Stephen Catlin Addresses MMC Young Professionals Global Forum 2015

In his address to the MMC Young Professionals Global Forum 2015 Stephen Catlin, Executive deputy chairman of XL Group, urged young insurance professionals to demonstrate “courage, determination and conviction” in shaping the industry’s future.

Catlin stressed the importance of creating “brand value” as his address was entitled “Building a Brand.” He explained why “he set up Catlin Underwriting Agencies in 1984 aged just 28 and how he developed the company’s brand, culminating in its acquisition (as Catlin Group) by XL Group earlier this year,” said the Forum’s bulletin.

He told delegates he believes every company needs to establish a set of values by which it operates – “Values people live, not just hang on a wall,” he said. He added that growing a successful business requires three things: vision, strategy and execution. “The vision is easy, strategy is more difficult and execution is by far the hardest,” he said.

Catlin also highlighted the challenges facing the next generation of insurers in a rapidly changing world, including the industry’s ability to cover systemic cyber risk.

The Forum’s bulletin gave a summary of Catlin’s remarks to the young professionals as follows:

On joining the insurance industry:
“Like many of you, I didn’t intend to end up in insurance. I nearly left Lloyd’s two or three times in my first few years. I couldn’t decide whether I was working in an industry that had some social value, or a great gambling casino. Eventually I realized that insurance and reinsurance has a value to society, and I’m so glad I work in this industry.

On setting up Catlin:
“I didn’t set out in life to be an entrepreneur. But I found myself in a situation where the company I worked for was up for sale but I didn’t know if I wanted to be sold – and certainly not to the people we were going to be sold to. I didn’t like their culture, and didn’t want to be a pawn in the rich man’s game. Two years later, the company who bought us went under.

“Looking back I must have been barking mad. When we started Catlin, our corporate assets were some pink Lloyd’s blotting paper and an inkwell given to me by my old boss. We didn’t have a photocopier or a fax machine for two years. I had no idea what the pressure of setting up an underwriting company would be, but I just did it. It is frightening and requires courage, conviction and determination.”

On growing an insurance business:
“Growing a successful business requires three things: the first is vision; from vision you develop strategy; and from strategy then you have to execute. The vision is easy, strategy is more difficult and the execution is by far the hardest bit to do – it requires planning, determination and courage.

On Catlin’s growth:
“In 2001 we wrote $430 million in premiums and employed less than 100 people, but by 2005 we were writing $1.7 billion. How? We got capital when others were struggling to get capital, and the market was changing overnight. 9/11 was a huge event, but the casualty model had already begun to change. We tripled our top line and quadrupled our bottom line in the space of 2.5 years. When you see an opportunity, don’t think about it – just take it. But make sure you execute your strategy well.”

On Catlin’s troubled first attempts at global expansion:
“We had to start all over again because we got it wrong. It had nothing to do with the vision or strategy, but our execution was poor. We chose the wrong people. We didn’t have people who shared our values. That was a big lesson to me.”

On building brand values:
“We wanted to identify whether the values we stood for as a management team filtered down to the troops. A consultant told us we were unique, because all of our colleagues were on the same page – and that rarely happens. However, when our employees were asked to explain about Catlin’s culture, they might take 30 minutes to reach the same conclusions.

“The consultant suggested we try to capture our values and culture in five simple words. Six months later, we had them: accountability, teamwork, integrity, transparency and dignity. I think every company needs to have a value proposition – values people live, not just hang on a wall.

“Using the value proposition has been a good filter for the kind of people we let through the interview process. Had we employed that principle when we started in Kuala Lumpar or Houston, we wouldn’t have fallen over. We fell because the people we employed did not meet our value proposition on at least one point.”

The speed of change:
“The world is changing at an incredible pace, and that pace is going to accelerate. Just think – in five years, one piece of technology – the iPad – has transformed how we behave. My grandchildren are going to grow up in a completely different environment than I did.”

Challenges for the next generation of insurers:
“These are the kinds of challenges you young professionals have to face. You have to work out how we as an industry stay relevant to our clients and how we become more relevant.

“It’s a truism that in the last 10 years, while cat losses around the world have increased, the percentage of economic values insured has trended downwards, not upwards. We have got to ask ourselves why that is.”

On bringing XL and Catlin together:
If you’re going to make a merger or acquisition work, you have to bring together the thought processes of both companies. The thing we [Catlin and XL] talked about most was culture. We made four commitments: make it better, be accountable, collaborate, do what’s right. One word that encapsulates these commitments is trust.”

Building trust:
“In our industry we are selling a promise to pay. The person buying that promise from us has to trust us. Trust is something you cannot buy. It is not for sale. It’s something you learn.

“It’s a two way street when we offer trust to someone else and they offer it back to us. You can either sit and watch them for 18 months, and eventually give them a tiny bit of yourself, or you can get on the front foot and give them your trust in order to receive theirs. I in no way advocate doing this without thinking about what it means, or picking the right people to trust…. But guess what? If you trust others, you probably will be trusted yourself.”

How young professionals can learn from this:
“When we first set up our value proposition at Catlin I was frightened about talking about it externally. I learned, though, that when we started talking about trust, people listened – analysts, rating agencies, clients, investors.

“Therein lies your opportunity to differentiate and do what’s right. That’s the opportunity that each one of you has going forward – to be different, to be trusted, to have a vision, to think about a strategy and then be able to execute it.

“That’s what will make a difference to your business, and make a difference to your career, and I wish you all the best in doing it.”

Source: Stephen Catlin at the MMC Young Professionals Global Forum 2015