The Not Unreasonable Podcast

Dinos Iordanou on Cyprus, Hard Work and Culture

June 03, 2019 Season 1 Episode 36
The Not Unreasonable Podcast
Dinos Iordanou on Cyprus, Hard Work and Culture
Chapters
The Not Unreasonable Podcast
Dinos Iordanou on Cyprus, Hard Work and Culture
Jun 03, 2019 Season 1 Episode 36
David Wright
Dinos Iordanou on Cyprus, culture and lessons from Hank Greenberg and Warren Buffett
Show Notes Transcript

My guest for this episode is Dinos Iordanou, former Chairman and CEO of Arch, which he co-founded as Arch in 2001 and led from 2003 until retiring last year. In this incredible episode we cover: 

An amazing show and my deep appreciation of Dinos for his time. See notunreasonable.com for more!

David Wright:
2:16
My guest today is Dinos Iordanou, former chairman and CEO of Arch, which Dinos co-founded in 2001 and led from 2003 until 2018. He held a variety of executive leadership roles before that at AIG, Berkshire Hathaway and Zurich. Dinos is as an engineer by training and moved to the US from Cypress when he was a teenager. Dinos welcome to the show.:
Dinos Iordanou:
2:36
Thank you. Pleasure to be here.:
David Wright:
2:38
So one thing that I hadn't had the pleasure of doing before preparing for this interview was researching Cyprus. Interesting little country and that's where you're from. And I thought I'd open up with some questions on Cyprus. First, who is the Cypriot you admire most?:
Dinos Iordanou:
2:52
My answer is probably going to surprise you, but the person that I admire most was my father.:
David Wright:
2:58
Good answer. Uh, why:
Dinos Iordanou:
3:02
Here was an individual who with fourth grade education and an orphan.:
David Wright:
3:07
Wow.:
Dinos Iordanou:
3:08
Who wore his first pair of shoes when he was 16 years old. What he, um, he was barefoot and until the time and he actually borrowed those shoes and borrow clothes to go for an interview to become a constable in the British police force. And he lied on the application that he was 18 years old because it was the minimum age requirement. He was only 16. He looked older so he figured he can get away with it. And he did. And actually he was selected as one of the constables and he was the first time, this was in 1932. Uh, it was the first time that the British police in Cyprus, Cyprus was a colony. It was a British colony at that time.:
Dinos Iordanou:
3:57
They were starting to hire locals into the police force and roll the tape here is, you know, a barefoot at kid, uh, you know, living as orphan with two siblings and his mom, uh, that created a family. There are six of us, uh, all of us very successful. Uh, and a lot of it, it was his perseverance and understanding and teaching us great values that prepared us to excellence in our future years. Um, I was pretty successful. I have two brothers thy're medical doctors. You know, my sister has a phd. Uh, my other brother, he is a, he was a biomedical engineer, uh, uh, from Rutgers university and he had a masters in biomedical engineering. And our kid brother, he, he has a degree in, um, in, uh, uh, uh, hospitality and he's an owner of the restaurant. So the entire family has done well. And I think their foundation, the family foundation, the principles that my father inspired upon us, the, um, uh, that environment is really gave us their foundation to achieve in life.:
David Wright:
5:23
So can you think of maybe a representative story, maybe something about your father that you think about, like that was the moment then the sticks in my head and that's, you know, I learned something big from him as a result of that story or that experience.:
Dinos Iordanou:
5:35
Absolutely. Absolutely. I, I went to a school in Nicosia, I graduate high school. I went to the army is mandatory. Once you finish high school, you got to go and serve. I did my two years in the military.:
David Wright:
5:51
This was, was it, this was, it was, it was independent or was it still under British rule then?:
Dinos Iordanou:
5:56
No, it was independent.:
David Wright:
5:57
Okay.:
Dinos Iordanou:
5:57
Cypress got its independence in 1960. Okay. I served in the army from 67 to 69, 1969. He puts me on a boat called Nano Maria. And, uh, off I come to America,:
David Wright:
6:11
wow. His call, he said, this is what this is what you're doing,:
Dinos Iordanou:
6:15
Where you're the oldest. I was the oldest. I'm the first born. I had 200 bucks in my pocket and a hope and that was it. So I arrive here after 17 days on the boat, no communication with the family. Uh, uh, and the reason why I came by boat, he couldn't afford a plane ticket. So, uh, he was cheaper to come by boat. So I arrive and uh, I call and I said, dad, I made it. I made it. I'm here. And he's first two sentences out of his mouth. Did you enroll in school and did you get a job yet?:
David Wright:
7:02
And he knew the answers. I just landed so he knew. But basically I think it was his way of sending the message you when they are for a principle, uh, to get an education. And the only way you can achieve that is by finding a job so you can sustain yourself. So the first two things out of his mouth, did you enroll in school and did you get a job yet? And you know, of course never asked, did you had a good time on the boat? It was a principle. It was, you are going with a goal. This is your goal. You got to stay focus and, uh, uh, tell you the truth, you know. Um, I'm a pretty brave guy, but if I had a 19 year old son, I wouldn't send him a 5,000 miles away, you know. But in subsequent discussions with my father, he says, I knew you were ready.:
Dinos Iordanou:
7:56
You were always responsible as a kid growing up. I started working when I was 14 years old, doing little things here, helping the family, six kids. Uh, my father was a policeman on a policeman's salary in Cyprus. You know, things don't go very far. I mean, uh, handing down clothes is the, was the norm. I, I was the only son pretty much I was having the privilege because I was the oldest where new shoes, my shoes or get passed down all the way. Even my brothers were complaining, how come you always gets the.. Because he's the oldest and that's the biggest size. And then when, uh, when it's time you're going to get his shoes.:
David Wright:
8:44
so what was this trip to America? Was it the plan for awhile? Do you remember when you first heard this is what I'm going to do for you? And you're like..:
Dinos Iordanou:
8:51
It was, it was, it was not planned. There were two options for me to get an education.:
David Wright:
8:56
Okay.:
Dinos Iordanou:
8:56
Was either go to Greece, which universities, uh, are free of charge. But But. Uh, you have to, you know, pay your way for room and board. Um, and my father couldn't even afford that. And there are no jobs in Greece for college students that you're going to go into work or earn some money and pay your way through a school where it was more appropriate to do that. In the United States. We had a few friends, um, older people, uh, than me who had already have come here. One of them who arranged for my, uh, my, uh, my visa, the F-1 visa, a student visa. Uh, he came four years before me and he was just graduating from, uh, Queens College and then he went and got his masters at Rutgers University and he says, I'll do the paperwork for you and all that, you know, get here. I help you find a room and all of that. And, uh, helped you find a job. And when I came, you know, I, um, my first job was gas station attendant on Hoyt Avenue Astoria Queens. Uh,:
David Wright:
10:16
how'd you get that job?:
Dinos Iordanou:
10:18
Uh, he says we're going to go around and we're going to ask people, and it was a Shell station. It says, you know, my English was challenging, but at least I can understand regular and high test and, and uh,:
David Wright:
10:35
[laughs] that's all you need,:
Dinos Iordanou:
10:36
and that's all you need it and clean windows and uh, you know, uh, um, and I, you know, I got the job and I had flexible hours because, uh, gas stations run 24 hours a day. So I was getting odd hours. Where others, they don't want to work. And he didn't interfere with me going to school in the morning. So it was, it worked for me. It was a tough job. You know,:
David Wright:
11:02
But it was a job. So I'm going to go back to Cyprus for a second again because it's an interesting place. I hadn't really looked into where it was exactly. It is nestled up right against the Middle East. Right. And it's a, in terms of Greek culture, an outpost, it's, it's pretty far away from mainland Greece, much closer to other countries. There's a lot of, let's call it a sectarian tension:
Dinos Iordanou:
11:23
Well, quite a bit between the Turks and..:
David Wright:
11:25
Yes. Yeah. Yes. I mean, that's it. That's a, that's a strange environment I would think to grow up in probably feeling how did, how does it feel? What does it, how does it..:
Dinos Iordanou:
11:34
Well when I grew up there was no tension, tight.:
David Wright:
11:36
Okay. Oh really? Interesting.:
Dinos Iordanou:
11:37
Yeah. They, uh, Turkey invaded in 74.:
David Wright:
11:43
Yep.:
Dinos Iordanou:
11:43
Right. I was already in the United States. I came in 1969. I think he's outside influence. The, the Turkish Cypriots and Greek, they live next to each other. The village, my mother was born, I had about 300 people, half of them, thye're Turkish, half of them, they were Greek.:
David Wright:
12:02
So you had friends who were Turkish .:
Dinos Iordanou:
12:03
Yeah. My, My, both of my parents, my father, my mother had spoke Turkish fluidly.:
David Wright:
12:08
Wow.:
Dinos Iordanou:
12:08
And vice versa. A lot of their friends, they would speak Greek now. Turkey as a big power always had, uh, ambitions, ambitions to, you know, to, to, uh, get either some of the Greek islands or a, or part of Cyprus. And they accomplish that in 74 with the invasion. And to this day, nobody's recognizing the north island Turkey, um, uh, the, um, the, the end. And they did ethnic cleansing, uh, you know, with the approval of the United States. That's the thing that really bothered me the most. You know, they move all their ethnic Turks from the south of Cypress up to the north, and they push all the Greeks on the south, divided the island. And now there is pure, uh, is no Greeks on the north and no Turks on the south. And that was accomplished by, you know, by Turkey, uh, with the blessing of Kissinger at that time.:
David Wright:
13:10
So when, when you were growing up in this uh, let's call, before the tensions began, did you, did you travel to other Middle Eastern? Did you ever go on vacations? I mean, I guess we didn't have,:
Dinos Iordanou:
13:19
I did not, um, uh, go on vacations per se but I did travel quite a bit to Israel and, uh, he was, uh, to visit friends I made as a teenager, as a teenager. I was working in a hotel, uh, up in Platres, which is the, um, um, the mountainous area in Cyprus, Troodos Platres and Forest Park Hotel. I was a, I was working, I started when I was 14 years old, first job and all that. And uh, the rich Israelis, they used to go to vacation in Europe and all the poor Israel will come to Cyprus.:
David Wright:
14:03
Okay. Very close.:
Dinos Iordanou:
14:05
And yes is very close.:
David Wright:
14:07
How many hours on the ferry? How long was it?:
David Wright:
14:09
If you leave Limassol at eight o'clock at night on the ferry, 6:00 AM the next morning you're in a:
David Wright:
14:17
Big distance still. Long time.:
David Wright:
14:18
Well it's about a hundred, 120 miles. Boats don't go by, you know, so he, he still takes about, you know, uh, 10 12 hours to get there, you know. But uh, so, uh, the hotel was booked by the teacher's Union in Israel. Okay. So as part of their dues yeah, they will get one week, uh, stay in Cyprus.:
David Wright:
14:47
A Perk:
Dinos Iordanou:
14:48
Yeah. It was part of the for their dues. So every Monday morning a crew will leave and Monday afternoon a new crew come in. They will stay until the next Monday morning and uh, and every week. So I made a lot of friends and they will invite me to go to Haifa and Jerusalem and all that. And uh, I was, I took those opportunities, you know, to go and visit. So I've been to Israel quite a few times.:
David Wright:
15:17
Was that unusual? Did Friends of yours do things like this too? Or is that,:
David Wright:
15:20
Yeah, the Sunday you will go to Lebanon, you know, Beirut American University was flourishing at that time. I, uh, my, I have three or four cousins who are graduates of the American University in Beirut.:
David Wright:
15:33
It wasn't an option for you, though, going there?:
David Wright:
15:35
No, because of the same issue, you know, they are, I had to pay tuition and also, um, uh, the living expenses. So I was the first one and I came here. My second brother is a doctor. Uh, he went to University of Athens and he finance, he's staying in Athens by coming into summers visiting me here.:
David Wright:
16:00
Right.:
Dinos Iordanou:
16:00
And working two jobs. He would work as a, as a, uh, a, a dishwasher and as a delivery boy down on broad street in and, uh, in, um, in downtown. Right, right over here. You know, there was a, you might remember it if you've been around here for Kees coffee shop who was in the corner right by a 90 broad street right on the corner. So in the morning he will deliver food into the offices, uh, breakfast and lunch and all that. And then from four to midnight he will be the dishwasher and he will save any, we'll save all his money for 10 weeks in the summer that he was here:
David Wright:
16:45
sleeping on your couch or:
Dinos Iordanou:
16:46
sleeping on my couch or then that will last them for the full year, paying rent and living expenses in, in, in Greece, in Athens. And he graduated medical school there and then he came and became the chief resident of Roosevelt and look. Okay. He built his own practice with, um, you know, in Astoria Queens, a call, Astoria Pediatrics. And then they later on they sold it to north shore university hospital, which just retired this year from it, you know. But that's why I went back to my father. I mean, he instill a sense of purpose. You got to have goals, they're not impossible. They're might be difficult. But at the end of the tunnel, it's a lot of bright light. So my brother got his MD, uh, and it became a very successful doctor in the United States all on his own. Not because my father didn't want to help, but he couldn't.:
David Wright:
17:49
Sure.:
Dinos Iordanou:
17:49
You know, you're a poor family. Yeah. You, you, uh, you, uh, to, to, to this day, my wife says, oh, you're a multimillionaire and I am, uh, and he says, you, you're so cheap. I says, I'm not cheap. I'm frugal because I grew up like that.:
David Wright:
18:03
Yeah. Is it possible to instill that kind of value in somebody without that kind of upbringing? Like, can you do it?:
Dinos Iordanou:
18:09
We tried very hard, I think. I think my kids, uh, um, I'm very happy with where they ended up. I have three daughters. The oldest is 34, uh, have, uh, 31. And at 24 year old, uh, they went to Northwestern, William and Mary and University of Virginia. Uh, two of them graduated Cum Laude in one. You had a 3.3. You didn't make Cum Laude, but not bad. Not Bad. Uh, this is Northwestern. 3.3 is pretty good and they all very, uh, working and they're very, very successful. As around, matter of fact, my youngest one just went back to, um, you know, mid deal, uh, the communication school I'd, uh, at Northwestern and she's one of 19 kids. They have admitted into there. You, she wants to be a sports communications person, you know, either as an announcer or as a site, you know, sideline reporter of some sort. She was a terrific athlete. She played for the US under 17 national team in soccer. She played for the University of Virginia.:
David Wright:
19:20
You played soccer?:
Dinos Iordanou:
19:21
I did.:
David Wright:
19:22
Do you play in Cyprus?:
Dinos Iordanou:
19:23
I played in Cyprus for a Pro Team for three years when I was young. 17, 18, 19. And then I played for the New York freedom here when I came to the u s and, um, you know, I played all the way into my fifties.:
David Wright:
19:35
So did you, did you ever, I looked up a name, uh, in cypress. Did you ever play with, Sotiris Kaiafas?:
Dinos Iordanou:
19:41
Uh, Sotiris Kaiafas, yeah. I played against him in 1976 we went with the New York Freedoms and he used to play for Amonia.:
David Wright:
19:50
Yeah. Yeah. Meant to be the best Cypriot soccer player of all time. Would you agree with that?:
Dinos Iordanou:
19:55
I, uh, I don't, I don't think so. In my view. There are others out there who. He Was very, very good, but I think the best, I was named.. From Limassol called Krystallis, you know, he was phenomenal player.:
David Wright:
20:10
When was he active? When:
Dinos Iordanou:
20:11
He was active with, right before him. He was in the, in the, uh, in the early sixties, mid sixties. And he played for AEK, Athens. You went to Greece and played, uh, you know, and in those days, there's a lot of players now that they play all over the place overseas. But it was unusual for him. But you know, he was recruited in play for AEK Athens, which was a big, a big club in Europe. Uh, and then he came back, uh, you know, to Cypress to play. But you know, I uh, I enjoy the game and my daughter's play, my oldest play for Northwestern and my young one played for University of Virginia. She was a starting lift up lift back. She went all the way to the um, College Cup and then she played a pro for a year. Didn't like the environment there's not a lot of money in pro soccer. She played for um, she was drafted by the North Carolina courage. She didn't want to stay here. She went overseas, she play for Magilla in Norway and then she play for a Portland ladies in Cypress and then she came back.:
David Wright:
21:21
So important, obviously an important part of your own kind of life and your family, uh, the sports. Do you think that, um, it, do you think that that's an, is that a necessary I, so here is an observation. I find that it's common for people, let's call it people who work hard and have that kind of ethic, successful people to often have a real passionate about how, a lot of passion about sports. Do you agree with that? Do you think that's a, is it, is it,:
Dinos Iordanou:
21:45
there's young, young kids. I don't care of the boys or girls. Uh, they have, uh, uh, quite a bit time on their hands. Right. So, um, so now how do you, how do you challenge, you know, that energy and how do you challenge, uh, you know, the, the teachings of, uh, of really playing a team sport. They're learning how to, you know, play with others, uh, and share and try to make others better. The best soccer player is not the guy who is the superstar bodies, the guy who elevates that play of every player on the field. You know, Pele was like that. He will make everybody playing around him better because of knew when to pass the ball. He knew when to keep the ball, etc. But also is the camaraderie of, you know, on these travel teams, you travel.:
Dinos Iordanou:
22:48
I stayed two more and motel six, you know, in my life with my daughters as they were growing up. But you mix rich kids with poor kids, with different ethnicities. We have a Spanish kids, we have black kids, we had white kids. You know, and that creates a great environment for the kids to, to, to be brought up in audition. You just created a discipline. They have to go to practice. They have to manage their time well because they still have to do homework. They still have to do well in school. Uh, so there is less time to be hanging around the neighborhood corner or going down to the mall at the theater, wasting their time and associating themselves with bad actors. You know, so I, I, I've used sports as part of the upbringing and an important ingredient in creating structure with purpose.:
Dinos Iordanou:
23:50
If you your achieving things because you're competing, you're trying to get to the next level. Let me make the travel team, let me make the state team, let me make the regional team, let me make the national team, you know, not all my girls to have done that, but my, my youngest one has done that. My, my oldest daughter go to all the way to state, she made the state team, you know, which is an accomplishment:
David Wright:
24:14
It sure is:
Dinos Iordanou:
24:15
You know, Eh, and, and then she got recruited and she went to play for Northwestern. You know, we'd just division one Big 10, uh, you know, sport and I think that helped quite a bit in a lot of different respects as to how you deal with other people, how you become a team player, which is very, very much part of their success individuals have in businesses. Very, very few people in my 45 years in insurance have done well as individuals.:
David Wright:
24:52
Okay.:
Dinos Iordanou:
24:53
If that, if you're not a team player, if you're not sharing, you're not going to do well. You can be a good manager. You can be a good colleague, you know, at the end of the day, you know, team performance is, is been discovered now. It's the new password. Oh, sure. The buzzword. Uh, you know, but, um, you know, to me, teamwork. I discovered way back that I knew when I had cohesive teams that they were working together. Not only their productivity, but the solutions that they will come up with they were so far superior than very bright individuals working on their own.:
David Wright:
25:36
Yeah. Did you like, have you liked all of your jobs?:
Dinos Iordanou:
25:40
I loved every single one.:
David Wright:
25:41
Right. Right. From the hotel to the gas station to the dishwashing to the taxis.:
Dinos Iordanou:
25:45
My father used to say a job is like a prayer. Yeah. So you, yeah. Did I do jobs I didn't like? Yea. I was a dishwasher. Hot:
David Wright:
25:55
Sucks.:
Dinos Iordanou:
25:56
Sweating, you know. But at the end you've got a paycheck. Yeah. And when you went to the person's office to pay your tuition, you had the money to do it. Yeah. So, and the people on the job, right? Yeah. The team. Uh, I mean, uh, at the end, you know, you have to do what you had to do for survival fairly. It was not an option, you know, I mean, yeah. And at the end, you know, remember the towards my father says, did you get a job yet? And did you enroll in school? Yeah, yeah. You went there with a purpose. You went there to get an education and you went there and you can't get an education unless you can pay your bills and you better get a job. And your know to me it worked out and I was never ashamed. I'm probably a, is the only CEO was the best, uh, grill man. So I work in Greek diners as a, as a, as a grill man. Um, I'm the best breakfast guy.:
David Wright:
26:48
Can you really crack four eggs?:
Dinos Iordanou:
26:50
Yeah. Who told you that?:
David Wright:
26:53
I have my sources two in each hand. You crack them at once four on the grill. How, how quickly does it tell long does it take to make a breakfast order? Does he sing? Oh, short order cooks. It's like, I mean,:
Dinos Iordanou:
27:04
I used to go through, uh, a case. A case of eggs in a diner is 36 dozen.:
David Wright:
27:11
Okay.:
Dinos Iordanou:
27:12
I used to go through one case an hour.:
David Wright:
27:14
Okay. Wow. 36. Right. That's a lot of eggs, man.:
Dinos Iordanou:
27:19
Right. Yeah. Right.:
David Wright:
27:20
So you're in the zone:
Dinos Iordanou:
27:21
I was in the zone. I used to work, uh, uh, uh, Toomi's diner in a, across from the Ebbets field in Brooklyn. You know, when they demolish the stadium, the big project, the diner was across the street. Of course, it used to be a very famous diner and then a Greek Cypriot bought it. You know, what's in a very, very poor neighborhood. You know, all my customers, they were African Americans. So a black, uh, you know, guys and you see they eat. I had orders you, you know, you, I had orders like four over easy eggs play, you know, grits and bacon I knew how to make grits because uh, you know, they, they love grits. You know, you don't, you don't find that in a lot of diners. Right. You know, you get home fries, you get, but yeah, you know, it was, it was fun. I, I will work Friday night, Saturday night and Sunday night. Uh, and when I was in engineering school at NYU and believe me, I was making enough money to pay my tuition, pay for my room, and even afford to have a junky car to get me around.:
David Wright:
28:31
When did you stop working? When did you stop working more than one job?:
Dinos Iordanou:
28:34
Well, I was, well, I was working throughout, uh, you know, my college years, I was working multiple jobs. My main job was, he was presumably, you know, but if, if a friend of mine, he says, would you, would you do eight hours tonight on a cab? I will go out and do it. Because you know, if, if I did my homework, I didn't have anything, I'm going to go to school the next day. And the guys says, Hey, you know, I got the car sitting there, I'm not going to take it out. We used to, we used to get 40% cut. Right.:
David Wright:
29:14
Wow. Right.:
Dinos Iordanou:
29:15
60% goes to the medallion at 40% goes to their driver. So if I went out in a night in those days and I make, you know, a couple of hundred bucks, that's a lot of money, you know, and uh, you know, hustle, get to JFK, wait for, you know, and all of that.:
David Wright:
29:31
So you, but you graduate from university, you get a job in the engineering business for a little bit. You still working two jobs there?:
Dinos Iordanou:
29:37
No, I stopped that when I started working at, uh, you know, uh, Eh, any was a short period of time. I only work in engineering for about a year and then I couldn't get top clearance. And then my career was pretty much over before it started. But, uh, I went back to my advisors at University. I was, uh, you know, uh, and they said, listen, you have so much math in your background, why don't you go and get a job down on Wall Street as an analyst somewhere either with an investment bank, you've got a good degree. It's NYU School of Engineering and science, you know, uh, or an insurance company or a manager in a bank, you know, and then give it a try. Do you pretty good. You know, you, you, you're very, you have a very analytical mind. Um, and then go and get an MBA. And then, well, first job I got, I got offer was at AIG. They wanted me to help underwriters underwrite satellite launches on, it was when their communication satellites there, where we're talking about mid seventies now, right. And I got discovered by Hank Greenberg and:
David Wright:
31:01
discovered how did he discover you?:
Dinos Iordanou:
31:03
there was there, there was an incident that there was some bad underwriting and they ignored my recommendations in the report. I wrote a report about, um, uh, you know, some technical flaw, well, not a technical flaw, but I said the probability of failure is, should be around 14, 15%. And in essence, if you're going to price this business, you got be charging a rate of 18 to 20 because you've got to put expenses and the going rate, it was like 6% and they wrote the risk at 6%. And of course, you know, even the probability of failure is about 15%, uh, writing 6, they're going to fail. And it happened to fail. So he wanted to, okay, uh, see who did the evaluation, et cetera. And, and um, they, um, they eliminate my report from the file.:
David Wright:
32:01
Oh, did they? Oh, no.:
Dinos Iordanou:
32:02
And then he said to the head of the engineering department, I thought I asked you to hire somebody who knows anything about this business. And I says, I did. And he says, where is his his report? He says I don't know, but I have a copy in my office. It's going and get it. And Cliff Stone was the head of the engineering department and got the report because:
David Wright:
32:27
your boss,:
Dinos Iordanou:
32:28
My boss, of the engineering department. So he took it up. He says, I want to meet this kid.:
David Wright:
32:34
And you're, how old are you there?:
Dinos Iordanou:
32:36
I was, uh, uh, 27.:
David Wright:
32:41
How old is Hank at that point?:
Dinos Iordanou:
32:43
Oh, well, Hank, uh, let's go. It's a, um, uh, he is 25 years a senior to me. Mid Fifties. It was early fifties, right? Yeah.:
David Wright:
32:56
So, and before that meeting, what did you know about him?:
Dinos Iordanou:
33:01
Oh, he was:
David Wright:
33:02
living legend already:
Dinos Iordanou:
33:03
living legend already. I mean, here, you know, so:
David Wright:
33:06
a bit of a tough guy.:
Dinos Iordanou:
33:08
Very tough, very tough. But you know, so he, he uh, he says, uh, I'm gonna, I'm gonna put you on the fast track program. They had a fast track,:
David Wright:
33:21
so he liked what he saw. When you, when you walked in:
Dinos Iordanou:
33:23
Well you talked about my background. Okay, well, different interview that you're doing with me, right? You want, what was your father? How did you come here?:
David Wright:
33:31
Yeah.:
Dinos Iordanou:
33:32
You know, he says you're smart and hungry and I liked that. Yes. I'm going to put you on the fast track program and see how you do.:
David Wright:
33:40
Yup.:
Dinos Iordanou:
33:40
And the rest of his history, 1982, I was 32 years old. I made CV Starr partner.:
David Wright:
33:46
Yeah. Cool.:
Dinos Iordanou:
33:47
Yeah, that was, you know, and one of the hardest weeks in my life is when I left AIG, you know, I mean they, he introduced me to Warren Buffett because we are going to do a transaction and that transaction didn't happen. Uh, and uh, the Berkshire people, you know, Mike Goldberg and uh, um, the, the group that including Warren, they were impressed with our negotiations, my knowledge of the business, et cetera. So six months later they came and they said, would you come and join us? And, and I did. And that created a little bit of a tension between Hank and insurance.:
David Wright:
34:34
So what was that conversation like with Hank,:
Dinos Iordanou:
34:35
oh, he used to throw my resignation. Ah, AH, you lost your mind, you know, no, this is your house. This is where you belong or you want to go work for some guy who doesn't know anything about insurance.:
David Wright:
34:48
Yeah.:
Dinos Iordanou:
34:48
That was his. you know...:
David Wright:
34:51
I've heard before that, that uh, um, comments from Hank Greenberg about how people don't understand insurance. What does he mean by that? What, what is it that people don't understand about insurance.:
Dinos Iordanou:
35:00
Well, they don't understand, you know, that it's a risky business, right? I mean, you, you, you, you're managing risk. You got to price it appropriately. And there is many pitfalls, you know, it's getting easier today than 50 years ago because of the flow of information is so much better. you know that Google has been the biggest invention in underwriting because now companies, they can hide, they will not lie about their past, but they're not going to come. And I says, I've sinned and I've sinned and I've sinned.:
David Wright:
35:39
Sure.:
Dinos Iordanou:
35:39
What'd you don't, won't hurts you. So, so the old crafty broker is in our early days, they won't tell you the bad things. So we'll always present the risk with the most positive light. Right. And he was up to you to find out:
David Wright:
35:56
what was really going on or the skeletons in the closet:
Dinos Iordanou:
35:59
and and that and the tools. They were not as available then as they are today. Now you know as it's been many years since I was a desk underwriter, but I can tell you the job, it has become a lot easier for those who want to practice great underwriting because underwriting is good analysis of information, making judgments and putting an appropriate price and you have to be disciplined in the way you do it and if you're not disciplined, if you're not patient and disciplined, you're not going to do well. Arch has done well because I always insisted in certain insisted in collaboration. I wanted people to talk to each other, pricing actuaries with the claims people with the underwriters as a team because each, let's face it, it is simple math. One, mind is not as good as two minds. He's not as good as three minds.:
Dinos Iordanou:
37:04
I'll take three minds working together in collaboration to make a good decision because when you step back, what is the insurance business? What do you manufacturer? I asked that question to a lot of people, what do manufacture? You manufacture decisions. It's no different than the investment business, the investment business, what are you do? You don't make widgets, you don't make a cars, you don't make chairs, you make decisions. You analyze a company, you analyze their strategy. You are, same thing with underwriting. You look at the company, you look at the risks that they're facing, et Cetera, and you make a decision as to what is an appropriate price for you to take that risk and give them the protection that they need. And so collaboration is very important. Working as teams is very important and not taking shortcuts, meaning you have to do the analysis. There is no shortcuts. And as technology has improved, the ability of information to flow freely and you find it, you can go Google a local, a little paper, and if they have a plant in, in a Timbuktu, you'll find out if they had an explosion five years ago or, and even if the broker, they don't tell you it's up to you to find now and it's easy to day to do it when it was not easy 40 years ago.:
David Wright:
38:30
So one thing that is I guess famous about the AIG kind of classic culture was that it was actually pretty competitive, right? So people advance and, and Hank picks people and pulls them out of the pack and says, you're now and then they have divisions, which legend has it, I don't know a whole lot about it directly, but competed against each other. And so you're emphasizing a lot of collaboration. But then from what I hear about, AIG has a lot of competition. Is there, am I understanding it right? Or:
Dinos Iordanou:
38:57
there was competition, you know, there was always competition between the Lexington, uh, people and American home, right? Because and there wasn't as much between AIU and up because they were most of the foreign division, et Cetera. But there was some company, internal competition because you know, is this account a standard account and go to standard market or these account and he says surplus lines account and go to the surplus lines market.:
David Wright:
39:24
Yup.:
Dinos Iordanou:
39:24
And you know, but, but, but that doesn't because there was internal, you know, competition there, we had viewed it. It was no different than the other 50 competitors you have on the outside. Right. What's the difference? Why create barriers? If, if a unit has better ideas and they can, you know, uh, take a product and be more successful, uh, at the expense of some other division within AIG. So be it because there was another 50, 60, a hundred insurance companies, they're trying to do this the same. So by eliminating one internally, you haven't eliminated the other 50 or 60.:
David Wright:
40:05
So what difference does it make? So does that mean that there's like a limitation to how many minds can be focused on a single problem? It productively, right? So one better, two better than one three better than two, but 50 not necessarily better than 15 or,:
Dinos Iordanou:
40:17
so you, you get to analysis paralysis. I've got some point in time. He's bringing it, it's a cultural thing.:
David Wright:
40:25
Okay.:
Dinos Iordanou:
40:26
You know, everyone is busy, you know, but if you have an open mind and you have collaboration, you know, with the, that the right number of people, uh, I think you, you're in the business of manufacturing decisions, right? So the quality of the decision that you make will determine the ultimate outcome. Right. And if you eliminate defects because people don't try to make the wrong decisions, wrong decisions get made because you're trying to do something, right? Yeah. But by eliminating a lot of wrong decisions, the company will go and forward and, and succeed. And I want collaboration to happen all the way with this simplicity of risks down at the bottom, all the way to the big decisions that they get all the way to the c suite. Because you got to have that team, you've got to have that team, you know, in the collaboration. And once you, once you achieve that, do you have something culturally that really is very powerful, you know, within, you know, the organization. There is residual positive effects on that culture too. In the insurance business, even though we have more universities now, Saint John's university school or risk management that they teach the basics, you know, um, a lot of the art, of underwriting happens through practical experience and the more a company collaborates, that transfer of knowledge both inwards and outwards accelerate significantly. Yeah. So how do you get the younger generation to learn from the old crafty underwriters? By collaborating. Yeah, because, and believe me, young people sometimes will come with ideas than the older people will not even think about because culturally they were not brought up in, in that fashion. So I'm, I'm a big proponent of collaboration on any business that is decision make a decision making business. What does an actuary do? He makes decisions every single day, right? You sit there, you analyze, you analyze, you analyze and you make decisions. Uh, talking to claims, people talking to underwriters, etc. He, it enhances, you know, your ability to make a better judgment.:
David Wright:
43:18
On this podcast, I interviewed Paul Ingrey a colleague of yours for a long time.:
Dinos Iordanou:
43:24
Uh, Paul was one of the founders of Arch. Yes. It was Bob Clements Paul Ingrey and I, yeah.:
David Wright:
43:30
Paul worried a lot about companies getting too big. So he would say, I, I get nervous when I forgot the number he picked, you know, maybe it was like 25 or something like ridiculously small number people because then I think his point there was that you, you lose some of the intimacy, I guess, of the collaboration once, once organization gets larger as a very reinsurance kind of thing. Right. Insurance companies are different. They're bigger, much bigger, doing harder things. You moved from AIG to Berkshire Hathaway though not a big company. Berkshire Hathaway. And we've got time, large balance sheet, but small team.:
Dinos Iordanou:
44:00
That's correct. Yeah.:
David Wright:
44:01
What do you think about that transition mean? Very different kinds of organizations.:
Dinos Iordanou:
44:06
I think Paul was right. You know, uh, the larger the organization, the more challenges in maintaining the cultural cooperative attitude. But you can do it. You can do it is if you view each profit center, if you organize a company into a profit center where, you know, the, the, the small modules, you know, it's, uh, if you have, if thousand seal teams, they're going to be as effective as any seal team that has 12, 15 members and now you got 15,000 of them and they do their core special forces. And some is the Delta force in some is the seal for, but the culture, tough training ability and working collaborative with each other, it's all there. And then you got to take that and translate that into an organization now, tougher in insurance because you got to create all these teams. Yeah. And allow them to operate in the marketplace without stepping over, you know, each other. And, but I wouldn't do it any other way. Uh, the collaborative, uh, uh, culture within an insurance company, it will directly affect the results.:
David Wright:
45:52
What was your, what was the role you had at Berkshire Hathaway? What'd you go there to do?:
Dinos Iordanou:
45:56
When I went there, I was, uh, running their commercial insurance operations. And then Ajit Jane was running, their reinsurance operations. Right. And then, uh,:
David Wright:
46:06
Based in Stamford were you or were you...:
Dinos Iordanou:
46:08
No, we were here at 84 William St.:
David Wright:
46:10
Oh, you were in New York. Okay.:
Dinos Iordanou:
46:11
84 William Street. And we used to go he had a floor I had a floor. And then we used to go to Omaha and once a month.:
David Wright:
46:18
Okay. Yeah. And how'd that go? I mean, that was a very hard market, that kind of late eighties.:
Dinos Iordanou:
46:23
It is what we did well, not as well as I wanted to do.:
David Wright:
46:27
Why not?:
Dinos Iordanou:
46:28
Uh, we had an individual who we reported to Mike Goldberg and he was very risk averse, so he was holding us back. He was holding us back. That's the reason I left Berkshire. I stayed there for five years. And then, you know, I moved on to Zurich to be the chief executive of Zurich North America because I knew that, uh, he wasn't going to be, uh, you know, a big operation once I left, I think Warren recognize that with Mike in charge of all insurance operations at that time. Uh, people were leaving, etc. So he moved him and then he Ajit in charge of it and Ajit has done extremely well and he gave him more aware of a leeway to do things that Mike will never do.:
David Wright:
47:23
So Warren Buffet and Hank Greenberg in my conception of it, radically, radically different people.:
Dinos Iordanou:
47:29
Yes.:
David Wright:
47:29
Is there anything in common, what do they share?:
Dinos Iordanou:
47:31
Uh, they, the thing that they share that that is common is they make decisions based on a lot of analysis and a lot of knowledge. Mm. Uh, both of them. Okay. They're, uh, Warren reads enormous, hmm. Uh, volume of information and he has a sixth sense. That is what I'm thinking. Logically can it happened yet. And uh, Hank or was made decision based on, at least my interaction with him. When you went to see him, you better have all the facts in order. Yeah. You don't go by guessing go by having the appropriate information. He was.. Both of them. They were tremendous, uh, focus on detail and they liked the detail, different minds, different attitudes, et cetera. But if I had to say, uh, what, what was both a secret ingredient to both in decision making? He, they will base it on a lot of facts and knowledge.:
David Wright:
48:49
Anything in particular about your own leadership style that you might've learned from, from from that one,:
Dinos Iordanou:
48:54
That one I learned it from Hank for us and Warren reinforced it, right? That was it. They, they pay attention to detail. Uh, you're not going to get every decision, right. But the likelihood of getting the decisions right starts by having a lot of detail and uh, and pay attention to it. And I, and, and I did through my entire career.:
David Wright:
49:23
And is it, is it just an intuition you have to, cause you can get overwhelmed by that. Right. One of the, one of the things that I noticed about, about actuaries, and it'd be the case from new different kinds of people, but is that you used the phrase just now now a paralysis by analysis. And I think that that is a common thing where you just want to have it be perfect. Right? And so endless detail and go, ha ha. I, this is probably not a great question, but how do you think about that? You know, I've had enough, I know what to do now.:
Dinos Iordanou:
49:48
Well, perfection is the enemy of good enough for sure. Right. Right. Uh, at the end of the day, uh, and, uh, at some point to make you, it depends on, on, uh, your risk appetite and all that as to how good is good enough. Yeah. You know, because you, you know, um, the lesson I learned from, you know, Mike Goldberg, which I worked for at Berkshire Hathaway, I, I wasn't reporting to Warren. I will report to Mike Goldberg who reported to Warren Buffet. You was for Mike. Good enough was never, he, he wanted perfection. Yeah. You know,:
David Wright:
50:28
and he overlearned this lesson about pay attention to detail:
Dinos Iordanou:
50:31
and, and, and at the end, uh, you, if you are trying to achieve perfection, uh, you don't go anywhere. Yeah. Yeah. It's, um, you know, at some point in time, you know, there is the opposite that, you know, people will make decisions with very little information and you know, it's, uh, it's not the right approach. Uh, when you're in the risk business, but you know, you know, you're taking risks. The question is, is it priced appropriately? And you know, the other big lesson that I learned from, um, uh, Warren Buffet is that if you're making a decision that he will be catastrophic to the company, even though the probabilities of that happening, the very small 1%, right? Don't do it.:
David Wright:
51:38
Never bet the farm.:
Dinos Iordanou:
51:40
Never bet the farm, uh, if even if the probability is very low. And, um, it was a few other lessons that I learned from him. Worry.. Spend 80% of your time worrying about the downside, protecting the downside and only 20% about the upside. And believe me at the end, the upside will take care of itself. And, and the best one, he says, give you, don't rush your mind. Give yourself the ability to think things through. And he says, when you're going to make a good decision, listen to different people. But at the end of the day, put your feet on the table, lean back, think it through. If it is logical to you and you think you're making a good decision, go ahead.:
David Wright:
52:40
Manufacturing a good decision:
Dinos Iordanou:
52:43
on facts on that decision, take it and go:
David Wright:
52:45
So these strike me as really deep, important skills and practices for being good at insurance. That.. these Lessons you've learned from Warren, why did Hank think Warren wasn't good at insurance:
Dinos Iordanou:
52:58
or , uh, Hank:
David Wright:
53:03
Just thought nobody was going to insurance. Maybe if your name wasn't Hank Greenberg, you weren't good in insurance.:
Dinos Iordanou:
53:09
Uh, Warren Buffett is brilliant at insurance.:
David Wright:
53:13
Yeah.:
Dinos Iordanou:
53:13
He understands that it's the game that you'll create your own odds.:
David Wright:
53:20
Yeah.:
Dinos Iordanou:
53:21
Right?:
David Wright:
53:21
Sure.:
Dinos Iordanou:
53:22
Insurance is, uh, you borrowing money with an implicit interest rate and you determine that. Is it going to be, you know, one, two, three, 4% or is it going to be minus one minus two, minus three minor? You know, and that's where he talks about the float and yeah, if you're successful in underwriting, in insurance business, um, uh, under a hundred. So in essence, you borrowing money, which you're going to keep for a long period of time and eventually pay out. But, uh, you know, your cost of funds, the less than zero, that's a wonderful business. And, uh, um, uh, basically we were very, very focused on that. Uh, when we worked for Warren Buffet, you know, to make sure that, you know, that's exactly what was happening. You know, on the other hand, you can take undue risk and all of a sudden you borrowing cost, it might be 10%. And then, you know, I don't care how good you are as an investor, you won't be able to make it. And that's when you start losing money:
David Wright:
54:33
And their cultures' the same way we would do business with them now. And they say, say the same things. Now obviously that's something that's deep about Berkshire Hathaway thinking like that.:
Dinos Iordanou:
54:41
Well, you, well, uh, I mean, and everywhere it is. And I, I did ask Warren as to when did, when did this idea that the insurance business a great place to be? And he says when he was a very, very young kid, he went to Vegas with his father, was a congress, uh, senator, uh, and he says they're walking their casino and he saw all these, uh, uh, rich people in nice suits and all that playing games that they knew their odds there are against them.:
David Wright:
55:18
[laughs] Nuts, really:
Dinos Iordanou:
55:19
Right. And basically says, when I grow up, I want to be in a game that, that I'm the house the odds, they're with me. And the insurance business gives him that ability. I mean, GEICO sets the odds, they set the rates, et Cetera, and they want to have a certain margin. And if they do it well, they get that margin. I don't care if it's three, four, or 5%, you know, whatever it is, you know, it's a good business to be in. Same thing with the, you know, their insurance division or the insurance divisions that they have as long as, uh, you know, Ajit produces quite a bit of float and the float costs, uh, less than zero. That's a wonderful business.:
David Wright:
55:59
So you go from having maybe not directly reporting to, but having done enough personal contact with two of probably the most success that I mean successful insurance executives of all time. Right, right. I mean number one and number two, which one's, which I'm not sure, but:
Dinos Iordanou:
56:13
I would say Warren is number one.:
David Wright:
56:14
Yeah. Don't tell Hank. Hank will probably won't listen to this:
Dinos Iordanou:
56:19
Hank will. So took some, uh, risks sometimes that I wouldn't have.:
David Wright:
56:26
Yeah or Warren wouldn't have. Yeah. And so you leave and go to Zurich. Now I don't know too much about the Zurich organization, partly because it's based out of Switzerland. Um, but there doesn't seem to me to be as much of a kind of call it legendary leadership at the top of that organization. And am I wrong about that? What, what made you, what prompted you, I mean, you said that you were leaving the situation that you felt like you wanted to do more, you felt constrained at Berkshire, but going to Zurich why Zurich?:
Dinos Iordanou:
56:53
Well, a, Zurich is an opportunity to be a chief executive.:
David Wright:
56:57
Yep. Become the leader,:
Dinos Iordanou:
56:59
Become the leader. Uh, not of the holding company, but for their North American operations.:
David Wright:
57:06
Biggest division probably. Was it the biggest,:
Dinos Iordanou:
57:08
uh, non, originally when I, one day because I only, I was a CEO of Zurich, uh, America would, you was the, the, um, the branch of the parent in the US, but they own a lot of other operations. Universal underwriters, Empire Fire and Marine, uh, Maryland casualty, uh, fidelity and deposits Zurich Canada, etc. And they were not, they were underperforming units that were not, uh, and um, they asked me to consolidate all that and I did and I created a Zurich North America. Okay. Which is now their biggest division within the Zurich world, you know, especially since they bought farmers, you know, later on. Uh, but um, uh,:
David Wright:
57:57
Consolidating... And that means you're, you're merging divisions of a company. That must must be really tough work.:
Dinos Iordanou:
58:02
Very tough work. Very tough:
David Wright:
58:04
people not liking that, I imagine.:
Dinos Iordanou:
58:06
But there were a lot of inefficiencies. There were, you know, we had the 14 underwriting systems, I mean 14 claims system, seven, eight underwriting system. Each company had their homes and some of them they had to. So, uh, you know, I, uh, uh, I, I try to, you know, consolidate it back rooms and get efficiency, uh, not, not, not easy to do, but I had a great partner, uh, you know, in doing that, uh, which I think is, is:
David Wright:
58:41
Who was that?:
Dinos Iordanou:
58:41
Mark Lyons, Mark Lyons worked with me at AIG. Then we left together, we went to Berkshire, then we left to go to Zurich together and then we came to Arch and he left Arch when I retired. And he's a CFO at AIG now. Yeah. He's an executive back to AIG, working from Brian Duperreault, which is also a good friend.:
David Wright:
59:05
From the AIG days:
Dinos Iordanou:
59:06
Way back. Yeah, yeah. All these years. But, uh, you know, uh, that, that was, that was a very, very challenging assignment and I would have stayed at Zurich because I was the designated heir apparent and a Rolf Huppi wouldn't want to give me the job. And I, I had all these opportunities, people calling me too. And as I said, we've got these wonderful opportunity to do a newco and start Arch. Uh, you know, and uh, I left a a, I wasn't going to stay with Zurich waiting for and then when I left within three months they fire Huppi:
David Wright:
59:45
oh really?:
Dinos Iordanou:
59:46
Yeah. Yeah.:
David Wright:
59:47
I want to come back to this, this moment when you show up and then you probably know in your mind or in your heart that you're going to have to fire a lot of people, I would think. When you come to Zurich, do you expect that? When do you realize that? How do you do that?:
Dinos Iordanou:
59:59
I did. And uh, and uh,:
David Wright:
60:02
cause that's difficult, right? I mean the emotional toil, all:
Dinos Iordanou:
60:04
Very, very difficult. Especially if to me, I have these belief that employees is the most valuable asset of the company. Yup. Capital you can always get and all that. Uh, if you have great employees, you're going to get customers, you're going to get distributors, so is,:
Dinos Iordanou:
60:32
and then they should be a balance between the professional aspirations of these employees and also their personal obligations. So you got to create a company with a culture that would respect both. We don't want employees to feel that they're slaves to their company and vice versa. Uh, Eh, and I try to promote that culture everywhere, you know, weren't including Zurich, which was difficult because there were, um, companies in different places with different cultures, you know, et cetera. And is hard when you have 15,000 employees and you know that you probably need only 10. Wow. Right? So how do you do it? Of course,:
David Wright:
61:21
Because everybody's asking you, you show up and they're like, are you going to fire a bunch of people? And what do you say?:
Dinos Iordanou:
61:25
Well, I mean it's the, the, the, the, the beauty of the insurance business, you know, and also the anathema of the insurance business is that the turnover is pretty high. Okay. Usually most companies there I have about in the companies I run our turnover it was around nine 10% but in the business as usual, they're on 15, 16%. So if you're a little patient and you willing to talk to employees and said, say you might, we're going to try to protect as many jobs and we are going to eliminate excess, unnecessary jobs through attrition. You can do it all through attrition, but you can do a lot of it. Don't forget 15% on 15,000 people. There's 2000 people come in and out the company every year.:
David Wright:
62:20
Yeah, sure.:
Dinos Iordanou:
62:21
So maybe you replace 500 because they're critical, but the other 15 you don't, and you're in line within two, three years, you get to equilibrium. So we try and Mark was phenomenal in, in, in, in helping me, uh, Mark Lyons, uh, making sure that we were a little more patient instead of, because you can injure the organization. If you go into the analyst like to hear that, oh, I'm going to cut 3000 jobs and I'm going to:
David Wright:
62:57
It's expense, it's just numbers:
Dinos Iordanou:
62:59
you doing more damage culturally then if you do it in a, you know, and I'm not talking about people who they're not, they're pulling their own weight within the company. If it's performance issues, you create an organization that says, Hey, if you're not a good performer, we're going to ask you to leave because you're not fair to the guy sitting next to you because he is pulling extra workload to cover for you, which you're not doing your workload.:
David Wright:
63:29
Yeah. He's cracking four eggs. You're cracking one.:
Dinos Iordanou:
63:32
Exactly. Correct.:
David Wright:
63:33
So what, what was it that mark brought that, that, that helped you so much? What was this quality that the complimented yours up?:
Dinos Iordanou:
63:39
uh, compassion and intellect at the same time. Okay. Yeah, it was very compassionate. You know, he, he understood that there is ways to do it and uh, he view employees as people, not units. And uh, and you, he has tremendous amount of intellect, you know, so he knew longterm and also the short term, you know, benefits as to how to do it. I rather have the extra expense for another year or two and do it in a smoother way. And then you gaining the confidence of the employee is when you tell them, hey, you know, because later on you're going to ask managers not to have a staff. I always in my speeches, you can probably Google a lot of them. I always said what very rarely in the insurance business who has grown on average three, 4% a year, right. Any has at 10 to 15% turnover over staffing is the problem of management because there is enough in and out of the company for you to manage and have the right workforce for the workload that is necessary.:
Dinos Iordanou:
65:01
And don't blame the employees for over-staffing. Blame the managers. Hmm. You know, and what I instill upon all managers and employees that says, when you make a decision, I need another person. Make sure you need that other person for the next 10 years. Not I needed for the next year or so, and then, oh, we'll get rid of him. That's not a way to run a company. If you're going to give somebody a job and look them in the eye and says, that's a permanent job as long as you do, you know the job well. You don't have to worry about your job. And that's a strong message. And the the, the, the CEO got to live it. Breathe it and it has to permeate through the senior management and all the way down. Um,:
David Wright:
65:52
well, what do you think, what was the part of being a CEO that you'd like to least there was most difficult, but the part you're like, I hate this part of the job.:
Dinos Iordanou:
66:03
Well, I mean, the, the hardest, the hardest part of the job. It was, you know, you've got to make the ultimate decisions and uh, and, and sometimes, you know, I felt that I was making a decision and I wasn't 100% sure he was the right one. But you had to make a decision. And in that, I used to agonize about that quite often.:
David Wright:
66:32
Is there, is there an example that you can get me up at the time that you felt that way? It could be an hour back in history or, uh, yeah.:
Dinos Iordanou:
66:41
Uh, we had a company call a universal underwriters. Okay. Um, and, uh, it was a direct writing company.:
David Wright:
66:50
Okay.:
Dinos Iordanou:
66:51
Uh, when I consolidated the Zurich, he was a company that every other company, Maryland Casualty, et Cetera, uh, universal, uh, with the exception of universal underwriters. There were distribution, he was agents and brokers.:
David Wright:
67:08
Okay.:
Dinos Iordanou:
67:09
And I was getting a lot of pressure from the brokerage community. Oh, we like to be able to submit to universal underwriters and uh, um, I agonize and long time at the end, I think I made the right decision to keep them separate and independent and have their, their direct sales force. But I came close to making the wrong decision and now I stepped back and I say, Eh, you know, thank God I was lucky. It was a flip of a coin. Not because, because you, you feel the pressure from one side and you've got great relationships with all these brokers, Marsh, Aon, you know, and Willis and you go all the way to Gallagher, etc. And they, it says, Hey, you know, we got auto dealerships, why don't we submit it? But I says that companies they're a direct company. They have a culture of their own.:
Dinos Iordanou:
68:01
I didn't want to do, I was big on culture. I didn't want to destroy the culture and the direct sales force and the relationships they have with the local dealers. I think it was part of their success, you know, because they knew their customers intimately, which is the beginning of the underwriting process. Who am I doing business with? Do I trust them? What is their track record? If you had our sales people go up and down auto dealership boulevard, which every town has it and you see one deal after another, uh, and they knew this a good one, there's a good one. This is a guy who don't want to write. This is a good one. That was the beginning. Your of course, you've got to make the financials work, right? The underwriting process and you've got to agree on coverages and prices. But at the end of the day, that's the beginning of selection.:
David Wright:
68:55
Yeah. There, uh, we're kind of running on low on time, but there's two topics I want to cover. I'm gonna come back to culture because that's so important. But before we get there, there's one of the thing that I wanted to talk about, which was the interplay between, let's call it quality of strategy and market opportunity. Again, back to the conversation I had with Paul Ingrey, he more or less said, and this is my word, so I don't want to put them in his mouth, but he basically said that the market drives the opportunity to market. We'll give you the opportunity and is there or it is not. And if it is not, just wait for the market to give you an opportunity. So the hard market underwriting kind of style, and that's obviously the opportunity in which Arch was founded and exploited it to great success, but that's not the case everywhere in all the time. There isn't always a hard market somewhere for you to exploit to, to great success. What do you think about this idea that that hard market is really the time when an insurance company can shine and other market cycles? It's, they aren't as good, just fundamentally aren't as good:
Dinos Iordanou:
69:48
in principle he's absolutely Correct. But you know, it depends how you see the world and where the opportunities are, right? Because if you, if you remain narrow in your thinking, uh, you will not find your opportunities.:
David Wright:
70:06
Yeah.:
Dinos Iordanou:
70:07
In underwriting the two principles you must have is discipline and crisp execution. So in any market, if you discipline and you have good execution, you would, you were still find transactions that you can do, not maybe not in the volume that you would like, that it will give you good profitability. That means you're willing to lose volume. But when you lose volume in or not in one area, you always have to look in other areas. A great example with Arch, when the financial crisis happened, we saw opportunities in the mortgage space. 75%, 80% of our earnings today, they're coming from mortgage insurance. That's amazing, right?:
David Wright:
71:09
Heck of a transition.:
Dinos Iordanou:
71:10
He was, he was pivoting from less reinsurance, last insurance, more mortgage insurance and new line of business for us and you will for us, et Cetera. And I don't, I can't tell what the future will bring, but I'm sure Marc Grandisson, you know, running the company, he believes in that philosophy. You know, he worked for Paul, he worked for me for all these years. Uh, that if the opportunities are in reinsurance, we're going to allocate capital there. If they have opportunities in the insurance space, we're going to allocate... And the insurance space is broad is you know, different, uh, products. Different distributions is a wholesale channel. There's the retail channel is all these products from professional liability, the director's and officer's liability to the traditional auto GL and worker's comp. And then you get customer groups within where do you specialize and how do you access that business? So you always have to be looking, but you got to fall back to that original two principles. You have to be discipline and you have to execute well.:
David Wright:
72:28
Well, why do you think, why do you think Arch, so me and as a spectator and student of the business haven't noticed Arch being mentioned in a lot of M&A, at least as a, as a target, as a, as a seller. Um, why do you think that is? I mean, it seems like everybody else from Time to Time gets brought up in a conversation.:
Dinos Iordanou:
72:47
We get some calls and they were, but they always, they always, you know, felt that were expensive.:
David Wright:
72:56
Yeah. Okay.:
Dinos Iordanou:
72:57
Right. Uh, it helps a reward for good execution. Yeah. And, but, but, but, but at the end, you know, at the end of the day is you pay for what you get and right is th th there, there is a different in price between a, you, you go an a, an a Bentley or a, uh, a Rolls Royce, you know, I think arch is a Bentley Rolls Royce, you know, tie over an example versus Eh, you know, Eh, Eh, Yugo. Yeah. Right now there is, you've seen more transactions because people think they buy something cheap. Right. Uh, the one new one that I've seen that, uh, it was significant size and he paid, he paid very good price for it is Ace when they bought Chubb, right?:
David Wright:
74:08
Yeah, yeah. Is what I mean, nobody saw coming that it was amazing.:
Dinos Iordanou:
74:13
And it's the attitude of Evan, who's a good friend of mine that, you know, I don't mind paying when I'm getting quality.:
David Wright:
74:23
Yeah. Yeah.:
Dinos Iordanou:
74:24
Nobody has stepped up to pay for the quality of Arch, but it doesn't mean it might not happen, you know, at the right price. You know, I think everything is for sale. Right. And vice versa. We, we looked at universal underwriters. I had my eyes on it for three, four years before even we bought it from AIG, but I, I didn't like what they were asking the price. And then when the price got to the point that it was attractive to us, we made the transaction. We bought it for a little over 3 billion at that time. And you know, use a company who is producing 800 million of profits a year.:
David Wright:
75:03
Yeah. That's a good deal.:
Dinos Iordanou:
75:04
Yeah. It's a terrific deal. Yeah.:
David Wright:
75:06
So the source of Arche's, let's call it defenses is maybe you would say culture.:
Dinos Iordanou:
75:14
It is culture, uh, being disciplined. uh, yeah. Spending a lot of time to make sure the execution is crisp, you know, and more importantly, uh, attracting and retaining talent because in their business, that is a decision making business. That quality or of the of the people that you have is, is, it's not measurable. Right. But he makes the difference. If you don't have good quality people, uh, I don't, you can have the best rules. You can have the best, Eh, you know, processes, etc. It's not going to happen.:
David Wright:
76:01
How do you get them?:
Dinos Iordanou:
76:03
Um, it's culture. You develop it and it starts from the, from the head, the CEO and it goes down to, and it's how you treat people. And you know, if you, if you treat people as professionals and you do respect, you know, that they have, uh, both, uh, professional needs to grow and get to the next level and you know, promote from within and give people opportunities to achieve. And also you're accommodating a, you know, uh, their, their, their family obligations. You know, for example, at arch we will never stop unemployed to go at three o'clock in the afternoon to see a play because their kid is playing in the local high school. I told managers, so, you know, you put that prohibition and I'm going to fire you because that employee is going to give me productivity in spades when he does that because you're respecting, you know, he's ability to go and see his child, you know, either on a socket, a field or in the theatre and he's only going to happen that one time at that moment. And if he's not there, he's missing that moment. And I don't want him to miss that moment. And if he has a report to write or if he has an analysis to do, he can get home from eight to midnight and do it. And the next day everything is Hunky Dory. He's happy and the company is happy because he believes that we respected him. And believe me, most employees, they will give you that much back, you know, for, uh, appreciating you know, what you do for them.:
David Wright:
77:47
But what you're saying there isn't controversial, I don't think. Oh, why don't more companies do it? Why, why do, why do you think that you're able to distinguish yourself from the companies you've led in that way? And others can't?:
Dinos Iordanou:
77:58
Because, I don't know. I, I mean is, you know, there is this, these, uh, Greek word called Philotimo okay.:
David Wright:
78:11
All right.:
Dinos Iordanou:
78:11
You can Google it. It doesn't totally translate, but it says it's the love filos means, it's love and timi means honor. I want people that they have a lot of philotimo means they love honor. And if you honor them, they will honor you. And if it permeates from the CEO down, I think gets embedded into the organization, they know that it's not words. Words don't mean a damn thing, right? It's the actions. It's you leading by example. You know, and you know, of course as the company gets larger and larger, it's back to the difficulty that Paul was sharing with you Paul Ingrey, that it gets harder and harder to keep that core his because the cultural cohesion, it's going to come from the leadership team and also the local leadership teams. You know, and not every person will believe. Yeah, I'm totally committed to it and I was a big proponent, but you get a lot of people, yeah, the worst cancer in, in a company is politics.:
David Wright:
79:37
What does that mean? What is politics,:
Dinos Iordanou:
79:38
politics is, oh, I, um, I'm going to undermine, my colleague, uh, because you know, getting him out of their way because I want to get his position and all that. And that's a cancer that eats companies:
David Wright:
79:53
Anti-collaboration,:
Dinos Iordanou:
79:54
it's Anti-Collaboration. It's backstabbing, it's knifing and all that. You get that in a company is the cancer that eventually destroys it.:
David Wright:
80:06
I want to bring it back to, to close. So you open an office in Cyprus.:
Dinos Iordanou:
80:11
Well it's a, it's a service office. It's a small,:
David Wright:
80:14
still probably the only insurance company and the Bermuda based or US based insurance company with an office in Cypress. I must think. Tell me about that. What you're supporting your homeland. I mean that's an important part of who you are:
Dinos Iordanou:
80:26
I felt that. I felt that certain type type of employees. Yeah. Uh, well educated, high degree of intellect, but a strong desire to go back home and live there. Yeah. Uh, could have been a good asset for us. And these are actuaries, mathematician, some accountants and that work can be done with electronics today, anywhere in the world. Of course, again, Arch has almost 600 employees in the Philippines. That's for it work and back room work, etc. And he's, because of course the etc. The Cyprus, uh, office was more about quality. Can I get high end personnel at low cost? And because I'm a Cypriot I can arrange for that action. Is being successful. I'm surprised they haven't grown. If I was the CEO now that office would have been 50, 60 people instead of, I think we have 20 people there. Uh, because you know, the quality and the cost is so much superior. We, we get a cra, fully accredited actuaries for 3000 euros a month, that's 36,000 a year. And it's the same kind of quality of actuaries we get here, which we have to pay probably 150,000 or, you know, so there is, is, is, is part is outsourcing and part of it is, let me get the quality at a much lower cost.:
David Wright:
82:04
and, and I think that you get people, so when you make that decision, you wind up generating an enormous amount of appreciation because they get to, they get to do the work, right? The high quality work, but live the lifestyle, you know, you had to leave. Not everybody necessarily needs to leave and this day and age them,:
David Wright:
82:21
Exactly. A lot of them they want to go and live back home. And, uh, uh, um, I'm on the board of directors of a, of Verisk, you know, the old ISO, you know, which became a for profit company and he's very successful and we just open and, uh, in a big office in Romania for the same reason, uh, we're gonna have a lot of analytics done there because we can get high quality individuals at a much lower cost than in the u s and now this is a global world, you know, and more and more students that come and get educated in the US or in the UK and they want to go back home and international corporations should give them the opportunity to work. And that was the idea behind it and it's been successful. Very successful. Yeah.:
David Wright:
83:13
Any closing thoughts on, uh, and you know, you're, what are you doing right now? How aware what opportunities you're looking at? What are you excited about in the insurance industry or outside?:
Dinos Iordanou:
83:22
Well, I, I, uh, I think, uh, the market is moving into positive territory and I think it will be, um, it will be good for, for, for the business over the next few years, uh, and it will give opportunities for arch and others to grow in that. Uh, me personally, I'm joining a couple of boards, you know, and, uh, is, uh, there is a few calls for me to, uh, uh, take CEO jobs, but, you know, I, I can do anything that is competitive with ours. So I have, I have, I have to find the right opportunity. On the other hand, I'm 69, so I don't know if I want to get back into the trenches, you know, part of me says, yes, do it. And part of me says, mostly my wife says, don't do it. You know, it, it will depend on the opportunity, you know, but, um, uh, you know, I, uh, you know, I, I have, uh, a lot of knowledge of 45 years in the business. So for the right opportunity and the right company, I think I can contribute quite a bit. And if it comes, I'll take it. If it doesn't, I'm still happy with what I'm doing.:
David Wright:
84:31
Well, thank you for your contributions today. My guest today is Dinos Iordanou. Dinos, thanks for joining me on the show.:
Dinos Iordanou:
84:36
You're quite welcome. Thank you.: