When someone gets to be a CEO at the age of 36, perhaps it’s a good idea to listen to his story about how he got there and some of the lessons he’s learned.
From his current position as chief underwriting officer at Hiscox Re in London, Mike Krefta will move to Bermuda in July, taking over the role of CEO of Hiscox Re and ILS and Hiscox Bermuda.
It’s been a relatively quick progression for him. He joined Hiscox’s accounting department in 2003 as a recent university graduate and subsequently took on interesting roles across the company when opportunities arose. If he’d stayed in one place, Krefta said he wouldn’t have ended up on the underwriting path, which he has found very fascinating.
He admits that he’s relatively unique in the market because he’s young for the role he’s had and the role he’s about to take. “Essential for my career progression were the experiences I’ve gained throughout the group. Of course, I’ve worked hard, which is a given, but the reality is that moving around the company provided me with the depth of experience; connections to senior, mid-level and junior people; and all the opportunities that have come my way.”
The No. 1 piece of advice he gives younger people is to move around either geographically or across product lines. Other advice? “Work hard; don’t be complacent; don’t be afraid to ask questions, even if you perceive them to be silly; and continue to learn at every opportunity.”
He admitted that he’s “learning more now than I ever did as a graduate.”
He emphasized that the previous, traditional path of moving through the ranks of a company into bigger and bigger offices throughout a career are long gone. “Any person who is interested in a C-suite role has to be a very broad-minded individual with wide experience of your organization and your industry in order to succeed.”
Career to Date
After Krefta graduated with a degree in geography from the UK’s University of Bristol, he got an internship with Merrill Lynch’s fund management team in 2002. In 2003, he heard about an opportunity with Hiscox’s accounting department, which he jumped at, even though he wasn’t really sure what the Lloyd’s market was all about. “I never knew anyone who worked in the city. The friends I grew up with have ended up in all kinds of jobs, but not in the city of London or financial services.”
After a few years, he joined the company’s catastrophe modeling team, “which, frankly, just sounded exciting—but I didn’t know what on earth a catastrophe modeler was.” He then moved to do cat modeling for Hiscox’s Lloyd’s business.
In 2006, while he was working full time, he got a post-graduate certificate in natural hazards from University College London and later gained a certification in catastrophe modeling.
Then he moved into the reinsurance underwriting team at the end of 2006, where he got his experience underwriting, taking up different roles as the years progressed. When Hiscox Re was formed in 2013, he was appointed director of Non-Marine Underwriting. In 2014, he was appointed Hiscox Re’s chief underwriting officer, also serving as joint active underwriter of Syndicate 33 and active underwriter for Syndicate 6104. In December 2016, Hiscox announced that Krefta would be taking on his new role in Bermuda.
Krefta said one of the best decisions he made in his career “was to commit to a company that I believe in and trust.”
“I’m technically a millennial by the strictest definition, and we’re starting to see that many millennials prefer career variety,” he noted. “However, I’ve made a long-term commitment to Hiscox, which has ended up being a benefit to me and hopefully the company.”
Goals as CEO
In his new position in Bermuda, Krefta aims to continue the journey that’s already started for Hiscox. “We’re a fiercely independent company. Part of that is driven by our company’s desire to grow organically and to try to expand the breadth and depth of what we do,” he said.
As a result, he will be continuing the company’s existing focus on underwriting discipline as well as developing new products and innovative uses of third-party capital, including in the company’s insurance-linked securities (ILS) operation, which he will be running.
“I come from an underwriting background, and that will always be key to me, even though I will have a much broader role going forward.
“I’m really proud of Hiscox’s underwriting performance. Our underwriting results are in the upper quartile and have been since before I joined. That’s something we aim to continue, even in this difficult underwriting environment.”
Krefta said innovation is a key part of Hiscox’s strategy, although he says it’s a very overused term.
“If you put a tweak in a line of an existing product suite, rather than a reinvention, that to me is what makes innovation. A lot of times we think about reinventing the wheel in this industry, but the reality is the game changer for me in the insurance space will come from very clever tweaks of existing products,” Krefta emphasized.
Of course, the group continues to seek ways to improve its operational efficiencies, reduce expenses and “be smart” with its use of technology, he said. “We aim to have first-class technology to underpin our operational systems, management information systems, underwriting and modeling platforms, performance indicators and claims capabilities.”
With those efficiencies in place, “it’s easier to innovate and create products that sit on those platforms. It’s not just about the external-facing product. It’s about having technology transform the way we work,” Krefta affirmed.
Technology needs to run through the veins of an organization to make it more operationally efficient, reduce expenses and remain lean, he added. “It’s all about remaining lean and never becoming complacent or lazy. We all know what that does to our bodies; well, it’s the same for the body of a company.”
Innovation will also come with the company’s use of third-party capital. “We’re fairly extensive users of third-party capital in the ILS space, and our ILS growth plans are quite ambitious. Linking capital with innovative products is our aim,” he added.
“I think the biggest disruption to hit the industry has been the entry of third-party capital, which has poured into the market over the last 10 years. It’s been a real game changer. Fortunately, through good leadership, we’ve been at the forefront of that trend and have been very extensive users of third-party capital.”
Another way to grow is with specialty business, he confirmed. Hiscox’s reinsurance team defines “specialty” as underserved or emerging classes of business.
“Underserved classes are areas like terrorism where there’s a shortage of supply of capital but increasing demand for new product types and differing levels of coverage,” he said, citing nuclear, biological and chemical as an example.
Emerging specialty includes cyber, which could provide coverage opportunities after changes in European regulation and laws, Krefta explained. (The European Union has passed a new data protection law called the General Data Protection Regulation, or GDPR, which will lead to stronger enforcement powers and higher fines. It is due to come into force in May 2018.)
“This new law will drive increased demand for such products,” he said.
“A lot of people focus on cyber as a malicious damage product because that’s what it was in the past. When someone hacks a system with malicious intent, damage is caused and insurers pay for it,” he said.
He noted, however, that cyber has moved on massively from just malicious damage. “It’s become almost an information technology product.”
He pointed to the example of “fat finger syndrome,” where someone erroneously presses a Delete key instead of an Enter key and suddenly brings down a system. “That sort of coverage is not currently very prevalent in the cyber world.”
Another specialty emerging class is mortgage impairment business, he said, explaining there is increasing demand by government-sponsored entities like Fannie Mae and Freddie Mac in the United States as well as private mortgage insurers globally to use capital beyond the banking world to support their mortgage portfolios.
“Growth opportunities also can be found by bridging the gap between insured and economic losses in emerging market economies,” he said.
Such coverage could range from personal accident or life insurance in Indonesia, increasing the penetration of property cover in China, or providing a broader spread of agricultural products in India, to name just a few, Krefta said.
“Of course, very careful underwriting would have to take place for all these risks, but they could provide us with new business opportunities.”
Preparing to Be a CEO
How is he preparing for his new role? Once again, it’s all about learning from everyone. In addition to doing an external executive leadership course, he will pick up a lot of what he needs to learn via experience-based training, “which is quite a big part of how we develop people at Hiscox.”
“I get mentoring from Bronek Masojada, our group CEO, whom I trust and admire, as well as mentoring from Jeremy Pinchin [his current boss], Richard Watson [group chief underwriting officer] and others on the executive management team,” Krefta said.
“And, of course, I’ll listen carefully to my new team. A big part of my role will be to represent their opinions, views and thoughts.”
He said his new role will require a broader management and corporate governance skillset, “which I don’t have as much of in my current underwriting role.”
“It’s always easiest to revert to what you know and what you have the broadest experience in, which in my case is underwriting. So one of my biggest challenges will be letting go of that focus, which will belong to others, and getting myself to take a broader, corporate view.”
Krefta said, for him, being people-oriented is an important focus of his leadership style. “It doesn’t matter how great your ideas are as a leader; it doesn’t matter how brilliant your strategy is. If you can’t carry people with you to make that a reality, then you might as well not have bothered.”
He also aims to be results-focused. “I’m a very analytically minded person given my background. For me, it’s important to instill a sense of discipline and sensible decision-making throughout the organization,” he added. “That’s also part of my leadership style, but it starts first with people.”
Krefta admitted he did not learn his leadership skills from management books. He had experiential learning, from the time he was in school to the present.
He had planned to go to Sandhurst, a UK military academy, to prepare for a future career. “I ended up not going into the military after an injury, but their ongoing sponsorship, when I was in my teens to after university, taught me a lot.”
He also gained a lot of experience by being part of a mountain rescue team in the West Country in the UK while he was in university. “I spent my weekends running across hills in the driving wind and rain, getting people off the mountain who had gotten lost,” Krefta recalled.
“These experiences taught me to be adaptive to change and to develop learning agility,” he added. “It’s important to make sure you’re receptive to learning. It’s one thing surrounding yourself with good people; it’s another thing to be a sponge that accepts their wisdom.”
While he was at university, he had multiple jobs, largely driven by the need to pay his way. In addition to being part of the mountain rescue team, he worked as a deejay in nightclubs, a manager of an internet café and as a marketing analyst.
“If you have varied experiences as a youngster, that helps massively later in your career,” he said.
Outside of Work
Krefta is a trustee for several charities, where he provides his time on a pro bono basis. “It’s an opportunity to make a difference and, ironically, I’ve also learned about governance of an organization, how to be on a board, and how to adapt and alter my skillset in order to help achieve common goals.”
By working with these charities, he said he has learned “the value of spreading your net widely and learning from as many people as possible. Everyone can teach you something—right or wrong, positive or negative, but they can teach you.”
Krefta said if he hadn’t gotten into financial services, he probably would have conducted expeditions to remote, inaccessible areas of the world such as the Arctic and the Antarctic. This is not just a pipe dream for Krefta because he does these things in his spare time.
“I spend most of my holidays either husky sledding in Alaska or hiking and kayaking in Greenland, where I was last year,” Krefta said.
He said these many non-work-related activities not only have taught him quite a lot but they are also brilliant talking points. “If you’re out with the clients, brokers or your peers in the marketplace, it’s wonderful to be able to bring some of these experiences into the boardroom or a team meeting.”