Dan Reynolds

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

Brokerage

Thoughtful Chemistry

The leaders of Willis Towers Watson discuss their hopes for the newly combined organization.
By: | May 24, 2016 • 5 min read
Lloyd`s of London

As they discuss their “merger of equals,” John Haley and Dominic Casserley emphasize a willingness to let the chemistry between their two legacy organizations develop naturally, rather than through top-down directives.

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Haley, CEO of the newly created Willis Towers Watson, and Casserley, the company’s deputy CEO and president, sat down with Risk & Insurance® at the RIMS convention in San Diego to talk about the progress of their company since the Willis/Towers Watson merger was completed in January.

The merger combined a benefits firm with a global large cap network — Towers Watson — with Willis, which had a strong large cap presence in commercial property/casualty insurance broking globally, but was best known as a middle market player in the United States.

“When Dominic and I were sitting down and talking about this, we thought the real prize is if we can create an environment where we have people working together and where we think of ourselves as an integrated firm,” said Haley, a Rutgers University mathematics major who rose up the ranks from the early roots of the Towers Watson organization in 1977.

John Haley, CEO, Willis Towers Watson

John Haley, CEO, Willis Towers Watson

Sure, the two leaders talk to their teams about their talent mix and the business opportunities the merger presents.

But since the firms merged in January, Haley and Casserley say they have been happy to let members of the two legacy firms reach out to one another, to start solving customer challenges together under their own steam and see how they gel as teammates.

He reiterated that point in a May 6 WTW earnings call with analysts.

“As I travel to the various offices and see firsthand the collaborative sales efforts and hear about our market success, it’s clear our colleagues are not waiting for a top-down integration mandate or reporting tools to go to market,” Haley said.

“We don’t know exactly what all the new capabilities, the new products and services are going to be,” Casserley said in San Diego in April.

“We do know that we are creating a unique organization, which is truly global and which is integrated as opposed to operating in silos,” said Casserley, a University of Cambridge graduate who before the Towers Watson marriage oversaw the completion of Willis’ acquisition of the large French brokerage Gras Savoye and its 3,900 colleagues at the end of 2015.

Willis bought its first stake in Gras Savoye back in 1995, taking a third of the French firm at that point in time.

The Relevance of Scale

Both men lead firms with a history of making big deals.

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Just to name a couple, Towers Watson was formed by the merger of Towers Perrin and Watson Wyatt back in 2010. Haley oversaw that merger.

A big part of the Willis middle market presence in the United States stems from its 2008 acquisition of Hilb, Rogal and Hobbs.

Scale comes into the Willis Towers Watson combination in a couple of ways.  Haley sees the fact that Towers Watson and Willis are coming together as two same-sized companies as an advantage.

“It is much easier to create a working environment when you have two roughly equal-sized firms than when you have one that is much larger than the other,” Haley said.

Pre-merger, according to company statements, Willis had more than 18,000 employees. Towers Watson had approximately 15,000.

Dominic Casserley, Deputy CEO and President, Willis Towers Watson

Dominic Casserley, Deputy CEO and President, Willis Towers Watson

Scale, as in bigger size, is also a consideration in the investment realm according to Casserley.

Among other responsibilities, Casserley oversees investment and reinsurance for WTW.

“The merger enables an uptick in client service and enables us to make some investments that might have been harder for us to do as separate firms,” Casserley said.

Although both Casserley and Haley have plenty of experience in acquisitions, and this is a busy time for M&A in general, Haley said Willis Towers Watson and its leaders are concentrating on clients and merging their cultures, rather than casting about for more acquisition targets, at least for now.

“For the first 12 to 18 months, it would have to be an exceptional opportunity,” said Haley.

“It would have to be unique and something that if we let it pass we would never have the chance again,” he said.

Opportunity Knocks

As it stands, the global reach of Towers Watson and its client list are a grand opportunity for Willis.

“One of the things we know is that if you don’t have the relationships ahead of time it is very difficult not to finish second,” Haley said.

“The merger enables an uptick in client service and enables us to make some investments that might have been harder for us to do as separate firms.” — Dominic Casserley, deputy CEO and president, Willis Towers Watson

On the other side, adding the legacy Willis expertise in property/casualty insurance broking gives legacy Towers Watson team members one more tool to bring into their conversations with clients.

“We have client relationship directors that are responsible for understanding their whole business strategy and for understanding the key people and for bringing together the appropriate subject matter experts. What we are doing now is we are adding one more subject matter expert,” Haley said.

“We are not asking them to do something new or fundamentally different from what they’ve done before.”

“The grand prize is having our folks work together across lines and work cooperatively with clients to identify and solve those problems.” — John Haley, CEO, Willis Towers Watson

Casserley stressed that the fact that Willis can now take advantage of Towers Watson’s large cap relationships doesn’t mean that Willis is turning away from its strength or its relationships in the middle market.

“This is not a pivot,” Casserley said.

The merger also allows the benefits-focused legacy Towers Watson employees to bring yet another tool to their clients, the insurance expertise of the legacy Willis employees.

“We don’t know what the solutions we come up with will be,” Haley said.

“But we do know that the human side and the risk side are related. We think they are not only related today but they are going to be increasingly related in the future.

“The grand prize is having our folks work together across lines and work cooperatively with clients to identify and solve those problems.”

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Casserley said how the Willis Towers Watson colleagues find those solutions as part of a new, integrated platform is an exciting unknown.

“It may well be applying property and casualty techniques to a benefits problem and vice versa,” he said.

“Or it might be applying an actuarial analysis to a property/casualty risk in a way that hasn’t been done before. You won’t know that until you see the teams literally intertwined,” he said.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]
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Musical Mission

Brokers That Rock

Three Bay Area insurance brokerage executives raise money for nonprofits and explore their creative sides in a rock and roll band.
By: | May 13, 2016 • 4 min read
Topics: Brokerage
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Joan Baez and Bob Dylan were the musical artists that first entranced ABD’s CFO Mike McCloskey when he was a youngster growing up in Ireland.

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His colleague Steve Moore, an account executive, was lured by the electrified guitars of Black Sabbath, Led Zeppelin and Deep Purple. Later on he got to know and love the progressive rock of Yes, Genesis and Pink Floyd.

EPIC senior vice president Dave Hock, like many of us, first revered the Beatles.

Mike McCloskey, CFO, ABD Insurance and Financial Services

Mike McCloskey, CFO,
ABD Insurance and Financial Services

But then it was the languid country rock of the Eagles and Jackson Browne and the keening vocals of the Canadian thunderbird Neil Young that awed him.

As teenagers, all three sought out chord books and battered acoustic guitars with which to explore their newfound passion.

Now all three insurance brokerage professionals make up Men Behaving Loudly, a classic rock cover band that plays benefit shows throughout the San Francisco Bay area.

The three execs met at San Mateo, Calif.-based ABD Insurance and Financial Services back in the late ’90s. Moore, who has been in bands since the seventh grade, recalls watching Hock and McCloskey play a show for the company Christmas party.

“I was watching them play and thinking I would love to be up there with them at that Christmas party next year,” said Moore.

“So I got together to practice with them for the next year and never left,” he said.

It’s been more than 15 years now that Men Behaving Loudly have done what their name implies. They rock out at everything from fundraisers for Alzheimer’s and the American Heart Association to events for cash-strapped preschools.

Left to right: Mike McCloskey and Steve Moore of ABD; and Dave Hock of EPIC

Left to right: Mike McCloskey and Steve Moore of ABD; and Dave Hock of EPIC

They charge nothing, but their return is sizable.

Each of the brokerage executives talks about the importance of being able to do their part, however small, in helping along a nonprofit that in some cases seeks to wipe out a dreaded disease.

“We all know somebody that has MS, or somebody that had pancreatic cancer — a quick killer — I think we all have been touched by that,” McCloskey said.

Dave Hock, senior vice president, EPIC

Dave Hock, senior vice president, EPIC

For the past 12 years, Men Behaving Loudly played the San Jose installment of the Walk to End Alzheimer’s event. The organization has raised $225 million at such walks across the country since its origin in 1989.

“Terrific organization; great event,” EPIC’s Hock said.

“Most of us have friends or family members who have been touched by this disease in one way or another, and I am no exception. This definitely adds some poignancy and additional meaning to it,” Hock said.

“It’s such a great feeling to give back and do what we can for these great organizations. And of course it’s a lot of fun for us,” said Moore.

A typical Men Behaving Loudly set might be bookended with the Stones’ “Honky Tonk Woman” and “Jumping Jack Flash.”

In between you could find yourself grooving to Steve Miller’s “Jet Airliner,” released in 1977, or the Byrds’ classic “Mr. Spaceman,” which hails from 1967.

VIDEO: Men Behaving Loudly, performing at the Walk to End Alzheimer’s in San Jose, Calif.

All three men love power chords. But to a man, they also love their jobs with insurance brokerages.

“Quite frankly I could spend 12 hours a day at it,” said McCloskey of his position with ABD Insurance and Financial Services.

“But the music helps me balance things out and I think I’m the better for it,” he said.

Steve Moore Account Executive ABD Insurance and Financial Services

Steve Moore, account executive, ABD Insurance and Financial Services

“It’s a challenging job and never gets boring,” Moore said of his work, which now focuses on the tech sector.

“But it can certainly be stressful at times and playing music is such a great release,” he said.

For Hock, having fun as a musician is a good reminder of how to go about your work life.

“It is very important to remember that what you do professionally needs to be fun as well,” Hock said.

“You have to enjoy your work.”

Lugging amps at four and five in the morning is not easy for men in middle age, but these men do it.

They don’t golf or while away the time in other ways. Music is their thing. And the joy they seem to get from it appears to be endless.

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“We can sit in Dave’s garage, eating pizza and having a Guinness and playing the same song that we’ve played hundreds, thousands of times before and still get incredible enjoyment out of it,” McCloskey said.

And playing in front of people?

“There is a little bit of ego gratification in it,” Hock said.

“And a little fantasy. Maybe an aggregation of both.”

“We get to pretend for a time that we are rock and rollers and we get positive reinforcement, which helps,” he said.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]
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Risk Manager Profile

Insuring the Towers

Shari Natovitz lost hundreds of former colleagues on 9/11. Now she manages risk for a vital piece of New York’s skyline.
By: | April 28, 2016 • 10 min read
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Shari Natovitz, the director of risk management for Silverstein Properties, is a Jersey girl. She grew up in Fair Lawn, N.J., which is less than 20 miles from Lower Manhattan.

Children in her family were not coddled.

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B-plus on your English paper? Not good enough.

A-minus in Trigonometry? Meh.

“You had to bring home an A,” Natovitz remembers as she spoke with R&I on the 46th floor of 7 World Trade Center in Lower Manhattan on a windy March morning.

“My brother and I were in the same elementary school, about two and a half years apart. I remember sitting in front of this little black and white television, with our macaroni and cheese, and ‘Jeopardy’ would be on.”

The dynamics of the house were such that the two siblings would play along, competing against one another for allowance money. The home was devoid of gender bias.

“I grew up playing baseball, softball and football out in the street. My mom ran track and field, so I ran track and field,” Natovitz said.

These days, Natovitz manages a $100 million-plus insurance program for one of the highest profile projects in the nation, the resurrection of the World Trade Center in Lower Manhattan.

In place of the seven buildings that were either destroyed or heavily damaged by terrorists in 2001, a new set of towers is rising.

Natovitz manages risk for four of them with one assistant; not to mention her responsibilities for additional Silverstein Properties holdings.

Is she intimidated by the scope and responsibility of her job? No, she is not.

Natovitz says she has the background and the passion to meet those challenges.

“Her demands are very high and she wants everyone else to be prepared.” —Tim Egan, senior vice president, property broking, Willis Towers Watson

Before joining Silverstein, Natovitz spent decades as a construction broker with Marsh, its predecessor Johnson & Higgins, and later with USI. It was at the conclusion of bidding on the broking work for part of the WTC rebuild — when Natovitz was the East Coast construction practice leader for USI — that Silverstein offered her the job of risk manager.

“I have an extremely strong brokerage background and believe in transparency and negotiations to secure a mutually acceptable outcome. Because I grew up in the Johnson & Higgins system, it was a much more consultative than transactional approach, which was really what was needed to organize this and set a solid foundation for the transition to risk manager,” she said.

The passion stems from the fact that Natovitz, like many insurance veterans, lost friends and colleagues in the inferno of 9/11.

“I was a Marsh/J&H person for 20 years and left the company in late 2000, and was a part of the construction group. The construction group was meeting at the North Tower that day,” she said.

Marsh & McLennan lost 295 people in the attack.

“For me, it became very personal and life-affirming.  It wasn’t a job, rather a mission, and a tremendous desire to be a part of and contribute to the rebuild,” she said.

The Program

Managing risk for the rebuild of the World Trade Center is, perhaps needless to say, complex and demanding. When Natovitz took the job in 2005, she had several obstacles to overcome. Perhaps the most forbidding barrier was that insurance carriers were reluctant to offer cover.

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“What did surprise me when I got here, stunned me, were the number of markets in 2005 that did not want to do business with our company; absolutely floored me,” she said.

A number of factors played into that reluctance.

Discord over who should rebuild the towers and how they should be designed generated headlines in many New York newspapers.

“They weren’t flattering headlines. They weren’t truthful. Not unusual in the world, but frustrating,” she said.

“What did surprise me when I got here, stunned me, were the number of markets in 2005 that did not want to do business with our company; absolutely floored me.” — Shari Natovitz, director of risk management, Silverstein Properties

There was also the fact that the WTC was twice a target for terrorists. First came the 1993 attempt to bring down both towers by exploding a truck bomb in a garage of the North Tower.  Then there was the 2001 attack via two hijacked commercial jetliners that did bring them down.

Thus, two terror attacks on one site’s loss run.

“Nobody else in the U.S. had that experience,” she said.

Natovitz said that going forward she and her brokerage team needed to showcase the re-engineering and security of the new structures — including life safety — that made this a different and more robust project.

The coverage of the Silverstein buildings lost or damaged in the 2001 attack was also in dispute at the time and wouldn’t be settled until 2007, with a number of carriers eventually agreeing to pay the company $4.55 billion.

Natovitz also began her task dealing with four different insurance brokerages. Within a year or two, banking on her own deep experience as a broker, she had seen enough to put the entire program in the hands of Willis, now Willis Towers Watson.

“Willis didn’t get anything they didn’t deserve,” she said.

Insuring the safety of those building the World Trade Center towers ranked high in the minds of the Silverstein Properties risk management team.

Insuring the safety of those building the World Trade Center towers ranked high in the minds of the Silverstein Properties risk management team.

Natovitz said she was impressed by the way Tim Egan — a WTW senior vice president, property broking — solved problems for her on a property placement for 7 World Trade Center.

“That made me feel like they were the broker who best understood the market challenges and lack of  market identity and could best lead us through that,” she said.

The insurance program for the operational buildings was fragmented.

The coverage for each property was being placed separately, under the name of each building, as opposed to one comprehensive program.

“There was no understanding of the collective premium that was being put in the marketplace. This not only affected the quality of coverage, but also the buying power,” she said.

She was also impressed with the assertion that $6 billion in needed builders’ risk capacity could be developed and had confidence in the plan put together by Neil Kent, a WTW builders’ risk placement leader.

A prior broker told Natovitz, a Maryland resident, that she didn’t understand the New York market (she had worked for her first 10 years in the New York market) and stated that the capacity needed to protect the project was unobtainable.

A year and a half into her new position, the redesign of the Freedom Tower and responsibility for it — which formerly fell into Natovitz’s risk management portfolio — transferred to the Port Authority.

Natovitz met with Silverstein Properties management to explain why they needed their “own dog in the hunt” for limited capacity. That preferred bloodhound was what we now know as Willis Towers Watson.

With her WTW team, Natovitz set about creating an owner-controlled insurance program, known as an OCIP, for the construction of 2 WTC, 3 WTC and 4 WTC and a builders’ risk and terrorism program that required $6 billion in capacity, which was a hard sell.

The solution to the builders’ risk capacity challenge was to break the risk into three $2 billion risks, and pull the terror and fire following risk out and put that in a captive.

“We knew that $6 billion of construction capacity was not available in the market. But we knew that there was $2 billion available in the market,” WTW’s Kent said.

The captive option for terrorism needed to be explained to management.

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“Among the real estate community there was a lot of differing opinions as to whether it was a viable risk transfer option,” Natovitz said, “but over the past 10 years, it has become an option that many have adopted to address capacity/aggregation issues.”

Be on Your Toes

Neil Kent and Tim Egan said Natovitz expects everyone that works with her to be very well-prepared.

“I think she reads everything and knows everybody,” said Kent.

“Her demands are very high and she wants everyone else to be prepared,” Egan said.

Tim Egan, senior vice president, property broking, Willis Towers Watson

Tim Egan, senior vice president, property broking, Willis Towers Watson

“This is a very important project to everybody, and I think everybody feels the same way. She’s done a lot of things to bring this project to the front and center,” he said.

“Certain risk managers, when you deal with them, you learn from them how they see this. I don’t think there is a better example of that than Shari in that respect,” Kent added.

Natovitz and her risk management partners at WTW are also very conscious of the importance of maintaining long-term relationships with carriers.

Throughout the recent coverage history of the WTC, from the terror attacks through the rebuild, transparency and buy-in from senior insurance carrier management occupied a place of utmost importance.

“The key to all of this was never operating in a vacuum with the marketplace,” said Ray Blackton, an executive vice president with Willis Towers Watson.

“When Shari first took the job, one of her big concerns was that her company was not really known by the markets or had a misconception of the markets. Our first plan was high-level meetings with the most senior people of the organizations before any submission ever went out on the Trade Centers,” Blackton said.

There are now more than 50 carriers/carrier profit centers, including the domestic and international markets, on the Silverstein Properties program overall.

“Everybody’s a key to the placement, but Lexington, Munich Re, Zurich, Swiss Re and Starr really provide a significant part of the capacity, along with XL Catlin and Chubb,” she said.

Through high-stakes insurance settlement litigation, political squabbling and the flooding from Superstorm Sandy, keeping an eye on the long-term and the value of respectful relationships remained of paramount concern.

“We have enjoyed a great working relationship with Shari over the years,” said George Stratts, president, property and special risks for AIG.

Neil Kent, builders’ risk placement leader, Willis Towers Watson

Neil Kent, builders’ risk placement leader, Willis Towers Watson

“And as with any good relationship or partnership, it’s honest, it’s open. And one of the things that I think we have appreciated from Shari is seeing both sides of an issue. How do you see multiple points of view so that we arrive at the best answer for all parties?” he said.

That came into play when there were World Trade Center construction delays. The delays meant that Silverstein was paying insurance premiums for two years when there was no exposure.

Natovitz went to her brokers and asked them to approach the markets to adjust the premium for the two years without any exposure and move the term forward to represent the new schedule.

“I knew this would be a difficult request, but wanted to work out a solution to continue coverage with the same carriers for the completion of the project without the financial burden of paying for an extra two years with no construction taking place.

“In addition, we were now only going to build two of the three towers,” she said.

“The carriers were very fair in their responses and almost one-third of the casualty program was returned, with the knowledge that the coverage would be placed with those same insurance partners down the line. We have continued the placement through 2019 with these partners,” Natovitz said.

New York’s Brilliant Place

No American citizen could look out from the 46th floor of  7 World Trade Center and not be moved.

The view is stunning. The human drama that unfolded over time in New York and that’s reflected in its skyline is profound.

Then there is our more recent history. Brutal attacks of terrorism, grief and a remarkable recovery.

“I can always say I worked on the World Trade Center project when it was being built and operational,” said WTW’s Tim Egan.

“I think it’s the most important thing I’ve done in my career,” he said.

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“When you get to the core of what we do as risk and insurance professionals, it’s making good and helping restore and being part of that restoration process,” said AIG’s Stratts.

“That rebuilding process has been a way to affirm what we do as a profession and also honor the suffering that took place,” he added.

“Everybody who is on this placement through not even two or three degrees of separation knows somebody whose name is on that memorial,” Natovitz said.

“This is part of reinvesting and honoring them in the future.” &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]
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