Shawn Moynihan: When you first accepted the AIG position, I imagine it had to run through your mind, "All right, then. Here's where we’ll start." So, where does that journey begin?
Brian Duperreault: Well, if you can put the right talent in play, things tend to take care of themselves. It always starts with the people.
I was able to bring a couple of good people in right away in Peter [Zaffino, COO] and Seraina [Macia, executive vice president and CEO of a new, planned AIG subsidiary], but I’ve also seen that the company itself already has a great deal of excellent people.
AIG today is pretty close to getting back to the position where it was before, which was the place to work. I’m getting a lot of phone calls now from people who have worked with me before or just see the excitement around what's happening here — because the company has such great potential.
How does it feel to be back and leading AIG now, versus more than the 20 years you spent with the company previously? What's changed, and how is it even similar in some ways?
The essence of the company is still one that is a great source of solutions for problems that surround risk. Our clients still look to us as the company that helps when they’ve got a critical problem on their hands that they need to solve.
AIG has always been that company. It's still that company in their minds and it's still that company in our mind, so that hasn't changed. Technology has evolved, so how one makes those [underwriting] decisions likewise continues to evolve.
How do you see AIG today from the brokerage side now, versus when you were with the company?
It's made me a better executive in understanding the way a broker works, the way they think, the stresses they’re under in delivering their services to the client, what they’re trying to accomplish and why — so we can help them do their job better. I think it helps everyone to get a meeting of the minds faster. It's a process of negotiation, but also a partnership.
It's made me a more balanced executive because I have a better feeling for what's happening on both sides of the negotiating table, and that's helpful because if you do, you get to the answer quicker, you cut through the inefficiencies, the misdirection and the mistrust that can occur.
"There are two ways to grow: organically or inorganically," says AIG CEO Brian Duperreault. (Photo: AP Images)
Part of your strategy for taking AIG forward involves strengthening reserves and growing the business. What's involved in those processes?
The reserves are a consequence of your risk-taking actions and the profitability that results from it; they’re a natural consequence of the business we do. That starts with doing the right thing from an underwriting point of view. Being professional, selecting the risks you want to write, pricing them at a price that makes sense so you’re paid for the exchange of risk.
There are two ways to grow: organically or inorganically. We are looking for ways to grow organically, so there are things that are exciting for us out there that we’re pursuing. But there are also areas where, frankly, the market is not allowing us to make a profit. Terms, conditions, pricing and competition are such that we can look at it and say, “We love the business, but we can't do it at this price or these terms, so we have to say no.” It requires professionalism in the business of risk selection and pricing. If sometimes you say no, you’ll actually improve your bottom line, because if you said yes, you’d lose money. If you want to grow your bottom line, that's one way.
So when I say “profitable growth,” I’m talking about growing the profit, which in some ways is saying no, and then when we find things we like that's where we’re saying yes. You’ve got to do both and you balance that out, but in our commercial space we also have to look at other spaces: the middle market, small corporations where we have not really provided service in the past, and other opportunities. That's where Seraina comes in, to leverage technology and an approach that we think could revolutionize the way business is done.
When I broached the subject of acquisitions, or inorganic growth, we [still] look for those. We have capital that we can deploy, and I want to deploy it intelligently to build out the franchise.
Every experience you’ve had in this business — and you’ve made every second count while you’ve been in it …
That's kind of you to say.
All of those collective experiences, obviously, have informed your perspective. What lessons in particular can you point to throughout your career that have enabled you to be the right person to take AIG forward now?
My experiences cumulatively do put me in a position to run this company. Whether it's my early days here or running one of our biggest competitors or one of our biggest trading partners, it's given me a perspective and a set of skills I think that work perfectly here.
Perhaps on a more personal level, is where I’m going with this.
Well, you know, I’ve learned that if you’ve got a team that is cohesive, of good quality, you can do almost anything. If you set your sights and there's no blinking, no negatives in that group, you can aspire to do things through the collective strength of will. That's one interesting thing. I don't worry about problems; we can fix them.
Markets are always difficult; either you embrace that, or you don't. If you embrace the fact that the markets tend to be difficult, you can attend to the challenges of your business. That includes being disciplined and knowing when to say no. Our business is not always about saying yes; it is saying no. Knowing when to say those two words, really, is the essence of it.
You know, I’ve learned over the years — and Hank [Greenberg] was a great teacher of this — you’re always going to have problems, but you must address them. So you have to be almost ruthless about your self-criticisms. In other words, don't turn a blind eye to a problem. Face it head on, recognize it's a problem, admit it if it is, and then attack it. To me, it's not the problem that's the issue: It's your failure to fix it.
Challenges are going to come. Don't pretend they don't exist. Don't be embarrassed because it happened on your watch. If you don't fix it, then I’ve got a problem with you. So, to me, the offense is not the problem — the offense is not fixing it. I think that is so essential to running a company like AIG. It's got to be part of the DNA, and I’ve learned that.
I think there's a certain pride one needs to have to walk in the door and lead an organization like this — not hubris. Hubris will kill you, and I’ve seen several companies where that manifests in not admitting problems. You’re too prideful, you’re not self-inspecting.
To me, the greatest underwriters that I’ve run into are the ones who will look at a risk and say, ‘You know? I’m not sure,’ and they’ll go ask for advice. They’ll find another person whose opinion they respect and they’ll ask. If you’re self-confident enough about your skill set that you’re able to admit you don't know, great things can happen.
"The whole (insurance) industry is a work in progress" with regards to AI and machine learning, Duperreault says. (Photo: iStock)
Establishing Hamilton Insurance Group would seem to have paved the way for much of the AI and machine learning that is still being adopted elsewhere as underwriting and risk selection becomes more important. Would you say that's accurate, and how do you see those types of innovation driving the process at AIG?
Well, I think the whole industry is a work in progress in that regard. We have, as an industry, not moved as rapidly in machine learning and AI as a lot of other industries have, including the investment side, so we’re catching up.
Why do you suppose that is?
On one hand, I think it's probably a bit harder to apply it to our business. We have always been information-driven and fact-based in the way we make decisions as an industry. You don't just take a risk without asking questions, doing analysis, but we’ve stayed in a pattern that hasn't evolved very much, whereas the world has evolved dramatically in the amount of information available to make decisions. There are sources of information we just haven't used.
We’re both risk-averse and not risk-averse at the same time. We’re out there taking risks all day long, but because of that we don't necessarily want to change the process of making those decisions because the consequences could be disastrous. We would naturally stick to things that work, so I think that's another reason why we probably haven't been as adaptive.
Another reason is that there's such a capital base required. There's a body of assets you need to have in order to take the risk. And when you see innovation in other areas, those innovators tend to shy away from capital-intensive activities. So I think we haven't had the interest by innovators that other industries enjoy because we have this capital need that is an inhibitor because of its size, and you’ve got to feed the beast.
But it's coming, because it's logical that if we have more information, we have better insight about that risk and whether we should take it. I think everybody has woken up to this idea, and now the question is, how do we do it? Can we execute it? Who is doing it better than the other guy, and how do you incorporate it into the processes that already exist? You don't throw them out. How do you put this other view of the truth into the equation to make that decision? So it's a work in progress for everybody.
And how much you want to spend on it ...
And how much you want to spend on it. You look to get the reward, right? So to say, “This is working, so why would I change it?” Some [insurers] do that very incrementally — and the great thing about Hamilton was, anything I did was not incremental because I started from nothing. I didn't have to worry about easing my way in, because I was already in it with both feet right from the start.
You related to me years ago that the acquisition of CIGNA P&C while you were with Ace was a transformative experience for you, and that you had to visit some cities at that time and tell them what was working, what wasn't working, and the changes that had to be made and the people really appreciated some fresh perspective and direct communication with them on a human level. Would it be appropriate to draw comparisons to that experience with what you’re doing at AIG right now?
Well, to me, it's applicable just generally in anything you manage, so certainly here, it would be applicable. What I've found — maybe I should’ve known this, but it was profound for me — was that people want to know the truth. They just want to know the truth, even the hard truth. Even the difficult truth. Not only do they want to hear it, they probably already know it — they just want to hear their leadership talk about it and what they’re going to do about it. They want leadership to step forward, see the same problem they do and do something about it. They want it fixed.
That's what they want to hear: What direction are we going in as a company? They want to be led, and they want to be led by people who accept the truth and will do something about it, regardless of the difficulties around that — and they want to hear it from the boss. They want to hear what you think, they want to believe in what you do. They want to believe. They’re there to go. Take a direction and let's just go.
I get the sense that the path to AIG achieving greater results is becoming clearer, although there is certainly still work to do. What would you say to that?
Well, a lot of work had already been done before I arrived, so I didn't just come in and say, “Stop the presses” or anything. I’m building on what they’ve already done. We recognize there are certain issues in the portfolio that they had to address and they’d been addressing them. What I’m telling them is, "OK, that's necessary but not sufficient to getting this company into greatness again." You have to complete that task. Recognizing it and starting it is not the same as finishing it, so we’ve got to finish what we’ve started.
Then it's, “OK, where do we go next?” You’ve recognized and are addressing the problems; where are the opportunities? You put those in balance, and that's where we’re going.
What keeps you motivated now at this point in your career, after everything that you’ve achieved?
I graduated from the School of AIG, this is my alma mater and I want it to be the company that I was so proud of. Even when I was competing against them I was so proud of them, and that motivates me.
My motivation now is much more around helping others — to get them to be as great as they possibly can, to succeed, to set goals and achieve them. I’m much more the mentor now. I’ve done it, and I don't need to do it again. I love seeing others do it — that's what really motivates me.