Maurice "Hank" Greenberg isn't just an icon of the P&C business. He still exhibits the same drive that has propelled him his entire career: the determination to find solutions, to forge alliances, to accept challenges and seize opportunities.
It's no surprise that Greenberg has driven Starr Companies from zero direct premiums written in 2008 to $4.4bn in 2018. Late last year Chinese President Xi Jinping honoured him with the China Reform Friendship Medal for helping China's economy open up to the world economically over the past four decades. Ten foreign leaders received this award, only two of them from the US.
Reactions Editor-in-Chief Shawn Moynihan sat down with Greenberg to discuss such topics as the state of the market, the importance of maintaining equitable relationships with China, and what's next for Starr Companies.
SHAWN MOYNIHAN: Your efforts in cultivating business relationships with China are well known. What has that journey involved for you over the years?
HANK GREENBERG: Starr's history in China has been long and deep. The insurance industry in China when I first went there in 1975 was non-existent. You had the PICC, at that time it was a tiny company in a small building off Tiananmen Square, I think there were 50 people in the whole company. I got to know them, we helped them in many ways. We took some of their people and trained them here and in other parts of Asia. We helped them build the agency system, which created a million jobs.
A few years later the Mayor of Shanghai, Zhu Rongji, asked me to help him start an organisation (the International Business Leaders' Advisory Council, or IBLAC) that would bring foreign investment to Shanghai; it celebrated its 30th anniversary last year. I chaired it for two terms, and we became pretty good friends. The organisation was very successful.
I'd been trying to get a Life licence from the time I first went to China but couldn't get anybody interested. When Rongji became premier, I got it. It's still the only 100% foreign-owned Life insurance company licenced in China today.
US-China relations is one of the most important in the world. They've got 1.4 billion people; we have 300 million. The changes in China are dramatic. They learn very quickly, it's a dynamic economy. Do we agree on everything? Of course not, but we have to have a relationship and we have to work out any differences. It's both in our interest and their interest.
SHAWN MOYNIHAN: Do you believe that the trade dispute between the US and China will impede the progress made on the insurance front?
HANK GREENBERG: My guess is there'll be a deal. Will it be perfect? Probably not. But I think if we have the environment where we can discuss differences, that will work.
SHAWN MOYNIHAN: China has grown receptive to the idea of 100% foreign ownership of insurers; what do you think changed their thinking on that?
HANK GREENBERG: Their thinking hasn't changed. The problem has been not what they say, it's what they do. Yes, they've agreed to 100% ownership, but over what period of time? And will they have the same rights as Chinese insurance companies? What we've insisted on in our trade negotiations is that we treat Chinese companies here the same as US companies; we want the same rights for American companies in China. The Chinese will say, "We agree with that," but the implementation falls short.
SHAWN MOYNIHAN: I'm curious about the feedback you received on the editorial you wrote last year for The Wall Street Journal on the topic of US-China relations. You made an excellent case for better relations economically but I don't think everyone grasps that opportunity as well as you do, or the investment of time and relationship-building required for that to be successful.
HANK GREENBERG: The Chinese were not unhappy with the op-ed. The Chinese ambassador here and a number of important leaders and the business community said the facts were correct.
SHAWN MOYNIHAN: What other feedback have you received?
HANK GREENBERG: That
SHAWN MOYNIHAN: Let's talk about the P&C market. Is the industry finally entering a hardening phase, or does it still have a way to go?
HANK GREENBERG: It depends on the company. Many companies lack the experience or willingness to underwrite only to a profit. Many times underwriters don't know if they're underwriting to a profit or a loss. It takes a lot of experience on the part of the underwriter and the management of the company has to be disciplined in that area. Historically, the industry has lacked discipline. You look at the results today and you wonder how many companies will stay in business.
SHAWN MOYNIHAN: When you say management lacks discipline, do you mean around pricing or risk selection?
HANK GREENBERG: Underwriting and pricing. Discipline starts at the top.
SHAWN MOYNIHAN: What's your take on alternative capital and its impact on the market, especially on pricing?
HANK GREENBERG: It's not helping with stability.
SHAWN MOYNIHAN: It makes you wonder how many more years of severe cat losses it is going to take for that money to move out of the market, if it moves at all.
HANK GREENBERG: They've had patience for a long time. Look at the cat losses the industry has incurred -- incredible. And the price of their stock shows it.
SHAWN MOYNIHAN: I know that Starr recognises the need to leverage new technology on a variety of fronts. How big an influence will technology have on the underwriting and distribution?
HANK GREENBERG: Change is inevitable. The industry's expense ratio is too high, and so there's going to have to be corrective action -- and it'll happen. Technology will help. Failing to do something when the tools are available is inexcusable.
Change comes about when management has the courage to bring it about. It's not just in the insurance sector; it's in many other sectors as well. Those who have the courage and the insight and the ability are the winners.
SHAWN MOYNIHAN: Starr is one of the fastest-growing insurers in the industry. What's driving that?
HANK GREENBERG: Starr has two main businesses. The Property & Casualty business started with three people, we now have about 3,000. And we started a specialty financial business which is highly successful. We've made a ton of money in this area.
The results speak for themselves. You have to have the right people, who share the same vision that you have, and have discipline -- and that starts at the very top. You can't ask people to do what you won't do. That's part of my training from the military.
SHAWN MOYNIHAN: I would wager that the lessons you learned in the military have greatly informed your management style.
HANK GREENBERG: No question. That certainly was true in the company I ran before Starr. The very senior people all shared the same background, they'd been young officers in the military. They understood what an order meant and there was no argument about it. And we built the largest insurance company in history.
SHAWN MOYNIHAN: Are there any lines that show particular potential for more growth? Everybody talks about Cyber, but I'm not positive whether take-up is still quite where it could be.
HANK GREENBERG: It's a very risky business. You have to know what you're doing. We have a very good team here, but having said that it's still a very tough business. We work on a profit-centre basis; some profit centres are particularly profitable, others take a lot more work. We expect growth in all of our businesses. 2019 is off to a good start.
SHAWN MOYNIHAN: You recently were quoted in the Journal taking issue with AIG's claim to have been founded in 1919. Why is it important to you to set that record straight?
HANK GREENBERG: I formed AIG in 1967. I created the company. To say otherwise is wrong, and I couldn't let that happen.
SHAWN MOYNIHAN: The Starr Foundation recently made the single largest donation ever at my alma mater at St John's, $15m to the benefit of the School of Risk Management, Insurance and Actuarial Science, so thank you for that, first of all. What do you think it will take to attract more students and more junior talent to the industry?
HANK GREENBERG: Insurance is an integral part of the economy, and the economy can't grow without insurance. We need young people in our company who understand that the future is very much tied to profitable growth, and we're doing our best to help them understand that.
SHAWN MOYNIHAN: You've had an extraordinary life and career by anyone's standards. At this point, what motivates you?
HANK GREENBERG: I love what I do.
SHAWN MOYNIHAN: What parts of it do you enjoy the most?
HANK GREENBERG: Building. I think about what's next.