The Not Unreasonable Podcast

How Jonathan Beach is An Awesome Salesman

October 30, 2017 David Wright Season 1 Episode 2
The Not Unreasonable Podcast
How Jonathan Beach is An Awesome Salesman
Show Notes Transcript

Jonathan is founder of Beach and the best salesman I've ever met. His style was an enormous influence on me personally and on the culture of my firm as a whole. I wanted to do this interview to help explore what our culture is and what its most prominent practitioner can achieve with integrity, self-awareness, openness and honesty.

In this interivew we cover:

  • Jonathan's first sales experience
  • How Beach was founded
  • What he says when a client asks if he can do something
  • How Jonathan changed his mind about actuaries
  • How Jonathan builds trust and relationships

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Speaker 1:

My guest today is Jonathan Beach founder of The Economist firm where I've spent my entire career. Jonathan has had a profound influence on me through my career both directly and also through the firm that he built. Will explore that and more today. Jonathan welcome to the show. Thank you David. So I want to start with an origin story of you as a salesman and there is I think it was some kind of local fair where you had your first direct sales experience and indirectly led to your job in the business. Can you tell us that story.

Speaker 4:

Well I was 19 years old at the time and much to my grandmother's horror. I agreed to work on selling toys in open markets in England.

Speaker 5:

And you come across that opportunity. Well what happened was I was a bit of a lost soul to be honest. First of all I was a college dropout.

Speaker 4:

I was wondering the world that I was a job and that I'd be traveling in the Near East and I came back to England my home and was rather desperate to start work. But I was conscious of the fact that I didn't have.

Speaker 6:

Any educational qualifications of any description we're talking about. And so it happened that I ran into a friend the first day back and he said he was moving some equipment for a band. Would I like to help him. And the pay would be two pounds. So I said sure. So I did it got my two pounds and when I was talking to one of the band members it turned out that he sold toys and open markets. So I said oh I'd like to do that could I do it. And he said sure come along meet you at 5:00 in the morning. Well we wrapped up the band's equipment at 3:00 in the morning. Two hours later he picked me up and off we go to some some some beer somewhere or other.

Speaker 7:

Did you know you like it.

Speaker 8:

Well what happened was he was doing it and he was standing up there selling these toys doing a pitch you know typical open air market way. And.

Speaker 5:

And I said to him I could do that and he said no is completely the wrong type. He said you know the time for them all and I said No I think I could do that. So they agreed to let me have a go at it at the end of the market. Right at the end when it was wrapping up and I didn't spend any sales were talking about the guys said No you were just the wrong type. I said No no I know I can do this. Nobody bought from me because it's the end of the market. They they're dumb but give me from the beginning and I'll do it. So I persuaded them to let me have a go. So I set up a set up in the market and it was ridiculous. We were selling quite frankly just used out of sight out of line you know no longer produce toys. Even the most ridiculous thing junk junk junk toys actually. You know like my Potter movies in a minute late is I'll show you my dealing. They usually grandmotherly types would love anyhow and it was for toys for a pound. So I was WARC market Oruc in the middle of England and I stood up there and started my Patta.

Speaker 8:

And now the type is sold out of all the all the toys so I you ever had an experience like that before.

Speaker 9:

Where were you. I mean that's a that's a it's a delivery with charisma. So you know it's a joking it's a commanding an audience had you done speaking before like what gave you the clue.

Speaker 10:

This is something I could figure out just felt it for years before that I felt that I was destined to be on the sales side business. I wanted to be in business. I wanted to be on sales side of business and so I thought I could communicate.

Speaker 8:

And yes it was done with humor.

Speaker 11:

And I used to try to get successful sales I had to get a crowd around me. And typically as I said they were ladies and they were older ladies so I get more important Gallan the men with a bit of chatter until they get more more and then I start with my chatter and I leave it up into a crescendo to make the sale. And get everybody digging in for a pound because you know I'd say think you must all know little children somewhere and this coming Christmas who are going to need a toy. Maybe a child in the hospital maybe a grandchild maybe a summer or. You know somebody way and you can afford a pound to bring some joy on Christmas Day. I mean it was the usual stuff. You know what's amazing about that is you're not talking about the toy.

Speaker 9:

Nothing of this conversation has to do with you selling your toy right. You're selling yourself you're selling the experience you're selling Christmas. The old ladies you know at a market. Right. So what does that tell you about sales.

Speaker 12:

That's that's a that's a valid point that I hadn't really thought about.

Speaker 13:

But anyway I enjoyed it the men sat in it for about three months at weekends only for three months prior to the Christmas Christmas 1973. I knew it was good and it was fantastic fun. I'm like my grandmother was horrified. They made money and it made some money make some cash and it helped me get going and then I told when I decided that I had to get a proper job. And somebody had introduced me to always. And I've decided I want to be a broker Lloyds and I was introduced that was a story in itself. To the chairman of a firm called bland pain. I had to meet his daughter as a dinner party founder as he was the candidate and said I'd like to meet your father.

Speaker 12:

She kindly arranged it and I told him that story as you were not. Were you on a different path up to that point. So before that dinner party.

Speaker 14:

What what's the what's the what's the alternate universe Jonathan's story whereby you don't meet him. Where would you have gone beyond that was the step. The next day without having met him where would you have gone next.

Speaker 8:

I would've found some other way of getting into doing some business right. I just another opportunity would have another opportunity but. The truth of the matter was that I I wanted to be in a sales position but I wanted to be a professional in some way shape or form. And. I literally I walked through the doors of Boids and I looked at how they interacted Broca and underprice. And with this this is where I meant to be literally this is where are meant to be. So I was waiting for that sort of eureka moment. This is where I want to do.

Speaker 12:

And it happened about it.

Speaker 8:

And so you do join this firm this firm I joined the firm they offered me a job two thousand two hundred pounds. In 1978 75 excuse me 1975. And I only ever worked for that firm because it was bland pain when I joined it and became Sedgewick Forbes bland Pame became Sedgewick group and they had Aga's obviously in London initially and then met the girl became my wife who was Canadian on a trip to North America actually and in nineteen eighty five. Ten years later I moved to Canada. With my family because I have requested a transfer. So I stayed with Sedgewick and three years off that started beach in 1988 so we'll come back to that in a second. Now.

Speaker 15:

Canada not usually on the top of anybody's list you wound up your Medicare Odean girl which helps of course why that first business trip to Canada.

Speaker 8:

Well first and foremost my my when I met my girl became my wife. I was working for Sedgwick's had an office in Toronto which they used as a training ground for all of North America and I was on the insurance side in those days doing primarily North American property so they sent me to Toronto for this training thing in 1978 and I met the girl who became my wife and where in downtown Toronto the date they should make some friends money. So I persuaded her. Subsequently to move to England and she has said well you should move to Canada and I said I live in the center of the universe. Why would I have an insane moving to Canada. Well the power of women is something to behold. Lo and behold a few years later we moved to block having married and having had our first child. We moved to Canada in 1985.

Speaker 11:

And I said my son thought I was crazy. I gave up my career and walked away from.

Speaker 10:

I was doing well I actually become I become right at the top of the department the North American department said We can and I said I wanted to move to Canada. I gave up everything they were going to stop me on the lowest rung Sedgwick's on the retail side back in Canada and then when they realised I was dead serious they said would you like to become the president of the North America and big promotion to the top of operation of the wholesale business.

Speaker 12:

So I said hey I'd like that. So there I was at 32 finding myself as the president of a company with 75 employees. How did you manage before.

Speaker 8:

No I was a pure broker.

Speaker 12:

If that's not true I had I had banished people I had a team of brokers working on different than a full audit had a full office with all the aspects of the company was completely new. And so what was the what was the first big surprise you had it walking into that job. I looked at it and thought how inefficient is this. OK.

Speaker 10:

There were there was four and a half million of brokerage and there were 75 employees. And I thought this is completely unnecessary and ridiculous and the business the office was trying to produce business from the U.S. and Canada primarily the U.S. to send the London market.

Speaker 16:

And I thought this is ridiculously inefficient that if you adopt that business model years later adopt a version of that business model that isn't business the United States through Canada and then bring it and spreading it around.

Speaker 13:

His first book that can come entitled to but anyway so I decided we had to change that office complete in its outlook and it had to specialize and remember this since the late 80s it was the last really really hard market. I mean actually it was that easy the hardest market ever casualty market.

Speaker 17:

And so I changed the focus of the operation to look at risk retention groups and purchasing groups which was of course where I learned what something I subsequently used in the creation of beach. So for three years I was working for Sedgwick's in Toronto and changed that office reduced the staff numbers significantly. I believed the office could have run fourteen people instead of 75. We ended up actually because in those days it was before you really let go of people but we just reduced the numbers off and just by natural.

Speaker 16:

So let's let's turn to the founding story of Bije you. There is there was a deal.

Speaker 7:

That you did well that was when I was still employed employee Sedgewick Yeah. Yeah.

Speaker 13:

The last you know more happened was here in Toronto. There's a new sports stadium called the Skydome is being constructed and they needed it. Architects and engineers you know more specifically project you know insurance on it.

Speaker 17:

And a home had been working on it for two years and was unable to find insurance. And the reason they couldn't plant insurance is this is the first large dome with a retractable roof. And there was a concern on public insurers that wouldn't work as planned. So they'll have been able to do it too young extremely well-connected brokers insurance brokers in Toronto whose fathers were top top in finance were asked if they could do it and they approached me and I said yes I could get that insurance. And why do you think that.

Speaker 18:

Because we said yes yes.

Speaker 11:

If there's a way to it if there's a will there's a way. And of course there was a way. And so as soon as we were appointed.

Speaker 19:

They said how are you going to do it. I said I'm going to do anything. The architect and the engineer again to present the rises that we identified and an underwriter they can easily say no to a broker but they can't say no to they should nanti as easily and if the architects and engineers say this roof is going to work in the way it was designed then who is an insurance underwriter to tell them no it won't. They didn't have the they don't have the technical skills to be able to identify why. And of course that's what happened.

Speaker 13:

And the insurance was procured. And as a result of that. The chairman of the stadium corporation that was building the Toronto skydives said to me is there anything you need. I said yes actually I'd like to start my own company. And I need a line of credit.

Speaker 17:

Of four hundred thousand dollars. And he said take it as done. It wasn't quite that simple that it held for you.

Speaker 16:

I'm 35 and so you. You went through a bit of negotiation process.

Speaker 7:

How about the above the departure conversation with Sedgewick head of and by the way the person who I negotiated with for the money was one joke court right. Right. Twenty years later 15 years exactly. And in fact when when beach needed a CEO we went to John Cartwright first only said the job is yours if you want and if you don't want to do a search. So how does Cevik take it they wish me well. By that time I had a very good I had a very good relationship with Dick chairman who said we can.

Speaker 20:

You know there was no hope given you as you just said good luck.

Speaker 16:

And so you founded the firm. What is the first thing you did. You open it up as you have to do all that stuff so.

Speaker 10:

So the money had come from a company called trival which John Cartwright with. And we talk of all four of us. When we took office space in that space forty four of us I sat behind the desk and I said to myself Where the hell am I going to get business. Because I didn't want to go to Sedgwick's business because that was their business. And so I wrote a letter to each of the 17 members of the U.S. retention association offering my services as reinsurance. And I got two replies one from a taxi company in Baltimore Maryland and one from an architects and engineers insurance company based outside of Chicago. And of course that became our first client. I see we're still a client pitch to this day. So tell me about the first reinsurance.

Speaker 16:

Experience.

Speaker 21:

It's sort of the story I have in my mind of the genesis of the Liberty account for us. Maybe I should back up a step and say was that the first reinsurance periods that you had a beach. But I do want to hear the story. Well first of all the fun started in the effectively January 1989 and Liberty didn't come into us until.

Speaker 8:

1994.

Speaker 6:

ABC was the first customer although really client we weren't really doing the reinsurance program Eylem was doing it. Then we were just defining fronting the race for attention. But certainly wasn't that he was not by any stretch the first reinsurance deal. But you have to understand I did not buy that. I did not have a reinsurance background. I had an insurance background with doing some certain amount of specialty reinsurance and. The young. So what happened was that I had when I was still a Sedgewick I flew in from London to Calgary to help support the creation of a new Sedgewick office in Calgary which was going out of oil and gas and I was in oil and gas specialist. And the guy who headed up that Calgary office subsequently became the head of Liberty Canada.

Speaker 22:

And I ran into him in the street one day and he said that Sedgewick our old shop was able to put together a treaty for oil and gas business and he said to me Do you think you could. And what do you think. I said and I said yes and and actually we did it and it was relatively straightforward. So then they Livity said this was 1994 said we could only get 5 million of treaty capacity for property. And they really wanted ten. Could we do another five for them. And I said yes and we did it. So then they said we're going to directors and officers liability. And rather than going to any other Brunka would you like to do it. And I said yes. And so that's how it started.

Speaker 23:

And so you don't have to form relationships with three insurance companies much deeper than you would have had before. I would think. Is that true. Did you know the people who were going to be doing this or did you have to forge those relationships are having won the business.

Speaker 24:

No because the relationships haven't got a clue where to go.

Speaker 23:

To be honest I didn't know any of the reinsurers and so yeah we did call the AMP the switchboard saying looking for the deal no underwriter correct that it works of course and it worked. So moving 40 a little bit you wound up joining forces with Michelle Margarete a few years later he came in 96. Okay so this is I guess it was just three two or three years later.

Speaker 8:

Not too long after I guess yeah actually it was primarily because the Ludy Account Account Stazi growing streamy quickly but I wasn't traditional treaty broker and I knew it and I needed somebody with a traditional Shriti background for various reasons one of my colleagues which had established a rapport with this individual Michelle whom I had not met and I then met and met him and I invited him to come to Toronto from London to build the reinsurance business because it's time we went to just reinsurance. We were also doing specialty insurance programs. And he agreed. And equity although based upon how much reinsurance business and he became partnering up to that point how many other partners had you had in the firm. David at the beginning David at the beginning and and the finance company that backed us right they had 25 percent from the get go I bought out that 25 cent off after five years and about 1993. 1994 somewhere around there. And then. So I then owned 100 percent of the company and then I probably reduced my share to make way for equity for.

Speaker 23:

And so that was a very successful partnership.

Speaker 16:

You know I have I have a bit of a theory about Michele in his it is in effect in the firm and I wonder what you think about this. So when I look around and I think to myself why I stayed here this long living your whole career is a very long time now we're coming on 15 years and next year you're right and that's a long time and so is amazed me about this organisation is that it seems to me that every time that I'm ready for a new challenge something presents itself there's always I never feel like I'm at the top of the learning curve and I think one of the reasons why that's the case is actually the quality of the people that are around us.

Speaker 25:

It's almost a clichéit's true so you can't really call it that that the quality of the people is what makes you enjoy the firm you're working at and the thing that I think what you could have known then but which I think turned out to be an extraordinary stroke of luck with Michelle is actually the quality of his network. I mean he knows selfie very intelligent guy and a lot of the people who came into the firm later on I feel like you were brought in through the people that he knew. You know the talent that we acquired the individuals that joined three insurance people.

Speaker 26:

What I enjoyed about the show particularly was he was not a standard reinsurance type. He he he. You know he was classically educated of the Royal College of Music. He had a very musical mind. He had us abstract mind and he thought about things completely different from the vast majority of people. And in many ways from a conventional perspective he wasn't he wasn't wouldn't be most people's cup of tea but he was very much his own man and came at things and some of the things to this day the beaches doing things that he thought up and created. He was enormously creative in his own way.

Speaker 16:

And what do you think about my theory on his network being equally interesting group of people who have found little of the creativity that really is where we are now.

Speaker 7:

Sorry I didn't respond to that point. Absolutely. Absolutely.

Speaker 27:

He helped very much the culture of beach. It was created by him and the way he responded to those people.

Speaker 24:

One of the earliest employees was Adam Hedley Adam Henry and Michelle got along stream the well and in some ways much in common. And there's no question in my mind that Adam came to beach in large part because he was attracted to Michelle.

Speaker 23:

And you know is there's another one of another thing that has really amazed me about the progression of your career as I've observed it ever in my career is there's a point in the mid 2000s where we started hiring actors and I became an actuary. As a result of that process and. I have to think that you weren't always convinced that that was something that needed to happen.

Speaker 11:

I was dead against it right. It was Simon Hedley who was the proponent of breaking in and broke Jones into the phone.

Speaker 23:

The thing that amazed me though is how you embraced it after I think you were convinced by it by the value that was being generated by them and I never heard you say nice things about the profession in the abstract or at least as it's been manifested in our firm.

Speaker 16:

How does your view change. What caused you to change your view. Did you change your view of that. Is that true.

Speaker 27:

Well first of all I changed dramatically 180 degrees opposed enough for it. And the answer of course is that as far as I'm concerned for reinsurance brokers are really add value. They have to understand where the insurance company is coming from. They have to understand what reinsurance can do for an insurance company and the other people that can really grasp that and the only people that can really grow as fast in my view are actors especially actors talking to actors who haven't the important within the insurance organization itself. So I have come for full full circle of full circle half circle I have now determined that you cannot be an effective reinsurance broker unless you have a very strong upfront actuarial presence and that was probably not true 30 years ago 30 years ago it was certainly not true. I mean up until the 90s. Until Hurricane Andrew which changed the industry in my view reinsurance was very transactional the young the right metal. So an underwriter run driving a certain portfolio by reinsurance on that portfolio with his Paiva reinsurance broker. That's how it worked. Andrew change things because bottlings started off orangery modeling went to marketing. It has seven separate each but to a large extent falls into the into the actuarial bucket and people started thinking on a broader basis about how to protect the NCT road and in particular portfolio and that of course continued to develop until today when we see less and less reinsurance being bought as a portfolio level a much more reinsurers now being purchased at the end and the entity that will you'll have you'll have the chief financial officer and you'll have the chief actuarial officer and those become far more important to the process in the end. Well some it depends on the company and the underwriting side is not nearly as strong in the reinsurance buying process used to.

Speaker 25:

Do you think we this is a collective noun for the wool industry understand how it all works better as a result of this evolution towards actors.

Speaker 27:

Yes I do. On the other hand some people argue and I'm sympathetic to the argument that it's gone too far that the underwriting side is being blocked out too much and that the only writing site is overwhelmed shall we say by the finance and the actuarial side. And I think that's correct. I think that the underwriting side has become undervalued and I think the pendulum will swing back a bit. That's what I predict and the rises will again get shall we say more power within the insurance company in terms of reinsurance making decisions and power generally. So I want to turn to another story that.

Speaker 15:

I think about a lot that you told me once and I'll set it up this way and how it was set up in our experience together where we're having dinner with an underwriter once and it was clear that he wasn't going to play ball. He wasn't going to the deal that we wanted him to do. And at the end of it you were very nice to him. You said you know I understand your reasons and I think I think you did a great job. And thanks and we'll come back for the next deal. And I remember walking back to the hotel. And when we. Saw it right when we were walking back I remarked to you that I thought it was very interesting switch there and never seen something before. And then you told me a story. Maybe you can that's enough of a set up that experience you had where were you. You were gracefully bowed out of a deal. But actually I had a pretty good outcome.

Speaker 4:

Yes that that that particular deal that I know you're referring to is it important to the development of beach. I have poured enormous amounts of resources into finding a solution. For the red car industry and. Excess liabilities sold over the counter. And. I had. Deliberately targeted a particular insurance company to do this and I had again put an awful lot of stake in this insurance company and as a broker you should always be extraordinarily careful of that. You should always have backup plans if something doesn't go wrong. And I wasn't sufficiently prepared I had put all my resume on my depth into this particular insurance company. And I remember I was actually in London and the insurance company in the States called me and they said they'd made a decision not to move forward even though they give me strong signals very strong signals that we're going to do will be needed. And they had made a decision not to do it devastated and it was devastating and I can't tell you how devastating it was because so many resources are being put into it and we were not. And this was 19 ninety two. So it was three years in the company. We were not in a we we made money by the way every year other than the first year but we were not in a very strong financial position and so this was really hurting our clients because this was going to be an extraordinary Big Pilot Program. And so he said it made the decision not to and I said. Well all I can say as you did your best. You worked hard on it. I enjoyed working with you and I'm very very sorry that it hasn't worked out. But on the stand. And incidentally that's consistent. I can't stand Broca's putting forcing underwriters putting pressure undue pressure at the end of the day. You're taking a deal to an insurance company or reinsurance company and you trying to get them to quit naturally but they are commercial people and they have to make the decisions as they see fit on behalf of the company and brokers should never have in my view get mad at an underwriter for Mitt doing his job. The failure is on the part of the broker to convince the insurance company or insurance companies that this is in their interests. So anyway I said Well thank you I meant it. But I was looking at genuine devastation not devastation that was the first peril at this I wouldn't say it was in peril but it was certainly a massive setback and certainly all my expectations went out the window and I thought what am I going to do now. 24 hours later he and I were still in London Nkobi back and he said that the tone of your voice was such that I knew that your heart had sunk to your feet. So I decided to go back and have another look. And he said you decided to do it after all. And that made an enormous difference to the company and yes it also paid for my house right.

Speaker 12:

And how did the deal go terribly right. Unfortunately it lost a fortune and lost his job right now.

Speaker 4:

That was awful. So there's this there's an interesting contrast that I want to try out here which is.

Speaker 14:

You know your point is currently powerfully made about how it's our job to manage the process right and to the degree that you can you have to be disinterested in the process because that makes you a better manager of the process allows you to maintain strong relationships with people. But the problem is sometimes it will screw up right. And.

Speaker 25:

One of the interesting things about us now owning some of the intellectual capital in the process so that we bring in the actuaries we know more about the process now so we understand we have a view implicitly or explicitly in our own minds or explicitly on a piece of paper of what of what a good deal is. And so we're kind of constrained now. I wonder if you agree with that in our ability to be dispassionate conduits for business to go through us and so is there to what degree is there a responsibility for us to help people not screw up in our minds.

Speaker 14:

You know it's in some ways it's very hard to understand what is and isn't a good deal and you know as a salesman myself I think I don't know what the answer is here so I'll let these guys figure it out but you know how much. How much should you try and protect your counterparty from from sometimes making a mistake going around as a broker.

Speaker 19:

Well first of all your contest not your responsibility but it's not yours. They have to. They are empowered to make their own decisions and you have to respect that but you do everything in your power to show them why it's in their interest to make the decision that you're trying to get them to make. If you cannot do it as I said earlier then you have failed and you have failed. You have literally failed. Now you say it's a lot of it is actuarially driven which is correct and therefore because it's more objective is that the world has changed to a certain extent but to a large extent I don't accept it. You know the most buying decisions are based upon emotion. They're not made they're not based upon. Hard facts. We're all guilty of that. If that's the right word it's just a matter of fact that you make decisions more on more on the notion that anything else plus you know we don't control everything by any stretch there are Australians going on behind our customers that we have no idea about what kinds of political concerns pressures and we've definitely been victim off of his death and definitely know victim of those sorts of things so companies can clearly make decisions that appear to go completely contrary to their own interests but there's nothing we can do about that other than to use our best efforts to persuade them otherwise. And do you think that.

Speaker 25:

Do you think that there is there is a way in which the firms themselves are constraining themselves in that way. So you know I think the ray effect. We talked about it in our own business but on their business it's almost like the Scopa decision just gets narrowed down to a very small place and you know how much they can really move it around as has changed. Do you still see that people do less different stuff now than then than they did say 20 or 30 years ago is it more similar or are firms worse learn what they try to achieve.

Speaker 4:

My own opinion is professional now not withstanding what I just said. I do think they go through a process that's more disciplined. So I think that the approach but that doesn't mean to say there is going to be the right decision by any stretch but they are more professional more disciplined. You know though for example reinsurance brokers I am one of the things that we try to do is be as professional as we possibly can but we do not have the presence in the marketplace that Aon marsh with jailed GLT happened. And that was those positions in the market are extremely powerful and so while the decision for example we think that it's self evident that we'd come up with the best solution.

Speaker 28:

For our client and it may be the best solution on a dispassionate basis but you can't we can't we know that decisions are made on a much broader picture of how they should be. Who knows but we can't do much about it if Marsh turns around and use his leverage which you just see significant to push us out of the picture. This story told a minute ago there really I think draws what I see as a remarkable.

Speaker 15:

Characteristic of yours which is the ability to maintain strong relationships in the face of difficult negotiations and circumstances and some of these decisions are tough and people although I think it's an important important source of dispassion in our business when it comes to intuiting deals and I think that's a key part of our culture. Not everybody shares that. And tensions can rise right.

Speaker 25:

And in the face of that I think that you've been very good about maintaining strong relationships with people on all sides of that of negotiating table even while you're ushering through something that can be painful for people who are sitting around that table you ever think about that.

Speaker 29:

Is that something you try and do or is that something you just sort of you know intuitively feel like it's a good idea.

Speaker 8:

Well certainly I think it's a good idea of it. Yes I have been very conscious of trying to maintain in my professional life and in all fairness professional life. High degree of integrity and so everything we do is above board.

Speaker 30:

It's we're being honest to ourselves are always we can certainly make mistakes but we do everything to the highest standard. I believe that that is very good business very good as if you because you may lose out on a particular deal once you gain in the longer term and I believe that's being borne out to that to this day. I mean beach continues to grow and grow successfully. And I think to a large extent it's because Graham has spoken to that because of the firm's reputation for its integrity and his professionalism. And again also going back to Dubai to Liberty hold my emotions in check. Yes but not particular it's not particularly much of an effort because of my strongly belief. That insurance companies reinsurance companies our clients and our markets have to make their own decisions. And that if they make a decision that goes against our interests or against what we're trying to do that's a failure on our part. And when I say that failure on our part I don't want to be too strong that we made our case and we presented it is extremely professional. And the other party has chosen to go another route. Certainly their prerogative and that's it. Now.

Speaker 14:

Changing gears a little bit. The life of an entrepreneur has ups and downs and you know there are a couple of experiences that are there in some ways legends within the firm. You know that I'm not sure I've heard the story from you directly before so I'll ask you about them. There are a couple of stumbles you know. One of them was when when the firm branched out into underwriting. So we started up and image you could tell the story of that you know how it started. So some of the broker came to us with the suggestion of the past we consider. Hiring an individual who was an actuary actually by profession from mostly from the from the lifesize. And.

Speaker 31:

As you said there was a strong demand in London for what this underwriter did which was to specialize and stop losses. And so after some debate and some so forth we decided to go ahead Hadiza individual and luckily it was an unmitigated disaster because lawyers and writers are too damn shrewd. Anyway they both Stop-Loss which would almost I think just about every one of them blew through its limit.

Speaker 8:

It just wasn't unmitigated disaster and he was underwriting only about maybe just a little bit more than that. So the partners that we had the people that provide the capacity were extremely angry with us as a firm.

Speaker 4:

Why had it damaged our reputation. Because we had delivered them terrible losses and they thought it was deliberate and they thought it was because we were going off the energy commission which was 5 percent. It wasn't extraordinary but it was 5 per cent Nakell that's what we wanted.

Speaker 16:

Which nearly speaking is of course the point here reason why you're in business. But they felt like you were taking advantage of.

Speaker 8:

We were abusing the position and handing off losses. So I realised we had a real potential disaster on the hands and so we took the decision to we may have really made a mess of this and we had made a mistake. It is also the underwriter when his went his way and we had. I think it was six or seven years. Of. Runoff. Him we decided we were going to throw our resources money. And making sure the runoff was handled as professionally as possible. And soon in the insurance companies who were threatening us with litigation in fact we were told they were. Backed off and we ended up having a strong relationship. And then as an individual in the market to this day who was particularly the forefront of that who likes offer as sites how we did that roll up so we turned what was a real mess into ultimate. It took a long time but ultimately into an asset on behalf of our reputation.

Speaker 28:

But it costs a fortune. What did you learn from it. We went in we did we we. We strayed from our path. We all brokers we not underwriters. We are trained to think and act as brokers not as underwriters. And that's the difference. This a different business. It's a completely different business. Brokers are providing a service. They are acting on behalf of one entity with another UNCED.

Speaker 32:

Underwriters and in. One could argue as I suppose doing the same thing and ricers at the end of the day on the writing to and right problem. I had actually received some warning signals from people in the market when they heard I was thinking of doing this saying this guy's going to be a disaster just he's just he's out of control. And that's why I didn't pay sufficient heat that I don't think I was too caught up in thinking this was going to be a good idea.

Speaker 33:

And I was in love with it. I was in love with the idea and I was deaf to the warning signs. You know obviously it could have been incomplete we could have had a great time I should maybe found business with the great underwriter. We found tons of business because we had an underwriter who bluntly didn't know what he was doing which he acknowledged subsequently and and it was so we ventured off of field and I failed to pay heed to the warning signs.

Speaker 25:

So in principal what's interesting about it is there's always this debate of consolidation and disintermediation where you bring the underwriting and distribution together into one firm go direct and then some. Sometimes that business model appears to work and I think it's safe to say sometimes it does work. But it doesn't always work and there are failures as well. Any kind of reflection on sort of lessons that might be more broadly applicable from that are there are other ways that can be done or are there things that you simply just pick a better guy for.

Speaker 4:

Well there's no question that you can have a holding company that has a broking operation and it has an underwriting Operation. Okay. But I would put somebody with a strong. Underwriting background and a background of successful underwriting and challenge. And putting the purse of the underwriting Operation and a person of strong broking background in charge of the broking operation.

Speaker 33:

Now I recognize there are people who move from one side of the aisle to the other. And for example Marsh we've just seen the lead of Moscow over to AIG. Right. Those people have been able to in fact they've both been a month both the president and number two opposing Marsh and AIG. But I think that the difference there of course there's a huge organized a sure bet in the culture of that and dealing with strategic issues and the like and some management issues and see you out of it.

Speaker 4:

But if I had to add a more working level I would still say you have to have some deferment. Really you have to have it on the right of strong underwriting and running and underwriting operations from broke or running a broker operation.

Speaker 15:

And so that same year there is another stumble.

Speaker 11:

And you're right. 1997 it was a tough year tough year. It was suggested one of the guys who worked at beach came up and said that he had heard about an underwriter in Australia who had been let go and this would be a wonderful opportunity to back in you reinsurance on the writing operation in Australia writing international accounts in the is back in the late 90s Australia was a leading market for international reinsurance. So.

Speaker 4:

I went for it a role that refinanced. The review of creation of a new company a reinsurance company which got our money back when it was formed and 200 billion dollars was raised to form this new reinsurance company. Behind the sunrise. And unfortunately that reinsurance company was the shortest Liberty insurance company of all time. It also was bust with it and of course what did we do. We did exactly the same.

Speaker 19:

We backed an underwriter. It was not the appropriate person to be running that particular operation and we were getting into something we didn't understand we didn't have sufficient knowledge of I should say that. And by the way I had warning signals Gibbon's meal Nasz as well. And failed and ignored them. So I made to those the two biggest mistakes as far as I'm concerned. I made a speech with those two items and they were both insane in the 1990s and the same mistake and it was and it was the same mistake.

Speaker 21:

Amazing but they were made simultaneous trip and a chance to learn from one of them and the other now did did did those lessons. If I could if I could summarize it by saying Be careful who you pick and that you are able to evaluate the talent you know and trust with your capital. How did that inform or or influence any behaviour after that there. I mean sometimes the deals you avoid but if you think about that and how did it affect your behaviour later on.

Speaker 32:

Well several. First of all we didn't venture off the reserve after that. We stayed with broking. And any opportunities from another writing perspective. We just said no because we'd been burned but also in the earlier days of beach it was more difficult attracting talent and as we grew and became more successful it became easier. We became more attractive and I realised clearly that the mistakes were based on picking the wrong person for the position and without sufficient background checks. And that you had to before you hire somebody get as much information about that individual's professional background. Because failure to ask the right questions when the information was available. And not do it was a failure clearly on our part and to avoid those mistakes. Yes you have to do your due diligence and had to do that.

Speaker 21:

Look at one of the I think back to the period following that. So you know I joined first in 2003 and I think over the course of the next eight or nine years or so. I would characterize the firm as remarkably stable in terms of its strategic path. Right so we opened smaller offices but did it slowly adding individuals here and there. So there definitely looks like that was a strategy that emerged from that.

Speaker 29:

But I wonder if did you. Did you joined that part of it you know sort of the build out as opposed to you know you're a transactional person and you're a broker you know did you did you feel like you were. You know was that was that kind of organic growth part something that really got you excited. Well those two things to that by the way because it was remarkable. I mean it was amazing the transition of the firm.

Speaker 8:

The first thing I'd say is that the rollout which started in 2001 2002 with the opening of the London office was not a strategy where we sat around. We were very much a transactional.

Speaker 26:

We were not. We did not sufficiently strategize and we only opened up the London office and subsequent offices because of pressure you know the London broker who we were using was trying to Pinshaw business. And he frankly we opened up in Sydney because the Australian Broker we were using was trying to pinch of business. New York Bermuda were different. Those were strategic decisions but you know going back to the mistakes I was a lot more conservative and a lot more careful after making those two mistakes which could have taken down the company. We were fortunate that they did. But as a result I became probably if I go back now to conservative we we we could've invested more heavily in expansion of personnel offices. I've struggled with that enormously because finding that the key to the key to getting growth. Is finding individuals who can generate business and that is the most difficult thing of all. In my experience is to find people who can actually generate opportunities. It's not a question of intelligence. It's a question of training. It's just an innate ability that is difficult to pinpoint.

Speaker 8:

Somebody who has whatever it takes to attract opportunities. So I think however and so I was always loath to make more mistakes. But we should have invested more heavily and could we have purchased another broking house that didn't even enter my head to think about purchasing an alternative. And we did. So if I have regrets that we were more aggressive in terms of expansion in that period say from 2001 to 2010 2013. And probably it was those two mistakes in 1997 Scott. And over that period you know since the 97 through to 13 what was the part of your job your Jordan most in that period real run of. What I loved about I love working with people I really really enjoyed it.

Speaker 31:

I had a particularly close relationship with two individuals named Michelle and John. And they I felt we had a really good relationship on the whole we had our moments but on the whole we had a very good relationship with people around. And the one thing that I really wanted was at the firm to act as one. And it was a rather than whether somebody was working in the Toronto office of the New York office or the London office or wherever. Everybody back to this one and on the whole we thought or I thought that we were quite successful in that. Now others may have a slightly somewhat different perspective but I generally think it's I feel that it worked quite well. We were much smaller in numbers in those days. But I wanted us to be one firm. I wanted us to have one culture and I wanted us to be thinking about how we could go out and with more business. Also of course we were heavily dependent upon one account and so if I had another regret it wasn't that we weren't expensive enough and didn't want people to spread the risk shall we say to a greater extent than we did. But that one account was immensely demanding pull on time and our resources and it was quite difficult figuring out how to how to how to.

Speaker 8:

Reduce our dependence on that one. One client.

Speaker 21:

Now on the theme of working together is one firm. I agree that I read it as somebody who is very junior of their company at the time. I can offer support of that comment but everybody says that.

Speaker 29:

Everybody says that and a lot of you know to your point a second ago a lot of CEOs will self deceive and they'll say this is where we are but it's not really work. What do they understand. What are they missing. What do you what do you think that you might have figured out there or did that was hard for somebody else to do.

Speaker 8:

Well I felt that the one area that would be a great deal of contention between offices would be revenue sharing and therefore I wanted to avoid it. It was only going to be one revenue that I didn't want to be a London revenue post and then you go revenue Pozza in those days. And. Because I didn't want brokers getting into arguments for centage went to this office that the rest of it. But inevitably as companies get bigger they have to be there. There has to be a basis of remuneration accountabilities accountability and I recognise that too. And it was always a huge debate in my head on how to reconcile it but hold it together as one company and I never went down the route of revenue splitting simply because I was too nervous about. Having opponent opposing camps in the organization. And I recognize it's in human nature actually to start effectively seeing the other side as being in opposition of some sort and therefore had to find a way in my head because of course I was completely dispassionate as to where anybody work but how to how to be able to preserve that unanimity. And it suddenly came at a cost. It possibly came at a cost that individuals didn't feel sufficiently recognized financially for their efforts. And that's a debate quite frankly that every organization has to go through. I had one of the reasons why I wanted to do this was.

Speaker 14:

I had an interesting experience with the consultant our firm hired recently where he came through the office and I sat down with her for a bit and we talked a bit about culture and I made the point it was hard for me to observe our culture because I spent almost half my life here. But he said that.

Speaker 15:

Our firm has one of the most distinct cultures he's ever seen in his career really that break me too. And so. I mean I was kind of taken aback. And what do you think our culture is.

Speaker 5:

Well I think this is where I think our culture is I think our culture is built on a high degree of professionalism a high degree of integrity. That's that's how I see it. That's why I always wanted this to be.

Speaker 8:

And I believe has to be maintained since I stepped down as CEO at the beginning of 2013. Billy Graham has seen that has its value and has maintained it. He's also seen the weaknesses that I talked about in his last and set about set about changing that sort of are much more diversified company. But I think that our culture at the end of the day. Yeah I think it's about time. I think it's about integrity and professionalism. And I think that.

Speaker 14:

The culture is always good. It comes from the people who run the organization right. And so you know how you think that you're you have a certain amount of self-awareness which you have to work on. Right.

Speaker 25:

I mean even in this conversation it's clear that you don't run away from the fact that there are some things that didn't go well right. And you're very happy to be open about that and you made a point earlier on where you were. I asked where we were talking about this idea of you have to control your emotions put them in check in. And there's this thing that I was talking to another colleague of ours about recently where you have to be real. Right. So you have to be open with people and be somewhat transparent because that emotional clarity. I think that people respond to that. But in order to be open and real there has to be something good inside. Right. And integrity has to be legitimate in order for her to be you'd be both open and engaging with the people around you. Any thought about that.

Speaker 33:

Well I have never subscribed to the view that many people have a my opinion expressed or not not expressed specifically that everything is good everything is good in the organization and it's go go go go go. And don't admit if you made a mistake. I say the opposite. You tell everybody what's wrong. Now you have to be careful. There's a fine line naturally. But I am of the opinion that if you open a book that people will trust you much. And I do believe in that and I don't believe there's an organization out there that's just unbelievably a happy place and a wonderfully successful organization. Because when all the Facebook in terms of growth and everything else but we've got a good reputation we got we got a fine reputation. So I believe in that because I believe that on a personal level I used it in the business business. And I don't think it did me any harm and I don't believe it did the employees any harm. I don't believe I believe that was well served by it. And so I continue to believe it. And I think that most organizations however do not subscribe. Why.

Speaker 8:

Didn't you do it once or did Sedgwick's Sedgwick's was really fine. In my opinion that a fine professional. They certainly didn't take it to them. No they didn't. They didn't operate in the way that the beaches operate.

Speaker 15:

And did you at the time were you aware of of this being something that wasn't quite perfect or right or did did you did you know at the time you know if I did if I was building something I wouldn't do it like this.

Speaker 8:

There were individuals colleagues in the organization who behave in my opinion incredibly badly incredibly bad unethical to the board to the point of potentially being fraudulent. And why were they Sedgwick's was a fine organization. But there were a couple of bad apples around.

Speaker 12:

Why didn't they find them right. Why.

Speaker 8:

Why do you think they might buy them was also in those days especially in the 70s and into the 80s. I believe that the London market where I was working there was some real overall ethical challenges. You know that with us the baby syndicates and high tides because certain names and so on and so forth and little clumps it was it wasn't good. Nope nope nope not a good culture.

Speaker 25:

So do you think that at that time the value of integrity and openness was higher because other people weren't that way. Or is it higher today when there's less of that around you know the relative value of that. Well I think integrity as a whole within within within the Western world has increased because unfortunately because of regulatory oversight.

Speaker 8:

Because because human beings tend to do bad things as always attend to. You can't escape it. And therefore you have to be particularly aware. Of that potential and that reason we have so much more regulation today than POS was because of past sins. Paul's transgressions look at the financial crisis of 2008 that almost brought the capitalist world to its knees. As for the financial world to its knees. To a large extent. Or to us. To a large extent was because of.

Speaker 28:

Bad things going on. And so. No that would take us into another debate are we overregulated and so civil isn't necessarily going to go down that. But yes I think that if a firm has a reputation. For professional integrity must by definition in my mind on a longer term basis attract more business. It just must because if you can't trust what your professional advisers telling you who the hell can you trust. When you go to see a doctor. Who you knew could be slightly.

Speaker 8:

Questionable in his professional match you never know. And so why should that apply. Any other walk of life.

Speaker 16:

I guess that is at the beach. Jonathan thank you very much. Thank you.