I say that it's usually the 860 00:48:18,280 --> 00:48:24,000 Speaker 1: extremely unique construction, either historic or somebody put an enormous 861 00:48:24,040 --> 00:48:25,680 Speaker 1: amount of money into it. They know they'll never get 862 00:48:25,680 --> 00:48:27,840 Speaker 1: the money back, and we need to be able, but 863 00:48:27,920 --> 00:48:30,680 Speaker 1: we have to promise to rebuild that house the way 864 00:48:30,680 --> 00:48:33,440 Speaker 1: it is. What I would say is is that we 865 00:48:33,520 --> 00:48:37,400 Speaker 1: have responded to a movement on on the UH dramatic 866 00:48:37,520 --> 00:48:41,560 Speaker 1: increase in new construction for luxury homes. So there's been 867 00:48:41,680 --> 00:48:45,080 Speaker 1: been a significant double digit increase year after year since 868 00:48:45,120 --> 00:48:49,279 Speaker 1: since we hit the bottom for new home starts, and 869 00:48:49,600 --> 00:48:52,600 Speaker 1: the fastest growing new home start areas four thousand square 870 00:48:52,600 --> 00:48:56,720 Speaker 1: foot and above. That's a substantial custom build home exactly. 871 00:48:56,719 --> 00:49:00,080 Speaker 1: So UM we started a new product launched launch in 872 00:49:00,120 --> 00:49:03,120 Speaker 1: Texas a couple of months ago. UM geared to helping 873 00:49:03,200 --> 00:49:07,319 Speaker 1: people UM design a home that's more likely to be 874 00:49:07,400 --> 00:49:11,399 Speaker 1: resilient and mitigate against loss UM with engineering services right 875 00:49:11,400 --> 00:49:13,440 Speaker 1: there when you're sitting now with the architect, and then 876 00:49:13,520 --> 00:49:16,480 Speaker 1: ensuring you all the way through the construction project, and 877 00:49:16,520 --> 00:49:18,640 Speaker 1: then once you're done, put it onto a standard home 878 00:49:18,640 --> 00:49:21,480 Speaker 1: owners policy. And so that would be a reaction to 879 00:49:21,600 --> 00:49:25,520 Speaker 1: looking at this market and saying, one, there's a demographic movement. 880 00:49:25,920 --> 00:49:28,120 Speaker 1: And the second thing, back to what we talked about earlier. 881 00:49:28,400 --> 00:49:31,240 Speaker 1: If your purpose is to help people pursue their passions 882 00:49:31,280 --> 00:49:34,319 Speaker 1: with greater confidence when they want to build a dream home, 883 00:49:34,360 --> 00:49:36,719 Speaker 1: we should be there. And and so we ended up 884 00:49:37,080 --> 00:49:39,839 Speaker 1: trying to build out what it would take to help 885 00:49:39,840 --> 00:49:43,040 Speaker 1: people through this construction project. And so far, so good. 886 00:49:43,200 --> 00:49:47,920 Speaker 1: That's really interesting. I have a a little runabout. I 887 00:49:48,040 --> 00:49:53,040 Speaker 1: keep on the linisle and sound nothing, nothing outrageous. But 888 00:49:53,360 --> 00:49:56,360 Speaker 1: when I'm out on the water with my phone and 889 00:49:56,440 --> 00:49:59,440 Speaker 1: the Zillo app, I could look at the various prices 890 00:49:59,480 --> 00:50:03,080 Speaker 1: of what what's been sold, what's for sale. The boat 891 00:50:03,120 --> 00:50:04,440 Speaker 1: went in the water a little late. It was a 892 00:50:04,520 --> 00:50:07,880 Speaker 1: very cold spring. But I noticed an amazing number of 893 00:50:07,920 --> 00:50:13,800 Speaker 1: new constructions right waterfronts. So if someone is doing something 894 00:50:13,880 --> 00:50:17,640 Speaker 1: like that, uh, let's say either Sands Point or where 895 00:50:17,640 --> 00:50:20,200 Speaker 1: have It doesn't matter. You guys are are national right 896 00:50:20,239 --> 00:50:23,360 Speaker 1: every state? But one? Is that right? Um? That that 897 00:50:23,440 --> 00:50:25,719 Speaker 1: might be worth talking about. Also, I looked at the 898 00:50:25,760 --> 00:50:30,760 Speaker 1: map Idaho? Why not? Why not Idaho? But um? Uh, 899 00:50:30,880 --> 00:50:34,160 Speaker 1: I wondered what happens when someone is building a home? 900 00:50:34,239 --> 00:50:37,719 Speaker 1: How is that ensured normally? And do you guys do 901 00:50:37,800 --> 00:50:42,480 Speaker 1: something different? Yeah? So so there are specialists who UM 902 00:50:42,719 --> 00:50:45,879 Speaker 1: developed what's called either a builder's risk or a home 903 00:50:45,960 --> 00:50:50,480 Speaker 1: ensured under the course of construction. And um, there are 904 00:50:50,640 --> 00:50:53,440 Speaker 1: different types of risks and and it can be a 905 00:50:53,520 --> 00:50:56,720 Speaker 1: risky proposition. You know, at the point in time where um, 906 00:50:56,840 --> 00:51:01,200 Speaker 1: people are doing work and it's unoccupied at night end, um, 907 00:51:01,239 --> 00:51:03,240 Speaker 1: even all the way to the end when they're varnishing 908 00:51:03,239 --> 00:51:07,040 Speaker 1: the floors. There there are periods of greater risk than 909 00:51:07,080 --> 00:51:10,560 Speaker 1: you might find otherwise. So traditionally insurance companies have stayed 910 00:51:10,560 --> 00:51:13,759 Speaker 1: out of that business and let the construction experts do it. 911 00:51:14,120 --> 00:51:16,799 Speaker 1: And then when they're done that. We would we would 912 00:51:16,800 --> 00:51:19,960 Speaker 1: take the policies. The problem is it doesn't always work 913 00:51:20,000 --> 00:51:22,560 Speaker 1: that tidy number one. There isn't a lot of service. 914 00:51:22,719 --> 00:51:25,040 Speaker 1: So when they build a house and you get out 915 00:51:25,040 --> 00:51:27,719 Speaker 1: there later and say, you know, you really should have 916 00:51:27,800 --> 00:51:30,320 Speaker 1: put these windows into reduce the likelihood of windstorm. You 917 00:51:30,360 --> 00:51:32,279 Speaker 1: really should have put these tiles on to reduce the 918 00:51:32,320 --> 00:51:34,960 Speaker 1: lighthood of hail haill damage. You should have insulated in 919 00:51:35,000 --> 00:51:36,520 Speaker 1: this way. You should have put a shower pan in 920 00:51:36,560 --> 00:51:38,640 Speaker 1: this way, they would have. You should have put the 921 00:51:38,680 --> 00:51:42,960 Speaker 1: simple these these nuts on in a way that will 922 00:51:43,000 --> 00:51:45,319 Speaker 1: be less likely to corrode and less likely to create 923 00:51:45,320 --> 00:51:48,600 Speaker 1: water damage. The value we can provide when you're sitting 924 00:51:48,640 --> 00:51:50,680 Speaker 1: down with the architect right at that point in time 925 00:51:51,320 --> 00:51:53,160 Speaker 1: is far greater, and so we felt like it was 926 00:51:53,200 --> 00:51:56,000 Speaker 1: important to lean in and try to help um. The 927 00:51:56,040 --> 00:51:58,520 Speaker 1: other part of it is is that insurance policies tend 928 00:51:58,560 --> 00:52:03,480 Speaker 1: to be twelve month policies. Construction products, construction processes don't 929 00:52:03,520 --> 00:52:07,960 Speaker 1: work that neatly, and so sometimes with a thirteen month project, 930 00:52:08,040 --> 00:52:10,280 Speaker 1: you've got to pay twenty four months of insurance because 931 00:52:10,280 --> 00:52:14,000 Speaker 1: they're fully earned for the annual period um. And so 932 00:52:14,480 --> 00:52:16,640 Speaker 1: we thought we could design a product that would be better, 933 00:52:17,480 --> 00:52:20,560 Speaker 1: and we could certainly add a lot more value, and 934 00:52:20,600 --> 00:52:24,040 Speaker 1: then um and then once once we're done back to 935 00:52:24,080 --> 00:52:25,680 Speaker 1: kind of one of the points we're talking about earlier, 936 00:52:26,400 --> 00:52:28,520 Speaker 1: the people who build these homes that are brand new, 937 00:52:28,560 --> 00:52:32,160 Speaker 1: those homes are much better equipped to to withstand whatever 938 00:52:32,239 --> 00:52:36,359 Speaker 1: loss might becoming its way. Um by and large and uh. 939 00:52:36,400 --> 00:52:40,000 Speaker 1: And so we have adding new members who have homes 940 00:52:40,000 --> 00:52:43,360 Speaker 1: that are extremely insurable because they've been built to the 941 00:52:43,400 --> 00:52:47,080 Speaker 1: most contemporary standards. So I again, well, we'll stick with 942 00:52:47,120 --> 00:52:49,120 Speaker 1: the water theme. I look at a lot of these 943 00:52:49,160 --> 00:52:52,480 Speaker 1: houses that are built waterfront. We had looked at one 944 00:52:52,480 --> 00:52:55,120 Speaker 1: house that was on a cliff, only the cliff was eroding. 945 00:52:55,200 --> 00:52:57,560 Speaker 1: That's scared of the Jesus set of my wife. That 946 00:52:57,640 --> 00:53:00,160 Speaker 1: never happened. I really love the view. It was a 947 00:53:00,280 --> 00:53:03,279 Speaker 1: point um and we looked at other houses. We ended 948 00:53:03,320 --> 00:53:06,399 Speaker 1: up not going water front. But I'm still enamored with that. 949 00:53:07,040 --> 00:53:11,560 Speaker 1: And I'm astonished that I sometimes see new construction pretty 950 00:53:11,640 --> 00:53:13,799 Speaker 1: much I don't know, let's call it two three ft 951 00:53:13,840 --> 00:53:17,440 Speaker 1: above sea level. And I'm surprised given all your you 952 00:53:17,480 --> 00:53:21,799 Speaker 1: mentioned the change in weather, possibly with hailstones. How does 953 00:53:22,000 --> 00:53:26,040 Speaker 1: an insurance company deal with the possibility of sea levels 954 00:53:26,160 --> 00:53:29,800 Speaker 1: rising a couple of feet over the next couple of decades. Well, well, certainly. 955 00:53:29,840 --> 00:53:33,960 Speaker 1: I mean I think that that we use catastrophe models 956 00:53:34,000 --> 00:53:36,359 Speaker 1: to try to understand the likelihood of losses and and 957 00:53:36,480 --> 00:53:39,120 Speaker 1: try to deconstruct them to understand what their assumptions are, 958 00:53:39,160 --> 00:53:43,960 Speaker 1: including about water temperatures and sea levels UM. And I 959 00:53:44,000 --> 00:53:47,439 Speaker 1: think we create standards by which we expect to only 960 00:53:47,480 --> 00:53:51,799 Speaker 1: ensure homes that are properly elevated UM, meaning something at 961 00:53:51,840 --> 00:53:55,320 Speaker 1: sea level is not going to be right for for 962 00:53:55,480 --> 00:53:58,560 Speaker 1: you as a client. Yeah, I think, I think exactly. 963 00:53:58,600 --> 00:54:00,320 Speaker 1: But I think what will end up happening is that 964 00:54:00,440 --> 00:54:05,480 Speaker 1: each individual UH location, there are mapping techniques to determine 965 00:54:05,520 --> 00:54:08,600 Speaker 1: what elevation you should have. I mean, you know, the 966 00:54:08,920 --> 00:54:11,880 Speaker 1: common things which we've seen over the years is someone 967 00:54:11,920 --> 00:54:17,080 Speaker 1: built a home up uh sufficiently elevated and UM the 968 00:54:17,280 --> 00:54:21,040 Speaker 1: first floor living area might be fifteen feet above UM 969 00:54:21,320 --> 00:54:26,759 Speaker 1: the ground and it's it's ample and absolutely and underneath 970 00:54:26,800 --> 00:54:31,840 Speaker 1: there's some um open area UM ideally even vented so 971 00:54:31,880 --> 00:54:35,840 Speaker 1: floodwaters could would come right through. And there will be 972 00:54:35,840 --> 00:54:38,640 Speaker 1: people who look at that and say that would make 973 00:54:38,680 --> 00:54:42,239 Speaker 1: a great media room, and and and so now you've 974 00:54:42,280 --> 00:54:45,040 Speaker 1: got right and and and and so trying to be 975 00:54:45,080 --> 00:54:47,240 Speaker 1: there to give the right advice to sort of say, 976 00:54:47,440 --> 00:54:49,400 Speaker 1: you know, not only is that not a great idea, 977 00:54:49,480 --> 00:54:52,400 Speaker 1: but you've really changed the ensurability of that home once 978 00:54:52,480 --> 00:54:56,920 Speaker 1: you have living area well below the necessary elevation. And 979 00:54:57,000 --> 00:54:59,520 Speaker 1: so you know, if you if we're not there at 980 00:54:59,520 --> 00:55:01,799 Speaker 1: the right time time to stop them from from doing that, 981 00:55:01,840 --> 00:55:04,840 Speaker 1: we can't help um. But we try to select carefully. 982 00:55:04,880 --> 00:55:07,319 Speaker 1: We try to advise as much as we can make 983 00:55:07,360 --> 00:55:09,520 Speaker 1: sure that we we you know, listen to if you 984 00:55:09,560 --> 00:55:11,440 Speaker 1: want to ensure wealthy families and then tell them, by 985 00:55:11,480 --> 00:55:14,080 Speaker 1: the way, you can't live near the water, you know, yeah, 986 00:55:14,120 --> 00:55:16,680 Speaker 1: exactly so, so so we did. We did see a 987 00:55:16,719 --> 00:55:19,399 Speaker 1: lot during Sandy. There were a lot of buildings that 988 00:55:19,440 --> 00:55:23,480 Speaker 1: had put their emergency generators in the basement and they 989 00:55:23,520 --> 00:55:26,360 Speaker 1: got flooded and they thought they had an electrical backup. 990 00:55:26,520 --> 00:55:29,839 Speaker 1: They didn't. So there is something to be said for saying, hey, 991 00:55:29,880 --> 00:55:31,880 Speaker 1: you don't if you're in a flood zone. The basement 992 00:55:31,960 --> 00:55:35,120 Speaker 1: is not why you want something that is either valuable 993 00:55:35,280 --> 00:55:38,680 Speaker 1: or or crucial. Sure, and so in every major market, 994 00:55:38,800 --> 00:55:42,400 Speaker 1: we've got risk managers who are experts in that market. 995 00:55:42,560 --> 00:55:45,640 Speaker 1: We've got UM people who in the Northeast, they, boy 996 00:55:45,680 --> 00:55:48,680 Speaker 1: do they understand nowadays ice damming and snow on roofs 997 00:55:48,719 --> 00:55:51,200 Speaker 1: and burst pipes and everything we've gone through. And in 998 00:55:51,280 --> 00:55:53,800 Speaker 1: Florida they understand how to make sure that every opening 999 00:55:53,880 --> 00:55:57,000 Speaker 1: is protected so that you know, the windstorms don't damage 1000 00:55:57,040 --> 00:55:58,880 Speaker 1: the house and lift the roof off and and and 1001 00:55:58,920 --> 00:56:02,000 Speaker 1: everything there. They try to provide as much advice as 1002 00:56:02,400 --> 00:56:05,799 Speaker 1: as they can UM. And and not only that, I 1003 00:56:05,840 --> 00:56:09,640 Speaker 1: think that this is where we've differentiated ourselves, is that 1004 00:56:09,840 --> 00:56:13,399 Speaker 1: insurance companies would make a pattern of saying, you know, Barry, 1005 00:56:13,440 --> 00:56:15,239 Speaker 1: you should do this. Here's a piece of advice for 1006 00:56:15,280 --> 00:56:19,120 Speaker 1: you between you and me. But but but you're busy 1007 00:56:19,760 --> 00:56:21,600 Speaker 1: or you're not. And if I told you should put 1008 00:56:21,600 --> 00:56:23,680 Speaker 1: a lightning suppression system in, you think you'd know how 1009 00:56:23,680 --> 00:56:26,040 Speaker 1: many lightning rods were needed or how we do it right. 1010 00:56:26,080 --> 00:56:29,040 Speaker 1: And so what we ended up developing are these groups 1011 00:56:29,040 --> 00:56:30,960 Speaker 1: we call member advocates. I think there'll be as many 1012 00:56:31,000 --> 00:56:33,680 Speaker 1: as fifty by the end of this week. UM and 1013 00:56:34,360 --> 00:56:38,040 Speaker 1: they would take the advice and say, right, this is 1014 00:56:38,040 --> 00:56:41,440 Speaker 1: how many you know, lightning suppression lightning rods you need, 1015 00:56:41,520 --> 00:56:43,080 Speaker 1: or this is this is the right water shut off 1016 00:56:43,160 --> 00:56:45,840 Speaker 1: value need er, this is the right solution. This is 1017 00:56:45,840 --> 00:56:47,880 Speaker 1: how much it costs. This is the vendor that we 1018 00:56:47,960 --> 00:56:50,200 Speaker 1: think is best. Here's a work order I can get 1019 00:56:50,320 --> 00:56:54,560 Speaker 1: done for you. The fulfillment of advice for wealthy families 1020 00:56:54,640 --> 00:56:57,120 Speaker 1: has proven to be as valuable as the advice itself, 1021 00:56:57,200 --> 00:56:59,840 Speaker 1: because you know they're busy and they're not experts, and 1022 00:57:00,040 --> 00:57:03,000 Speaker 1: if you can go and get it done for them, UM, 1023 00:57:03,040 --> 00:57:06,560 Speaker 1: that makes a huge difference. Everybody is time constrained, and 1024 00:57:06,960 --> 00:57:09,640 Speaker 1: I have a flat roof. I'd love some advice. Is 1025 00:57:09,680 --> 00:57:13,239 Speaker 1: what the heck is supposed to be replaced? It's an 1026 00:57:13,239 --> 00:57:17,000 Speaker 1: eighty three. I know that there's new roof technologies. Let's 1027 00:57:17,040 --> 00:57:20,360 Speaker 1: let's let's look into that and find find something about that. 1028 00:57:20,520 --> 00:57:22,440 Speaker 1: So I know I only have you for a finite 1029 00:57:22,480 --> 00:57:25,680 Speaker 1: amount of time. Um, and I want to get to 1030 00:57:25,760 --> 00:57:30,240 Speaker 1: my favorite questions before I do. I have one last question. 1031 00:57:30,280 --> 00:57:34,880 Speaker 1: So you mentioned mailers, Uh, but typically how do you 1032 00:57:35,040 --> 00:57:38,760 Speaker 1: find the clients or how do the clients find you? 1033 00:57:38,800 --> 00:57:43,240 Speaker 1: We we addressed this briefly, but I know there's there's more. 1034 00:57:43,280 --> 00:57:49,400 Speaker 1: They're given that fifteen to maybe forty billion dollar addressable market. Uh. 1035 00:57:49,520 --> 00:57:53,120 Speaker 1: We we see ads all the time on TV for 1036 00:57:53,320 --> 00:57:58,840 Speaker 1: the mainstream UM insurers, Geico has been running NonStop ads 1037 00:57:58,880 --> 00:58:02,520 Speaker 1: for it seems like twenty years. What what can the 1038 00:58:02,600 --> 00:58:08,400 Speaker 1: high end insure do to find and attract the right clients? Yeah, 1039 00:58:08,480 --> 00:58:11,720 Speaker 1: so I think that the there to to sort of 1040 00:58:11,800 --> 00:58:14,600 Speaker 1: insights that have come from both research and to some 1041 00:58:14,680 --> 00:58:18,040 Speaker 1: degree common sense. One of them is is that wealthy 1042 00:58:18,080 --> 00:58:21,960 Speaker 1: families rely on the advice of trusted advisors and so 1043 00:58:22,000 --> 00:58:25,600 Speaker 1: to the extent that we have relationships with family offices 1044 00:58:26,000 --> 00:58:30,200 Speaker 1: or wealth managers. UM, that's helpful, but far more they 1045 00:58:30,240 --> 00:58:32,360 Speaker 1: rely on the advice of friends and family like your 1046 00:58:32,360 --> 00:58:38,040 Speaker 1: brother and and so. UM. We've created UH a team 1047 00:58:38,120 --> 00:58:41,600 Speaker 1: that we refer to them as Member Engagement, but they 1048 00:58:41,760 --> 00:58:46,959 Speaker 1: organize all across the country every month, arguably every week, 1049 00:58:47,800 --> 00:58:50,800 Speaker 1: UM opportunities to get members together with their friends and 1050 00:58:50,840 --> 00:58:53,320 Speaker 1: family to tell the story member to member or or 1051 00:58:53,480 --> 00:58:56,960 Speaker 1: appeer to peer, with the idea that that UM they 1052 00:58:56,960 --> 00:59:00,120 Speaker 1: would be telling their their friends a story about what 1053 00:59:00,200 --> 00:59:02,760 Speaker 1: happened when we rebuilt their house, a story would happen 1054 00:59:02,760 --> 00:59:04,480 Speaker 1: when they save money, a story would happen when they 1055 00:59:04,520 --> 00:59:08,240 Speaker 1: got great advice and service UM. And last year we 1056 00:59:08,280 --> 00:59:12,200 Speaker 1: had about three thousand of these interactions. UM. This year, 1057 00:59:12,200 --> 00:59:15,400 Speaker 1: we'll have a lot more. UM. You know, insurance has 1058 00:59:15,400 --> 00:59:18,200 Speaker 1: been a low interest category where people wouldn't stop and say, boy, 1059 00:59:18,200 --> 00:59:21,560 Speaker 1: I really think I'm an engagement insurance company today. UM. 1060 00:59:21,640 --> 00:59:24,880 Speaker 1: And yet they're willing to and even excited about doing it. 1061 00:59:24,920 --> 00:59:28,040 Speaker 1: And I think that that's where we've embraced what seemed 1062 00:59:28,080 --> 00:59:31,160 Speaker 1: like a difficult journey to make this a subject that 1063 00:59:31,240 --> 00:59:34,240 Speaker 1: you want to talk about or spend time thinking about, 1064 00:59:34,360 --> 00:59:38,320 Speaker 1: or um hang out with and and and so that's 1065 00:59:38,360 --> 00:59:41,000 Speaker 1: been really really critical to our growth. All right, so 1066 00:59:41,080 --> 00:59:45,320 Speaker 1: let's jump into my my favorite questions. So you started 1067 00:59:45,320 --> 00:59:48,920 Speaker 1: a chub right out of college? Is that right? Is 1068 00:59:48,960 --> 00:59:50,920 Speaker 1: that what you were expecting to do? What you study 1069 00:59:50,960 --> 00:59:52,440 Speaker 1: in college? And what do you think you would be 1070 00:59:52,440 --> 00:59:55,400 Speaker 1: doing for a living. So I went to Trinity College 1071 00:59:56,040 --> 01:00:00,400 Speaker 1: in Hartford, in a classic Northeast liberal arts college, and 1072 01:00:00,440 --> 01:00:05,040 Speaker 1: studied economics along with art history and voodoo, witchcraft and 1073 01:00:05,080 --> 01:00:07,400 Speaker 1: magic or whatever you do with a liberal arts school. 1074 01:00:08,040 --> 01:00:11,880 Speaker 1: And UM, So I was in Hartford, Connecticut, and businesses 1075 01:00:11,920 --> 01:00:15,200 Speaker 1: came to campus, and there were a lot of them 1076 01:00:15,240 --> 01:00:19,080 Speaker 1: in Hartford. I grew up, grew up in Boston, and UM, 1077 01:00:19,560 --> 01:00:22,360 Speaker 1: but Chubb was offering me a job in New York, 1078 01:00:22,920 --> 01:00:25,680 Speaker 1: and um, you know, for for a Boston kid who 1079 01:00:25,760 --> 01:00:27,160 Speaker 1: never spent time in New York, that feel that that 1080 01:00:27,200 --> 01:00:29,200 Speaker 1: seemed like a really neat idea at the time. And 1081 01:00:29,240 --> 01:00:31,120 Speaker 1: so I knew nothing about what they were doing. It's 1082 01:00:31,160 --> 01:00:32,920 Speaker 1: just that that job was in New York. And so 1083 01:00:33,000 --> 01:00:37,919 Speaker 1: I accepted that job. Um, not particularly well informed. Um 1084 01:00:38,400 --> 01:00:40,280 Speaker 1: And uh, but I was going to share a house 1085 01:00:40,320 --> 01:00:42,640 Speaker 1: in Brooklyn with somebodies from school and it was it 1086 01:00:42,760 --> 01:00:46,160 Speaker 1: was it was great, um. And I end up really 1087 01:00:46,240 --> 01:00:49,000 Speaker 1: enjoying it. And so um, you know, even if it 1088 01:00:49,040 --> 01:00:53,160 Speaker 1: was somewhat accidental. Um, you know, I haven't done anything else, 1089 01:00:53,320 --> 01:00:55,760 Speaker 1: even outside of our little niche for for twenty nine years. 1090 01:00:56,000 --> 01:01:01,200 Speaker 1: So who were your early mentors? Uh? Um, you know, 1091 01:01:01,280 --> 01:01:04,320 Speaker 1: I think back to, Um, you know, I had. I 1092 01:01:04,400 --> 01:01:08,000 Speaker 1: had a a childhood as a caddie was sort of 1093 01:01:08,000 --> 01:01:11,120 Speaker 1: one of my greatest experiences, just just as a young 1094 01:01:11,200 --> 01:01:15,080 Speaker 1: kid going off and getting up bright and early and 1095 01:01:15,080 --> 01:01:20,400 Speaker 1: and looping and um and I got hooked up, you know, 1096 01:01:20,480 --> 01:01:24,280 Speaker 1: as a as a really young kid with some young 1097 01:01:24,320 --> 01:01:28,040 Speaker 1: guys who were who turned out to become extraordinarily successful, 1098 01:01:28,080 --> 01:01:30,000 Speaker 1: but at the time they were they were young guys. 1099 01:01:30,000 --> 01:01:32,720 Speaker 1: When was a young accountant to who ended up becoming 1100 01:01:32,720 --> 01:01:35,560 Speaker 1: the CFO of a very very big company. Um and 1101 01:01:35,760 --> 01:01:40,040 Speaker 1: uh um. I watched everything they did. I you know, 1102 01:01:40,160 --> 01:01:42,640 Speaker 1: I I sort of really aspired to be like them, 1103 01:01:42,840 --> 01:01:46,080 Speaker 1: the way they treated, you know, a knucklehead kid carrying 1104 01:01:46,080 --> 01:01:50,040 Speaker 1: their bags. Thought, boy, those guys are just are just great. Um. 1105 01:01:50,320 --> 01:01:54,440 Speaker 1: So I think probably besides the the the natural thing 1106 01:01:54,480 --> 01:01:58,520 Speaker 1: of of watching your parents very closely, UM, I probably 1107 01:01:58,600 --> 01:02:01,200 Speaker 1: learned more carrying golf bag than uh, than a lot 1108 01:02:01,240 --> 01:02:04,600 Speaker 1: of other things in early in my life. That is intriguing. 1109 01:02:04,760 --> 01:02:07,680 Speaker 1: What what about Hank Greenberg? You would you had some 1110 01:02:07,720 --> 01:02:10,880 Speaker 1: good things to say about him? How did he mentor 1111 01:02:10,960 --> 01:02:13,560 Speaker 1: you along? Well? You know, I, I you know, I 1112 01:02:13,960 --> 01:02:17,160 Speaker 1: don't know if if it was as much mentoring. I 1113 01:02:17,160 --> 01:02:19,560 Speaker 1: think that to everybody who worked there, he created a 1114 01:02:19,560 --> 01:02:23,240 Speaker 1: great morale model. You watched the way he he um 1115 01:02:23,440 --> 01:02:27,320 Speaker 1: lad Um, you know I I enjoyed I was joking 1116 01:02:27,360 --> 01:02:30,760 Speaker 1: with with somebody, you know he I Every year I 1117 01:02:30,800 --> 01:02:33,120 Speaker 1: share the annual report with him, and he's usually kind 1118 01:02:33,400 --> 01:02:37,400 Speaker 1: to write back a quick note and often with questions. 1119 01:02:37,440 --> 01:02:39,400 Speaker 1: And I think, you know, we all still respond to 1120 01:02:39,480 --> 01:02:42,560 Speaker 1: him as if he's the boss, you know, even even 1121 01:02:43,440 --> 01:02:46,160 Speaker 1: more than a decade later. Um, so he was great 1122 01:02:46,240 --> 01:02:50,000 Speaker 1: and and and and he was a great teacher, um 1123 01:02:50,640 --> 01:02:53,960 Speaker 1: and and Uh. But but I think also you realize 1124 01:02:54,000 --> 01:02:56,360 Speaker 1: that he's he You don't you don't you don't go 1125 01:02:56,400 --> 01:02:57,960 Speaker 1: and say I want to be Hank Greenberg. I mean, 1126 01:02:57,960 --> 01:03:01,800 Speaker 1: that is a really unique, you know, man who's accomplished, 1127 01:03:02,000 --> 01:03:05,439 Speaker 1: you know, so so much so um, I clearly learned 1128 01:03:05,440 --> 01:03:09,800 Speaker 1: a lot. But but and have just deep respect for him. 1129 01:03:09,880 --> 01:03:13,160 Speaker 1: So you mentioned you pattern pure more on some of 1130 01:03:13,200 --> 01:03:17,360 Speaker 1: the wealth management firms than than on insurance firms. Any 1131 01:03:17,440 --> 01:03:22,120 Speaker 1: particular investors, Uh, influence your your attitude or your approach. 1132 01:03:22,120 --> 01:03:25,360 Speaker 1: Who stands out to you, Well, you're talking about you know, 1133 01:03:25,600 --> 01:03:28,080 Speaker 1: Van Garden and you know, and sort of thinking about 1134 01:03:28,200 --> 01:03:31,320 Speaker 1: you know, the Vogel view of of of the world 1135 01:03:31,400 --> 01:03:34,080 Speaker 1: is certainly hard to argue with a lot of times. 1136 01:03:34,240 --> 01:03:37,560 Speaker 1: But but you know, I I take great pride in 1137 01:03:37,600 --> 01:03:40,960 Speaker 1: being an operator of a business, much better than an investor, 1138 01:03:41,000 --> 01:03:43,520 Speaker 1: and so I look for help from people who who 1139 01:03:43,560 --> 01:03:46,600 Speaker 1: share the values of an alignment of interest, rather than 1140 01:03:46,640 --> 01:03:49,120 Speaker 1: me thinking I'm clever enough to to do it myself. 1141 01:03:49,520 --> 01:03:52,440 Speaker 1: Any other names you wanna mention or other businesses that 1142 01:03:52,520 --> 01:03:55,840 Speaker 1: stand out. Well, I I really think there's a there's 1143 01:03:55,880 --> 01:04:01,080 Speaker 1: a broad number of them these days who who fully 1144 01:04:01,120 --> 01:04:03,680 Speaker 1: embraced you know, there might have been, you know, fifteen 1145 01:04:03,760 --> 01:04:06,600 Speaker 1: years ago you might talk about, um, a small number 1146 01:04:06,600 --> 01:04:09,160 Speaker 1: of people who embraced this idea of an alignment of interest. 1147 01:04:09,200 --> 01:04:11,800 Speaker 1: And I think you know, today it's become much more 1148 01:04:11,840 --> 01:04:14,480 Speaker 1: commonplace and and and almost table stakes if you want 1149 01:04:14,480 --> 01:04:17,240 Speaker 1: to be good in that business. So UM, I think 1150 01:04:17,240 --> 01:04:20,840 Speaker 1: that's a great sign for for uh, for wealthy families, 1151 01:04:20,880 --> 01:04:25,360 Speaker 1: but also for those serving. There's that that that um, 1152 01:04:25,360 --> 01:04:30,320 Speaker 1: it's become so established that conflicts should be avoided. Uh, 1153 01:04:31,800 --> 01:04:34,480 Speaker 1: It's no longer out there on the fringe. It's becoming 1154 01:04:34,520 --> 01:04:37,480 Speaker 1: more and more mainstream, even if if a lot of 1155 01:04:37,480 --> 01:04:40,120 Speaker 1: people fought it tooth and nail on the way in. 1156 01:04:40,840 --> 01:04:43,080 Speaker 1: Let's talk about books. What what are some of your 1157 01:04:43,160 --> 01:04:48,480 Speaker 1: your favorite books being fiction or nonfiction? Well, I I find, um, 1158 01:04:48,600 --> 01:04:52,720 Speaker 1: you know, when the company has gone from from you know, 1159 01:04:53,520 --> 01:04:56,960 Speaker 1: twenty people ten years ago over five people today that 1160 01:04:57,520 --> 01:05:00,640 Speaker 1: I feel like I read about culture and environment and 1161 01:05:00,800 --> 01:05:05,360 Speaker 1: organizations more than anything. So Simon sinics um point of view. Uh, 1162 01:05:05,720 --> 01:05:09,200 Speaker 1: both first starting with with purpose, but then some of 1163 01:05:09,200 --> 01:05:14,560 Speaker 1: his more you know, Leaders Eat last, the most recent book. Um, 1164 01:05:14,760 --> 01:05:19,960 Speaker 1: you know, I enjoy um uh Stephen Levitt and the 1165 01:05:19,960 --> 01:05:22,840 Speaker 1: freakonomics guys, and I and I think about, you know, 1166 01:05:23,040 --> 01:05:28,920 Speaker 1: the the uh, the appraisal that the lemma that you described, right, 1167 01:05:29,040 --> 01:05:31,280 Speaker 1: the the idea that that someone went out to your 1168 01:05:31,280 --> 01:05:34,680 Speaker 1: house and increased the value by five thousand dollars. Stephen 1169 01:05:34,760 --> 01:05:36,960 Speaker 1: Levitt would look at that very simply, and he would 1170 01:05:37,000 --> 01:05:39,600 Speaker 1: he would say that that one day an appraiser got 1171 01:05:39,680 --> 01:05:43,200 Speaker 1: yelled at because the house burned down and and they 1172 01:05:43,200 --> 01:05:45,800 Speaker 1: didn't have enough coverage. And so the incentives are I 1173 01:05:45,840 --> 01:05:48,040 Speaker 1: don't ever want to be the guy who gets yelled 1174 01:05:48,080 --> 01:05:50,280 Speaker 1: at because there wasn't enough coverage, So I'm going to 1175 01:05:50,360 --> 01:05:53,280 Speaker 1: increase it even more, um, you know. And and so 1176 01:05:53,360 --> 01:05:55,840 Speaker 1: I find that there's there's hardly a day goes by 1177 01:05:55,920 --> 01:05:58,680 Speaker 1: that I don't think about the principles that that he 1178 01:05:58,800 --> 01:06:03,120 Speaker 1: writes about and and speaks about. Um. In in business 1179 01:06:03,120 --> 01:06:07,960 Speaker 1: and in life, incensives matter. In other words, UM, so 1180 01:06:08,160 --> 01:06:11,439 Speaker 1: what else has changed since you joined the industry? You 1181 01:06:11,440 --> 01:06:14,160 Speaker 1: you've been doing this, you said for thirty years. What 1182 01:06:14,160 --> 01:06:16,600 Speaker 1: what do you see as the big secular shifts that 1183 01:06:16,640 --> 01:06:21,160 Speaker 1: are taking place. Well, data and technology is probably you know, 1184 01:06:21,440 --> 01:06:24,200 Speaker 1: hard to understate. Um, to think about it. I mean 1185 01:06:24,240 --> 01:06:27,880 Speaker 1: I and I, Um, seven doesn't feel like it was 1186 01:06:27,960 --> 01:06:30,439 Speaker 1: that long ago. It's this is not you know some 1187 01:06:30,560 --> 01:06:33,320 Speaker 1: old story where we picture you know, the old New 1188 01:06:33,400 --> 01:06:36,040 Speaker 1: York and you know, um, but when you when you 1189 01:06:36,080 --> 01:06:38,960 Speaker 1: see pictures of that era, those computers look like they're 1190 01:06:39,040 --> 01:06:42,560 Speaker 1: dinosaurs right well, and and and and uh, you know, 1191 01:06:42,600 --> 01:06:45,640 Speaker 1: we we would send things off to the typing pool. 1192 01:06:45,640 --> 01:06:48,000 Speaker 1: I was trying to describe to my to my daughter 1193 01:06:48,040 --> 01:06:49,680 Speaker 1: the other day about how I get an idea for 1194 01:06:49,720 --> 01:06:51,439 Speaker 1: a memo when I'd scribble it down and I'd mail 1195 01:06:51,480 --> 01:06:53,120 Speaker 1: it to a typing pool who had then type it 1196 01:06:53,160 --> 01:06:54,960 Speaker 1: and then send it back. And you know it was 1197 01:06:55,040 --> 01:06:58,400 Speaker 1: it was crazy. But but um, what we really had 1198 01:06:58,440 --> 01:07:03,280 Speaker 1: back then was runners. So if a insurance broker wanted 1199 01:07:03,320 --> 01:07:06,000 Speaker 1: an underwriter to look at at at a piece of business, 1200 01:07:06,440 --> 01:07:08,000 Speaker 1: they would give it to a young guy who would 1201 01:07:08,000 --> 01:07:09,560 Speaker 1: get on his bike and he'd go there and he'd 1202 01:07:09,560 --> 01:07:11,360 Speaker 1: sit at your desk and he was told not to 1203 01:07:11,440 --> 01:07:14,120 Speaker 1: leave until you gave an answer. UM. I mean today, 1204 01:07:14,120 --> 01:07:15,600 Speaker 1: I guess that would be an email or a text 1205 01:07:15,680 --> 01:07:18,760 Speaker 1: or something, or they snapchat me or something and and uh, 1206 01:07:19,120 --> 01:07:22,640 Speaker 1: and so just the way information flowed. It was crazy 1207 01:07:22,720 --> 01:07:26,640 Speaker 1: to think, um, that on your bike and go downtown 1208 01:07:26,720 --> 01:07:28,840 Speaker 1: and and don't come back till you have an answer. 1209 01:07:28,920 --> 01:07:31,760 Speaker 1: And that was thought of as absolutely you know, common 1210 01:07:31,880 --> 01:07:35,040 Speaker 1: and and and and so the pace in which information flows. 1211 01:07:35,480 --> 01:07:38,560 Speaker 1: And I even think today about how I made decisions 1212 01:07:38,600 --> 01:07:40,480 Speaker 1: at that point in time. So they would present me 1213 01:07:40,520 --> 01:07:42,800 Speaker 1: with a risk and I'd make a decision. Today I 1214 01:07:42,840 --> 01:07:45,919 Speaker 1: can get dozens and dozens of sources of third party data, 1215 01:07:45,960 --> 01:07:48,600 Speaker 1: will come in, someone will have helped me score that risk, 1216 01:07:48,640 --> 01:07:51,080 Speaker 1: and I'll be able to go make a precise decision. 1217 01:07:51,520 --> 01:07:53,720 Speaker 1: And back then I would look and I'd say, you know, 1218 01:07:53,920 --> 01:07:55,880 Speaker 1: looks good to me or or doesn't look good to me. 1219 01:07:55,920 --> 01:08:00,760 Speaker 1: I mean, it's so data technology the way we communic Kate, Um, 1220 01:08:01,320 --> 01:08:04,120 Speaker 1: it's a bit obvious, but but it wasn't that long 1221 01:08:04,160 --> 01:08:06,200 Speaker 1: ago that. I mean, I remember when we had our 1222 01:08:06,240 --> 01:08:08,160 Speaker 1: first fax machine installed, me had to figure out what 1223 01:08:08,160 --> 01:08:10,560 Speaker 1: the skinny little paper was all about and stuff. So 1224 01:08:11,000 --> 01:08:13,040 Speaker 1: what are if those are the recent shifts, what do 1225 01:08:13,040 --> 01:08:15,520 Speaker 1: you see as the next major shift that's gonna come 1226 01:08:15,520 --> 01:08:20,840 Speaker 1: along to Royal the industry? Well, I'm sure how much 1227 01:08:21,080 --> 01:08:24,519 Speaker 1: you know, royaling, But but UM, you know I I 1228 01:08:25,120 --> 01:08:28,559 Speaker 1: do think that the insurance has been this category that 1229 01:08:28,560 --> 01:08:32,360 Speaker 1: that UM is a little bit more low. Interest hasn't 1230 01:08:32,400 --> 01:08:37,800 Speaker 1: been the thing that that uh, everybody focuses on. And 1231 01:08:37,880 --> 01:08:41,040 Speaker 1: as a result, there is either is less information out 1232 01:08:41,080 --> 01:08:44,000 Speaker 1: there or the perception that the information is not out there, 1233 01:08:44,000 --> 01:08:47,599 Speaker 1: and so UM, it's been a bit of buyer beware. 1234 01:08:47,880 --> 01:08:50,800 Speaker 1: I don't know, UM, I don't know whether I'm making 1235 01:08:50,800 --> 01:08:52,680 Speaker 1: the right choice. I don't know why my my home 1236 01:08:52,720 --> 01:08:55,719 Speaker 1: went up five dollars whatever else is And I think 1237 01:08:55,840 --> 01:08:58,519 Speaker 1: there is, and like there has been in just about 1238 01:08:58,560 --> 01:09:02,160 Speaker 1: every other industry, this shift where it will move more 1239 01:09:02,200 --> 01:09:05,160 Speaker 1: to sellar beware, and that the consumers will eventually have 1240 01:09:05,280 --> 01:09:07,960 Speaker 1: all the information in their hands or on their phones 1241 01:09:08,280 --> 01:09:10,920 Speaker 1: or in some way they will be able to get 1242 01:09:10,960 --> 01:09:12,759 Speaker 1: a more accurate view of what it costs to replace 1243 01:09:12,800 --> 01:09:14,959 Speaker 1: their house, or a more accurate view about what competitive 1244 01:09:15,040 --> 01:09:17,720 Speaker 1: rates are out there, or a more detailed comparison of 1245 01:09:17,800 --> 01:09:22,519 Speaker 1: coverage is UM And from our standpoint, is somebody who 1246 01:09:22,520 --> 01:09:26,680 Speaker 1: thinks that transparency is great, we would love if this 1247 01:09:26,760 --> 01:09:29,960 Speaker 1: moved even faster. UM, but I think it'll be a 1248 01:09:30,000 --> 01:09:32,599 Speaker 1: pretty big shock to the industry when consumers start being 1249 01:09:32,640 --> 01:09:37,240 Speaker 1: more informed, that that information asymmetry starts to become more symmetrical. 1250 01:09:37,360 --> 01:09:39,880 Speaker 1: And it's no longer Hey, we have all all the 1251 01:09:39,960 --> 01:09:42,240 Speaker 1: knowledge and the buyer has nothing there there you know. 1252 01:09:42,280 --> 01:09:44,320 Speaker 1: One of our competitors actually has a video. I mean 1253 01:09:44,360 --> 01:09:49,200 Speaker 1: it's it's it's it's UM. Well if it's true, so 1254 01:09:49,200 --> 01:09:51,040 Speaker 1: otherwise it be just you think it was done from 1255 01:09:51,040 --> 01:09:54,599 Speaker 1: the onion and and it and it says, UM, if 1256 01:09:54,640 --> 01:09:58,080 Speaker 1: you were buying a flat screen TV, you probably are 1257 01:09:58,120 --> 01:10:00,639 Speaker 1: smart enough to figure out what to do and where 1258 01:10:00,640 --> 01:10:03,599 Speaker 1: to go and how to do it. But insurance you 1259 01:10:03,760 --> 01:10:05,720 Speaker 1: couldn't do that. So why don't you just go to 1260 01:10:05,760 --> 01:10:07,720 Speaker 1: the guy that we pay money to make sure he 1261 01:10:08,680 --> 01:10:11,439 Speaker 1: you know, recommends my company and and and that's the 1262 01:10:11,479 --> 01:10:14,760 Speaker 1: best way to go about doing it. Um, you know. 1263 01:10:14,800 --> 01:10:17,080 Speaker 1: And it just gets right at the heart of this issue. 1264 01:10:17,160 --> 01:10:19,400 Speaker 1: You know, we're talking about some of the smartest, most 1265 01:10:19,400 --> 01:10:22,679 Speaker 1: successful people that were trying to serve UM. And there's 1266 01:10:22,720 --> 01:10:25,479 Speaker 1: been a view that either you're unable to understand it, 1267 01:10:25,600 --> 01:10:28,320 Speaker 1: or you don't want to understand it because you're too 1268 01:10:28,320 --> 01:10:31,200 Speaker 1: busy to worry about insurance. So just let it continue 1269 01:10:31,200 --> 01:10:33,760 Speaker 1: to be a black box to you UM, I think 1270 01:10:33,840 --> 01:10:38,240 Speaker 1: more transparency in this this information shift UM will have 1271 01:10:38,400 --> 01:10:42,920 Speaker 1: a profound impact on the industry. And went down to 1272 01:10:42,960 --> 01:10:46,439 Speaker 1: our last two questions. UM, if a millennial or someone 1273 01:10:46,439 --> 01:10:49,639 Speaker 1: who just graduated college came to you and said, Hey, 1274 01:10:49,680 --> 01:10:52,479 Speaker 1: I'm thinking about a career in the insurance business, what 1275 01:10:52,600 --> 01:10:55,240 Speaker 1: sort of advice would you give them? Well, first of all, 1276 01:10:55,240 --> 01:10:58,960 Speaker 1: I think it's a great business. I I I welcomed 1277 01:10:59,080 --> 01:11:03,280 Speaker 1: these forty seven kids on Monday, and and and you know, 1278 01:11:03,320 --> 01:11:06,880 Speaker 1: among other things shared with them, UM, you know the 1279 01:11:06,920 --> 01:11:09,880 Speaker 1: great the great challenge that is this business. You're trying 1280 01:11:09,920 --> 01:11:14,000 Speaker 1: to understand risk, You're trying to anticipate what could happen. 1281 01:11:14,560 --> 01:11:17,519 Speaker 1: It's it's a complicated business and so intellectually it's fun 1282 01:11:17,560 --> 01:11:20,320 Speaker 1: to take on challenges like how much should you charge 1283 01:11:20,360 --> 01:11:22,680 Speaker 1: for for hail insurance in Oklahoma? I mean, it's a 1284 01:11:23,400 --> 01:11:26,320 Speaker 1: UM but but what But my my advice to them 1285 01:11:26,360 --> 01:11:30,280 Speaker 1: largely centers around purpose. That that that I think that 1286 01:11:30,400 --> 01:11:34,000 Speaker 1: young people have it right when they want to be 1287 01:11:34,160 --> 01:11:37,200 Speaker 1: part of something that's greater than simply trying to reward shareholders. 1288 01:11:37,760 --> 01:11:40,679 Speaker 1: And UM and we, by no means are the only 1289 01:11:40,720 --> 01:11:42,880 Speaker 1: purpose driven company in the world, let alone the only 1290 01:11:42,920 --> 01:11:46,080 Speaker 1: purpose driven company in the insurance industry. UM. But if 1291 01:11:46,080 --> 01:11:49,400 Speaker 1: you combine the good important work of insurance, the social 1292 01:11:49,439 --> 01:11:52,720 Speaker 1: service that we provide, um, you know, and and the 1293 01:11:52,760 --> 01:11:56,200 Speaker 1: intellectual challenge of the business, UM you know. But but 1294 01:11:56,240 --> 01:11:58,599 Speaker 1: I tend to emphasize the purpose to them more because 1295 01:11:58,640 --> 01:12:01,120 Speaker 1: I know that they're right to go to work knowing 1296 01:12:01,160 --> 01:12:03,880 Speaker 1: they're doing something it's important. That makes a difference. UM. 1297 01:12:03,960 --> 01:12:07,160 Speaker 1: And when I see the impact that we have when 1298 01:12:07,200 --> 01:12:09,920 Speaker 1: we help people rebuild after Sandy or you know, heaven 1299 01:12:10,000 --> 01:12:12,720 Speaker 1: forbid if these California fires do move in the wrong 1300 01:12:12,760 --> 01:12:16,000 Speaker 1: direction for our membership, UM, there's no doubt that what 1301 01:12:16,040 --> 01:12:17,920 Speaker 1: we're doing is important. And I think young people really 1302 01:12:17,960 --> 01:12:21,559 Speaker 1: appreciate them. And our final question, what is it that 1303 01:12:21,640 --> 01:12:25,479 Speaker 1: you know today about investing you wish you knew? Or 1304 01:12:25,560 --> 01:12:27,759 Speaker 1: I'm sorry, I got to redo that question. I asked 1305 01:12:27,760 --> 01:12:31,519 Speaker 1: it wrong. Our final question, what is it that you 1306 01:12:31,600 --> 01:12:35,360 Speaker 1: know about insurance and risk management that you wish you 1307 01:12:35,439 --> 01:12:41,559 Speaker 1: knew thirty years ago when you started? Yeah, UM, you 1308 01:12:41,600 --> 01:12:46,479 Speaker 1: know that's a good question. UM. You know, I I 1309 01:12:46,640 --> 01:12:49,519 Speaker 1: do think I go back to to uh to to 1310 01:12:49,720 --> 01:12:53,880 Speaker 1: Hank's advice about UM, you know, don't be afraid to 1311 01:12:53,880 --> 01:12:58,160 Speaker 1: take risks UM, that that you know, UM, you know, 1312 01:12:58,200 --> 01:13:00,519 Speaker 1: I I think probably having start did a couple of 1313 01:13:00,520 --> 01:13:04,040 Speaker 1: companies from scratch. It's it's not as if, UM, you know, 1314 01:13:04,120 --> 01:13:09,479 Speaker 1: I'm afraid of risk, um but I but I naturally 1315 01:13:09,520 --> 01:13:12,440 Speaker 1: am not a risk taker. And and and and and UH. 1316 01:13:12,560 --> 01:13:14,760 Speaker 1: I think if I wish from the from day one, 1317 01:13:14,840 --> 01:13:17,280 Speaker 1: I had a little more courage on on stuff, I 1318 01:13:17,280 --> 01:13:20,240 Speaker 1: I may have note even even grander things. But I'm 1319 01:13:20,920 --> 01:13:23,840 Speaker 1: certainly proud of where we've been. ROUS. Thank you so 1320 01:13:23,920 --> 01:13:26,360 Speaker 1: much for being so generous with your time. This was 1321 01:13:26,520 --> 01:13:31,599 Speaker 1: really fascinating. It's it's a part of the financial world 1322 01:13:31,600 --> 01:13:33,679 Speaker 1: that I think a lot of people don't know about. 1323 01:13:33,720 --> 01:13:35,720 Speaker 1: And I feel like I know a little more than 1324 01:13:35,760 --> 01:13:39,479 Speaker 1: I did UH before we started the conversation. UM. For 1325 01:13:39,520 --> 01:13:41,920 Speaker 1: those of you listening at home, be sure and look 1326 01:13:42,040 --> 01:13:44,920 Speaker 1: up an inch or down an inch on Apple iTunes 1327 01:13:44,960 --> 01:13:47,559 Speaker 1: and you could see any of the other nineties seven 1328 01:13:47,640 --> 01:13:51,320 Speaker 1: or so UH podcasts that we've done in the past. 1329 01:13:52,040 --> 01:13:54,679 Speaker 1: I would be again remiss if I did not think 1330 01:13:55,360 --> 01:14:00,280 Speaker 1: Charlie Volmer, our engineer, UH, Taylor Rigs Are booker, Mike Nick, 1331 01:14:00,400 --> 01:14:04,240 Speaker 1: our researcher for helping to put this together. Our our 1332 01:14:04,280 --> 01:14:10,639 Speaker 1: engineer Today is uh Mark Santa Scouche. You've been listening 1333 01:14:10,680 --> 01:14:13,639 Speaker 1: to Masters in Business on Bloomberg Radio