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Coping With Global Transformation

Anthony Egerton MA MBA ACIITang Long Consulting

The Malaysian Insurance & Takaful Brokers Association CEO Conference

Bali - October 2011

Agenda

• Global transformation – ‘the journey ahead’

• McKinsey & Company research– “Journey III”– “Building a Talent Magnet”

• Lessons to be learnt

The ‘old chestnuts’

• How profitable is your existing business?

• Brokerage v Fee conundrum

• Is Profitable Growth an oxymoron?

• Why does insurance ‘enjoy’ such a poor reputation?

McKinsey & Company Research

“The Journey”

• Risk management is the primary driver of success

• Not investment performance, expense management or financial leverage

• Performance is remarkably consistent and self-reinforcing

• Winners capitalize on counterintuitive ‘ironies of risk’

“The Journey Revisited”

• Industry returns remained poor, lagging behind the cost of equity by a wide margin

• Returns in P&C lagged far behind those of other financial service sectors, most of which generated returns in excess of 14%

• Differences in underwriting performance accounted for the lion’s share of differences in returns

• Differences in investment margins and financial leverage were less important

“Journey III: The Next Frontier in Property and Casualty Insurance”

http://db.tt/XqNc6Hx

A Paradigm Shift

• The exit of undisciplined capacity

• Strengthened risk management skills

• Stronger foundational pillars

Next-Generation Risk Management

The Implications

• The risk journey continues – with profitable growth as the new frontier

• Continuous improvement of risk management• Growing profitably in a competitive industry– Lessons and barriers– Levers to drive growth

• Upgrading the foundational pillars

Overcoming Barriers To Growth

“Building a Talent Magnet”

http://db.tt/p8ToAzP

Conclusions

• Property and casualty insurance industry faces three challenges in attracting high-quality talent: – a poor reputation, – a limited understanding among high school and college

students of the industry’s career opportunities, and – a limited pool of trained talent.

• There is cause for optimism• Coordinated actions are required• The work involved will be neither easy nor quick

Ten talent questions - Culture

1. What are the most pressing people and skills needs you require to fulfil your 5- and 10-year strategic objectives?

2. Can you estimate the numbers of leaders or technical experts you need in each of your businesses to have a strong bench for succession purposes?

3. Can you rate where your organization stands relative to competitors in talent attractiveness? On what dimensions you are leading and lagging?

4. Most important: Do you spend 30-50% of your time developing people and their capabilities?

Ten talent questions - Performance

5. Do high performers in your organization receive the recognition and differentiated rewards they deserve?

6. Have you provided clear and consistent guidance to employees on the behaviors and values you expect them to demonstrate as a part of their overall effectiveness? Is that guidance the same across all geographies and units?

Ten talent questions - Development

7. Do people in your organization know how to get ahead? Are they aware of career paths and roles open to them and how they should be preparing to succeed?

8. Are your employees engaged and motivated to perform? Do they find meaning and engagement at work?

Ten talent questions - Recruiting

9. Do you know what talent pools and geographies yield the most promising recruiting candidates? Have you identified the campuses you should build recruiting relationships with?

10.Does your human resources organization have the credibility required to advise business leaders on people and performance matters?

With Acknowledgement & Special Thanks to

Pete MillerAuthor, “Journey III” & Director, McKinsey & Company +1 (212) 446-8580Peter_Walker@McKinsey.com

Dr Stephan BinderLeader, Insurance Practice - Asia & Director, McKinsey & Company+86 (21) 6122 3241Stephan_Binder@McKinsey.com

Journey III: The Next Frontier in Property and Casualty Insurance http://db.tt/XqNc6Hx

Building a Talent Magnet http://db.tt/p8ToAzP

And Thank You to You too!

Anthony Egerton MA MBA ACII +65 9128 1855

Tony@TangLong.com.sg

“A journey of a thousand miles begins with a single step.”or "The journey of a thousand miles begins beneath one's feet."

Lao-tzu, The Way of Lao-tzuChinese philosopher (604 BC - 531 BC)

千里之行，始于足下 老子 , 道德经(604 BC - 531 BC)

Anthony Egerton MA MBA ACII +65 9128 1855

Tony@TangLong.com.sg