By CYRIL TUOHY, managing editor of Risk & Insurance«.
NEW YORK--Seraina Maag, chief executive officer of XL Insurance North America Property and Casualty, doesn't like walls. They limit and restrain her, she said. Walls tell her where she can't go, what she can't do, who she can't be, how she can't grow.
Much of Maag's life has been about knocking down walls, which helps explain how an ambitious young woman worked her way from the tiny Swiss canton of Thurgau on the German border, to the top rung of XL Insurance, a major global property/casualty underwriter.
From the 21st floor of the World Financial Center in downtown Manhattan, one of Maag's first acts was to take down the walls to her corner office. Colleagues -- or collaborators might be a better word -- seated at interior cubicles were left to gaze past Maag's desk and beyond, to the sweeping vistas of New York Harbor, Liberty Island and the open spaces of New Jersey, gateway to the vast American continent.
"The more you collaborate the better the outcome,'' Maag said, in an August interview with Risk & Insurance«.
As the walls come down at XL, the underlying message from the new leader in charge at the company was that the carrier had embarked on an initiative to break its silos that for years governed its operating structure.
At times, the silo-based approach benefitted XL, as it took advantage of economies of scale in its path to becoming a global underwriter through years of mergers and acquisitions. Other times, though, the silo model hindered the free flow of information and ideas within the company.
For Maag, though, barely in her 40s and an admitted "gadget person,'' the issue is that Internet- , social media- , mobile device- , and cloud computing-savvy managers entering the workforce prefer to tear down walls, and transcend silos.
Young workers joining the industry today being led by up-and-coming executives like Maag work outside the silo. "We want and need to create that environment in the office,'' she said, an iPad loaded with apps including Skype at the ready. "It's also a more conducive atmosphere to cross-selling.''
Cross-selling property/casualty, environmental and construction products represents a big shift for XL Insurance, as the company has never cross-sold "in a targeted way,'' she said.
Since officially beginning her work last September, XL Insurance has begun cross-selling property/casualty products to customers in the Northeast and in the Midwest in hopes of grabbing a greater share of the $70 billion North America property/casualty market, the largest in the world.
"I was brought in here in North America to do that, to break the silos,'' Maag said."It's almost like being at a start-up, with the benefits of a great brand, and a global organization with sound underwriting practices.''
Last year, XL Group wrote $3.46 billion in net written premium and $1.53 billion in net reinsurance premium, according to company reports. In 2011, second-quarter net written insurance premium jumped 17.9 percent to $893.2 million. Net reinsurance premium rose 15.6 percent to $412.9 million, the company reported.
Noting that 2011 has been shaping up as a test of XL's financial and operating strength, analysts at Keefe, Bruyette & Woods wrote in a second-quarter earnings report to investors that "the company is looking good.''
Strengthening rates helped the company post double-digit premium growth in the second quarter in property, excess casualty and specialty lines coverage, marine in particular, Keefe, Bruyette said.
Maag declined to release 2011 and 2012 premium growth targets, saying only that when she started last September, the team was told they had 90 days to meet cross-selling goals, just to see what the team could achieve when they put their minds to it, "and I'm pleased that we've exceeded our numbers,'' she said.
"Premium volume for us will be very different a few years down the road, and a large part of that will be coming out of North America,'' Maag said. "We have a bigger market share in Europe. But in North America, there's a lot more upside.''
At the end of last year, professional lines accounted for 31 percent of property/casualty net insurance and reinsurance premium, property lines for 25 percent, casualty for 17 percent, specialty for 25 percent, and all other lines for 2 percent, the company reported.
FROM THURGAU TO NEW YORK
For Maag, the top spot at XL Insurance represents the latest step in an unlikely journey that has taken her from Switzerland to Southeast Asia, and then to Australia. She was the first woman Swiss Re sent to Asia, she said.
At the age of 27, she found herself representing the reinsurance giant's business interests in the Land Down Under. "It was a lot of fun, and my family got used to me being a bit of a gypsy,'' Maag said.
She stayed in Australia four years and earned her master's in business administration, before going on to earn the coveted professional designation of Chartered Financial Analyst.
Her brown eyes aglow with warmth, Maag exudes intensity from her petite build, and a visitor has no problem taking her at her word when she casually lets on that she's a multiple Swiss champion in "voltige'' or horse acrobatics.
"The one word I would use to describe her is 'intensity,''' said John Amore, former CEO of Zurich Financial Services' General Insurance segment."She brings so much energy to whatever issues she's dealing with.''
Maag hails from the canton of Thurgau in Switzerland, a small, landlocked and wealthy nation, which has built for itself a global reputation of delivering service, security and quality.
Thurgau, population 238,000, quiet and idyllic like much of rural Switzerland, isn't a breeding ground for female insurance industry leaders.
Industry captains are more likely to come from Zurich, the commercial capital, or Basel, the heart of Switzerland's pharmaceutical industry, or perhaps Geneva, nerve center of the nation's private banking industry.
When women in Switzerland bear children, even today it is unusual for them to come back to work.
Maag's professional ascent would have made any alpinist proud. Between 1990 and 2000, Maag held management positions within the underwriting and financial departments at SwissRe in Switzerland and Australia.
From 2000 to 2002, she was a founding partner and financial analyst for the investment bank Neue Zuercher Bank. As an analyst, she covered Zurich Financial Services, the Swiss property/casualty giant.
It was her probing questions that caught the attention of Zurich's top managers, said James J. Schiro, former CEO of Zurich Financial Services.
"I was very impressed with the questions she asked and she was very confident,'' Schiro said."I remember going back and talking about how we had to turn around our image, and if we could get someone else on board to help us.''
Schiro tapped Maag in 2002 to become the company's head of investor relations and rating agencies, and she helped the property/casualty giant polish its image in the eyes of investors, analysts and ratings houses.
"She is aggressive and I always appreciate people with ambition,'' Schiro said."I always appreciate people you have to hold back when they want to run, as opposed to people you have to beat with a stick to make them run.''
So, when Maag announced she was going to become a mother, some executives believed the industry had seen the last of her.
"She told me she would come back,'' Schiro said."Some people were skeptical and I said, 'No, she's coming back.' And she did.'' After the birth of her second child, she returned to work once again. Ditto with child No. 3. "She rolls with the punches,'' Schiro said.
Maag, who had no intention of being circumscribed by the walls of motherhood and Swiss tradition, was promoted to chief financial officer, and then to president of the specialty lines business unit of Zurich North America Commercial, where she managed all aspects of the unit's U.S. operations.
"When you get an opportunity, a lot of people don't have the courage to take it,'' Maag said."Great opportunities don't always come your way. It's too exciting not to take them. With kids, of course, it's more complicated.''
Maag explains her journey in terms of getting "out of your comfort zone.'' "It's the only way you grow as a person,'' she said.
NORTH AMERICA CHALLENGE
XL Insurance has a reputation for underwriting large complex risks that are global in nature, "tough stuff,'' in the words of John R. Glancy, former chief underwriting officer of XL Insurance.
But the Great Recession in 2008 hit XL underwriting units like a Bermuda hurricane, and with the turn of the economic tide, XL Insurance underwriters, like many in the industry, became more conservative.
For XL Insurance, it was literally the Great Regression. "People had regressed to a more conservative risk appetite in the wake of the crisis, and that was inconsistent with their risk strategies,'' Maag said.
Many underwriting decisions that should have been made in the field, close to the risk, had become centralized, removed from the risk, Maag said. The challenge for her now, and for her leadership team is to encourage XL Insurance managers to "get involved with the decision-making process in the field.''
To revamp the underwriting decision-making process, XL Insurance recently hired "supercoach'' Bob Shine as chief underwriting officer, North America property/casualty, to bring what Maag calls a "collaborative worldview.''
Out of a two-day brainstorming session last October about how to increase the collaboration among XL Insurance's units, was born the suggestion of starting up a construction and surety unit.
Sure enough, less than three months after the meeting, the company's new construction business "went live'' Jan. 1, 2011, Maag said. XL Insurance also launched its surety business from scratch. "People were excited and the collaboration was great,'' she said."We quickly found ourselves with plenty of upward momentum.''
In addition to Shine, Maag has appointed a new chief operations officer. A new leader, Roxanne Mitchell, is in charge of the company's excess and surplus lines unit.
Maag's experience around the world has taught her she stands more of a chance of pushing through her managerial agenda by collaborating with those around her, and by leaning on her powers of persuasion.
"She manages people in a way that doesn't flaunt or impose ideas on other people,'' said Paul I. Tuhy, global head of claims for XL Insurance companies.
"She solicits people to come forward with their ideas and then molds them to think the way she does,'' he said."In a way, you don't even see it, you don't even know it's there, before she's won you over.''
(Tuhy recently completed the implementation of a new global claims system for the company.For more information, please turn to the story on Page 38 by Joel Berg.).
Maag is a firm believer that claims should sit next to underwriting so underwriters can talk -- indeed collaborate -- with claims, risk engineering and actuarial experts.
"We want them to work as closely as possible,'' Maag said."In the end, it comes down to talent and under a centralized model, units felt they weren't as important as they used to be.''
---and it comes down, again, to breaking down walls, rupturing the silos.
Even as she grapples with XL's siloed past built up through one acquisition after another, Maag is going to have to surround herself with skilled lieutenants, as prices in the North American market remain soft, particularly in casualty lines.
"There's excess capacity in which people are underwriting business today and worrying about paying claims tomorrow,'' Maag said. "Excess casualty is really an issue and there's what I call 'na´ve capacity' in the marketplace with regard to pricing.''
The litigious nature of the U.S. market surrounding torts and class-action lawsuits makes the North American market a particularly treacherous one, and can make it very costly to do business for insurance underwriters.
Pockets of profitability persist, of course, and Maag wants to see to it that XL Insurance exploits those niches, in surety and construction, for example, before the competition is hammering at the door, or if it is, then by offering an altogether different approach to underwriting.
"We lost that edge somewhat after Hurricane Katrina in 2005, and the economic crisis,'' Maag said."My focus is to turn this around.''
October 1, 2011
Copyright 2011© LRP Publications