XL’s President and CEO Brian M. O’Hara told delegates at the company’s global risk conference in Boston that P/C insurance companies with strong underlying corporate cultures and values will differentiate themselves from their competitors. The conference is the first of its kind XL has held in the U.S.
He pointed out that while many companies in the insurance industry have taken steps to replenish their capital and to focus on strong underwriting discipline and sound risk management practices, companies must add value through other means. “Being in possession of the capital to back a promise to pay will get you into the marketplace. However, it may not adequately differentiate you from your equally well-capitalized competitors,” O’Hara stated. “Though we are proud of our unique track record for responsive claims payment, we are equally proud of the enabling culture behind it.”
“Additionally,” he continued, “the quantitative risk and capital metrics used by the rating agencies now play a bigger part in determining our ratings than the quality of the security of our risk transfer promise. However, we think quality is as important and is reflected in both our claims paying track record, particularly in the case of large, complex claims, and in our overall attitude towards the payment of legitimate claims. Both of these point to the strength of our underlying culture.”
O’Hara observed that the P&C industry had demonstrated a “steely determination to endure in the face of severe adversity”, despite the catastrophic losses of 2005. But he added: “Resilience is not a given. It must come from a strong underwriting discipline, sound risk management practices, sensible use of reinsurance claims-paying capacity, and the ability to earn investment income, and culture and values.”
During the conference, which carries the theme of “One World Without Borders”, a diverse range of international speakers and panelists are critically examining major economic, political, and social issues with the aim of helping Congress attendees gain a better understanding of the changing face of risk and its evolving impact on the business world.
By an odd coincidence, O’Hara’s call to promote culture and values closely aligns with a similar observation from a very different source. San Diego-based attorney William Lerach – perhaps the best known securities class action lawyer in the U.S. – told delegates at the PLUS Conference in London earlier this week that, ultimately, “honesty in companies is a matter of character.” He was speaking mainly about the prevalence in the U.S. and elsewhere of corporate fraud, about which he’s pretty pessimistic. But his words and O’Hara’s seem to be a needed reminder that honesty is the best policy.
An official xl Congress website containing speaker profiles, location details and other general information can be accessed at: www.xlcongress.com/boston.
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