Interview With Ross Buchmueller: Masters in Business (Audio)

of the Pure group of insurance companies. I don't usually think about insurance companies, and I certainly hadn't gone out and said, hey, let's find someone from the insurance industry. I don't get a lot of PR pitches that I'm remotely interested in. But when uhuh, someone had contacted me and said, hey, are you interested in speaking with the founder of Pure, I said, hey, that's my insurance company. Person was really no one ever really heard of us

in the media. Well I did. I I heard of you because I was unhappy with one of your competitors, and my brother, who's an insurance agent, recommended I look at this company and and I thought they were really interesting, terrific and competitive. So I I had coffee with the

the founder. His name is Ross talked to them about who they were, how they came about, and I thought it was really a surprisingly fascinating tale, certainly much more fascinating than we typically expect from the world of insurance. So we discussed how he uh came up with the concept, why he left A I G Financial in order to to launch this insurance company. And really they've been an extremely successful entity, much faster growth than the rest of

the insurance industry. There over six hundred and fifty million dollars in premiums and they're growing forty percent a year. That that's a pretty astonishing number. So, with no further ado, here is my conversation with Ross Buck Mueller of Pure Insurance. This is Masters in Business with Barry Ridholts on Bloomberg Radio. My guest today is a gentleman you may not be aware of, but you should be. His name is Ross Buck Mueller and he is the founder of the Pure

Insurance Group of companies. UH. He has a storied background in the insurance industry. UH. He began his career at Chubb, where he spent more than a decade working the fields before he moved to A I G where he launched the A i G Private Client Group and built it it into a billion dollar business. He was president of

the Private Client Group for more than six years. He has been recognized by Cranes New York in its annual forty under forty feature UH looking at Rising Stars of New York, as well as being the winner of the Ernstein Young Entrepreneur of the Year Award. Ross Buck Mueller, Welcome to Bloomberg. Thanks Berry. We don't really have a lot of people from the insurance industry in the studio, and I think a lot of people, uh don't really

think about insurance until they need it. But you've been plowing those fields for a long time and you identified a number of interesting anomalies, not not only an underserved niche in the insurance industry, but an under utilized corporate structure that that made your company is more competitive. Let's

let's start with that underserved niche. How did you first identify the niche either at a I G or at Pure Well for starters, the high net worth area, which is we focus on serving successful families, is the only business I've been in. Right out of college, got a job as an underwriter at chub in the personal insurance area. And uh. So on one level, discovering high net worth

was well, it's where I fell into. UM. But as time went on, UM, you know what we began to see, or I certainly did along with some colleagues who joined me at Pure, were some some inefficiencies in the way that market had operated. Even as we brought more competition to it, there was more chance for inefficiency. But um,

really it was this question of an alignment of interest. UM. You know, if you if you look back ten or fifteen years ago, there began a movement where both in the insurance world and and particularly in the wealth management world, were alignment of interest, the elimination of conflicts, UH, the

improvement of transparency. They all became important, either forced by regulators who were saying you better behave better or demanded by consumers who said, I want to be treated with this sense of trust that I know you're gonna behave well. And we were able to look at the natural conflicts between policy holders and shareholders and design a business that would create this alignment. And uh, and that's what we've done.

So so let's address that conflict. A lot of big insurance companies are publicly traded, which you are suggesting, and I think most of our listeners know UH have a fiduciary obligation to their shareholders. But as a mutual structure, where the policy holders are technically the owners of the company, there is no such conflict. Is that a fair way to describe it? Well, I think in the simplest terms, it is. But but you know it, and and our

form takes a bit of a hybrid structure. UM. We think it takes the best aspects of mutuality, UM A low cost of capital because our policy holders contribute to build up the strength of the company. UM and UM looks at some of the challenges that that mutuals have had. Capital flexibility, the ability to compete with larger companies, and and an entrepreneurial environment. You know, maybe the best and most talented people want to work in a place where

they feel like they can flourish. And sometimes the older mutual companies weren't seen as that we weren't the same stock option grants in the same exactly exactly, UM, and I think I and I think that that UM some of the great mutual companies were terrific stewards of the capital and the risks that their policy holders presented to them UM, but perhaps weren't weren't run with some of the modern ideas of corporate culture and environment, So beyond

the rewards UM, you know, the environment might not have been as dynamic. So in any event, we looked at this and said, if we could create UM a business that really embraced mutuality, transparency, the alignment of interest, the elimination of conflicts, of lower cost of capital, of focus on the policy holders, do it in a way that it was entrepreneurial. Boy, we thought we'd have something terrific, and that's what we've done. But some of these conflicts

are not sinister. They're simple, right, that that shareholders want premiums to be higher and policy holders want them to be lower. You know, so as a mutual, how much lower are your premiums relative to the to the big

players in your space? Well, so I think the reciprocal structure probably gives us a ten to fifteen percent advantage in part because you know, insurance companies need to cover the cost of the claims and the cost of your expenses, but also the cost of capital UM and when your capitalists free contributed by policy holders year after year, that certainly reduces the burden to the need to return the The other part, though, that I think is just as important,

is when you start a company from scratch and you have this idea of what you want to do. We were we have been able to select our our members, our policy holders carefully. So if you only ensure those people who are more responsible, who are less likely to make claim aimes, who appreciate what you're offering, UM, you can do it at a lower cost. So I'd say on average, our members report savings North. I'm Barry Rioults. You're listening to Masters in Business on Bloomberg Radio. My

special guest today is Ross buck Mueller. He is the founder of Pure Group of insurance companies. Previously, he was the creator of the A I G Private Client Group. Let's let's talk a little bit about that. You're working as a youngster at chub, you're there for a dozen years.

How did a I G come a knocking well? I was so I was in London, UM building out a UK high net worth practice and and and a few other things, and UM, you know the first thing that happened was is we were hosting our chairman at the time, UM and two companies in the United States, Continental and Sienna had merged and they both had a consumer business.

And we're hosting our chairman for a dinner with some uh European executives and they uh, they said to him, so I see this merger, what is this going to mean? And and he reflected and said, We've never had competition and we never will. Boy, I was sitting at the dinner saying I'd like to compete against a company that

doesn't think they'll ever have competition. Um. And about sixty days later I got a call from a I G saying they're exploring getting into the business and when I'd be willing to have a conversation and so, um, you know, I flew over from from London at the time and and uh, um you know, I had breakfast with Evan, at lunch with Hank and met everybody in between, and that would be Hank Greenberg and Evan Evan Greenberg as well. Yes, sorry, so at the time, who are running the company? And

and um, uh you know I'll never forget. You know, at the time, I was thirty four years old. Um, Hank with seventy four chairman and uh. And he turned to me, and he said, you better take this job because you're getting too old at thirty four. Well, and his point was a good and you know, I had just been married for a couple of years. You know today we have two kids. We were expecting our first child.

And his point of view was that that you know, you're not going to be able to take risks, or you may not be willing to take risks, you know, real soon when you're like exactly and and and so you know, for twelve years at CHUB, I'm being told, you know, calm down, young man, your day will come. And here's this guy telling me that I better take it now because I'm gonna start losing my my courage

to to take risk. And so, um, it was the it was an absolute great decision and I and I loved every minute of how hands on was Hank Greenberg at seventy four at a I g oh, you know he he was. He was hands on in that he was there to help you at any at every turn. You know. Um. In my case, you know, he had a I think we still use rolodexes back then, but he had a great one. And and if you're getting into the high net worth business, and you have Hank,

you know, behind you. That's a great tail wind to to meet a lot of people who could who could help your business. And so he was helpful in that. But most importantly he created a clear sense of accountability. It was your business, and so his help was there, his involvement was there. But let let there be no doubt that that good or bad, it was your business. And and uh, you know, we got to about a half a billion dollars in the first few years when I was there before I left, and and you know,

the business continues to perform. Well, I take pride, you know, eleven years after having left, it's still a good business. You know. So this was the pre crisis days. This was in the early two thousand. When did you start at a all right? And you were there until oh January of o six we started pure alright, so you were almost seven years and that was all right before everything hit the fan. What was a I G like

in that period? Those were really as big as a I G ever gotten that that that region was just they were tremendous then. So I just last week was was with a friend who now runs a big company and who was there the time and UM and we were having this reflection about the good old days as it were, and and I think the common theme was was winning. You just felt like you had such an edge and there was such momentum built around um winning.

And I think everybody throughout the organization, UM, you know, embraced that idea that that that we were and could do great things and and and win and and people took great pride in in in winning. And so I think that was the first notable thing. I mean, I I was I was long gone by by the two thousand eight issues, but um, you know, that was a

really important part of the culture. There was winning. When you say winning, where there our fps where the proposals that you were competing against some other companies, uh like? And what how often did it feel like a I G was if it's between you and who was the next closest competitor back then? Well again, I think that in the insurance industry my recollection and now we're going back a bit, but the market capitalization of a I G was bigger than the cumulative market capitalization of just

about all other publicly traded insurers. So it was it was everybody, you know, I mean it was a two billion dollar market cap back I want to say sixty people something like that. Yeah, maybe even more than that. So so winning was the existing businesses were getting stronger all the time. New businesses like mine were entering and making an impact. They were acquiring Sun America, American General, um,

you know. And there was a certain sense of confidence and purpose um, you know, and and pride um you know. And it was it was a great deal of fun. And boy did I learn a lot. So when when you left, oh so you left in oh six, I assume after that period of time you had a nice fat slug of stock and you got to liquidated at all before everything at the right. Wouldn't that be good

if we could have done that? But you know, listen, I mean I guess I'll put that out as I was loyal to the company and I believed the company, even though you know, I set up a different business. But I I did hold probably a little more than I should, to say the least, although a I G has certainly recovered. At the time of the crisis, I would have bet a hundred million dollars that they would never repay sixty six billion dollars in aid, but apparently

they just about have. There's some tax waivers that probably gives them a little wriggle room, but they more or less repaid the vast majority of that, which is an astonishing accomplishment considering how much money was involved. Absolutely so uh, looking looking at what you built at A I G. How similar or different is Pure relative to to that model of servicing the high net worth individual. Interestingly enough,

it it's about as different as you could get. And so for to have the same guy build both companies and to look at it now, you know, But but but I think it reflects both a i G strength and

what Pure's purposes At the time. You know, we had the biggest balance sheet in the industry at a i G. And so for us to take on extraordinary risks for people who had art collections in the billions of dollars, and to to extend limits to help people ensure what might have seen uninsurable at the time, you know that made sense. You start a business from scratch, and you're now trying to operate a company where you're carefully selecting the most responsible people and pulling them together in the

most efficient way. Um, very different things, very very different things, and so the common the expertise was common, but other than that, it was very different business. I'm Barry Ridhults. You're listening to Masters in Business on Bloomberg Radio. My special guest this week is Ross buck Mueller. He is the founder and CEO of Pure Group of insurance companies, a specialty companies servicing high net worth individuals. And and let's talk a little bit about the rest of the

industry and what what they get wrong. What does the insurance industry sort of missed the ball with. Yeah, well, again, I've been in the business for almost thirty years and so I'm I'm a bit of a fan of the industry, and I like to think that as a group we do more good than bad. But I don't mean what they do that's bad. Yeah, so you obviously spotted a niche because because Pure has has really blown up to

be you're doing over half a billion absolutely. So what I was gonna say is is I think I think where, um, where we see as you have two big issues. One is there still remains inefficiencies in this market. Um. You know, in in nineteen seven, I joined a job out of out of college. I went through an underwriting training program and UM. I came back to the New York branch where I was set to be an underwriting trainee UM and they introduced a product called Masterpiece UM and at

that time, master Piece was coming to New York. This was within a couple of months of me joining the company UM and we looked at the first release of the product and it had a flaw that if you were to insure a New York City apartment where you wanted to insure the fixtures and fittings or the marble floors of the mahogany walls, UM that they would sell it deductible from a hundred dollars all the way up to the highest deductibles of tens of thousands of dollars.

And no matter what deductible you picked, the price was the same because they put the deductible credit in the wrong place in the algorithm, I mean, a silly little mistake. So here I was a two year old trainee and I wrote a memo saying, you know this is this is wrong And anyway, two thousand and sixteen, it's still the same. So if you're a Chubb insurance policy holder, call up and say I want the lowest possible deductible and your policy won't you for for this additions and

alterations cover virgin in apartments. But but I guess my point is it's such a it's a very inefficient market. It there there are lots of little quirks, all of them can be rationalized. UM, but it's inefficient. And uh so I think that the inefficiencies and there are many, and part of the charm of our businesses. This is all we do, and we have looked at these inefficiencies and found ways to make things work. Whether that is

the way jewelry insurance is over priced. So let's let's talk about that, because I would I know there's a tremendous amount of information asymmetry. It feels like as a customer, people don't necessarily know what's going on with things like that. Talk to us about the jewelry writers and how it's typically done and how you approach it. Well. For for for starters, the coverage is typically restrained on their homeowners policy. You can't make a claim for much jewelry to buy

a writer or scheduled personal property policy UM. That is priced to make massive offense for the insurer. UM. And in our case, we provide more cover in case you forgot to ensure something, and the stuff that you intentionally want to ensure, your more higher valued items are a much lower price. But but so part of this is an inefficiency, but part of it also is designed for this,

this rewarding shareholders. You know, the things that people do that everybody, even if you're not insurance expert, just no are are are wrong? Um. You know, I think we've been able to identify in fixed years ago there was a mortgage company that said sort of you know, even kids know it's not right to treat your new friends

better than your old friends. Um. But insurance companies will still have new business writing companies where the premiums are lower if they've never met you, and higher if you've been there for ten years, um. And so we just dealt with a lot of these issues where products are built to be more generous, priced to be more efficient, and and principles put in place like treat your loyal

customers better than you treat somebody you've never met. In other words, if you're an existing cost stomer, no one is going to come in as a brand new customer and get charged a lower exactly lower premium, So I was kind of surprised. We bought a house about eighteen months ago. I got an appraisal um for the mortgage, and then we got the insurance and uh lo and behold.

Two months after we closed, the insurance company sends us a note, Hey, we've reappraised your home and it appraised for half a million dollars more than the original appraisal. And by the way, here's a bill for another four grand I was astonished by it. Um is that standard operating a procedure or is that uh was that a one off for me? Now you saw the experience the way it's probably designed to be seen, which is unfortunate. Right.

So here's one of the great challenges. If you're with a standard company, they will they may overlook real issues that would cost more to rebuild, and so when you eventually had a claim, they might not have noticed some of those features. So the challenges as trying to you know,

underwrite properly. We want to get these values correct, but we can't make it feel like a bait and switch, right, and so you know, and simply what one of the things we've done is it said if the value goes up by more than ten percent, the appraiser cannot make up, cannot issue the report. They have to make a phone call and go through line by line to make sure you agree with what we said, so you don't have

that shock. UM. And there's lots of of of UH practices where the industry has done it the way they've done it. They believe they are right. There is some goodness in it, but it doesn't sit well with consumers. I'm Barry Ridholts. You're listening to Master's in Business on Bloomberg Radio. My special guest today is Ross buck Mueller. He is the founder, president, chief executive officer at the

Pure Group of Insurance Companies. You know, I was telling someone about today's show and I described Pure because the answer is Pure. I'm not familiar with them. The My response to that was, well, think of them as the Vanguard Group of insurance. How accurate is that? Well? I I think that for us, it's a flattering comparison. You know, when you look at Vanguard, one of the first things they say is is that they're uniquely driven to do

what's best for investors, and I think we share that value. Now, UH, we use independent brokers. They're much more of a direct to consumer. You know. We think we are very high touch. They're definitely low cost. So operating wise, there's probably some differences, but UM, I think we share the value that that let's focus on the customer and serve them as the most important part of the equation. Cost matter, transparency matters, Being on the same side of the table as the

client matters. That that's what was motivating me to draw that comparison. And you're hard pressed to find someone else in the insurance industry that at least publicly emphasizes that aspect of what they do. Yeah, you know, I think that USA has been an inspiration for us in many ways. You know, they use the same reciprocal structure, UM, they are laser focused on the service to their membership UM. You know, and so in many ways, I think we

view them as as someone to look up to. I would say we get most of our inspiration from the wealth management industry, where you have real evangelists who are out there UM trying to build businesses UM with out a focus on short term profits, but focused on this long term view. If if I serve my clients, well, I will prosper in the Meanwhile, I have no conflict that I am just simply going to serve them well, and that gives us inspiration. So let's talk a little

bit about underwriting revenue. How does that EBB and flow with the business cycle? How does that change over time? Yeah, I mean, I think you have to be careful if the market were to become over competitive and you simply thought you couldn't underwrite to a to a fair return. Um. You know. The good news for us is we operate in such an uncompetitive world with two or three other companies um, and so we see less um competitive cycles.

Then then you might see in a commercial insurance where there might be dozens and dozens of companies competing for the same type of business. So we also looked though, at at economic cycles. You know, in two thousand and eight, we had a significant amount of business in southwest Florida where the economy was hitting it hard, and we had to be careful that our membership, you know, was was

holding up and being resilient in those financial times. These days, we're looking at at the massive and frequent hail storms in in the center and south of the of the country, and is that an anomaly. Is that unusual? We're trying Yeah, we're trying to find out what whether it is the real uh, the new normal, or whether or not this is a cycle. But certainly the cost of replacing roofs the last couple of years has has been more than we might have anticipated. So let's talk a little bit

about that. I was reading one of the things that you had written, uh, and in two thousand and four and two thousand and five we had a huge hurricane cycle, and this was right before you launched. How did that run of hurricanes, especially on the East coast and most especially in Florida, How did that impact your ability to launch a company? Yeah, I'm sure it probably helped you.

You had a couple of factors going on there. So one of them was is that in O four to five where you had four hurricanes in two thousand and four make landfall in Florida, and in two thousand five you not only had Wilma and and Rita, but you had Katrina, who who you know, obviously did the damage in the Gulf. Um and so um insurance companies naturally

backed off a bit. And we're trying to digest what just happened, what's likely to happen in the future, UM, And so clearly there was a bit of an opening there for us. But the real issue is this is we were able to determine that very well built homes, and in this case, the newest built homes built to the highest standards were far more likely to with withstand damage than a home that had been built decades before.

Go into that, there was something I had read about the larger the distance from the four corners of the house, the more hurricane resistance the roof is, or something like that. Well, you know, listen, I would just say size matters in this case, and so UM. For for both engineering reasons and just the common sense, these these large homes held

up very well. UM. There's a terrific group, the Insurance Institute for Building and Home Business and Home Safety, that is testing damage ability UM down in a facility in South Carolina, and we're learning more and more about what UM causes damage or what construction helps mitigate damage. The newest big homes were withstanding damage far better than UM

than anything else. And yet when you're building a new home in two thousand six and seven, insurance companies were already kind of full up of what just happened to know four and oh five. So our con sept not limited to Florida, was what if we pulled together the most responsible owners of the finest built homes and bring

them together to create their own insurance company. And it just so happened that the owners of the finest built homes in Florida were being kept out because they were all new to the market coming in and people said, I'm full already, And so maybe a bit of serendipity. And probably when you look at any business that has great success, they can look back at some little factor that said, boy would have would this business has been as successful if the Florida market wasn't uncompetitive for that

period of time. But the real principle was select carefully and we can build a great business. There is a metaphor there for being willing to buy stocks when they've just gotten crushed in a crisis, like oh aight, O nine, You went into Florida right after a huge set of hurricanes and found most of your competitors had been scared away. That is a tremendous, tremendous opportunity. So let's talk about your growth rate. That this opportunity has led to you're

now doing, is am I reading the numbers right? Five hundred million in premiums? Yeah, so in two thousand sixteen will do about six d and fifty millions. So we did about five hundred last year, and and we'll continue to grow more. You're growing almost is it? For seven consecutive years? Well for more than that. So since we started back, you know, two thousand seven was the first full year of writing business, we grew by forty percent

every year, and and we grew forty percent last year. Um, now you know those numbers to put in perspective, we're still you know, about a six hundred million dollar business. We're in about a fifteen billion dollar niche um with only two other competitors Chubb and a I G. Really, who are who are in this? So we have been in many ways slow and steady building up a business that still is undersized within the category. But a year

that that's an astonishing growth rate for for a decade. Sure, and I'm sure if I went back to A I G. Mr Greenberg would say so six hundred million part of fifteen billions. So you haven't been able to crack it um, you know, yeah, well, and that that that's motivational. How long can you maintain a growth rate anywhere? Yeah, I think for some time now. As I said, it's a fifteen billion dollar gosh, our competitors have suggested could be a forty billion dollar market, and it's a part of

the economy that is showing growth the wealthiest Americans. So we see plenty of upside. We don't we don't see any um, need to slow down. The issue for us is managing risk, managing culture, UM, building scale. Luckily, from the very beginning we put in sort of scalable systems that would allow us to grow well into the future. Um. But that's the great challenge. Continue to find great people.

We launched forty seven college graduates coming in for a training program and and they will help us really more in eighteen when they're maturing, or they'll you know, um, hold on, yeah, it's interesting. I mean, twenty seven out of the twenty eight we hired last year are still with us. The two thousand ten class, the entire but still with us, so so we hope we can keep them. So you're actively recruiting kids right out of college, how do you find clients. How does the high net worth

homeowner come across Pure as as an insurer. Yah. So we use a network of around seven independent brokers. They are fiercely independent. They work for their clients. Uh, they put their client's best interest first. They do work with other companies UM and UM and so if we don't serve them, well they can they can UM you know,

offer them someone else. But I will tell you that after fifty five thousand families have joined UM, it's it's really the existing members and their enthusiasm that will lead to the next fifty five thousand. So UM, you know we have we have principally a channel of independent brokers and then we try to UM inspire the enthusiasm of

our membership to to to grow the next next group. Well, full disclosure, I was with one of your competite there is not especially happy with them, especially after that big increase and h Actually my kid brother referred me to you guys, and that's how Pure became my ensure. That's how I became aware of you who you were. And when one of the people UH in the media group for you contacted me, I'm like, oh, I know, Pure Insurance. They're might insure. They're like, really, well, thank your brother.

So so let's talk a little more about about revenues and and reserves. How do you maintain that balance between pricing premium so you generate sufficient um flows that that your reserves are where you want them to be, and yet at the same time not overcharging or staying as competitive as you can versus the other premium costs that that your competitors charge. Yeah, that's it's a it's a

great challenge. And I think it's also a challenge if you hire talented and experienced people who are accustomed to working in a stock company, their mentality maybe be different. So the first thing we did is we established a set of principles that our actuarial and pricing team would

use to make those decisions. One of them would be there are no new business writing companies or in other words, the existing members will always pay less than a new member and and UM, and that helps guide them UM.

But clearly we have to manage this business professionally. You know that we have to make sure we charge enough, and so we lay out UM these principles that guide them to seek an adequate rate um, to try to be fair amongst the members, so you don't have subsidization where some groups are not paying nearly enough and some groups are paying too too much. Thank you Ross for for being so generous with your time and and spending

so much time with us. If you enjoyed this conversation, be sure and check out our podcast extras, where we keep the tape rolling and continue chatting about all things insurance. Check out my daily column on Bloomberg dot com or follow me on Twitter at rid Halts. I'm Barry rid Halt. You've been listening to Masters in Business on Bloomberg Radio. Are you looking to take your business to the next level? The accounting, tax and advisory professionals from Cone Resnick can

guide you. Cone Resnick delivers industry expertise and forward thinking perspective that can help turn business possibilities into business opportunities. Look ahead, gain insight, imagine more. Is your business ready to break through? Learn more at Cone Resnick dot com slash Breakthrough, Cone Reisneck Accounting, Tax Advisory. Welcome to the podcast, um, Ross, Thank you so much for doing this. This is really fascinating.

There's there's so much stuff we didn't get to that I want to talk about um, perhaps most pressing artwork. How do you ensure artwork. It's one thing to assess the value of a Picasso because there was a recent auction. How do you put a value on any of the artwork that a high net worth household might have, whether it's original sculptures or paintings or what have you. Well,

valuation is an important part of it. And so we have a team of experts who have experience and valuations, and then they use a network to make sure that we have the right valuations. But it's only part of it. Um, you know. So for example, um, a a massive hail storm in St. Louis Uh just hit um a wonderful sculpture that was in the backyard of somebody's house, knocking the toes off of a cherub and and uh um and so you have to look at damage ability and

and um and so uh. From an underwriter's perspective, that's not only looking at the risks of outdoor sculptures, but understanding transit risk of pieces that are on loan or pieces that are moving from house to house, because honestly, the the exposure inside of a house installed properly on a wall, um you know, isn't isn't that gray eight? Once it starts moving, Boy, that's there so so understanding

value and an understanding exposure. And we've got a group of people who have done this for a long time and that allows us to be pretty good at it. Now I understand you have some interesting artwork in the lobby of your offices. How how did that come about? Well, um, it's interesting. Is is a member um very prominent family

here in New York. UM had a glass sculpture UM cut from one piece of glass by a a Czech Lislovakian artist who um uh had built these beautiful glass pieces and they discovered a a tiny crack in it UM but it it became um of no value. So we we paid the claim in full and there was no salvage value that anybody wanted. And our claim department we're trying to figure out what to do with this massive piece of glass, and we thought if it was installed in the reception of our headquarters, it would be

a reminder for everybody of why we're in business. And we did that and then all of a sudden, claims people from around the country started saying, well, really this, uh, you know, paper was stuck to a painting and it pulled off the the the the treatment of the oil and UM it it can't be repaired. UM, And that became installed. And then a a a print from uh Dolly was um was damaged in a in a in storage beyond repair and with all its mud stains it is on our walls. And then a twelveth century Chinese

plate was cracked and then reassembled. And so when we've had art that has been insured and it has no value in salvage, we installed it throughout our offices as a reminder for why we're in business, to help people pursue their passions of collecting art. The the gallery of damage artwork. That's that's pretty funny. Let's let's talk. I'm meant to ask you for and I didn't get to it about um. One of your capital partners, so XL Capital, was this one you launched or a later date picked

up about ten percent of the company. Is that right? Yeah, just in December, and and UM you know to to to back up, we've had the same partner from the beginning, you know, so Stone Point Capital in two thousand five, right before before left, we agreed to UM to build this business together. Um, and you know, you think about it, We're in the eleventh year with the same private equity sponsor and they are just They've been a phenomenal partner and nobody pressing you to go public or anything along

those lines. It's unusual for private equity. They're normally looking for some sort of an exit. Yeah, no, and I and and so I think that in a in a fairly complicated transaction, we did a recapitalization of the holding company, so we have a for profit company that manages the policy holder own exchange and that's where the investors see their returns. UM. And so in a very complicated transaction,

they brought in KKR to take a minority position. And we had received over twenty unsolicited unsolicited inquiries from insurance companies who wanted to be in a specialist market. Liked our model, like the predictable fee income and the customer centric um reciprocal and UM. You know, I have to say that that that xcel Um, they were terrific. Mike mcgavick, who's the CEO, has been a good friend throughout this process.

And I think that that the biggest thing we get is is for me, is I get to talk to Mike probably once a quarter about about culture and challenges and leadership and and he's been terrific and and uh um.

But the other side of it is, in addition to buying UH, you know, a single digit equity percentage um, they made a very generous commitment to provide additional capital as we needed a defined amount, but it can be called upon in a contingent capital So you know, if there was a either an opportunity for greater growth or a crisis where we had to replenish. Excel has given us this capital flexibility. That's you know, absolutely terrific for us. That that sounds like that's a a good sort of

partner um to have. So I've covered a ton of stuff. There's a handful of questions I wanted to ask that that we skipped over or ran out of time earlier. UM, I would be remiss if I did not ask, how are are your capital reserves invested? That float that the insurance company has as the reserves? How do you uh deal with that on a day to day or or year to year basis? Obviously it has to be somewhat liquid in case there's a need for it, it's not

going into gated funds. On the other hand, the shortest term treasuries are yielding nothing. How do you deal with that? Well, you know, I think we made the decision that that UM short duration, high quality UM, despite the modest yields negligible yields, was the right thing. We have enough risk in our business with hurricanes and earthquakes and hailstorms UM that we wouldn't take enormous amount of investment risk. So it's been tough these years to generate meaningful yield and UM,

but we we like our position. We've got lots of liquidity, lots of flexibility, but but surely not as much a yield as we'd like. So speaking of that, these low rates, what what do these really low fit induced zero interest rate policy? What do we won seven something on the ten year these days? Uh? And if you're looking short at term, it's practically nothing. What do low rates mean to the insurance industry in general that normally you're dealing with this massive float that used to be a source

of profit for them. Well, yeah, I mean if you think about it, if if if you're trying to return on capital, you need to to get investment returns or under any returns. If the investments aren't there and you need more underwriting returns, that requires you to raise prices. So having a lower cost of capital, this is a good time to to to be able to take advantage of that to some degree. But we buy a lot of reinsurance from people who need to see a fair

amount of return. So um, lower lower interest rates naturally would lead to higher prices, and probably competition keeps it from being too much higher. That's interesting. You don't really hear people talking about some of the secondary impacts of low interest rates, but insurance prices may actually be higher than they otherwise. Would that that kind of kind of appealing? Um, let's talk a little bit about analytics. We we reference this during the broadcast portion. What what sort of analytics

do you run? How significant is that to what you do? Would you be consider yourself a big data sort of company? Yes, I think we would. I think I think you have to be to be successful in the insurance business these days. I mean, um, so so from our perspective, and just actually made an investment outside of our actual area in a in a chief data scientist. UM, and she has built a team up that that looks at stuff beyond the products, so so on the underwriting and actual real side.

We we do analytics to understand the people we ensure and their behavior and the responsibilities and the risks we take, like the likelihood of hailstorm or what type of roof is more likely to cause significant damage. But the analytics

really applying to all aspects of our business. The performance of individuals recruiting college kids in the likelihood that they're going to succeed UH, the effectiveness of direct mail campaigns to UH to how do we make sure we don't upset too many people when we appraise your house UM using third party data that's available, so that instead of a bait and switch, if we could have alerted you ahead of time that said, it looks like you're under insured,

that might have reduced the shock of you know, seeing that, and so UM in an event. We I don't think there's any part of the business where analytics aren't being used. Let's talk a little bit about real estate, because I've been watching I'm a real estate junkie to some degree. It's it's an area I followed for a long time,

and parts of the country are just on fire. This this past weekend in the New York Times was an article about so a lot of people have kind of moved away from Manhattan into Brooklyn in this area, and they're they're in a one or a two bedroom, but the cost difference from a two bedroom in Brooklyn to a three bedroom is an order of magnitude jump. And so the article in the Times was about a family my friend Jonathan Miller always quoted in the Times Appraisal

uh discussions. Family is looking for a house and it was somewhere in Lower Westchester, either like Scarsdale or New Rochelle or something like that. And the house was listed for I want to say eight and change. And they see the house the first day, they make an offer for the full listing price, and the sellers say, thanks, we'll get back to you. What do you mean, you'll get back to us, that's your ask, Oh, we want to see what happens. The family comes back and makes

so maybe it was eight hundred thousand. They offered full ask, and they come back at eight fifty eight sixty seven, say we want this house at sixty seven. We appreciate it, but we have another open house next weekend, the family comes back a third and fourth time. Ultimately the house went for like a million and sixty seven. And the agent, the real estate agent said, we're seeing more and more of this because there's so little inventory, especially of quality

homes like that. What do you guys seeing when you're looking at the entire country and and primarily high net worth homes the the upper end of the scale. What's happening in real estate these days? Well, Barry, I'd also be REMISSI if I didn't stop you first and say that you don't tell an insurance guy that the country is on fire. Because California, we we have we have seen that so so figuratively not literally unfortunately, Mart Yes, and and literally California is on fire. Right. So so

this is a set. So you have a decent number of clients out. We just started in California in the last two years, and so we're we're very we're monitoring very carefully, and we're looking out Remember. So, UM, what I what I do think on this on this question? Um that that description you had of that, um, you know, the the million dollar sale for an eight hundred thousand dollar listing. I mean, we do see we tend to

play a little bit higher up that. So the the the the average or the the entry level for our programs are a million dollars of replacement cost, which on a market value could be considerably higher than that. It's all you're replacing, is the the actual structure exactly. And but but the challenges is that sometimes if it's a historic lum that costs, that costs even more because you're actually promising to replace all the unique features that they

may not have a market value. So so while there's a limited supply and a great demand for homes at a certain point in time, there's also that that argument going on right now in Manhattan about whether there's too much supply on the ultra high ends side of that and they're not moving as much. Um, well, we had a run of prices that were almost there. Yeah, I have a hundred million dollars. I don't care what I pay, let what apartment is worth truly worth a hundred million dollars.

And now it seems to kind of be reverted as as hot as the let's call it one to ten million range has been the ten to a hundred million, or maybe it's the thirty to a hundred millions seems to have cooled off. Yeah. What I would say, though, is from our perspective is is these are largely high quality problems. It creates more opportunities for us. These are

folks who are feeling good and wanting to ensure properly. Um. The challenges is if you go back to OH eight, when it moved in the other direction at a point in time where the home would have been worth more to them if if it burned down. That that UM trying to convince somebody to ensure home for its cost to rebuild when they could buy their neighbors for half

the price. Um. You know, I think that the challenges of of real estate movement are so much tougher furnitures on the downward cycle than they are on the on on a steady or upward cycle. So we're watching it, we're seeing opportunities. Um, but we don't get a lot of anxiety about the current market outside of places like Las Vegas and southern Florida. Uh, there was a brief window where hey, your neighbor's house is now half of

what your house is. But we've seen a lot of recovery across all but the worst areas in the country. I don't want to say everywhere, but you know, the people have described the Sand States as as problematic, Florida, Arizona, Nevada, and then the eastern parts of California where the excerpts with prices had just gone, you know, lost any correlation to reality. But outside of areas like that, it seems like a lot of of real estate has recovered. Do

you still run into those sort of problems? Hey, I have to convince you to ensure the full value of the home, even though the neighbor's house is considerably cheaper, less and less. And I say that it's usually the extremely unique construction, either historic or somebody put an enormous amount of money into it. They know they'll never get the money back, and we need to be able, but we have to promise to rebuild that house the way

it is. What I would say is is that we have responded to a movement on on the UH dramatic increase in new construction for luxury homes. So there's been been a significant double digit increase year after year since since we hit the bottom for new home starts, and the fastest growing new home start areas four thousand square foot and above. That's a substantial custom build home exactly. So UM we started a new product launched launch in

Texas a couple of months ago. UM geared to helping people UM design a home that's more likely to be resilient and mitigate against loss UM with engineering services right there when you're sitting now with the architect, and then ensuring you all the way through the construction project, and then once you're done, put it onto a standard home owners policy. And so that would be a reaction to looking at this market and saying, one, there's a demographic movement.

And the second thing, back to what we talked about earlier. If your purpose is to help people pursue their passions with greater confidence when they want to build a dream home, we should be there. And and so we ended up trying to build out what it would take to help people through this construction project. And so far, so good. That's really interesting. I have a a little runabout. I

keep on the linisle and sound nothing, nothing outrageous. But when I'm out on the water with my phone and the Zillo app, I could look at the various prices of what what's been sold, what's for sale. The boat went in the water a little late. It was a very cold spring. But I noticed an amazing number of new constructions right waterfronts. So if someone is doing something like that, uh, let's say either Sands Point or where have It doesn't matter. You guys are are national right

every state? But one? Is that right? Um? That that might be worth talking about. Also, I looked at the map Idaho? Why not? Why not Idaho? But um? Uh, I wondered what happens when someone is building a home? How is that ensured normally? And do you guys do something different? Yeah? So so there are specialists who UM developed what's called either a builder's risk or a home ensured under the course of construction. And um, there are different types of risks and and it can be a

risky proposition. You know, at the point in time where um, people are doing work and it's unoccupied at night end, um, even all the way to the end when they're varnishing the floors. There there are periods of greater risk than you might find otherwise. So traditionally insurance companies have stayed out of that business and let the construction experts do it. And then when they're done that. We would we would take the policies. The problem is it doesn't always work

that tidy number one. There isn't a lot of service. So when they build a house and you get out there later and say, you know, you really should have put these windows into reduce the likelihood of windstorm. You really should have put these tiles on to reduce the lighthood of hail haill damage. You should have insulated in this way. You should have put a shower pan in

this way, they would have. You should have put the simple these these nuts on in a way that will be less likely to corrode and less likely to create water damage. The value we can provide when you're sitting down with the architect right at that point in time is far greater, and so we felt like it was important to lean in and try to help um. The other part of it is is that insurance policies tend

to be twelve month policies. Construction products, construction processes don't work that neatly, and so sometimes with a thirteen month project, you've got to pay twenty four months of insurance because

they're fully earned for the annual period um. And so we thought we could design a product that would be better, and we could certainly add a lot more value, and then um and then once once we're done back to kind of one of the points we're talking about earlier, the people who build these homes that are brand new, those homes are much better equipped to to withstand whatever loss might becoming its way. Um by and large and uh.

And so we have adding new members who have homes that are extremely insurable because they've been built to the most contemporary standards. So I again, well, we'll stick with the water theme. I look at a lot of these houses that are built waterfront. We had looked at one house that was on a cliff, only the cliff was eroding. That's scared of the Jesus set of my wife. That never happened. I really love the view. It was a point um and we looked at other houses. We ended

up not going water front. But I'm still enamored with that. And I'm astonished that I sometimes see new construction pretty much I don't know, let's call it two three ft above sea level. And I'm surprised given all your you mentioned the change in weather, possibly with hailstones. How does an insurance company deal with the possibility of sea levels rising a couple of feet over the next couple of decades. Well, well, certainly.

I mean I think that that we use catastrophe models to try to understand the likelihood of losses and and try to deconstruct them to understand what their assumptions are, including about water temperatures and sea levels UM. And I think we create standards by which we expect to only ensure homes that are properly elevated UM, meaning something at sea level is not going to be right for for you as a client. Yeah, I think, I think exactly.

But I think what will end up happening is that each individual UH location, there are mapping techniques to determine what elevation you should have. I mean, you know, the common things which we've seen over the years is someone built a home up uh sufficiently elevated and UM the first floor living area might be fifteen feet above UM the ground and it's it's ample and absolutely and underneath there's some um open area UM ideally even vented so

floodwaters could would come right through. And there will be people who look at that and say that would make a great media room, and and and so now you've got right and and and and so trying to be there to give the right advice to sort of say, you know, not only is that not a great idea, but you've really changed the ensurability of that home once

you have living area well below the necessary elevation. And so you know, if you if we're not there at the right time time to stop them from from doing that, we can't help um. But we try to select carefully. We try to advise as much as we can make sure that we we you know, listen to if you want to ensure wealthy families and then tell them, by the way, you can't live near the water, you know, yeah, exactly so, so so we did. We did see a

lot during Sandy. There were a lot of buildings that had put their emergency generators in the basement and they got flooded and they thought they had an electrical backup. They didn't. So there is something to be said for saying, hey, you don't if you're in a flood zone. The basement is not why you want something that is either valuable or or crucial. Sure, and so in every major market, we've got risk managers who are experts in that market.

We've got UM people who in the Northeast, they, boy do they understand nowadays ice damming and snow on roofs and burst pipes and everything we've gone through. And in Florida they understand how to make sure that every opening is protected so that you know, the windstorms don't damage the house and lift the roof off and and and everything there. They try to provide as much advice as

as they can UM. And and not only that, I think that this is where we've differentiated ourselves, is that insurance companies would make a pattern of saying, you know, Barry, you should do this. Here's a piece of advice for you between you and me. But but but you're busy or you're not. And if I told you should put a lightning suppression system in, you think you'd know how many lightning rods were needed or how we do it right. And so what we ended up developing are these groups

we call member advocates. I think there'll be as many as fifty by the end of this week. UM and they would take the advice and say, right, this is how many you know, lightning suppression lightning rods you need, or this is this is the right water shut off value need er, this is the right solution. This is how much it costs. This is the vendor that we think is best. Here's a work order I can get

done for you. The fulfillment of advice for wealthy families has proven to be as valuable as the advice itself, because you know they're busy and they're not experts, and if you can go and get it done for them, UM, that makes a huge difference. Everybody is time constrained, and I have a flat roof. I'd love some advice. Is what the heck is supposed to be replaced? It's an eighty three. I know that there's new roof technologies. Let's let's let's look into that and find find something about that.

So I know I only have you for a finite amount of time. Um, and I want to get to my favorite questions before I do. I have one last question. So you mentioned mailers, Uh, but typically how do you find the clients or how do the clients find you? We we addressed this briefly, but I know there's there's more. They're given that fifteen to maybe forty billion dollar addressable market. Uh. We we see ads all the time on TV for the mainstream UM insurers, Geico has been running NonStop ads

for it seems like twenty years. What what can the high end insure do to find and attract the right clients? Yeah, so I think that the there to to sort of insights that have come from both research and to some degree common sense. One of them is is that wealthy families rely on the advice of trusted advisors and so to the extent that we have relationships with family offices or wealth managers. UM, that's helpful, but far more they rely on the advice of friends and family like your

brother and and so. UM. We've created UH a team that we refer to them as Member Engagement, but they organize all across the country every month, arguably every week, UM opportunities to get members together with their friends and family to tell the story member to member or or appeer to peer, with the idea that that UM they would be telling their their friends a story about what happened when we rebuilt their house, a story would happen when they save money, a story would happen when they

got great advice and service UM. And last year we had about three thousand of these interactions. UM. This year, we'll have a lot more. UM. You know, insurance has been a low interest category where people wouldn't stop and say, boy, I really think I'm an engagement insurance company today. UM. And yet they're willing to and even excited about doing it.

And I think that that's where we've embraced what seemed like a difficult journey to make this a subject that you want to talk about or spend time thinking about, or um hang out with and and and so that's been really really critical to our growth. All right, so let's jump into my my favorite questions. So you started a chub right out of college? Is that right? Is that what you were expecting to do? What you study in college? And what do you think you would be

doing for a living. So I went to Trinity College in Hartford, in a classic Northeast liberal arts college, and studied economics along with art history and voodoo, witchcraft and magic or whatever you do with a liberal arts school. And UM, So I was in Hartford, Connecticut, and businesses came to campus, and there were a lot of them

in Hartford. I grew up, grew up in Boston, and UM, but Chubb was offering me a job in New York, and um, you know, for for a Boston kid who never spent time in New York, that feel that that seemed like a really neat idea at the time. And so I knew nothing about what they were doing. It's just that that job was in New York. And so I accepted that job. Um, not particularly well informed. Um And uh, but I was going to share a house in Brooklyn with somebodies from school and it was it

was it was great, um. And I end up really enjoying it. And so um, you know, even if it was somewhat accidental. Um, you know, I haven't done anything else, even outside of our little niche for for twenty nine years. So who were your early mentors? Uh? Um, you know,

I think back to, Um, you know, I had. I had a a childhood as a caddie was sort of one of my greatest experiences, just just as a young kid going off and getting up bright and early and and looping and um and I got hooked up, you know, as a as a really young kid with some young guys who were who turned out to become extraordinarily successful, but at the time they were they were young guys. When was a young accountant to who ended up becoming the CFO of a very very big company. Um and

uh um. I watched everything they did. I you know, I I sort of really aspired to be like them, the way they treated, you know, a knucklehead kid carrying their bags. Thought, boy, those guys are just are just great. Um. So I think probably besides the the the natural thing of of watching your parents very closely, UM, I probably learned more carrying golf bag than uh, than a lot of other things in early in my life. That is intriguing. What what about Hank Greenberg? You would you had some

good things to say about him? How did he mentor you along? Well? You know, I, I you know, I don't know if if it was as much mentoring. I think that to everybody who worked there, he created a great morale model. You watched the way he he um lad Um, you know I I enjoyed I was joking with with somebody, you know he I Every year I share the annual report with him, and he's usually kind to write back a quick note and often with questions.

And I think, you know, we all still respond to him as if he's the boss, you know, even even more than a decade later. Um, so he was great and and and and he was a great teacher, um and and Uh. But but I think also you realize that he's he You don't you don't you don't go and say I want to be Hank Greenberg. I mean, that is a really unique, you know, man who's accomplished, you know, so so much so um, I clearly learned a lot. But but and have just deep respect for him.

So you mentioned you pattern pure more on some of the wealth management firms than than on insurance firms. Any particular investors, Uh, influence your your attitude or your approach. Who stands out to you, Well, you're talking about you know, Van Garden and you know, and sort of thinking about you know, the Vogel view of of of the world is certainly hard to argue with a lot of times.

But but you know, I I take great pride in being an operator of a business, much better than an investor, and so I look for help from people who who share the values of an alignment of interest, rather than me thinking I'm clever enough to to do it myself. Any other names you wanna mention or other businesses that

stand out. Well, I I really think there's a there's a broad number of them these days who who fully embraced you know, there might have been, you know, fifteen years ago you might talk about, um, a small number of people who embraced this idea of an alignment of interest. And I think you know, today it's become much more commonplace and and and almost table stakes if you want to be good in that business. So UM, I think that's a great sign for for uh, for wealthy families,

but also for those serving. There's that that that um, it's become so established that conflicts should be avoided. Uh, It's no longer out there on the fringe. It's becoming more and more mainstream, even if if a lot of people fought it tooth and nail on the way in. Let's talk about books. What what are some of your

your favorite books being fiction or nonfiction? Well, I I find, um, you know, when the company has gone from from you know, twenty people ten years ago over five people today that I feel like I read about culture and environment and organizations more than anything. So Simon sinics um point of view. Uh, both first starting with with purpose, but then some of

his more you know, Leaders Eat last, the most recent book. Um, you know, I enjoy um uh Stephen Levitt and the freakonomics guys, and I and I think about, you know, the the uh, the appraisal that the lemma that you described, right, the the idea that that someone went out to your house and increased the value by five thousand dollars. Stephen Levitt would look at that very simply, and he would he would say that that one day an appraiser got yelled at because the house burned down and and they

didn't have enough coverage. And so the incentives are I don't ever want to be the guy who gets yelled at because there wasn't enough coverage, So I'm going to increase it even more, um, you know. And and so I find that there's there's hardly a day goes by that I don't think about the principles that that he writes about and and speaks about. Um. In in business and in life, incensives matter. In other words, UM, so what else has changed since you joined the industry? You

you've been doing this, you said for thirty years. What what do you see as the big secular shifts that are taking place. Well, data and technology is probably you know, hard to understate. Um, to think about it. I mean I and I, Um, seven doesn't feel like it was

that long ago. It's this is not you know some old story where we picture you know, the old New York and you know, um, but when you when you see pictures of that era, those computers look like they're dinosaurs right well, and and and and uh, you know, we we would send things off to the typing pool. I was trying to describe to my to my daughter the other day about how I get an idea for a memo when I'd scribble it down and I'd mail it to a typing pool who had then type it

and then send it back. And you know it was it was crazy. But but um, what we really had back then was runners. So if a insurance broker wanted an underwriter to look at at at a piece of business, they would give it to a young guy who would get on his bike and he'd go there and he'd sit at your desk and he was told not to leave until you gave an answer. UM. I mean today, I guess that would be an email or a text or something, or they snapchat me or something and and uh,

and so just the way information flowed. It was crazy to think, um, that on your bike and go downtown and and don't come back till you have an answer. And that was thought of as absolutely you know, common and and and and so the pace in which information flows. And I even think today about how I made decisions at that point in time. So they would present me

with a risk and I'd make a decision. Today I can get dozens and dozens of sources of third party data, will come in, someone will have helped me score that risk, and I'll be able to go make a precise decision. And back then I would look and I'd say, you know, looks good to me or or doesn't look good to me. I mean, it's so data technology the way we communic Kate, Um, it's a bit obvious, but but it wasn't that long

ago that. I mean, I remember when we had our first fax machine installed, me had to figure out what the skinny little paper was all about and stuff. So what are if those are the recent shifts, what do you see as the next major shift that's gonna come along to Royal the industry? Well, I'm sure how much you know, royaling, But but UM, you know I I do think that the insurance has been this category that that UM is a little bit more low. Interest hasn't

been the thing that that uh, everybody focuses on. And as a result, there is either is less information out there or the perception that the information is not out there, and so UM, it's been a bit of buyer beware. I don't know, UM, I don't know whether I'm making

the right choice. I don't know why my my home went up five dollars whatever else is And I think there is, and like there has been in just about every other industry, this shift where it will move more to sellar beware, and that the consumers will eventually have all the information in their hands or on their phones or in some way they will be able to get a more accurate view of what it costs to replace their house, or a more accurate view about what competitive

rates are out there, or a more detailed comparison of coverage is UM And from our standpoint, is somebody who thinks that transparency is great, we would love if this moved even faster. UM, but I think it'll be a pretty big shock to the industry when consumers start being more informed, that that information asymmetry starts to become more symmetrical. And it's no longer Hey, we have all all the knowledge and the buyer has nothing there there you know.

One of our competitors actually has a video. I mean it's it's it's it's UM. Well if it's true, so otherwise it be just you think it was done from the onion and and it and it says, UM, if you were buying a flat screen TV, you probably are smart enough to figure out what to do and where to go and how to do it. But insurance you couldn't do that. So why don't you just go to the guy that we pay money to make sure he you know, recommends my company and and and that's the

best way to go about doing it. Um, you know. And it just gets right at the heart of this issue. You know, we're talking about some of the smartest, most successful people that were trying to serve UM. And there's been a view that either you're unable to understand it, or you don't want to understand it because you're too busy to worry about insurance. So just let it continue to be a black box to you UM, I think more transparency in this this information shift UM will have

a profound impact on the industry. And went down to our last two questions. UM, if a millennial or someone who just graduated college came to you and said, Hey, I'm thinking about a career in the insurance business, what sort of advice would you give them? Well, first of all, I think it's a great business. I I I welcomed these forty seven kids on Monday, and and and you know, among other things shared with them, UM, you know the

great the great challenge that is this business. You're trying to understand risk, You're trying to anticipate what could happen. It's it's a complicated business and so intellectually it's fun to take on challenges like how much should you charge for for hail insurance in Oklahoma? I mean, it's a UM but but what But my my advice to them

largely centers around purpose. That that that I think that young people have it right when they want to be part of something that's greater than simply trying to reward shareholders. And UM and we, by no means are the only purpose driven company in the world, let alone the only purpose driven company in the insurance industry. UM. But if you combine the good important work of insurance, the social service that we provide, um, you know, and and the

intellectual challenge of the business, UM you know. But but I tend to emphasize the purpose to them more because I know that they're right to go to work knowing they're doing something it's important. That makes a difference. UM. And when I see the impact that we have when we help people rebuild after Sandy or you know, heaven forbid if these California fires do move in the wrong direction for our membership, UM, there's no doubt that what

we're doing is important. And I think young people really appreciate them. And our final question, what is it that you know today about investing you wish you knew? Or I'm sorry, I got to redo that question. I asked it wrong. Our final question, what is it that you know about insurance and risk management that you wish you knew thirty years ago when you started? Yeah, UM, you

know that's a good question. UM. You know, I I do think I go back to to uh to to Hank's advice about UM, you know, don't be afraid to take risks UM, that that you know, UM, you know, I I think probably having start did a couple of companies from scratch. It's it's not as if, UM, you know, I'm afraid of risk, um but I but I naturally am not a risk taker. And and and and and UH. I think if I wish from the from day one, I had a little more courage on on stuff, I

I may have note even even grander things. But I'm certainly proud of where we've been. ROUS. Thank you so much for being so generous with your time. This was really fascinating. It's it's a part of the financial world that I think a lot of people don't know about. And I feel like I know a little more than

I did UH before we started the conversation. UM. For those of you listening at home, be sure and look up an inch or down an inch on Apple iTunes and you could see any of the other nineties seven or so UH podcasts that we've done in the past. I would be again remiss if I did not think Charlie Volmer, our engineer, UH, Taylor Rigs Are booker, Mike Nick, our researcher for helping to put this together. Our our

engineer Today is uh Mark Santa Scouche. You've been listening to Masters in Business on Bloomberg Radio