Ask Brian Duperreault what he is most proud of and he will tell you that it is the people he has led and the people who once saw something in him and trusted him with authority.
Duperreault steps down at the end of the year as president and CEO of Marsh & McLennan Cos. Inc., the $11.5-billion brokering and consulting group that owns reinsurance broker Guy Carpenter & Co. LLC, broker Marsh Inc, and the Mercer LLC and Oliver Wyman Group consultancies.
In his place, he leaves Daniel S. Glaser, the current group president and COO at Marsh & McLennan Cos., the person he credits with effecting the turnaround at Marsh, MMC's signature company.
Duperreault, 65, who has firmly established himself as one of the insurance industry's most respected leaders, is at a point in life once viewed as standard retirement age. What the Bermuda-based Duperreault will do next is something he is keeping from public view for now.
What is known is that in Duperreault's 40-year career in the insurance industry, with AIG, ACE and MMC, he has established a track record of having the vision and faith in people to build insurance companies into international powerhouses, and to execute significant turnarounds.
He may well get the chance to do something like this again. But as the record stands, he has built a list of accomplishments that will be talked about with interest and perhaps a bit of awe in some circles for quite some time to come.
His rise over more than 20 years at AIG to become chairman and CEO of American International Underwriters in 1994 is one such marker.
Another is his steadfast belief in the eventual success of what could be the insurance deal of the last century, ACE's acquisition of the international and domestic property/casualty operations of CIGNA in 1999 for $3.45 billion.
Add to those accomplishments his most recent role in the turnaround at MMC.
That company's future prospects are now getting positive reviews from analysts, eight years after the Marsh brokerage arm was battered by accusations and fines over contingent commissions and alleged bid-rigging from then-N.Y. Attorney General Eliot Spitzer.
One of the key tools in establishing his track record, Duperreault and others will tell you, is his trait of time and again identifying talented people and giving them the leeway to take on responsibility and prove themselves.
"The thing that I take more pride in today is the development of people and creating teams and seeing people grow," Duperreault said.
"I look at the team today, the one that will take this company forward, and it is a great team; there are some really good people in it and I am very proud of that structure," Duperreault said.
It wasn't that way when he got to MMC in January of 2008. MMC employees, who will always bear the emotional scars of losing 358 co-workers and company contractors in the terrorist attacks of Sept. 11, 2001, were struggling to stay upbeat.
Former CEO Jeffrey Greenberg had resigned under pressure in late October of 2004 following the announcement of Spitzer's bid-rigging investigation. Finding a leader who could get the best out of the MMC companies was difficult.
Ex-prosecutor Michael Cherkasky, who engineered an $850 million settlement with Spitzer, was ousted as CEO by the board in 2007. Talent at Marsh was jumping ship. The flag-bearing brokerage was also losing customers.
"I came in and I was getting a lot of free advice, most of it centered around Marsh, and it was, 'You've got a real problem on your hands, you are losing people, you are losing customers, you are hemorrhaging both,' " Duperreault recalled.
"So I went to the staff. The people that I know and I also talked to people I didn't know. But I asked them one question, 'Why are you still here and why didn't you leave?' "
Those who stayed told Duperreault they didn't want to give up on their commitments to their teammates and their customers. Duperreault, who praises that staff for their resilience in the face of the Sept. 11 attacks and the bid-rigging scandal, had found the core that he knew he could build on.
"And that is a wonderful culture. And I didn't want to change that culture and it has evolved over time. What you want to do is lead that culture and foster it and maximize it and get it celebrated and I spent a lot of time doing that," he said.
Getting to that structure in some cases meant cutting costs. It meant selling the Kroll Inc. security and risk consultancy in the summer of 2010 and it meant getting MMC to focus on its Guy Carpenter reinsurance and Marsh insurance brokering units, as well as the benefits consulting work it does at Mercer and Oliver Wyman.
Honing MMC's focus has yielded dividends.
In a Nov. 14, 2012 report, analysts at Morgan Stanley referred to "The ability of MMC management to 'flex' its cost structure with revenue growth" remaining "a critical component to our EPS outlook and our bullish thesis."
Morgan Stanley analysts think MMC will deliver approximately 15 percent earnings per share growth between now and the end of 2014.
Pride in the team that gets these kinds of reviews, and the human insight to know who should be part of that team, is a standard Duperreault trait, according to those who know him well.
Evan Greenberg, chairman, president & CEO of ACE, who describes himself as a close friend, said it is Duperreault's ability to handle people and the value he places on their opinions, that adds so much to his ability as a leader.
"He is a great listener," Greenberg said.
"They say that about a lot of people," he said. "It almost sounds trite at times, but Brian is a great listener."
Don Kramer, the insurance business entrepreneur who founded Tempest Re and merged it with ACE when Duperreault was chairman, president and CEO at ACE, said something similar.
"He is a tremendous people person," said Kramer, who after having sold Ariel Re to Goldman Sachs now helms Bermuda-based ILS Capital Management Ltd., a firm managing investments in the growing insurance-linked securities business.
"He has a quality of dealing with people so that, if he asked you something and you talk about something and even if he disagrees with you, he lets you finish," said Kramer.
"Brian will listen to you, and then turn around and tell you why he disagrees," Kramer said.
Maybe much of his success comes from innate skills, but Duperreault, quick to credit others, thinks he had a pretty good teacher when embarking on a career in the insurance business.
That teacher would be Starr Cos. Chairman and CEO Maurice "Hank" Greenberg, an insurance legend in his own right and the chief architect of AIG's rise to becoming a global insurer.
"I learned a lot from Hank, I really did," said Duperreault.
"He was an amazing executive. We are completely different in styles but he had core principles that I respected," Duperreault said.
One of Greenberg's core principles was not to look the other way when a problem arises, and to address issues immediately. "Look, I believed in that then and I believe in that now," Hank Greenberg said.
"You can't fix something unless you know about it," he said.
Duperreault said that trait -- facing issues head-on -- can make a big difference.
"You can't be in the business and not have problems and the great companies separate themselves from the others by being really good at getting rid of problems, fixing them and moving on. He [Greenberg] would not tolerate a head-in-the-sand attitude, or a cover up; that would be even worse," Duperreault said.
"Or trying to hide a problem, that was a hanging offense," he said.
For his part, Greenberg remembers Duperreault as a bright, well-educated lieutenant who consistently overdelivered during his years at AIG.
"I would say he outdid all the jobs he was assigned to, carried them out very well," Greenberg said.
As AIG grew, Greenberg said, so did Duperreault, growing into his roles there, from his start as an actuary in 1973 to eventually becoming president of American International Underwriters in 1991 and chairman and CEO of AIU in 1994.
"He grew along with the growth of the company; we all did," said Greenberg.
"If people flatten out and the company goes beyond them, you've got the wrong guy," he said.
Duperreault was not the wrong guy.
a risky acquisition
He was the right guy, the record shows. Perhaps never more so than in 1999, five years after he was appointed chairman, president and CEO of ACE.
That was when ACE, a relatively small Bermuda-based company formed in 1985 by 34 founding sponsors to provide excess liability and directors and officers coverage, took aim at buying the property/casualty operations of CIGNA. Many observers doubted the deal would come off well. Bermuda companies at the time were shielded from asbestos exposures, and CIGNA had them.
It was also a case of a smaller company buying a very large one. ACE then had about 700 employees, CIGNA's property/casualty operations, scattered around the world, numbered closer to 10,000 people.
"All acquisitions are risky and this one was particularly risky," Duperreault said.
"If you wanted to just play the odds as an independent observer, you would say, it's not going to work. Too many things could go wrong, so it was appropriate for people to be skeptical," Duperreault said.
But he and his team were confident. "Inside the company, there was not a shadow of a doubt that we were going to make it work," he said.
For one, according to Kramer, who was vice chairman of ACE at the time, Duperreault knew a lot of the CIGNA people and Kramer knew a lot about the background of the company. Together, they knew they were looking at a network that could be built into a successful addition.
Another factor was what Duperreault referred to as "organizational will."
"That is the one thing that I learned, was the will, the organizational will to accomplish your goals trumps everything else," Duperreault said.
Duperreault's knowledge, gained from the international insurance business during his work at AIU, was key to his understanding the possibilities of the CIGNA network, Evan Greenberg said.
"He had run AIU and he understood immediately, the significance and the uniqueness and the rarity of a franchise like CIGNA P&C," Greenberg said.
"It had an old, established global network of business, licenses, presence in all of these countries around the world -- in Asia, Latin America, Europe," he said.
CIGNA P&C traced its roots back to the AFIA, a global network acquired by the Insurance Co. of North America, or INA, which was founded in 1792 in Philadelphia.
But INA, which was later acquired by Connecticut General, was in a "state of dreadful mediocrity and stress," according to Evan Greenberg.
"Together we took on tremendous criticism, for supposedly overpaying, taking on an asbestos liability, blah, blah, blah," Kramer recalled.
"And of course it [the CIGNA deal] turned ACE into a major company; he had great vision," Kramer said of Duperreault's role in the deal.
The deal took ACE from a company with $880 million in net written premiums in 1998 to one with $2.49 billion in net written premiums in 1999. Within a year, the company had almost doubled again, racking up $4.87 billion in net written premiums in 2000.
"He bought this huge company that wasn't very profitable and had lots of asbestos exposure," said Cliff Gallant, an insurance analyst with Keefe, Bruyette & Woods.
"And you can compound that with 9/11 happening," he said. "It was a time when some people thought ACE was going to go under. But no, it was tremendous what they were able to do.
"They were able to put cost efficiencies into CIGNA's business.
"They let go of a lot of business," Gallant said. "They put some firewalls around the asbestos liabilities and were really able to focus on what was the good part of that company.
"It is one of the great turnarounds, maybe the only successful turnaround we have seen in this industry," he said.
"It was a very bold stroke, a game changer. That was a prize that would never come again and he knew that, and I give him all the credit in the world for that," Evan Greenberg said.
But the CIGNA acquisition wasn't the only deal Duperreault pulled off while running ACE.
"Together we did eight deals and none of them at ACE was a clinker," Kramer said.
Evan Greenberg also credits Duperreault with knowing when to leave, and leave ACE he did, but not before seeing Greenberg established as the president and CEO in 2004. Greenberg would go on to add the title of chairman of ACE in 2007.
Greenberg, said to be a numbers man like his father Hank, has performed admirably. ACE has reported an average of 4.66 percent annual growth in net premiums earned in its last four full-year results.
For ACE, 2011 was a breakout year, with the company registering $15.4 billion in net premiums earned, a 14 percent jump over 2010.
Duperreault evidently left a solid leader in place in Greenberg when he left ACE. He has done it again at MMC, leaving Daniel S. Glaser to succeed him beginning Jan. 1.
Gallant, the KBW analyst, like Duperreault, gives Glaser the bulk of the credit for the upturn in Marsh's fortunes.
"I'm sure Brian was always informed and knew what was happening but a lot of the detail and the execution was Dan's work," Gallant said.
"CEO successor Dan Glaser has been groomed for the lead role and we expect a seamless transition," Morgan Stanley analysts wrote in their November report on MMC.
"People say, 'Could you return it [MMC] to its former glory?'" Duperreault said of the challenge that faced him in January of 2008 when he took over the reins there.
"I say, 'That's not good enough.' We had higher standards than that and we are getting there."
DAN REYNOLDS is managing editor of Risk & Insurance®. He can be reached at email@example.com.
December 17, 2012
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