Speaker 1: Look ahead, imagine more, gain insight for your industry with
Speaker 1: forward thinking advice from the professionals at Cone Resnick. Is
Speaker 1: your business ready to break through? Find out more at
Speaker 1: Cone resnick dot com slash Breakthrough. This is Masters in
Speaker 1: Business with Barry Ridholts on Bloomberg Radio. This week on
Speaker 1: the podcast, we have a special and unusual guest. His
Speaker 1: name is Ross buck Mueller. He's the founder and CEO
Speaker 1: of the Pure group of insurance companies. I don't usually
Speaker 1: think about insurance companies, and I certainly hadn't gone out
Speaker 1: and said, hey, let's find someone from the insurance industry.
Speaker 1: I don't get a lot of PR pitches that I'm
Speaker 1: remotely interested in. But when uhuh, someone had contacted me
Speaker 1: and said, hey, are you interested in speaking with the
Speaker 1: founder of Pure, I said, hey, that's my insurance company.
Speaker 1: Person was really no one ever really heard of us
Speaker 1: in the media. Well I did. I I heard of
Speaker 1: you because I was unhappy with one of your competitors,
Speaker 1: and my brother, who's an insurance agent, recommended I look
Speaker 1: at this company and and I thought they were really interesting,
Speaker 1: terrific and competitive. So I I had coffee with the
Speaker 1: the founder. His name is Ross talked to them about
Speaker 1: who they were, how they came about, and I thought
Speaker 1: it was really a surprisingly fascinating tale, certainly much more
Speaker 1: fascinating than we typically expect from the world of insurance.
Speaker 1: So we discussed how he uh came up with the concept,
Speaker 1: why he left A I G Financial in order to
Speaker 1: to launch this insurance company. And really they've been an
Speaker 1: extremely successful entity, much faster growth than the rest of
Speaker 1: the insurance industry. There over six hundred and fifty million
Speaker 1: dollars in premiums and they're growing forty percent a year.
Speaker 1: That that's a pretty astonishing number. So, with no further ado,
Speaker 1: here is my conversation with Ross Buck Mueller of Pure Insurance.
Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
Speaker 1: My guest today is a gentleman you may not be
Speaker 1: aware of, but you should be. His name is Ross
Speaker 1: Buck Mueller and he is the founder of the Pure
Speaker 1: Insurance Group of companies. UH. He has a storied background
Speaker 1: in the insurance industry. UH. He began his career at Chubb,
Speaker 1: where he spent more than a decade working the fields
Speaker 1: before he moved to A I G where he launched
Speaker 1: the A i G Private Client Group and built it
Speaker 1: it into a billion dollar business. He was president of
Speaker 1: the Private Client Group for more than six years. He
Speaker 1: has been recognized by Cranes New York in its annual
Speaker 1: forty under forty feature UH looking at Rising Stars of
Speaker 1: New York, as well as being the winner of the
Speaker 1: Ernstein Young Entrepreneur of the Year Award. Ross Buck Mueller,
Speaker 1: Welcome to Bloomberg. Thanks Berry. We don't really have a
Speaker 1: lot of people from the insurance industry in the studio,
Speaker 1: and I think a lot of people, uh don't really
Speaker 1: think about insurance until they need it. But you've been
Speaker 1: plowing those fields for a long time and you identified
Speaker 1: a number of interesting anomalies, not not only an underserved
Speaker 1: niche in the insurance industry, but an under utilized corporate
Speaker 1: structure that that made your company is more competitive. Let's
Speaker 1: let's start with that underserved niche. How did you first
Speaker 1: identify the niche either at a I G or at
Speaker 1: Pure Well for starters, the high net worth area, which
Speaker 1: is we focus on serving successful families, is the only
Speaker 1: business I've been in. Right out of college, got a
Speaker 1: job as an underwriter at chub in the personal insurance area.
Speaker 1: And uh. So on one level, discovering high net worth
Speaker 1: was well, it's where I fell into. UM. But as
Speaker 1: time went on, UM, you know what we began to see,
Speaker 1: or I certainly did along with some colleagues who joined
Speaker 1: me at Pure, were some some inefficiencies in the way
Speaker 1: that market had operated. Even as we brought more competition
Speaker 1: to it, there was more chance for inefficiency. But um,
Speaker 1: really it was this question of an alignment of interest. UM.
Speaker 1: You know, if you if you look back ten or
Speaker 1: fifteen years ago, there began a movement where both in
Speaker 1: the insurance world and and particularly in the wealth management world,
Speaker 1: were alignment of interest, the elimination of conflicts, UH, the
Speaker 1: improvement of transparency. They all became important, either forced by
Speaker 1: regulators who were saying you better behave better or demanded
Speaker 1: by consumers who said, I want to be treated with
Speaker 1: this sense of trust that I know you're gonna behave well.
Speaker 1: And we were able to look at the natural conflicts
Speaker 1: between policy holders and shareholders and design a business that
Speaker 1: would create this alignment. And uh, and that's what we've done.
Speaker 1: So so let's address that conflict. A lot of big
Speaker 1: insurance companies are publicly traded, which you are suggesting, and
Speaker 1: I think most of our listeners know UH have a
Speaker 1: fiduciary obligation to their shareholders. But as a mutual structure,
Speaker 1: where the policy holders are technically the owners of the company,
Speaker 1: there is no such conflict. Is that a fair way
Speaker 1: to describe it? Well, I think in the simplest terms,
Speaker 1: it is. But but you know it, and and our
Speaker 1: form takes a bit of a hybrid structure. UM. We
Speaker 1: think it takes the best aspects of mutuality, UM A
Speaker 1: low cost of capital because our policy holders contribute to
Speaker 1: build up the strength of the company. UM and UM
Speaker 1: looks at some of the challenges that that mutuals have had.
Speaker 1: Capital flexibility, the ability to compete with larger companies, and
Speaker 1: and an entrepreneurial environment. You know, maybe the best and
Speaker 1: most talented people want to work in a place where
Speaker 1: they feel like they can flourish. And sometimes the older
Speaker 1: mutual companies weren't seen as that we weren't the same
Speaker 1: stock option grants in the same exactly exactly, UM, and
Speaker 1: I think I and I think that that UM some
Speaker 1: of the great mutual companies were terrific stewards of the
Speaker 1: capital and the risks that their policy holders presented to
Speaker 1: them UM, but perhaps weren't weren't run with some of
Speaker 1: the modern ideas of corporate culture and environment, So beyond
Speaker 1: the rewards UM, you know, the environment might not have
Speaker 1: been as dynamic. So in any event, we looked at
Speaker 1: this and said, if we could create UM a business
Speaker 1: that really embraced mutuality, transparency, the alignment of interest, the
Speaker 1: elimination of conflicts, of lower cost of capital, of focus
Speaker 1: on the policy holders, do it in a way that
Speaker 1: it was entrepreneurial. Boy, we thought we'd have something terrific,
Speaker 1: and that's what we've done. But some of these conflicts
Speaker 1: are not sinister. They're simple, right, that that shareholders want
Speaker 1: premiums to be higher and policy holders want them to
Speaker 1: be lower. You know, so as a mutual, how much
Speaker 1: lower are your premiums relative to the to the big
Speaker 1: players in your space? Well, so I think the reciprocal
Speaker 1: structure probably gives us a ten to fifteen percent advantage
Speaker 1: in part because you know, insurance companies need to cover
Speaker 1: the cost of the claims and the cost of your expenses,
Speaker 1: but also the cost of capital UM and when your
Speaker 1: capitalists free contributed by policy holders year after year, that
Speaker 1: certainly reduces the burden to the need to return the
Speaker 1: The other part, though, that I think is just as important,
Speaker 1: is when you start a company from scratch and you
Speaker 1: have this idea of what you want to do. We
Speaker 1: were we have been able to select our our members,
Speaker 1: our policy holders carefully. So if you only ensure those
Speaker 1: people who are more responsible, who are less likely to
Speaker 1: make claim aimes, who appreciate what you're offering, UM, you
Speaker 1: can do it at a lower cost. So I'd say
Speaker 1: on average, our members report savings North. I'm Barry Rioults.
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
Speaker 1: special guest today is Ross buck Mueller. He is the
Speaker 1: founder of Pure Group of insurance companies. Previously, he was
Speaker 1: the creator of the A I G Private Client Group.
Speaker 1: Let's let's talk a little bit about that. You're working
Speaker 1: as a youngster at chub, you're there for a dozen years.
Speaker 1: How did a I G come a knocking well? I
Speaker 1: was so I was in London, UM building out a
Speaker 1: UK high net worth practice and and and a few
Speaker 1: other things, and UM, you know the first thing that
Speaker 1: happened was is we were hosting our chairman at the time,
Speaker 1: UM and two companies in the United States, Continental and
Speaker 1: Sienna had merged and they both had a consumer business.
Speaker 1: And we're hosting our chairman for a dinner with some
Speaker 1: uh European executives and they uh, they said to him,
Speaker 1: so I see this merger, what is this going to mean?
Speaker 1: And and he reflected and said, We've never had competition
Speaker 1: and we never will. Boy, I was sitting at the
Speaker 1: dinner saying I'd like to compete against a company that
Speaker 1: doesn't think they'll ever have competition. Um. And about sixty
Speaker 1: days later I got a call from a I G
Speaker 1: saying they're exploring getting into the business and when I'd
Speaker 1: be willing to have a conversation and so, um, you know,
Speaker 1: I flew over from from London at the time and
Speaker 1: and uh, um you know, I had breakfast with Evan,
Speaker 1: at lunch with Hank and met everybody in between, and
Speaker 1: that would be Hank Greenberg and Evan Evan Greenberg as well. Yes, sorry,
Speaker 1: so at the time, who are running the company? And
Speaker 1: and um, uh you know I'll never forget. You know,
Speaker 1: at the time, I was thirty four years old. Um,
Speaker 1: Hank with seventy four chairman and uh. And he turned
Speaker 1: to me, and he said, you better take this job
Speaker 1: because you're getting too old at thirty four. Well, and
Speaker 1: his point was a good and you know, I had
Speaker 1: just been married for a couple of years. You know
Speaker 1: today we have two kids. We were expecting our first child.
Speaker 1: And his point of view was that that you know,
Speaker 1: you're not going to be able to take risks, or
Speaker 1: you may not be willing to take risks, you know,
Speaker 1: real soon when you're like exactly and and and so
Speaker 1: you know, for twelve years at CHUB, I'm being told,
Speaker 1: you know, calm down, young man, your day will come.
Speaker 1: And here's this guy telling me that I better take
Speaker 1: it now because I'm gonna start losing my my courage
Speaker 1: to to take risk. And so, um, it was the
Speaker 1: it was an absolute great decision and I and I
Speaker 1: loved every minute of how hands on was Hank Greenberg
Speaker 1: at seventy four at a I g oh, you know
Speaker 1: he he was. He was hands on in that he
Speaker 1: was there to help you at any at every turn.
Speaker 1: You know. Um. In my case, you know, he had
Speaker 1: a I think we still use rolodexes back then, but
Speaker 1: he had a great one. And and if you're getting
Speaker 1: into the high net worth business, and you have Hank,
Speaker 1: you know, behind you. That's a great tail wind to
Speaker 1: to meet a lot of people who could who could
Speaker 1: help your business. And so he was helpful in that.
Speaker 1: But most importantly he created a clear sense of accountability.
Speaker 1: It was your business, and so his help was there,
Speaker 1: his involvement was there. But let let there be no
Speaker 1: doubt that that good or bad, it was your business.
Speaker 1: And and uh, you know, we got to about a
Speaker 1: half a billion dollars in the first few years when
Speaker 1: I was there before I left, and and you know,
Speaker 1: the business continues to perform. Well, I take pride, you know,
Speaker 1: eleven years after having left, it's still a good business.
Speaker 1: You know. So this was the pre crisis days. This
Speaker 1: was in the early two thousand. When did you start
Speaker 1: at a all right? And you were there until oh
Speaker 1: January of o six we started pure alright, so you
Speaker 1: were almost seven years and that was all right before
Speaker 1: everything hit the fan. What was a I G like
Speaker 1: in that period? Those were really as big as a
Speaker 1: I G ever gotten that that that region was just
Speaker 1: they were tremendous then. So I just last week was
Speaker 1: was with a friend who now runs a big company
Speaker 1: and who was there the time and UM and we
Speaker 1: were having this reflection about the good old days as
Speaker 1: it were, and and I think the common theme was
Speaker 1: was winning. You just felt like you had such an
Speaker 1: edge and there was such momentum built around um winning.
Speaker 1: And I think everybody throughout the organization, UM, you know,
Speaker 1: embraced that idea that that that we were and could
Speaker 1: do great things and and and win and and people
Speaker 1: took great pride in in in winning. And so I
Speaker 1: think that was the first notable thing. I mean, I
Speaker 1: I was I was long gone by by the two
Speaker 1: thousand eight issues, but um, you know, that was a
Speaker 1: really important part of the culture. There was winning. When
Speaker 1: you say winning, where there our fps where the proposals
Speaker 1: that you were competing against some other companies, uh like?
Speaker 1: And what how often did it feel like a I
Speaker 1: G was if it's between you and who was the
Speaker 1: next closest competitor back then? Well again, I think that
Speaker 1: in the insurance industry my recollection and now we're going
Speaker 1: back a bit, but the market capitalization of a I
Speaker 1: G was bigger than the cumulative market capitalization of just
Speaker 1: about all other publicly traded insurers. So it was it
Speaker 1: was everybody, you know, I mean it was a two
Speaker 1: billion dollar market cap back I want to say sixty
Speaker 1: people something like that. Yeah, maybe even more than that.
Speaker 1: So so winning was the existing businesses were getting stronger
Speaker 1: all the time. New businesses like mine were entering and
Speaker 1: making an impact. They were acquiring Sun America, American General, um,
Speaker 1: you know. And there was a certain sense of confidence
Speaker 1: and purpose um, you know, and and pride um you know.
Speaker 1: And it was it was a great deal of fun.
Speaker 1: And boy did I learn a lot. So when when
Speaker 1: you left, oh so you left in oh six, I
Speaker 1: assume after that period of time you had a nice
Speaker 1: fat slug of stock and you got to liquidated at
Speaker 1: all before everything at the right. Wouldn't that be good
Speaker 1: if we could have done that? But you know, listen,
Speaker 1: I mean I guess I'll put that out as I
Speaker 1: was loyal to the company and I believed the company,
Speaker 1: even though you know, I set up a different business.
Speaker 1: But I I did hold probably a little more than
Speaker 1: I should, to say the least, although a I G
Speaker 1: has certainly recovered. At the time of the crisis, I
Speaker 1: would have bet a hundred million dollars that they would
Speaker 1: never repay sixty six billion dollars in aid, but apparently
Speaker 1: they just about have. There's some tax waivers that probably
Speaker 1: gives them a little wriggle room, but they more or
Speaker 1: less repaid the vast majority of that, which is an
Speaker 1: astonishing accomplishment considering how much money was involved. Absolutely so uh,
Speaker 1: looking looking at what you built at A I G.
Speaker 1: How similar or different is Pure relative to to that
Speaker 1: model of servicing the high net worth individual. Interestingly enough,
Speaker 1: it it's about as different as you could get. And
Speaker 1: so for to have the same guy build both companies
Speaker 1: and to look at it now, you know, But but but
Speaker 1: I think it reflects both a i G strength and
Speaker 1: what Pure's purposes At the time. You know, we had
Speaker 1: the biggest balance sheet in the industry at a i G.
Speaker 1: And so for us to take on extraordinary risks for
Speaker 1: people who had art collections in the billions of dollars,
Speaker 1: and to to extend limits to help people ensure what
Speaker 1: might have seen uninsurable at the time, you know that
Speaker 1: made sense. You start a business from scratch, and you're
Speaker 1: now trying to operate a company where you're carefully selecting
Speaker 1: the most responsible people and pulling them together in the
Speaker 1: most efficient way. Um, very different things, very very different things,
Speaker 1: and so the common the expertise was common, but other
Speaker 1: than that, it was very different business. I'm Barry Ridhults.
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
Speaker 1: special guest this week is Ross buck Mueller. He is
Speaker 1: the founder and CEO of Pure Group of insurance companies,
Speaker 1: a specialty companies servicing high net worth individuals. And and
Speaker 1: let's talk a little bit about the rest of the
Speaker 1: industry and what what they get wrong. What does the
Speaker 1: insurance industry sort of missed the ball with. Yeah, well, again,
Speaker 1: I've been in the business for almost thirty years and
Speaker 1: so I'm I'm a bit of a fan of the industry,
Speaker 1: and I like to think that as a group we
Speaker 1: do more good than bad. But I don't mean what
Speaker 1: they do that's bad. Yeah, so you obviously spotted a
Speaker 1: niche because because Pure has has really blown up to
Speaker 1: be you're doing over half a billion absolutely. So what
Speaker 1: I was gonna say is is I think I think where, um,
Speaker 1: where we see as you have two big issues. One
Speaker 1: is there still remains inefficiencies in this market. Um. You know,
Speaker 1: in in nineteen seven, I joined a job out of
Speaker 1: out of college. I went through an underwriting training program
Speaker 1: and UM. I came back to the New York branch
Speaker 1: where I was set to be an underwriting trainee UM
Speaker 1: and they introduced a product called Masterpiece UM and at
Speaker 1: that time, master Piece was coming to New York. This
Speaker 1: was within a couple of months of me joining the
Speaker 1: company UM and we looked at the first release of
Speaker 1: the product and it had a flaw that if you
Speaker 1: were to insure a New York City apartment where you
Speaker 1: wanted to insure the fixtures and fittings or the marble
Speaker 1: floors of the mahogany walls, UM that they would sell
Speaker 1: it deductible from a hundred dollars all the way up
Speaker 1: to the highest deductibles of tens of thousands of dollars.
Speaker 1: And no matter what deductible you picked, the price was
Speaker 1: the same because they put the deductible credit in the
Speaker 1: wrong place in the algorithm, I mean, a silly little mistake.
Speaker 1: So here I was a two year old trainee and
Speaker 1: I wrote a memo saying, you know this is this
Speaker 1: is wrong And anyway, two thousand and sixteen, it's still
Speaker 1: the same. So if you're a Chubb insurance policy holder,
Speaker 1: call up and say I want the lowest possible deductible
Speaker 1: and your policy won't you for for this additions and
Speaker 1: alterations cover virgin in apartments. But but I guess my
Speaker 1: point is it's such a it's a very inefficient market.
Speaker 1: It there there are lots of little quirks, all of
Speaker 1: them can be rationalized. UM, but it's inefficient. And uh
Speaker 1: so I think that the inefficiencies and there are many,
Speaker 1: and part of the charm of our businesses. This is
Speaker 1: all we do, and we have looked at these inefficiencies
Speaker 1: and found ways to make things work. Whether that is
Speaker 1: the way jewelry insurance is over priced. So let's let's
Speaker 1: talk about that, because I would I know there's a
Speaker 1: tremendous amount of information asymmetry. It feels like as a customer,
Speaker 1: people don't necessarily know what's going on with things like that.
Speaker 1: Talk to us about the jewelry writers and how it's
Speaker 1: typically done and how you approach it. Well. For for
Speaker 1: for starters, the coverage is typically restrained on their homeowners policy.
Speaker 1: You can't make a claim for much jewelry to buy
Speaker 1: a writer or scheduled personal property policy UM. That is
Speaker 1: priced to make massive offense for the insurer. UM. And
Speaker 1: in our case, we provide more cover in case you
Speaker 1: forgot to ensure something, and the stuff that you intentionally
Speaker 1: want to ensure, your more higher valued items are a
Speaker 1: much lower price. But but so part of this is
Speaker 1: an inefficiency, but part of it also is designed for this,
Speaker 1: this rewarding shareholders. You know, the things that people do
Speaker 1: that everybody, even if you're not insurance expert, just no
Speaker 1: are are are wrong? Um. You know, I think we've
Speaker 1: been able to identify in fixed years ago there was
Speaker 1: a mortgage company that said sort of you know, even
Speaker 1: kids know it's not right to treat your new friends
Speaker 1: better than your old friends. Um. But insurance companies will
Speaker 1: still have new business writing companies where the premiums are
Speaker 1: lower if they've never met you, and higher if you've
Speaker 1: been there for ten years, um. And so we just
Speaker 1: dealt with a lot of these issues where products are
Speaker 1: built to be more generous, priced to be more efficient,
Speaker 1: and and principles put in place like treat your loyal
Speaker 1: customers better than you treat somebody you've never met. In
Speaker 1: other words, if you're an existing cost stomer, no one
Speaker 1: is going to come in as a brand new customer
Speaker 1: and get charged a lower exactly lower premium, So I
Speaker 1: was kind of surprised. We bought a house about eighteen
Speaker 1: months ago. I got an appraisal um for the mortgage,
Speaker 1: and then we got the insurance and uh lo and behold.
Speaker 1: Two months after we closed, the insurance company sends us
Speaker 1: a note, Hey, we've reappraised your home and it appraised
Speaker 1: for half a million dollars more than the original appraisal.
Speaker 1: And by the way, here's a bill for another four
Speaker 1: grand I was astonished by it. Um is that standard
Speaker 1: operating a procedure or is that uh was that a
Speaker 1: one off for me? Now you saw the experience the
Speaker 1: way it's probably designed to be seen, which is unfortunate. Right.
Speaker 1: So here's one of the great challenges. If you're with
Speaker 1: a standard company, they will they may overlook real issues
Speaker 1: that would cost more to rebuild, and so when you
Speaker 1: eventually had a claim, they might not have noticed some
Speaker 1: of those features. So the challenges as trying to you know,
Speaker 1: underwrite properly. We want to get these values correct, but
Speaker 1: we can't make it feel like a bait and switch, right,
Speaker 1: and so you know, and simply what one of the
Speaker 1: things we've done is it said if the value goes
Speaker 1: up by more than ten percent, the appraiser cannot make up,
Speaker 1: cannot issue the report. They have to make a phone
Speaker 1: call and go through line by line to make sure
Speaker 1: you agree with what we said, so you don't have
Speaker 1: that shock. UM. And there's lots of of of UH
Speaker 1: practices where the industry has done it the way they've
Speaker 1: done it. They believe they are right. There is some
Speaker 1: goodness in it, but it doesn't sit well with consumers.
Speaker 1: I'm Barry Ridholts. You're listening to Master's in Business on
Speaker 1: Bloomberg Radio. My special guest today is Ross buck Mueller.
Speaker 1: He is the founder, president, chief executive officer at the
Speaker 1: Pure Group of Insurance Companies. You know, I was telling
Speaker 1: someone about today's show and I described Pure because the
Speaker 1: answer is Pure. I'm not familiar with them. The My
Speaker 1: response to that was, well, think of them as the
Speaker 1: Vanguard Group of insurance. How accurate is that? Well? I
Speaker 1: I think that for us, it's a flattering comparison. You know,
Speaker 1: when you look at Vanguard, one of the first things
Speaker 1: they say is is that they're uniquely driven to do
Speaker 1: what's best for investors, and I think we share that value. Now, UH,
Speaker 1: we use independent brokers. They're much more of a direct
Speaker 1: to consumer. You know. We think we are very high touch.
Speaker 1: They're definitely low cost. So operating wise, there's probably some differences,
Speaker 1: but UM, I think we share the value that that
Speaker 1: let's focus on the customer and serve them as the
Speaker 1: most important part of the equation. Cost matter, transparency matters,
Speaker 1: Being on the same side of the table as the
Speaker 1: client matters. That that's what was motivating me to draw
Speaker 1: that comparison. And you're hard pressed to find someone else
Speaker 1: in the insurance industry that at least publicly emphasizes that
Speaker 1: aspect of what they do. Yeah, you know, I think
Speaker 1: that USA has been an inspiration for us in many ways.
Speaker 1: You know, they use the same reciprocal structure, UM, they
Speaker 1: are laser focused on the service to their membership UM.
Speaker 1: You know, and so in many ways, I think we
Speaker 1: view them as as someone to look up to. I
Speaker 1: would say we get most of our inspiration from the
Speaker 1: wealth management industry, where you have real evangelists who are
Speaker 1: out there UM trying to build businesses UM with out
Speaker 1: a focus on short term profits, but focused on this
Speaker 1: long term view. If if I serve my clients, well,
Speaker 1: I will prosper in the Meanwhile, I have no conflict
Speaker 1: that I am just simply going to serve them well,
Speaker 1: and that gives us inspiration. So let's talk a little
Speaker 1: bit about underwriting revenue. How does that EBB and flow
Speaker 1: with the business cycle? How does that change over time? Yeah,
Speaker 1: I mean, I think you have to be careful if
Speaker 1: the market were to become over competitive and you simply
Speaker 1: thought you couldn't underwrite to a to a fair return. Um.
Speaker 1: You know. The good news for us is we operate
Speaker 1: in such an uncompetitive world with two or three other
Speaker 1: companies um, and so we see less um competitive cycles.
Speaker 1: Then then you might see in a commercial insurance where
Speaker 1: there might be dozens and dozens of companies competing for
Speaker 1: the same type of business. So we also looked though,
Speaker 1: at at economic cycles. You know, in two thousand and eight,
Speaker 1: we had a significant amount of business in southwest Florida
Speaker 1: where the economy was hitting it hard, and we had
Speaker 1: to be careful that our membership, you know, was was
Speaker 1: holding up and being resilient in those financial times. These days,
Speaker 1: we're looking at at the massive and frequent hail storms
Speaker 1: in in the center and south of the of the country,
Speaker 1: and is that an anomaly. Is that unusual? We're trying Yeah,
Speaker 1: we're trying to find out what whether it is the
Speaker 1: real uh, the new normal, or whether or not this
Speaker 1: is a cycle. But certainly the cost of replacing roofs
Speaker 1: the last couple of years has has been more than
Speaker 1: we might have anticipated. So let's talk a little bit
Speaker 1: about that. I was reading one of the things that
Speaker 1: you had written, uh, and in two thousand and four
Speaker 1: and two thousand and five we had a huge hurricane cycle,
Speaker 1: and this was right before you launched. How did that
Speaker 1: run of hurricanes, especially on the East coast and most
Speaker 1: especially in Florida, How did that impact your ability to
Speaker 1: launch a company? Yeah, I'm sure it probably helped you.
Speaker 1: You had a couple of factors going on there. So
Speaker 1: one of them was is that in O four to
Speaker 1: five where you had four hurricanes in two thousand and
Speaker 1: four make landfall in Florida, and in two thousand five
Speaker 1: you not only had Wilma and and Rita, but you
Speaker 1: had Katrina, who who you know, obviously did the damage
Speaker 1: in the Gulf. Um and so um insurance companies naturally
Speaker 1: backed off a bit. And we're trying to digest what
Speaker 1: just happened, what's likely to happen in the future, UM,
Speaker 1: And so clearly there was a bit of an opening
Speaker 1: there for us. But the real issue is this is
Speaker 1: we were able to determine that very well built homes,
Speaker 1: and in this case, the newest built homes built to
Speaker 1: the highest standards were far more likely to with withstand
Speaker 1: damage than a home that had been built decades before.
Speaker 1: Go into that, there was something I had read about
Speaker 1: the larger the distance from the four corners of the house,
Speaker 1: the more hurricane resistance the roof is, or something like that. Well,
Speaker 1: you know, listen, I would just say size matters in
Speaker 1: this case, and so UM. For for both engineering reasons
Speaker 1: and just the common sense, these these large homes held
Speaker 1: up very well. UM. There's a terrific group, the Insurance
Speaker 1: Institute for Building and Home Business and Home Safety, that
Speaker 1: is testing damage ability UM down in a facility in
Speaker 1: South Carolina, and we're learning more and more about what
Speaker 1: UM causes damage or what construction helps mitigate damage. The
Speaker 1: newest big homes were withstanding damage far better than UM
Speaker 1: than anything else. And yet when you're building a new
Speaker 1: home in two thousand six and seven, insurance companies were
Speaker 1: already kind of full up of what just happened to
Speaker 1: know four and oh five. So our con sept not
Speaker 1: limited to Florida, was what if we pulled together the
Speaker 1: most responsible owners of the finest built homes and bring
Speaker 1: them together to create their own insurance company. And it
Speaker 1: just so happened that the owners of the finest built
Speaker 1: homes in Florida were being kept out because they were
Speaker 1: all new to the market coming in and people said,
Speaker 1: I'm full already, And so maybe a bit of serendipity.
Speaker 1: And probably when you look at any business that has
Speaker 1: great success, they can look back at some little factor
Speaker 1: that said, boy would have would this business has been
Speaker 1: as successful if the Florida market wasn't uncompetitive for that
Speaker 1: period of time. But the real principle was select carefully
Speaker 1: and we can build a great business. There is a
Speaker 1: metaphor there for being willing to buy stocks when they've
Speaker 1: just gotten crushed in a crisis, like oh aight, O nine,
Speaker 1: You went into Florida right after a huge set of
Speaker 1: hurricanes and found most of your competitors had been scared away.
Speaker 1: That is a tremendous, tremendous opportunity. So let's talk about
Speaker 1: your growth rate. That this opportunity has led to you're
Speaker 1: now doing, is am I reading the numbers right? Five
Speaker 1: hundred million in premiums? Yeah, so in two thousand sixteen
Speaker 1: will do about six d and fifty millions. So we
Speaker 1: did about five hundred last year, and and we'll continue
Speaker 1: to grow more. You're growing almost is it? For seven
Speaker 1: consecutive years? Well for more than that. So since we
Speaker 1: started back, you know, two thousand seven was the first
Speaker 1: full year of writing business, we grew by forty percent
Speaker 1: every year, and and we grew forty percent last year. Um,
Speaker 1: now you know those numbers to put in perspective, we're
Speaker 1: still you know, about a six hundred million dollar business.
Speaker 1: We're in about a fifteen billion dollar niche um with
Speaker 1: only two other competitors Chubb and a I G. Really,
Speaker 1: who are who are in this? So we have been
Speaker 1: in many ways slow and steady building up a business
Speaker 1: that still is undersized within the category. But a year
Speaker 1: that that's an astonishing growth rate for for a decade. Sure,
Speaker 1: and I'm sure if I went back to A I G.
Speaker 1: Mr Greenberg would say so six hundred million part of
Speaker 1: fifteen billions. So you haven't been able to crack it um,
Speaker 1: you know, yeah, well, and that that that's motivational. How
Speaker 1: long can you maintain a growth rate anywhere? Yeah, I
Speaker 1: think for some time now. As I said, it's a
Speaker 1: fifteen billion dollar gosh, our competitors have suggested could be
Speaker 1: a forty billion dollar market, and it's a part of
Speaker 1: the economy that is showing growth the wealthiest Americans. So
Speaker 1: we see plenty of upside. We don't we don't see
Speaker 1: any um, need to slow down. The issue for us
Speaker 1: is managing risk, managing culture, UM, building scale. Luckily, from
Speaker 1: the very beginning we put in sort of scalable systems
Speaker 1: that would allow us to grow well into the future. Um.
Speaker 1: But that's the great challenge. Continue to find great people.
Speaker 1: We launched forty seven college graduates coming in for a
Speaker 1: training program and and they will help us really more
Speaker 1: in eighteen when they're maturing, or they'll you know, um,
Speaker 1: hold on, yeah, it's interesting. I mean, twenty seven out
Speaker 1: of the twenty eight we hired last year are still
Speaker 1: with us. The two thousand ten class, the entire but
Speaker 1: still with us, so so we hope we can keep them.
Speaker 1: So you're actively recruiting kids right out of college, how
Speaker 1: do you find clients. How does the high net worth
Speaker 1: homeowner come across Pure as as an insurer. Yah. So
Speaker 1: we use a network of around seven independent brokers. They
Speaker 1: are fiercely independent. They work for their clients. Uh, they
Speaker 1: put their client's best interest first. They do work with
Speaker 1: other companies UM and UM and so if we don't
Speaker 1: serve them, well they can they can UM you know,
Speaker 1: offer them someone else. But I will tell you that
Speaker 1: after fifty five thousand families have joined UM, it's it's
Speaker 1: really the existing members and their enthusiasm that will lead
Speaker 1: to the next fifty five thousand. So UM, you know
Speaker 1: we have we have principally a channel of independent brokers
Speaker 1: and then we try to UM inspire the enthusiasm of
Speaker 1: our membership to to to grow the next next group. Well,
Speaker 1: full disclosure, I was with one of your competite there
Speaker 1: is not especially happy with them, especially after that big
Speaker 1: increase and h Actually my kid brother referred me to
Speaker 1: you guys, and that's how Pure became my ensure. That's
Speaker 1: how I became aware of you who you were. And
Speaker 1: when one of the people UH in the media group
Speaker 1: for you contacted me, I'm like, oh, I know, Pure Insurance.
Speaker 1: They're might insure. They're like, really, well, thank your brother.
Speaker 1: So so let's talk a little more about about revenues
Speaker 1: and and reserves. How do you maintain that balance between
Speaker 1: pricing premium so you generate sufficient um flows that that
Speaker 1: your reserves are where you want them to be, and
Speaker 1: yet at the same time not overcharging or staying as
Speaker 1: competitive as you can versus the other premium costs that
Speaker 1: that your competitors charge. Yeah, that's it's a it's a
Speaker 1: great challenge. And I think it's also a challenge if
Speaker 1: you hire talented and experienced people who are accustomed to
Speaker 1: working in a stock company, their mentality maybe be different.
Speaker 1: So the first thing we did is we established a
Speaker 1: set of principles that our actuarial and pricing team would
Speaker 1: use to make those decisions. One of them would be
Speaker 1: there are no new business writing companies or in other words,
Speaker 1: the existing members will always pay less than a new
Speaker 1: member and and UM, and that helps guide them UM.
Speaker 1: But clearly we have to manage this business professionally. You
Speaker 1: know that we have to make sure we charge enough,
Speaker 1: and so we lay out UM these principles that guide
Speaker 1: them to seek an adequate rate um, to try to
Speaker 1: be fair amongst the members, so you don't have subsidization
Speaker 1: where some groups are not paying nearly enough and some
Speaker 1: groups are paying too too much. Thank you Ross for
Speaker 1: for being so generous with your time and and spending
Speaker 1: so much time with us. If you enjoyed this conversation,
Speaker 1: be sure and check out our podcast extras, where we
Speaker 1: keep the tape rolling and continue chatting about all things insurance.
Speaker 1: Check out my daily column on Bloomberg dot com or
Speaker 1: follow me on Twitter at rid Halts. I'm Barry rid Halt.
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.
Speaker 1: Are you looking to take your business to the next level?
Speaker 1: The accounting, tax and advisory professionals from Cone Resnick can
Speaker 1: guide you. Cone Resnick delivers industry expertise and forward thinking
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Speaker 1: Look ahead, gain insight, imagine more. Is your business ready
Speaker 1: to break through? Learn more at Cone Resnick dot com
Speaker 1: slash Breakthrough, Cone Reisneck Accounting, Tax Advisory. Welcome to the podcast, um, Ross,
Speaker 1: Thank you so much for doing this. This is really fascinating.
Speaker 1: There's there's so much stuff we didn't get to that
Speaker 1: I want to talk about um, perhaps most pressing artwork.
Speaker 1: How do you ensure artwork. It's one thing to assess
Speaker 1: the value of a Picasso because there was a recent auction.
Speaker 1: How do you put a value on any of the
Speaker 1: artwork that a high net worth household might have, whether
Speaker 1: it's original sculptures or paintings or what have you. Well,
Speaker 1: valuation is an important part of it. And so we
Speaker 1: have a team of experts who have experience and valuations,
Speaker 1: and then they use a network to make sure that
Speaker 1: we have the right valuations. But it's only part of it. Um,
Speaker 1: you know. So for example, um, a a massive hail
Speaker 1: storm in St. Louis Uh just hit um a wonderful
Speaker 1: sculpture that was in the backyard of somebody's house, knocking
Speaker 1: the toes off of a cherub and and uh um
Speaker 1: and so you have to look at damage ability and
Speaker 1: and um and so uh. From an underwriter's perspective, that's
Speaker 1: not only looking at the risks of outdoor sculptures, but
Speaker 1: understanding transit risk of pieces that are on loan or
Speaker 1: pieces that are moving from house to house, because honestly,
Speaker 1: the the exposure inside of a house installed properly on
Speaker 1: a wall, um you know, isn't isn't that gray eight?
Speaker 1: Once it starts moving, Boy, that's there so so understanding
Speaker 1: value and an understanding exposure. And we've got a group
Speaker 1: of people who have done this for a long time
Speaker 1: and that allows us to be pretty good at it.
Speaker 1: Now I understand you have some interesting artwork in the
Speaker 1: lobby of your offices. How how did that come about? Well, um,
Speaker 1: it's interesting. Is is a member um very prominent family
Speaker 1: here in New York. UM had a glass sculpture UM
Speaker 1: cut from one piece of glass by a a Czech
Speaker 1: Lislovakian artist who um uh had built these beautiful glass
Speaker 1: pieces and they discovered a a tiny crack in it
Speaker 1: UM but it it became um of no value. So
Speaker 1: we we paid the claim in full and there was
Speaker 1: no salvage value that anybody wanted. And our claim department
Speaker 1: we're trying to figure out what to do with this
Speaker 1: massive piece of glass, and we thought if it was
Speaker 1: installed in the reception of our headquarters, it would be
Speaker 1: a reminder for everybody of why we're in business. And
Speaker 1: we did that and then all of a sudden, claims
Speaker 1: people from around the country started saying, well, really this, uh,
Speaker 1: you know, paper was stuck to a painting and it
Speaker 1: pulled off the the the the treatment of the oil
Speaker 1: and UM it it can't be repaired. UM, And that
Speaker 1: became installed. And then a a a print from uh
Speaker 1: Dolly was um was damaged in a in a in
Speaker 1: storage beyond repair and with all its mud stains it
Speaker 1: is on our walls. And then a twelveth century Chinese
Speaker 1: plate was cracked and then reassembled. And so when we've
Speaker 1: had art that has been insured and it has no
Speaker 1: value in salvage, we installed it throughout our offices as
Speaker 1: a reminder for why we're in business, to help people
Speaker 1: pursue their passions of collecting art. The the gallery of
Speaker 1: damage artwork. That's that's pretty funny. Let's let's talk. I'm
Speaker 1: meant to ask you for and I didn't get to
Speaker 1: it about um. One of your capital partners, so XL Capital,
Speaker 1: was this one you launched or a later date picked
Speaker 1: up about ten percent of the company. Is that right? Yeah,
Speaker 1: just in December, and and UM you know to to
Speaker 1: to back up, we've had the same partner from the beginning,
Speaker 1: you know, so Stone Point Capital in two thousand five,
Speaker 1: right before before left, we agreed to UM to build
Speaker 1: this business together. Um, and you know, you think about it,
Speaker 1: We're in the eleventh year with the same private equity
Speaker 1: sponsor and they are just They've been a phenomenal partner
Speaker 1: and nobody pressing you to go public or anything along
Speaker 1: those lines. It's unusual for private equity. They're normally looking
Speaker 1: for some sort of an exit. Yeah, no, and I
Speaker 1: and and so I think that in a in a
Speaker 1: fairly complicated transaction, we did a recapitalization of the holding company,
Speaker 1: so we have a for profit company that manages the
Speaker 1: policy holder own exchange and that's where the investors see
Speaker 1: their returns. UM. And so in a very complicated transaction,
Speaker 1: they brought in KKR to take a minority position. And
Speaker 1: we had received over twenty unsolicited unsolicited inquiries from insurance
Speaker 1: companies who wanted to be in a specialist market. Liked
Speaker 1: our model, like the predictable fee income and the customer
Speaker 1: centric um reciprocal and UM. You know, I have to
Speaker 1: say that that that xcel Um, they were terrific. Mike mcgavick,
Speaker 1: who's the CEO, has been a good friend throughout this process.
Speaker 1: And I think that that the biggest thing we get
Speaker 1: is is for me, is I get to talk to
Speaker 1: Mike probably once a quarter about about culture and challenges
Speaker 1: and leadership and and he's been terrific and and uh um.
Speaker 1: But the other side of it is, in addition to
Speaker 1: buying UH, you know, a single digit equity percentage um,
Speaker 1: they made a very generous commitment to provide additional capital
Speaker 1: as we needed a defined amount, but it can be
Speaker 1: called upon in a contingent capital So you know, if
Speaker 1: there was a either an opportunity for greater growth or
Speaker 1: a crisis where we had to replenish. Excel has given
Speaker 1: us this capital flexibility. That's you know, absolutely terrific for us.
Speaker 1: That that sounds like that's a a good sort of
Speaker 1: partner um to have. So I've covered a ton of stuff.
Speaker 1: There's a handful of questions I wanted to ask that
Speaker 1: that we skipped over or ran out of time earlier. UM,
Speaker 1: I would be remiss if I did not ask, how
Speaker 1: are are your capital reserves invested? That float that the
Speaker 1: insurance company has as the reserves? How do you uh
Speaker 1: deal with that on a day to day or or
Speaker 1: year to year basis? Obviously it has to be somewhat
Speaker 1: liquid in case there's a need for it, it's not
Speaker 1: going into gated funds. On the other hand, the shortest
Speaker 1: term treasuries are yielding nothing. How do you deal with that? Well,
Speaker 1: you know, I think we made the decision that that
Speaker 1: UM short duration, high quality UM, despite the modest yields
Speaker 1: negligible yields, was the right thing. We have enough risk
Speaker 1: in our business with hurricanes and earthquakes and hailstorms UM
Speaker 1: that we wouldn't take enormous amount of investment risk. So
Speaker 1: it's been tough these years to generate meaningful yield and UM,
Speaker 1: but we we like our position. We've got lots of liquidity,
Speaker 1: lots of flexibility, but but surely not as much a
Speaker 1: yield as we'd like. So speaking of that, these low rates,
Speaker 1: what what do these really low fit induced zero interest
Speaker 1: rate policy? What do we won seven something on the
Speaker 1: ten year these days? Uh? And if you're looking short
Speaker 1: at term, it's practically nothing. What do low rates mean
Speaker 1: to the insurance industry in general that normally you're dealing
Speaker 1: with this massive float that used to be a source
Speaker 1: of profit for them. Well, yeah, I mean if you
Speaker 1: think about it, if if if you're trying to return
Speaker 1: on capital, you need to to get investment returns or
Speaker 1: under any returns. If the investments aren't there and you
Speaker 1: need more underwriting returns, that requires you to raise prices.
Speaker 1: So having a lower cost of capital, this is a
Speaker 1: good time to to to be able to take advantage
Speaker 1: of that to some degree. But we buy a lot
Speaker 1: of reinsurance from people who need to see a fair
Speaker 1: amount of return. So um, lower lower interest rates naturally
Speaker 1: would lead to higher prices, and probably competition keeps it
Speaker 1: from being too much higher. That's interesting. You don't really
Speaker 1: hear people talking about some of the secondary impacts of
Speaker 1: low interest rates, but insurance prices may actually be higher
Speaker 1: than they otherwise. Would that that kind of kind of appealing? Um,
Speaker 1: let's talk a little bit about analytics. We we reference
Speaker 1: this during the broadcast portion. What what sort of analytics
Speaker 1: do you run? How significant is that to what you do?
Speaker 1: Would you be consider yourself a big data sort of company? Yes,
Speaker 1: I think we would. I think I think you have
Speaker 1: to be to be successful in the insurance business these days.
Speaker 1: I mean, um, so so from our perspective, and just
Speaker 1: actually made an investment outside of our actual area in
Speaker 1: a in a chief data scientist. UM, and she has
Speaker 1: built a team up that that looks at stuff beyond
Speaker 1: the products, so so on the underwriting and actual real side.
Speaker 1: We we do analytics to understand the people we ensure
Speaker 1: and their behavior and the responsibilities and the risks we take,
Speaker 1: like the likelihood of hailstorm or what type of roof
Speaker 1: is more likely to cause significant damage. But the analytics
Speaker 1: really applying to all aspects of our business. The performance
Speaker 1: of individuals recruiting college kids in the likelihood that they're
Speaker 1: going to succeed UH, the effectiveness of direct mail campaigns
Speaker 1: to UH to how do we make sure we don't
Speaker 1: upset too many people when we appraise your house UM
Speaker 1: using third party data that's available, so that instead of
Speaker 1: a bait and switch, if we could have alerted you
Speaker 1: ahead of time that said, it looks like you're under insured,
Speaker 1: that might have reduced the shock of you know, seeing that,
Speaker 1: and so UM in an event. We I don't think
Speaker 1: there's any part of the business where analytics aren't being used.
Speaker 1: Let's talk a little bit about real estate, because I've
Speaker 1: been watching I'm a real estate junkie to some degree.
Speaker 1: It's it's an area I followed for a long time,
Speaker 1: and parts of the country are just on fire. This
Speaker 1: this past weekend in the New York Times was an
Speaker 1: article about so a lot of people have kind of
Speaker 1: moved away from Manhattan into Brooklyn in this area, and
Speaker 1: they're they're in a one or a two bedroom, but
Speaker 1: the cost difference from a two bedroom in Brooklyn to
Speaker 1: a three bedroom is an order of magnitude jump. And
Speaker 1: so the article in the Times was about a family
Speaker 1: my friend Jonathan Miller always quoted in the Times Appraisal
Speaker 1: uh discussions. Family is looking for a house and it
Speaker 1: was somewhere in Lower Westchester, either like Scarsdale or New
Speaker 1: Rochelle or something like that. And the house was listed
Speaker 1: for I want to say eight and change. And they
Speaker 1: see the house the first day, they make an offer
Speaker 1: for the full listing price, and the sellers say, thanks,
Speaker 1: we'll get back to you. What do you mean, you'll
Speaker 1: get back to us, that's your ask, Oh, we want
Speaker 1: to see what happens. The family comes back and makes
Speaker 1: so maybe it was eight hundred thousand. They offered full ask,
Speaker 1: and they come back at eight fifty eight sixty seven,
Speaker 1: say we want this house at sixty seven. We appreciate it,
Speaker 1: but we have another open house next weekend, the family
Speaker 1: comes back a third and fourth time. Ultimately the house
Speaker 1: went for like a million and sixty seven. And the agent,
Speaker 1: the real estate agent said, we're seeing more and more
Speaker 1: of this because there's so little inventory, especially of quality
Speaker 1: homes like that. What do you guys seeing when you're
Speaker 1: looking at the entire country and and primarily high net
Speaker 1: worth homes the the upper end of the scale. What's
Speaker 1: happening in real estate these days? Well, Barry, I'd also
Speaker 1: be REMISSI if I didn't stop you first and say
Speaker 1: that you don't tell an insurance guy that the country
Speaker 1: is on fire. Because California, we we have we have
Speaker 1: seen that so so figuratively not literally unfortunately, Mart Yes,
Speaker 1: and and literally California is on fire. Right. So so
Speaker 1: this is a set. So you have a decent number
Speaker 1: of clients out. We just started in California in the
Speaker 1: last two years, and so we're we're very we're monitoring
Speaker 1: very carefully, and we're looking out Remember. So, UM, what
Speaker 1: I what I do think on this on this question?
Speaker 1: Um that that description you had of that, um, you know,
Speaker 1: the the million dollar sale for an eight hundred thousand
Speaker 1: dollar listing. I mean, we do see we tend to
Speaker 1: play a little bit higher up that. So the the
Speaker 1: the the average or the the entry level for our
Speaker 1: programs are a million dollars of replacement cost, which on
Speaker 1: a market value could be considerably higher than that. It's
Speaker 1: all you're replacing, is the the actual structure exactly. And
Speaker 1: but but the challenges is that sometimes if it's a
Speaker 1: historic lum that costs, that costs even more because you're
Speaker 1: actually promising to replace all the unique features that they
Speaker 1: may not have a market value. So so while there's
Speaker 1: a limited supply and a great demand for homes at
Speaker 1: a certain point in time, there's also that that argument
Speaker 1: going on right now in Manhattan about whether there's too
Speaker 1: much supply on the ultra high ends side of that
Speaker 1: and they're not moving as much. Um, well, we had
Speaker 1: a run of prices that were almost there. Yeah, I
Speaker 1: have a hundred million dollars. I don't care what I pay,
Speaker 1: let what apartment is worth truly worth a hundred million dollars.
Speaker 1: And now it seems to kind of be reverted as
Speaker 1: as hot as the let's call it one to ten
Speaker 1: million range has been the ten to a hundred million,
Speaker 1: or maybe it's the thirty to a hundred millions seems
Speaker 1: to have cooled off. Yeah. What I would say, though,
Speaker 1: is from our perspective is is these are largely high
Speaker 1: quality problems. It creates more opportunities for us. These are
Speaker 1: folks who are feeling good and wanting to ensure properly. Um.
Speaker 1: The challenges is if you go back to OH eight,
Speaker 1: when it moved in the other direction at a point
Speaker 1: in time where the home would have been worth more
Speaker 1: to them if if it burned down. That that UM
Speaker 1: trying to convince somebody to ensure home for its cost
Speaker 1: to rebuild when they could buy their neighbors for half
Speaker 1: the price. Um. You know, I think that the challenges
Speaker 1: of of real estate movement are so much tougher furnitures
Speaker 1: on the downward cycle than they are on the on
Speaker 1: on a steady or upward cycle. So we're watching it,
Speaker 1: we're seeing opportunities. Um, but we don't get a lot
Speaker 1: of anxiety about the current market outside of places like
Speaker 1: Las Vegas and southern Florida. Uh, there was a brief
Speaker 1: window where hey, your neighbor's house is now half of
Speaker 1: what your house is. But we've seen a lot of
Speaker 1: recovery across all but the worst areas in the country.
Speaker 1: I don't want to say everywhere, but you know, the
Speaker 1: people have described the Sand States as as problematic, Florida, Arizona, Nevada,
Speaker 1: and then the eastern parts of California where the excerpts
Speaker 1: with prices had just gone, you know, lost any correlation
Speaker 1: to reality. But outside of areas like that, it seems
Speaker 1: like a lot of of real estate has recovered. Do
Speaker 1: you still run into those sort of problems? Hey, I
Speaker 1: have to convince you to ensure the full value of
Speaker 1: the home, even though the neighbor's house is considerably cheaper,
Speaker 1: less and less. And I say that it's usually the
Speaker 1: extremely unique construction, either historic or somebody put an enormous
Speaker 1: amount of money into it. They know they'll never get
Speaker 1: the money back, and we need to be able, but
Speaker 1: we have to promise to rebuild that house the way
Speaker 1: it is. What I would say is is that we
Speaker 1: have responded to a movement on on the UH dramatic
Speaker 1: increase in new construction for luxury homes. So there's been
Speaker 1: been a significant double digit increase year after year since
Speaker 1: since we hit the bottom for new home starts, and
Speaker 1: the fastest growing new home start areas four thousand square
Speaker 1: foot and above. That's a substantial custom build home exactly.
Speaker 1: So UM we started a new product launched launch in
Speaker 1: Texas a couple of months ago. UM geared to helping
Speaker 1: people UM design a home that's more likely to be
Speaker 1: resilient and mitigate against loss UM with engineering services right
Speaker 1: there when you're sitting now with the architect, and then
Speaker 1: ensuring you all the way through the construction project, and
Speaker 1: then once you're done, put it onto a standard home
Speaker 1: owners policy. And so that would be a reaction to
Speaker 1: looking at this market and saying, one, there's a demographic movement.
Speaker 1: And the second thing, back to what we talked about earlier.
Speaker 1: If your purpose is to help people pursue their passions
Speaker 1: with greater confidence when they want to build a dream home,
Speaker 1: we should be there. And and so we ended up
Speaker 1: trying to build out what it would take to help
Speaker 1: people through this construction project. And so far, so good.
Speaker 1: That's really interesting. I have a a little runabout. I
Speaker 1: keep on the linisle and sound nothing, nothing outrageous. But
Speaker 1: when I'm out on the water with my phone and
Speaker 1: the Zillo app, I could look at the various prices
Speaker 1: of what what's been sold, what's for sale. The boat
Speaker 1: went in the water a little late. It was a
Speaker 1: very cold spring. But I noticed an amazing number of
Speaker 1: new constructions right waterfronts. So if someone is doing something
Speaker 1: like that, uh, let's say either Sands Point or where
Speaker 1: have It doesn't matter. You guys are are national right
Speaker 1: every state? But one? Is that right? Um? That that
Speaker 1: might be worth talking about. Also, I looked at the
Speaker 1: map Idaho? Why not? Why not Idaho? But um? Uh,
Speaker 1: I wondered what happens when someone is building a home?
Speaker 1: How is that ensured normally? And do you guys do
Speaker 1: something different? Yeah? So so there are specialists who UM
Speaker 1: developed what's called either a builder's risk or a home
Speaker 1: ensured under the course of construction. And um, there are
Speaker 1: different types of risks and and it can be a
Speaker 1: risky proposition. You know, at the point in time where um,
Speaker 1: people are doing work and it's unoccupied at night end, um,
Speaker 1: even all the way to the end when they're varnishing
Speaker 1: the floors. There there are periods of greater risk than
Speaker 1: you might find otherwise. So traditionally insurance companies have stayed
Speaker 1: out of that business and let the construction experts do it.
Speaker 1: And then when they're done that. We would we would
Speaker 1: take the policies. The problem is it doesn't always work
Speaker 1: that tidy number one. There isn't a lot of service.
Speaker 1: So when they build a house and you get out
Speaker 1: there later and say, you know, you really should have
Speaker 1: put these windows into reduce the likelihood of windstorm. You
Speaker 1: really should have put these tiles on to reduce the
Speaker 1: lighthood of hail haill damage. You should have insulated in
Speaker 1: this way. You should have put a shower pan in
Speaker 1: this way, they would have. You should have put the
Speaker 1: simple these these nuts on in a way that will
Speaker 1: be less likely to corrode and less likely to create
Speaker 1: water damage. The value we can provide when you're sitting
Speaker 1: down with the architect right at that point in time
Speaker 1: is far greater, and so we felt like it was
Speaker 1: important to lean in and try to help um. The
Speaker 1: other part of it is is that insurance policies tend
Speaker 1: to be twelve month policies. Construction products, construction processes don't
Speaker 1: work that neatly, and so sometimes with a thirteen month project,
Speaker 1: you've got to pay twenty four months of insurance because
Speaker 1: they're fully earned for the annual period um. And so
Speaker 1: we thought we could design a product that would be better,
Speaker 1: and we could certainly add a lot more value, and
Speaker 1: then um and then once once we're done back to
Speaker 1: kind of one of the points we're talking about earlier,
Speaker 1: the people who build these homes that are brand new,
Speaker 1: those homes are much better equipped to to withstand whatever
Speaker 1: loss might becoming its way. Um by and large and uh.
Speaker 1: And so we have adding new members who have homes
Speaker 1: that are extremely insurable because they've been built to the
Speaker 1: most contemporary standards. So I again, well, we'll stick with
Speaker 1: the water theme. I look at a lot of these
Speaker 1: houses that are built waterfront. We had looked at one
Speaker 1: house that was on a cliff, only the cliff was eroding.
Speaker 1: That's scared of the Jesus set of my wife. That
Speaker 1: never happened. I really love the view. It was a
Speaker 1: point um and we looked at other houses. We ended
Speaker 1: up not going water front. But I'm still enamored with that.
Speaker 1: And I'm astonished that I sometimes see new construction pretty
Speaker 1: much I don't know, let's call it two three ft
Speaker 1: above sea level. And I'm surprised given all your you
Speaker 1: mentioned the change in weather, possibly with hailstones. How does
Speaker 1: an insurance company deal with the possibility of sea levels
Speaker 1: rising a couple of feet over the next couple of decades. Well, well, certainly.
Speaker 1: I mean I think that that we use catastrophe models
Speaker 1: to try to understand the likelihood of losses and and
Speaker 1: try to deconstruct them to understand what their assumptions are,
Speaker 1: including about water temperatures and sea levels UM. And I
Speaker 1: think we create standards by which we expect to only
Speaker 1: ensure homes that are properly elevated UM, meaning something at
Speaker 1: sea level is not going to be right for for
Speaker 1: you as a client. Yeah, I think, I think exactly.
Speaker 1: But I think what will end up happening is that
Speaker 1: each individual UH location, there are mapping techniques to determine
Speaker 1: what elevation you should have. I mean, you know, the
Speaker 1: common things which we've seen over the years is someone
Speaker 1: built a home up uh sufficiently elevated and UM the
Speaker 1: first floor living area might be fifteen feet above UM
Speaker 1: the ground and it's it's ample and absolutely and underneath
Speaker 1: there's some um open area UM ideally even vented so
Speaker 1: floodwaters could would come right through. And there will be
Speaker 1: people who look at that and say that would make
Speaker 1: a great media room, and and and so now you've
Speaker 1: got right and and and and so trying to be
Speaker 1: there to give the right advice to sort of say,
Speaker 1: you know, not only is that not a great idea,
Speaker 1: but you've really changed the ensurability of that home once
Speaker 1: you have living area well below the necessary elevation. And
Speaker 1: so you know, if you if we're not there at
Speaker 1: the right time time to stop them from from doing that,
Speaker 1: we can't help um. But we try to select carefully.
Speaker 1: We try to advise as much as we can make
Speaker 1: sure that we we you know, listen to if you
Speaker 1: want to ensure wealthy families and then tell them, by
Speaker 1: the way, you can't live near the water, you know, yeah,
Speaker 1: exactly so, so so we did. We did see a
Speaker 1: lot during Sandy. There were a lot of buildings that
Speaker 1: had put their emergency generators in the basement and they
Speaker 1: got flooded and they thought they had an electrical backup.
Speaker 1: They didn't. So there is something to be said for saying, hey,
Speaker 1: you don't if you're in a flood zone. The basement
Speaker 1: is not why you want something that is either valuable
Speaker 1: or or crucial. Sure, and so in every major market,
Speaker 1: we've got risk managers who are experts in that market.
Speaker 1: We've got UM people who in the Northeast, they, boy
Speaker 1: do they understand nowadays ice damming and snow on roofs
Speaker 1: and burst pipes and everything we've gone through. And in
Speaker 1: Florida they understand how to make sure that every opening
Speaker 1: is protected so that you know, the windstorms don't damage
Speaker 1: the house and lift the roof off and and and
Speaker 1: everything there. They try to provide as much advice as
Speaker 1: as they can UM. And and not only that, I
Speaker 1: think that this is where we've differentiated ourselves, is that
Speaker 1: insurance companies would make a pattern of saying, you know, Barry,
Speaker 1: you should do this. Here's a piece of advice for
Speaker 1: you between you and me. But but but you're busy
Speaker 1: or you're not. And if I told you should put
Speaker 1: a lightning suppression system in, you think you'd know how
Speaker 1: many lightning rods were needed or how we do it right.
Speaker 1: And so what we ended up developing are these groups
Speaker 1: we call member advocates. I think there'll be as many
Speaker 1: as fifty by the end of this week. UM and
Speaker 1: they would take the advice and say, right, this is
Speaker 1: how many you know, lightning suppression lightning rods you need,
Speaker 1: or this is this is the right water shut off
Speaker 1: value need er, this is the right solution. This is
Speaker 1: how much it costs. This is the vendor that we
Speaker 1: think is best. Here's a work order I can get
Speaker 1: done for you. The fulfillment of advice for wealthy families
Speaker 1: has proven to be as valuable as the advice itself,
Speaker 1: because you know they're busy and they're not experts, and
Speaker 1: if you can go and get it done for them, UM,
Speaker 1: that makes a huge difference. Everybody is time constrained, and
Speaker 1: I have a flat roof. I'd love some advice. Is
Speaker 1: what the heck is supposed to be replaced? It's an
Speaker 1: eighty three. I know that there's new roof technologies. Let's
Speaker 1: let's let's look into that and find find something about that.
Speaker 1: So I know I only have you for a finite
Speaker 1: amount of time. Um, and I want to get to
Speaker 1: my favorite questions before I do. I have one last question.
Speaker 1: So you mentioned mailers, Uh, but typically how do you
Speaker 1: find the clients or how do the clients find you?
Speaker 1: We we addressed this briefly, but I know there's there's more.
Speaker 1: They're given that fifteen to maybe forty billion dollar addressable market. Uh.
Speaker 1: We we see ads all the time on TV for
Speaker 1: the mainstream UM insurers, Geico has been running NonStop ads
Speaker 1: for it seems like twenty years. What what can the
Speaker 1: high end insure do to find and attract the right clients? Yeah,
Speaker 1: so I think that the there to to sort of
Speaker 1: insights that have come from both research and to some
Speaker 1: degree common sense. One of them is is that wealthy
Speaker 1: families rely on the advice of trusted advisors and so
Speaker 1: to the extent that we have relationships with family offices
Speaker 1: or wealth managers. UM, that's helpful, but far more they
Speaker 1: rely on the advice of friends and family like your
Speaker 1: brother and and so. UM. We've created UH a team
Speaker 1: that we refer to them as Member Engagement, but they
Speaker 1: organize all across the country every month, arguably every week,
Speaker 1: UM opportunities to get members together with their friends and
Speaker 1: family to tell the story member to member or or
Speaker 1: appeer to peer, with the idea that that UM they
Speaker 1: would be telling their their friends a story about what
Speaker 1: happened when we rebuilt their house, a story would happen
Speaker 1: when they save money, a story would happen when they
Speaker 1: got great advice and service UM. And last year we
Speaker 1: had about three thousand of these interactions. UM. This year,
Speaker 1: we'll have a lot more. UM. You know, insurance has
Speaker 1: been a low interest category where people wouldn't stop and say, boy,
Speaker 1: I really think I'm an engagement insurance company today. UM.
Speaker 1: And yet they're willing to and even excited about doing it.
Speaker 1: And I think that that's where we've embraced what seemed
Speaker 1: like a difficult journey to make this a subject that
Speaker 1: you want to talk about or spend time thinking about,
Speaker 1: or um hang out with and and and so that's
Speaker 1: been really really critical to our growth. All right, so
Speaker 1: let's jump into my my favorite questions. So you started
Speaker 1: a chub right out of college? Is that right? Is
Speaker 1: that what you were expecting to do? What you study
Speaker 1: in college? And what do you think you would be
Speaker 1: doing for a living. So I went to Trinity College
Speaker 1: in Hartford, in a classic Northeast liberal arts college, and
Speaker 1: studied economics along with art history and voodoo, witchcraft and
Speaker 1: magic or whatever you do with a liberal arts school.
Speaker 1: And UM, So I was in Hartford, Connecticut, and businesses
Speaker 1: came to campus, and there were a lot of them
Speaker 1: in Hartford. I grew up, grew up in Boston, and UM,
Speaker 1: but Chubb was offering me a job in New York,
Speaker 1: and um, you know, for for a Boston kid who
Speaker 1: never spent time in New York, that feel that that
Speaker 1: seemed like a really neat idea at the time. And
Speaker 1: so I knew nothing about what they were doing. It's
Speaker 1: just that that job was in New York. And so
Speaker 1: I accepted that job. Um, not particularly well informed. Um
Speaker 1: And uh, but I was going to share a house
Speaker 1: in Brooklyn with somebodies from school and it was it
Speaker 1: was it was great, um. And I end up really
Speaker 1: enjoying it. And so um, you know, even if it
Speaker 1: was somewhat accidental. Um, you know, I haven't done anything else,
Speaker 1: even outside of our little niche for for twenty nine years.
Speaker 1: So who were your early mentors? Uh? Um, you know,
Speaker 1: I think back to, Um, you know, I had. I
Speaker 1: had a a childhood as a caddie was sort of
Speaker 1: one of my greatest experiences, just just as a young
Speaker 1: kid going off and getting up bright and early and
Speaker 1: and looping and um and I got hooked up, you know,
Speaker 1: as a as a really young kid with some young
Speaker 1: guys who were who turned out to become extraordinarily successful,
Speaker 1: but at the time they were they were young guys.
Speaker 1: When was a young accountant to who ended up becoming
Speaker 1: the CFO of a very very big company. Um and
Speaker 1: uh um. I watched everything they did. I you know,
Speaker 1: I I sort of really aspired to be like them,
Speaker 1: the way they treated, you know, a knucklehead kid carrying
Speaker 1: their bags. Thought, boy, those guys are just are just great. Um.
Speaker 1: So I think probably besides the the the natural thing
Speaker 1: of of watching your parents very closely, UM, I probably
Speaker 1: learned more carrying golf bag than uh, than a lot
Speaker 1: of other things in early in my life. That is intriguing.
Speaker 1: What what about Hank Greenberg? You would you had some
Speaker 1: good things to say about him? How did he mentor
Speaker 1: you along? Well? You know, I, I you know, I
Speaker 1: don't know if if it was as much mentoring. I
Speaker 1: think that to everybody who worked there, he created a
Speaker 1: great morale model. You watched the way he he um
Speaker 1: lad Um, you know I I enjoyed I was joking
Speaker 1: with with somebody, you know he I Every year I
Speaker 1: share the annual report with him, and he's usually kind
Speaker 1: to write back a quick note and often with questions.
Speaker 1: And I think, you know, we all still respond to
Speaker 1: him as if he's the boss, you know, even even
Speaker 1: more than a decade later. Um, so he was great
Speaker 1: and and and and he was a great teacher, um
Speaker 1: and and Uh. But but I think also you realize
Speaker 1: that he's he You don't you don't you don't go
Speaker 1: and say I want to be Hank Greenberg. I mean,
Speaker 1: that is a really unique, you know, man who's accomplished,
Speaker 1: you know, so so much so um, I clearly learned
Speaker 1: a lot. But but and have just deep respect for him.
Speaker 1: So you mentioned you pattern pure more on some of
Speaker 1: the wealth management firms than than on insurance firms. Any
Speaker 1: particular investors, Uh, influence your your attitude or your approach.
Speaker 1: Who stands out to you, Well, you're talking about you know,
Speaker 1: Van Garden and you know, and sort of thinking about
Speaker 1: you know, the Vogel view of of of the world
Speaker 1: is certainly hard to argue with a lot of times.
Speaker 1: But but you know, I I take great pride in
Speaker 1: being an operator of a business, much better than an investor,
Speaker 1: and so I look for help from people who who
Speaker 1: share the values of an alignment of interest, rather than
Speaker 1: me thinking I'm clever enough to to do it myself.
Speaker 1: Any other names you wanna mention or other businesses that
Speaker 1: stand out. Well, I I really think there's a there's
Speaker 1: a broad number of them these days who who fully
Speaker 1: embraced you know, there might have been, you know, fifteen
Speaker 1: years ago you might talk about, um, a small number
Speaker 1: of people who embraced this idea of an alignment of interest.
Speaker 1: And I think you know, today it's become much more
Speaker 1: commonplace and and and almost table stakes if you want
Speaker 1: to be good in that business. So UM, I think
Speaker 1: that's a great sign for for uh, for wealthy families,
Speaker 1: but also for those serving. There's that that that um,
Speaker 1: it's become so established that conflicts should be avoided. Uh,
Speaker 1: It's no longer out there on the fringe. It's becoming
Speaker 1: more and more mainstream, even if if a lot of
Speaker 1: people fought it tooth and nail on the way in.
Speaker 1: Let's talk about books. What what are some of your
Speaker 1: your favorite books being fiction or nonfiction? Well, I I find, um,
Speaker 1: you know, when the company has gone from from you know,
Speaker 1: twenty people ten years ago over five people today that
Speaker 1: I feel like I read about culture and environment and
Speaker 1: organizations more than anything. So Simon sinics um point of view. Uh,
Speaker 1: both first starting with with purpose, but then some of
Speaker 1: his more you know, Leaders Eat last, the most recent book. Um,
Speaker 1: you know, I enjoy um uh Stephen Levitt and the
Speaker 1: freakonomics guys, and I and I think about, you know,
Speaker 1: the the uh, the appraisal that the lemma that you described, right,
Speaker 1: the the idea that that someone went out to your
Speaker 1: house and increased the value by five thousand dollars. Stephen
Speaker 1: Levitt would look at that very simply, and he would
Speaker 1: he would say that that one day an appraiser got
Speaker 1: yelled at because the house burned down and and they
Speaker 1: didn't have enough coverage. And so the incentives are I
Speaker 1: don't ever want to be the guy who gets yelled
Speaker 1: at because there wasn't enough coverage, So I'm going to
Speaker 1: increase it even more, um, you know. And and so
Speaker 1: I find that there's there's hardly a day goes by
Speaker 1: that I don't think about the principles that that he
Speaker 1: writes about and and speaks about. Um. In in business
Speaker 1: and in life, incensives matter. In other words, UM, so
Speaker 1: what else has changed since you joined the industry? You
Speaker 1: you've been doing this, you said for thirty years. What
Speaker 1: what do you see as the big secular shifts that
Speaker 1: are taking place. Well, data and technology is probably you know,
Speaker 1: hard to understate. Um, to think about it. I mean
Speaker 1: I and I, Um, seven doesn't feel like it was
Speaker 1: that long ago. It's this is not you know some
Speaker 1: old story where we picture you know, the old New
Speaker 1: York and you know, um, but when you when you
Speaker 1: see pictures of that era, those computers look like they're
Speaker 1: dinosaurs right well, and and and and uh, you know,
Speaker 1: we we would send things off to the typing pool.
Speaker 1: I was trying to describe to my to my daughter
Speaker 1: the other day about how I get an idea for
Speaker 1: a memo when I'd scribble it down and I'd mail
Speaker 1: it to a typing pool who had then type it
Speaker 1: and then send it back. And you know it was
Speaker 1: it was crazy. But but um, what we really had
Speaker 1: back then was runners. So if a insurance broker wanted
Speaker 1: an underwriter to look at at at a piece of business,
Speaker 1: they would give it to a young guy who would
Speaker 1: get on his bike and he'd go there and he'd
Speaker 1: sit at your desk and he was told not to
Speaker 1: leave until you gave an answer. UM. I mean today,
Speaker 1: I guess that would be an email or a text
Speaker 1: or something, or they snapchat me or something and and uh,
Speaker 1: and so just the way information flowed. It was crazy
Speaker 1: to think, um, that on your bike and go downtown
Speaker 1: and and don't come back till you have an answer.
Speaker 1: And that was thought of as absolutely you know, common
Speaker 1: and and and and so the pace in which information flows.
Speaker 1: And I even think today about how I made decisions
Speaker 1: at that point in time. So they would present me
Speaker 1: with a risk and I'd make a decision. Today I
Speaker 1: can get dozens and dozens of sources of third party data,
Speaker 1: will come in, someone will have helped me score that risk,
Speaker 1: and I'll be able to go make a precise decision.
Speaker 1: And back then I would look and I'd say, you know,
Speaker 1: looks good to me or or doesn't look good to me.
Speaker 1: I mean, it's so data technology the way we communic Kate, Um,
Speaker 1: it's a bit obvious, but but it wasn't that long
Speaker 1: ago that. I mean, I remember when we had our
Speaker 1: first fax machine installed, me had to figure out what
Speaker 1: the skinny little paper was all about and stuff. So
Speaker 1: what are if those are the recent shifts, what do
Speaker 1: you see as the next major shift that's gonna come
Speaker 1: along to Royal the industry? Well, I'm sure how much
Speaker 1: you know, royaling, But but UM, you know I I
Speaker 1: do think that the insurance has been this category that
Speaker 1: that UM is a little bit more low. Interest hasn't
Speaker 1: been the thing that that uh, everybody focuses on. And
Speaker 1: as a result, there is either is less information out
Speaker 1: there or the perception that the information is not out there,
Speaker 1: and so UM, it's been a bit of buyer beware.
Speaker 1: I don't know, UM, I don't know whether I'm making
Speaker 1: the right choice. I don't know why my my home
Speaker 1: went up five dollars whatever else is And I think
Speaker 1: there is, and like there has been in just about
Speaker 1: every other industry, this shift where it will move more
Speaker 1: to sellar beware, and that the consumers will eventually have
Speaker 1: all the information in their hands or on their phones
Speaker 1: or in some way they will be able to get
Speaker 1: a more accurate view of what it costs to replace
Speaker 1: their house, or a more accurate view about what competitive
Speaker 1: rates are out there, or a more detailed comparison of
Speaker 1: coverage is UM And from our standpoint, is somebody who
Speaker 1: thinks that transparency is great, we would love if this
Speaker 1: moved even faster. UM, but I think it'll be a
Speaker 1: pretty big shock to the industry when consumers start being
Speaker 1: more informed, that that information asymmetry starts to become more symmetrical.
Speaker 1: And it's no longer Hey, we have all all the
Speaker 1: knowledge and the buyer has nothing there there you know.
Speaker 1: One of our competitors actually has a video. I mean
Speaker 1: it's it's it's it's UM. Well if it's true, so
Speaker 1: otherwise it be just you think it was done from
Speaker 1: the onion and and it and it says, UM, if
Speaker 1: you were buying a flat screen TV, you probably are
Speaker 1: smart enough to figure out what to do and where
Speaker 1: to go and how to do it. But insurance you
Speaker 1: couldn't do that. So why don't you just go to
Speaker 1: the guy that we pay money to make sure he
Speaker 1: you know, recommends my company and and and that's the
Speaker 1: best way to go about doing it. Um, you know.
Speaker 1: And it just gets right at the heart of this issue.
Speaker 1: You know, we're talking about some of the smartest, most
Speaker 1: successful people that were trying to serve UM. And there's
Speaker 1: been a view that either you're unable to understand it,
Speaker 1: or you don't want to understand it because you're too
Speaker 1: busy to worry about insurance. So just let it continue
Speaker 1: to be a black box to you UM, I think
Speaker 1: more transparency in this this information shift UM will have
Speaker 1: a profound impact on the industry. And went down to
Speaker 1: our last two questions. UM, if a millennial or someone
Speaker 1: who just graduated college came to you and said, Hey,
Speaker 1: I'm thinking about a career in the insurance business, what
Speaker 1: sort of advice would you give them? Well, first of all,
Speaker 1: I think it's a great business. I I I welcomed
Speaker 1: these forty seven kids on Monday, and and and you know,
Speaker 1: among other things shared with them, UM, you know the
Speaker 1: great the great challenge that is this business. You're trying
Speaker 1: to understand risk, You're trying to anticipate what could happen.
Speaker 1: It's it's a complicated business and so intellectually it's fun
Speaker 1: to take on challenges like how much should you charge
Speaker 1: for for hail insurance in Oklahoma? I mean, it's a
Speaker 1: UM but but what But my my advice to them
Speaker 1: largely centers around purpose. That that that I think that
Speaker 1: young people have it right when they want to be
Speaker 1: part of something that's greater than simply trying to reward shareholders.
Speaker 1: And UM and we, by no means are the only
Speaker 1: purpose driven company in the world, let alone the only
Speaker 1: purpose driven company in the insurance industry. UM. But if
Speaker 1: you combine the good important work of insurance, the social
Speaker 1: service that we provide, um, you know, and and the
Speaker 1: intellectual challenge of the business, UM you know. But but
Speaker 1: I tend to emphasize the purpose to them more because
Speaker 1: I know that they're right to go to work knowing
Speaker 1: they're doing something it's important. That makes a difference. UM.
Speaker 1: And when I see the impact that we have when
Speaker 1: we help people rebuild after Sandy or you know, heaven
Speaker 1: forbid if these California fires do move in the wrong
Speaker 1: direction for our membership, UM, there's no doubt that what
Speaker 1: we're doing is important. And I think young people really
Speaker 1: appreciate them. And our final question, what is it that
Speaker 1: you know today about investing you wish you knew? Or
Speaker 1: I'm sorry, I got to redo that question. I asked
Speaker 1: it wrong. Our final question, what is it that you
Speaker 1: know about insurance and risk management that you wish you
Speaker 1: knew thirty years ago when you started? Yeah, UM, you
Speaker 1: know that's a good question. UM. You know, I I
Speaker 1: do think I go back to to uh to to
Speaker 1: Hank's advice about UM, you know, don't be afraid to
Speaker 1: take risks UM, that that you know, UM, you know,
Speaker 1: I I think probably having start did a couple of
Speaker 1: companies from scratch. It's it's not as if, UM, you know,
Speaker 1: I'm afraid of risk, um but I but I naturally
Speaker 1: am not a risk taker. And and and and and UH.
Speaker 1: I think if I wish from the from day one,
Speaker 1: I had a little more courage on on stuff, I
Speaker 1: I may have note even even grander things. But I'm
Speaker 1: certainly proud of where we've been. ROUS. Thank you so
Speaker 1: much for being so generous with your time. This was
Speaker 1: really fascinating. It's it's a part of the financial world
Speaker 1: that I think a lot of people don't know about.
Speaker 1: And I feel like I know a little more than
Speaker 1: I did UH before we started the conversation. UM. For
Speaker 1: those of you listening at home, be sure and look
Speaker 1: up an inch or down an inch on Apple iTunes
Speaker 1: and you could see any of the other nineties seven
Speaker 1: or so UH podcasts that we've done in the past.
Speaker 1: I would be again remiss if I did not think
Speaker 1: Charlie Volmer, our engineer, UH, Taylor Rigs Are booker, Mike Nick,
Speaker 1: our researcher for helping to put this together. Our our
Speaker 1: engineer Today is uh Mark Santa Scouche. You've been listening
Speaker 1: to Masters in Business on Bloomberg Radio