Chubb Chairman and CEO Evan Greenberg believes opportunity and incentives will encourage most executives to stay with the insurer in the wake of its recently completed mega-merger.
“I don’t kid myself. We’re not going to keep everybody,” Greenberg said during his first earnings call on Jan. 27, after his ACE Ltd. completed its $29.7 billion acquisition of Chubb on Jan. 14 and kept the Chubb name. “I firmly believe this, that the loss of talent that we have will be very much on the margin. It won’t be in large numbers and we have great depth within the organization.”
“This organization is on the ascendancy,” Greenberg added. “Why wouldn’t you want to be here?”
As Greenberg said, some executives will always leave. One notable one did so before the merger deal was even finished. Chubb Veteran Dino E. Robusto had been slated to become an executive vice president of the post-merger Chubb, and co-president of the North America Insurance division after the merger. In mid-November, news broke that he’d become chairman and CEO of CNA Financial Corp. instead.
Greenberg asserted during the company’s earnings call, however, that the post-merger Chubb has plenty of factors in play to keep executives engaged and motivated.
“It’s a little bit of a self-selecting process,” Greenberg said. “Those who want to sign on to an environment that is ambitious, that is hardworking, that is driven to win, that has an aggression to it – a certain aggressive stance, all those attributes that I can describe, they are juiced and energized by this. I don’t have any concerns about losing those people.”
Greenberg explained that he believed those qualities reflect the “overwhelming vast majority of talent of the combined organization.”
“At the end of the day, it’s not just about organizations, but individual motivations and aspirations. But people also work to be paid,” Greenberg added. “They want to be incented. We have no problem incenting for performance. We believe that our value creation in the future is substantial and in front of us. Anybody holding equity in the combined companies’ stock, that is a pretty good motivator of retention.”
Greenberg, in answer to a related question during the call, said that “legacy Chubb” and “legacy ACE” executives and employees are working hard to meet with clients and partners and hit the ground running, post-merger.
“Legacy Chubb and legacy ACE of all branches, and all regions, are getting themselves together quickly. They’re out meeting agents and delivering the message that we are open for business,” Greenberg said.
He explained that the mission right now is to deliver the message from the combined company that “we are bringing more to you.”
“The senior executives, everyone is out, we are doing it around the world,” Greenberg noted. “I am out there seeing agents. I was out last night seeing agents. Our business comes from producers and they need to feel comfortable.”
“Value creation is not in the inside,” Greenberg said. “Value creation is out there, and that’s where we live.”
In July, soon after announcing the plan for ACE to acquire Chubb, Greenberg made a point of stressing that the new Chubb would, in his words, “preserve” the agency culture of Chubb. He said then that the new company would adopt the best of both companies and that Chubb’s agency system is better than ACE’s, whereas ACE is better at brokerage.
He called Chubb a “great” agency company. “We’re going to preserve the agency culture. We’re going to preserve the agency distribution. We’re going to preserve the branch system,” said Greenberg in July.
The ACE CEO also said he would not be changing the contingent commission system – to do so he’d have “to be stupid or have “rocks” in his head, he said. Some insurers pay contingent commissions to agents for achieving certain goals with the insurer, such as placing a particular amount of business, retaining a number of policies or achieving a particular loss ratio.
The plan for the new company calls for not only keeping the agency distribution and branch structure of Chubb but also growing this distribution channel with new products and customers, he said. In urban centers where both ACE and Chubb have branches, the plan calls for combining the two.
Hollmer is editor of CarrierManagement.com’s daily newsletter, where the original version of this article was published.