The Intelligent Quarterly from the publishers of The Insurance Insider

Spring 2012

Search archive

Advanced search

Steve Hearn "The arrival of a new CEO is the opportunity to be a catalyst for change. And frankly that's why they asked me to do it - to drive some change and make it even better."

These words belong to Steve Hearn, the new CEO of Willis Re. Hearn is aware that he hasn't been brought in as a safe pair of hands. He has been parachuted into the top job to shake the organisation up and inject fresh ideas and impetus.

"Willis Re has been run by the same group of people for a very long time, which has provided valuable continuity, but I bring a fresh pair of eyes," he says.

Hearn isn't only new - he's different. The new CEO of the world's third biggest reinsurance broker is not a reinsurance broker by background - he is a London market wholesaler affinity specialist.

He believes that this provides him with a different perspective and a different set of experiences that will inform his leadership - but it can also provoke scepticism. Hearn thinks the objection is narrow-minded. "One of my senior colleagues said to me: 'Steve you don't need to be a zebra to run a zoo'. I think he's right.

"I don't need to be the guy who's deep in knowledge of industry loss warranties. I know what an ILW is - I know the fundamentals of it... I'm here to run the business with a group of senior executives - most of whom are absolutely dyed-in-the-wool reinsurance experts."

Hearn was unveiled as the new CEO of Willis Re in February. To take on the role he relinquished his positions as CEO of Willis's London market wholesale operation Faber & Dumas and chairman of Willis Fac. In fact, of his seemingly endless responsibilities prior to the move he retains only the executive chairmanship of the wholesaler Glencairn, which he has headed in one way or another since 2003.

Longstanding CEO and unrelated namesake Peter Hearn moves to become chairman of the reinsurance broker. The incoming Willis Re CEO is adamant that his predecessor in the role is not being sidelined. "There were most definitely two jobs there," he says, adding that Peter Hearn had been thinking of "bringing in someone to help him" for some time.

The more established Hearn has turned his focus primarily to fostering client relationships and generating new business, while the new Hearn on the block is more internally oriented. However, Willis Re's CEO makes it clear that the roles are not "mutually exclusive".

He robustly disputes the suggestion that he is now a manager, not a producer. "I've been a salesman for most of my career in some capacity or other," he contends. "Everybody in Willis Re has a role in production. Everybody. And certainly the CEO has to."

A zealous convert
As boss of Glencairn Hearn is too straightforward to pretend he was pleased when, in 2008, Willis made an offer to acquire the London wholesaler's US parent HRH.

"When I first heard about the offer to Hilb Rogal and Hobbs (HRH)'s shareholders - my reaction was: that can't work for my organisation, or for me as an individual." London market wholesalers are typically fierce in defending their independence. And they are normally fast to criticise their larger corporate competitors as cumbersome and bedevilled by internal politics.

A big-three acquisition of the US retail broker that had acquired Glencairn the year before sounded like a recipe for a management buyout; or at least for executive resignations within the next year or two. Hearn admits that the Glencairn team discussed this and he accepts that the widespread expectation was that he "wouldn't be there too long".

But Willis Group won him round. He says that Group CEO Joe Plumeri and Group president Grahame Millwater energetically engaged with Glencairn and set about the creation of Faber & Dumas, as a holdall for Willis's third-party wholesale businesses.

The prospect of being part of this concentration of resources and expertise appealed to Hearn; and so did the chance to prove wrong the naysayers who said that the world's third biggest retailer couldn't run a wholesaler.

More important, though, was the discovery that big-three executives - at least Willis ones - were not as objectionable as his prejudices had suggested. "I remember talking over a glass of wine one evening with the Glencairn senior management team and saying 'wow - they're much more like us than we would have thought'." And so Hearn stayed - and thrived.

So how does it feel when you find yourself responsible for 1,100 members of staff, working out of 49 offices all around the globe? Stressful? Pressurised? "I recognise the enormity of the task [with Willis Re]," Hearn says. He is keen to stress, though, that that this is not necessarily the toughest role that he has had in his career simply because the company is the biggest.

"I've had different challenges in my career - I would argue that running a small independent business without a boss, when I was chairman and CEO of Glencairn, [which] had bank debt and had to have enough money at the end of the month to pay people [was comparable]."

Super-size me
When asked about the strategy for Willis Re and its presumed attempts to outstrip Guy Carpenter and become the world's second largest reinsurance intermediary, Hearn replies simply: "Why?"

He continues: "If I brought a prejudice to the table at this stage - I wouldn't want to define us as aspiring to be the biggest, I'd want to define us as aspiring to be the best." There is a company that Hearn has in his sights, but it isn't Guy Carpenter. It's Benfield, the now Aon-owned reinsurance broker par excellence.

"There was a space vacated when Aon acquired Benfield. There's an opportunity for us in that regard, I believe. We have the opportunity to fill a vacuum that's been created now." But then, of course, every reinsurance broker wants to claim Benfield's mantle. Hearn thinks Willis's scale supports its ambitions in this regard. The reinsurance broker had revenues of roughly $600mn in 2009, according to AM Best. Above it, Guy Carpenter had circa-$900mn and Aon Benfield almost $1.5bn. Below it Cooper Gay had $162mn and Towers Watson $156mn.

This indicates a market share of 41 percent for Aon Benfield, 24.5 percent for Guy Carpenter and 16.5 percent for Willis Re.

"I think where Willis has potentially significant competitive advantages is in our relative size, perversely. We should be able to move up and down and compete with both the speedboats and when we choose, with the supertankers."

Hearn argues that Willis has both the scale and analytics capability to challenge its two larger peers and the nimbleness and relationship management skills to eat into the market share of the independents.

The first 100 days
Starting a new job is always difficult and these difficulties tend to be multiplied as the job becomes more senior and as the organisation grows.

Hearn has thrown himself into his new role with great energy. The process of acquainting himself in detail with the business started in January on paper.

And from day one he went out of his way to make himself available and to canvass opinion. Hearn held a series of structured interviews with senior employees, some of which lasted hours. Hearn asked for frank opinions on every aspect of Willis Re.

Stage two was introductory meetings with clients to elicit their candid assessment too. To that end the Hearns have taken to the road together. In recent weeks they have visited half a dozen locations in New York, Sydney and London.

The outcome of this frenetic activity is an Action Plan. Hearn has a presentation with him that he is due to give to the organisation's senior management, but at this early stage he is wary of disclosing too much. He says that it will involve some governance changes and a keener focus on the return that Willis Re gets for its expenditure. The rest remains under wraps.

Clearly, this is just the start. Detailed strategic planning is underway and it seems likely that Hearn will look to push forward significant change at Willis Re before long.