Lance Glinn:

Welcome into another episode of the Inside the ICE House podcast. Today's guest is Simon Wilson. He is the CEO of Markel Insurance, a subsidiary of NYSE Listed Markel Group. Simon, thanks so much for joining us Inside the ICE House. Happy to have you here.

Simon Wilson:

It's so good to be here, Lance. My first time inside the New York Stock Exchange. So thanks for having me and giving me a tick off the bucket list.

Lance Glinn:

So your first time at the NYSE, walking up, did you get goosebumps? Did you get an exciting feeling? Because it's a cool place to be. I'm lucky I get to come to work here every day, but for those who aren't here as often or who may never have been here before, it's just a different feeling, in my opinion at least.

Simon Wilson:

I agree. You see those words, Wall Street, as you walk down and then you see the flags outside of the building and you just sense the history that comes with this place.

Lance Glinn:

Absolutely.

Simon Wilson:

Very exciting place.

Lance Glinn:

Absolutely. Now you obviously lead Markel Insurance, CEO of Markel Insurance, but before we get to that specific branch of the overall business, dive a little bit into just what Markel is, what it does, what it holds, what it oversees, how the business as a whole works, because while it might not be 200... Almost 234 years old like the NYSE is, it has a long and rich and treasured history to it.

Simon Wilson:

That's right. So Markel now is almost a hundred years old. It was formed in 1930. The really interesting contextual history around the business, just to set this conversation up. So a hundred years ago, automobiles cars were becoming much more prevalent on the roads. But what didn't really go with it was rules, particularly. You don't really remember there back in the 1920s, but there were a lot of road accidents. There was a lot of things that just went bad on roads, which made increasingly those automobiles pretty uninsurable. And on form of automobile was the jitney bus. So the jitney bus was a bus that took workers to factories and they were notorious for workers falling out the back, bad accidents.

Lance Glinn:

I can imagine.

Simon Wilson:

So you've got basically an uninsurable asset. A guy called Sam Markel, he was in Northern Virginia at the time and he said, "Look, we need to put some rules around this to make this thing safer first, but secondly, so that we could insure the thing." So he was involved in the setting of rules around jitney buses specifically in the state of Virginia. And on the back of that, he created an insurance agency to say, "Right, now I think we can underwrite it." So this is back in 1930, which is probably not the greatest time in history to set up a business, but here we were. So we moved through that and Sam ran this agency, passed it on to his two sets of twin boys. So he had four sons, two sets of twins. Those two sets of twins decided in a kind of odd business way, "We will only make a decision if we're unanimously agreed on that decision." And so they didn't make that many decisions back through that era.

Lance Glinn:

Well, if you need 4-0... It's a lot harder to do 4-0 than say 3-1 or even 2-2.

Simon Wilson:

Especially when they're brothers. I mean, imagine the disagreements that they would have together. So it just stayed as a pretty small insurance agency until the late 1970s. And that's a really important time for Markel because the third generation takes over the business. It was an insurance agency, but they had two cousins. By this time, the family's branched out a fair bit. One of those cousins was a guy called Tony Markel. Now Tony Markel's 6'8", huge man, huge character, huge personality, insurance guy through and through. His cousin's a guy called Steve Markel, much more Wall Street, kind of 5'9", 5'10", so not the sort of giant physical presence that you get, but very much a financial mind. So he's kind of like the balance sheet guy. And the third character in it was a guy called Alan Kirshner. And sometimes Steve and Tony would fight about things.

So Alan Kirshner described himself as the best paid referee in business at the time. So he had a role in all of this. Now, Tony was your insurance guy. Steve's your investment kind of individual. And they said, "Look, we are really ambitious with this company that we're going to take on. We want to do much more than our fathers and grandfather were able to do with it." Well, what does that involve? They kept coming back to Warren Buffet at Berkshire Hathaway, which in the 1970s was a pretty progressive idea. Not many people had cottoned onto it. And what Warren Buffet was doing, he was taking an insurance organization, running that profitably. So it created a profit and a balance sheet effectively float and he was investing that float initially in bonds, but increasingly in public equities. And then as we know now, lots of private companies as well.

Steve and Tony saw that and said, "That is a blueprint for what we could become." So they go to... Actually it was the NASDAQ that they started on and moved over to the NYC, subsequently, "Let's go and raise some money." Back in 1986 is when they floated it for $8 a share. We raised some money. Here's the playbook. We get an insurance company going. We do well in that, which is the Tony bit. Steve gets the money, he invests it wisely and we're just going to grow a balance sheet over a long period of time. So it was a get rich slow playbook, which was just fascinating. And they ran that play from '86 right up until... Well, we've been running it up until today. So we've never changed the model. And that share price now is sort of towards 2000-

Lance Glinn:

Much more than $8.

Simon Wilson:

Much more than $8. They've done pretty well. So the model plays out in that particular way, but still at the heart of it is a specialty insurance organization, hopefully run well. That's what I'm responsible for. And then investment side of our business, which invests in the public securities and now private companies as well. So we have been described as a mini Berkshire. We're Markel. It's a similar philosophy that we have, but it's a business that stood the test of time, just a duration of a hundred years, but certainly the last 40 years of publicly traded stock. It's been a really exciting ride for us.

Lance Glinn:

And so you've had this philosophy or this similar Warren Buffet-like philosophy for the last 40 years, since 1986. Obviously, we're sitting here in 2026. As you mentioned in your answer, lead Markel Insurance as CEO. Just describe that specific unit for me. What is it really at its core, the markets it serves and the role it plays just within the broader organization of this larger Markel?

Simon Wilson:

Sure. So Markel Insurance is about a $10 billion gross written premium business. We've got three divisions. Two of them are based out of the US. A core one we call wholesale and specialty. Come back into in a moment. Then a suite of portfolio businesses we call programs and solutions, which are very, very specific niche individual standing businesses. And then our international organization, which is everything outside of the US. The 10 billion breaks down roughly a third, a third, a third into those business areas. What do we focus on? Very, very focused on what we call specialty insurance. And what specialty insurance, you might ask. Was everything that's not motor, the [inaudible 00:07:00]-

Lance Glinn:

Everything that's not the basics.

Simon Wilson:

So there are boats at the moment in the Arabian Gulf, which we will have insurance on. There are hotels and motels throughout America, which are utilized. We'll write lines on those particular bits of business. There are wind farms in South Korea, we'll be involved in that. So we have over a hundred product lines within our organization, all of which are quite niche in specialties. The knowledge that you have to have of industries to be able to underwrite those successfully, that's what we trade in and effectively lots and lots of expert teams coming together on one balance sheet that underwrite a diversified portfolio of quite difficult to understand risks and we attempt to put a decent price on those and to service those clients pretty well.

Lance Glinn:

And what's the process of understanding that? Because you mentioned it, it's these niche things. It's these unique things, these things that like the average person walking down the street might not really know a lot about, but yet Markel Insurance and its employees have to know a lot about them. What's the process in really learning all of these different things, educating from within inside the organization and making sure that you're underwriting and what you are insuring you have a lot of knowledge about?

Simon Wilson:

So as time goes on, I mean, those 100 products didn't happen overnight. It's like a gradual process. And often, what will happen, and you see this with something like a professional indemnity or an errors and emissions policy, that didn't really exist or directors and officers policy would be one that we would do quite a lot of. That didn't really exist until the late 80s, early 90s as a concept when boards of directors sought to protect their directors from being sued by certain people. So the economy has a problem. So a board of directors, a company says that we need to protect these guys. There's nothing there. So there's a customer demand. Often, there's a broker, or almost always there's a broker in the chain that says, "Look, I'm here to service my customer who used to buy property insurance. They're now asking for this new thing. I need to go and make a market."

So often the process of developing an insurance product is really a lot of back and forth between a customer demand and a kind of a balance sheet, which we are trying to get your arms around, "What can we insure? What can we price and how does that work?" And a more modern version of that is cyber insurance. So you're being hacked and having your data stolen and this type of thing, that's only really become something that businesses worried about in maybe the last 15 years or so. And that's when a cyber product has come in to deal with that particular risk. So I would say it was very iterative, but as things happen, like the marine industry's been around for 350 years, but the cyber industry's only been here for 15 years. We do both of them, probably more marine insurance than we do cyber at the moment, but both are really important. The great thing is, is there's always something new happening in the economy and that something new always requires insurance because you can't take risk if you're betting the farm on it and that's what we're there to pick up essentially.

Lance Glinn:

And so you have to evolve. Markel insurance, as you're saying, it has to continue to evolve because like you said, cyber 15 years ago... Or getting your information hacked or stolen wasn't necessarily a worry 15, 20 years ago. It becomes a worry, Markel Insurance has to evolve. I can think of AI and this recent AI boom, I'm sure five, six, seven, eight years ago wasn't necessarily a thought that it's going to be as big as it is today, but I'm sure Markel Insurance has to have... You really have to be understanding of the world around you, sort of on your toes, so to speak, realizing what's coming and then adapt to what is in the near future.

Simon Wilson:

Exactly. And we also have to pick our spots. This is really important because you could do everything. The problem with trying to do everything... I have a philosophy that I often quote called, "Don't dabble." If you are in a specialty insurance landscape, the downside of that if you get it wrong is quite significant, quite extreme. So you have to have these teams of experts who really, really understand the risk that they're running, otherwise you're going to get into trouble very quickly. So we don't do every single thing that comes up in the economy. Not all of it, I don't think, can be insured, but where we do go into something, we kind of double down in those areas and say, "Well, let's invest in the people, the data, the technology, all of the things that sit around an insurance product that services these new clients."

And you don't just stop by saying, "There's the product." Not only do you evolve into these new product areas, but the product itself evolves because the nature of the risk will change. Cyber, being a great example with AI now, has changed the nature of a cyber risk. We've seen Mythos and things like that coming in the news headlines fairly recently. We really do have to react to that and think about what that means for our cyber insured. So that's the game. You've got many, many teams. I think Jamie Diamond talks about these kind of Navy SEAL teams that are out there, very similar in my business whereby I've got to trust a hundred different teams around the world to know what they're doing and have a way of overseeing them to make sure that the business that we're putting on the books is profitable.

Lance Glinn:

So you stepped into the role of CEO in 2025 at a moment, obviously, when the insurance industry alongside many industries are evolving and changing and transforming. When you first took on this responsibility, what was just the vision you had for how you wanted or what you wanted Markel Insurance to be? If you could... When you're sitting in that first day in the CEO's chair and you sort of look outward for the next one, three, five, seven, whatever amount of years you want to put on it, what's sort of that vision for what Markel Insurance is?

Simon Wilson:

So I'll tell you the story about what I did find when I went and sat in the chair. I slightly knew about it slightly before I sat in the chair, but did take that job on. Over those 40 years that I described at the outset of the conversation, great things had happened. So the general trajectory was a financial performance, which is up and to the right. So we've got great financial performance overall. However, and you find this often with founder-led companies and Tony Markel and Steve Markel were those real founders. What happened there, that founder's mentality, that real sharpness that you have when you start a business, the insurgency, the owner mindset, the obsession over a customer, had begun to fray a little. It wasn't quite as sharp as it was to begin with. And you see it often in the corporate landscape. A couple of things that I've found, one was a very heavily matrix structure in the US where everybody was a leader, but no one was responsible.

So to make a decision and a matrix structure, which is product, region, distribution channel, size of customer, you imagine a four-dimensional matrix, decision making within something like that is really tough. So that was an issue that we had to resolve. The second, which I think again is a corporate issue that I'm not a fan of this corporate landscape that gets drawn, is centralization. So you get talked into the fact that, "Let's centralize HR and IT and finance," and all of it. Even claims we were centralizing at one point in the US. And the more you centralize, the further those key functions get away from the customer and your ability to make decisions and get things done, slows down. So we had a decision making culture that was stuck in a matrix and a heavily centralized and somewhat bureaucratic federal structure really at the center and we need to sort those two things out.

So what did I envision Markel becoming? Well, I want to be the preeminent specialty insurer in the world everywhere we go. So if someone goes, "I'd like to go and do this specialty insurance. Where should I go first?"

Lance Glinn:

[inaudible 00:14:41]-

Simon Wilson:

Come speak to Markel, that's the win. So that's what I want to do. What do we need to do? Because once you know the game you're playing, you can then understand better what the role is to win in that game. The four things that we always think about is, firstly, obsession over customer. And these things like a ship owner where there's boat stuck in the Arabian Gulf thinks differently than a construction company that needs a surety bond. But we need people who understand the construction industry and the surety bond. We need people who understand marine whole owners with boats that go to the Arabian Gulf.

So we need to understand both of those two things at the same time. The way you do that is by obsessing over those customers and building products that work for them. So customer first. The second is you really have to double down on expertise. In this game, it's an advice game, it's a trust game and it's people who can respond to quite sophisticated customers. So we need teams of experts all over the business. So second is expertise. Third is speed. Before, you could sit... There as an expert and maybe pontificate over what risks you want to write and whatnot, whether it be AI, the internet, technology, even email and so forth, just general technology, the need for speed is absolutely real and therefore, operational excellence, technology, artificial intelligence, all of those things go to getting a product in the hands of a customer much quickly.

The fourth one is just the trust factor and the consistency of doing the right thing over and over over again. If I sell your insurance policy to the New York Stock Exchange or whoever it might be to, you get a piece of paper in return for your dollars to promise to pay. Well, if I fail to pay you when you have a valid claim, my business is finished. Whether that's because of financials or just the way that I operate the business, I'm done. So consistently doing the right thing over and over and over again for a long period of time is really critical of what we do. So let's be the preeminent specialty insurer in the world. We do those four things right in lots and lots of different areas, we've got a great chance of winning more than we lose.

Lance Glinn:

So you have obsession, you have expertise, you have speed and you have trust, right? Those four things specifically that you mentioned. And obviously. As companies grow, they still want to stay rooted to how they got to where they are. They still wanted... I'm sure Markel wants to still stay rooted to that 40-year process or that 40-year philosophy that started in 1986. But how do you do that specifically? Because when you're scaling, when you're growing, when you have a changing sort of mindset, it's easy to stray away from potentially those four things that you just mentioned, but how do you make sure that you stay rooted to those four values so that that obsession is still there, that expertise is still there, that speed and that trust all still remain?

Simon Wilson:

The great thing that happened, we listed on the NASDAQ and then the NYSC. We did that and we... Not only did we have a financial model and a way about going about specialty insurance, but we also wrote down what we call the Markel style. There's 214 words about the way in which we as people that work within Markel Insurance and Markel more broadly will operate. And it's things like honesty and fairness in all your dealings, respect for authority, but a disdain for bureaucracy. The concept that winning is a good thing. These types of concepts, you read it and you read it on the page and you think, "Well, this is all good stuff. I don't disagree with anything. And actually it's pretty cool, but does it really exist?" And the power of the organization is that that Markel's style, which was written 40 years ago by Alan Kirshner, actually, that was his great gift to the organization in addition to his management of it, but he gave us that and we've never changed a word in it.

And the interesting thing about it is that in the whole 214 words, one word doesn't come up once and that's the word insurance. So this wasn't written about an insurance company, this was written about an insurance company... A company writ large. And if you really cut through it all, it goes down to the golden rule and the golden rule obviously being, "Do unto others as you have done to yourself." And if you do that and you do that right and you do that with your employees, you do that with your customers, well, your shareholder's going to benefit on the back of that as well. So that keeps us grounded. That particular statement, the Markel style, it's very, very important. There aren't words on the wall when you walk into our headquarter building saying all this stuff that people put. But you talk to people who work in the organization, they will quote you the Markel style more often than not, and generally, people that stay there very much like it, it's a passion of ours.

Lance Glinn:

And so for a lot of this conversation in the first half of it, let's say, we've spoken a lot about culture and I think culture, not just from Markel Insurance, but for Markel overall, you just talked about the Markel style, that 214 word document. Culture, for a lot of companies, is a fancy buzzword or a nice buzzword to sort of throw around, but I personally don't think it really means anything unless that culture and those words turn into tangible action or tangible value, that employees and even other stakeholders involved can actually really feel and point to like, "This is what our culture is and here is how and here is what our culture shows." What do you think or how do you think about creating and sustaining that strong unified culture, that tangible action, not just having that 214 word document, but really then putting it into action and making sure that employees that you oversee, employees in other parts of the company, they all sort of feel the same way and they feel that it's not just a buzzword?

Simon Wilson:

Yeah. I'm totally passionate in the fact that a cultural statement of way of being can't simply exist on the side of what you do operationally. It has to be part of a layered system where all the things kind of act in tune with one another. So if you think, we talked about the financial model a little bit earlier, so this is run a really successful specialty insurance business, that profit goes to a balance sheet, the balance sheet is invested. We've never paid a dividend and we don't intend to pay one in the future. So the money's continuously cycling through and everyone's aligned with it, but underneath all of that, what you hear is, "Long-term focus, long-term focus, long-term focus." So we care about years not quarters. I always look at... And so the people that want to come and work with us are both strategic and long-term in nature.

So if you get people with sharp elbows rather than sharp minds, they don't tend to last that long within Markel because they get frustrated really quickly and we're saying, "No, no, we need to build something that's going to be here for the next 40 years. We're not here just to be a fly by night, make a quick buck and then move on to the next thing," because that kills the trust factor that we talked about earlier. And also if you're going to have a business which is effectively built forever, every brick you put in the wall needs to be a really solid one that you're not going to move later. So the longterm-ism of the financial model, the way we hire and everything it says in our cultural statement, all come together and that creates just this almost a compounding of the culture within everything that we do.

And I suppose that comes down to is when you're hiring somebody or you're acquiring a business, you're looking for those character traits and those people, those businesses. And if they don't cut it, we tend not to hire them or buy those organizations. We're looking for things that are much more long term. So I love that. I hadn't really realized it when I first joined Markel 16 years ago that that was what it was really all about. But the minute you do realize that, you get the time and space to make really good decisions that work out over long periods of time. And that's where I think that share price up and to the right has been born out of more than anything else.

Lance Glinn:

And so we obviously talked a little bit about a company evolution and then you mentioned those four, let's say pillars, of the obsession, expertise, speed and trust. And obviously, companies evolve, but so do the clients. And I'm sure that's something that you've experienced over your 16 years. The client has changed, their needs have changed, what they want has changed, new things have come about. And as we talked about you and Markel Insurance need to adapt, how does Markel think about meeting those changing client needs without compromising any of those core traits that really make the business what it is? How do you make sure you evolve, but still again, stay true to what Markel insurance is?

Simon Wilson:

Yeah. So the first key bit in that is that... We go back to the obsession over the customer. So you have to understand what that customer's needs actually are. You're working with a broker to do that. If you're sat next to... I was with our trade credit team yesterday down in Philadelphia and sat there and we were talking to a client, which was John Deere. Now the John Deere business model has moved and moved and moved. We're a long-term shareholder as well as a long-term insurer of the John Deere business there. But imagine the machinery that John Deere is making today and the AI that's involved with all of that, well, the technology that's involved is in a cab of a combine harvester these days. It's a lot different than it was say 20 years ago. It's a lot more valuable as well and it's being used in different ways.

Well, I don't know that much about combined harvesters and John Deere.

Lance Glinn:

That makes both of us.

Simon Wilson:

But the people that are at the frontline dealing in that particular area, it's their job to understand that likewise, where we get our energy from. So go back 30 years and the vast majority of energy is coming from fossil fuels. So you've got mines and you've got oil rigs and you're thinking about how they work. Well, spin it forward 30 years and we've got wind turbines, we've got solar panels, we've got batteries. So for our energy folks to move from a fossil fuel mindset, still exists to some degree, to a new fuel mindset and all the technology-

Lance Glinn:

How much more diversified fuel mindset?

Simon Wilson:

Way more. And yet some of... The huge wind farms, they're now being drilled in mile deep sea. And so the technology and the weather that affects that type of thing is a really difficult challenge to get your head around. It's a big engineering feat to get your head around how that actually works. What part can we play? Well, if we're not participating on wind farms and solar farms and battery technology, we're missing out on a significant area of growth in this business. So our energy team has evolved significantly and we do the whole gambit now and offer that to our clients, which is really important. The other one, which is an obvious example today, look at a Meta or a Google who a few years ago are basically a software platform, a search platform. You're in the internet.

Well, the physical infrastructure that they're now building in terms of data centers is a massive growth area. If someone said to you, "Do you want to insure a data center for a hundred billion dollars?" We're never going to do a hundred billion dollars, by the way, we can't do that, but we're going to do a portion of that, but we have to understand what we mean by a data center, how it's built, where it's built, who's building it, and how it gets maintained, because these things get hot. It needs to be cooled down. Does it all work? It's a different type of technology than we've seen for a long period of time.

Lance Glinn:

So then off of that data center point, I do want to ask a question about AI. I was going to get to this a little bit later, but I'll get to it now since you brought it up. There is such a focus right on the technology, right? Physically using the technology, you go into your computer and you use a Copilot, use a Claude, you use a ChatGPT, whatever, you can pick and choose whatever when you want. But of course there is this physical infrastructure that's being put up, which is equally as important, if not more important than the softwares that we use on our computers. Is that a growth area for Markel? We talk about evolution, we talk about adapting to what's new. Obviously, these data centers, like you said, five, six, seven years ago may have not been on mine, but they're on mine now. Is that an area of growth for Markel?

Simon Wilson:

So data centers themselves absolutely is a growth area for all of the specialty insurance market. You're going to need as much capital as you can get your hands on to make those things work. The banks are talking about at the moment, so do the insurance company. So it's a huge growth potential. That's the machine and the power that sits behind it. But once you get to the front end of business, and imagine that AI is being applied, not just to our business... That's important. We might talk about that later as well, but every business in the world at the moment is starting to implement AI.

Now, unbelievable opportunities that brings for productivity, the ability to get better at what you're doing, speed is impacted by that a great deal as well, but there's a lot of risk involved also because a lot of this data is being shared who knows where. Who's on the other side of that, what are people using that data for and how could that... Because that could materially impact an organization, their security, their cybersecurity, but also just their ability to trade forward if that stuff stops down in the business interruption element.

So AI is a terrific opportunity in terms of revenue that can bring in changing of products that we have, but we have to be super alive to the risks that are occurring, which are new to the industry that we don't fully all understand, I don't think, at this point in time. So both sides of the equation. And that's always the issue with a business like mine is that you really want to contribute and service clients' biggest needs. But if you fundamentally don't understand it and you're dabbling, you dabble in AI insurance and I suspect that could end up quite badly overall. So we're not going to do that, but we quickly need to understand where we can play a role.

Lance Glinn:

And so far, AI, a lot of people have come on the podcast and just in news overall and said it's like a nine inning ballgame and we're saying inning one or two. And I've had even previous guests come on and say, AI is the worst it's ever going to be right now. It's always going to get better. It's always going to continue to evolve. It's going to learn more. And what AI is today is going to be different than what AI is tomorrow. It's going to be different than what AI is a month from now, a year from now, 10 years from now, whatever it might be. But from what you've seen so far, how do you see AI really reshaping the specialty insurance value chain?

Simon Wilson:

So your baseball analogy is an interesting one. So we might be an inning one or inning two, but in a baseball game, at least the ones I've gone to, most of those innings are of equal duration. I think you might find that inning three, four, five, six, seven, eight, nine happens much quicker than inning one and inning two. So I think that the speed of that is really important and getting out front of it is truly important to businesses like mine businesses all over the world. What are we doing with it? It was interesting, a year ago, almost looked like a magic trick, you go on your phone and you go into ChatGPT or whatever and you'd ask a question about what restaurant do I want to go into. And I felt that as a consumer, it was kind of interesting, but it wasn't something that I would use every day. I'd just use it and it was kind of fun. And you'd do one of those pictures that they come up with and stuff and it-

Lance Glinn:

You had a good time with it. You used it sort of nonchalantly.

Simon Wilson:

Today, I mentioned I was at the Kentucky Derby over the weekend, every single person in my area that we were sitting in was on their phone before the races taking photos of the form guide saying, "Which horse is going to win?" But last year, no one did that.

Lance Glinn:

And I would love to know what the success rate was.

Simon Wilson:

Well, one person on my table was... Well, one of my colleagues actually came back with a whole bigger pile cash than where she went in with, it was quite interesting. So I do think the speed of this thing and the change both in our consumer behavior but in business behavior is materially different in the middle of 2026 than it was in 2025. Where are we seeing that? So one of the big problems that we had operationally as a specialty insurer was, as I mentioned before, I'm selling marine war insurance in the Arabian Gulf. I'm selling energy insurance in the American Gulf. I'm selling surety bonds throughout the United States. So I'm doing these very, varied products. And what was happening, I had two choices. I could either buy a big enterprise-wide system, like core system for it. And these kind of implementations, those core systems, they take forever, cost hundreds of millions.

And they also require you to move to a standardized way of working because they say, "Our processes, which we've looked at, they work like this. If you start to move away from the way that our process work, we can do that. But when we patch it and when we improve it, you are going to get left behind because we won't have those improvements for you. We'd have to go and patch that on." Now there's ways of making that faster and all the rest of it, but you essentially get drawn towards a mean of the way that you do business, which in our world is not the specialty insurance business, but traditional insurance. So the ability to serve our customer in a way which is differentiated is actually reduced sometimes by the way in which those systems were working. The other alternative was you could build an IT system in house.

The problem with both is they're super expensive. You've got to maintain them and you don't normally keep up with the technology certainly when you've built it in house yourself. My view is AI fundamentally changes that game for us. So if our surety bond underwriters, the way in which we can sell these bonds more successfully is if we have a process that works like this and it goes end to end. We can build that process into Claude, set it on top of a filing cabinet type system and we're off at the races and you could be there in three or four weeks. Before that was three or four years and a ton of upfront investment. So it de-risks it, gets us up to speed quicker and is just focused on that specialty era. And at the same time as my surety team is doing that, my personal lines team, which is up in Milwaukee, they can be changing the way that they do business at the same time. Whereas before, remember that centralized IT thing, you'd have to go join a queue and there'd be some horrendous meeting-

Lance Glinn:

It'd be a long wait before you can even get started.

Simon Wilson:

Well, you're in a prioritization meeting, we've got some more questions and it's like 18 months. And by the time you get there, whatever the idea was that you had is out of fashion, you're done. AI just speeds all of that up and actually, I think, liberates the people that are running businesses, which sits right at the heart of the new structure of what we've developed within Markel Insurance.

Lance Glinn:

And obviously, with this AI opportunity, you mentioned it in an earlier answer that there is all this data and sometimes you don't even know who's on the other side of that data or who could be getting that data. So with this AI opportunity comes obviously a lot of responsibility. How are you and Markel, Markel Insurance, ensuring that there's still a level of transparency, still a level of trust, accountability from your end so that people know Markel is using AI but trust the way Markel is using AI?

Simon Wilson:

So you've got a lot of tools to choose from and some people prefer Gemini, lots of people like Claude, Copilot within the Microsoft area. We've typically been in the Microsoft world. So everyone's got Copilot and we've built the ring-fence that sits around the business. It's secure. But then someone puts a hand on and says, "I really, really want to use Claude." And you look at it and you go, "I can see why it's extremely powerful." And we've been looking at that kind of... But when we release it into the business, we just have to... If we set it up well and carefully to begin with, we won't have a problem as we go down the line. So when we do introduce Claude into individual users who are going to use that, we make sure we put the ring-fence around that particular large language model as well. We use one called Harvey and we've got our own instance of it.

So it's not the ChatGPT like we would use on our iPhones that goes off into the world and they know all about Lance and Simon type thing. It's within Markel where this data is being kept and we put some pretty rigid firewalls around the outside of it. Whether or not that's completely impenetrable, I don't know. There's a massive industry and cyber hacking and all the rest of it, but if you set it up with the right degree of governance, and I don't want it to become boring about that, it'll allow... If you do it right in the first instance, you can then go and play with this technology with the degree of safety that I think you require as a big listing-

Lance Glinn:

No, absolutely. I don't think you're being boring about it. I think it's something that people genuinely care about. You're putting all this data out there and obviously, companies like Markel have a lot of important data that they don't want to get shared, that you don't want to get shared. So I don't think it's anything boring. I think it's important to discuss because it's what people care about. They want to make sure that the data they're giving to Markel or really any company, that company's going to protect that data. They're not going to give that company their business if they don't have full faith that what they're providing to the company is going to be something that's secure. So I don't necessarily think it's boring. I think it's important and I think it's what essentially people want to hear about.

Simon Wilson:

Yeah. The boring point wasn't the fact that we're doing it. It was more this desire and entrepreneurial atmosphere and spirit and the speed at which people want to work. I want to hank off that type of work. We're so desperate to get entrepreneurialism and innovation into the very DNA of what we're doing each and every day. So maybe it slows it down for a little while at the very outset. I think we're over that particular hump now. We've got in our head around how we want to use it. The previous thought on this was like, "It's really scary, everything could go wrong." I tell you what's even scarier is if we don't do it and we'll be out of business. So we've got to do it. We just got to do it with a degree of balance between the risk and the opportunity.

Lance Glinn:

And correct me if I'm wrong, but you mentioned in a previous answer that you don't think quarter to quarter, you think year to year. You have this long-term sort of vision. But I think that's something that's hard to do in today's world because there is that need for speed, so to speak. There's a desire from customers and from people to have this sort of instant gratification, right? They want things now because there's so many things at their fingertips to provide us with, even if it's just quick answers, right? Everyone is sort of thinking right here, right now, and not looking the next year or 5 years or 10 years ahead. How do you reinforce that long-term thinking both for yourself and across the organization when there's just a lot of pressure to react quickly?

Simon Wilson:

Yeah, there's lots of pressure, but if you're always reacting to pressure, you're not carving your own [inaudible 00:36:43]. I think it's very important that any organization has confidence in what it's doing and how it's going about doing that. Now, for sure you have quarterly results that are important and people are going to see that. So we have to deliver with our core business quarter-on-quarter, but by the side of it, we need to have enough new things coming down the pipe in order to satisfy the next two and three years quarterly return. So we don't do that now, don't get the benefit of that later. So how do we do that? You're looking at, what are the new customer types? What are the new products that you're putting out there? How do we deliver that in a different way from a technology perspective?

And all of that requires investment today. So we do have this two time periods. You've got forever, which is our favorite one, I suppose, in a lot of respects, and right now. That's important. I do always reflect on some of these, the pop stars get their Grammy's or these kind of awards and it's always the best newcomer and often they'll get up on stage and go, "I'm the best newcomer after 15 years of trying my heart out to get this award." And I think there's a lot of truth in that. It's going like, "Oh my goodness, Markel, how did you come up with this product?" Well, it's like we started developing this product three, four years ago and we've now just got it to a point where it's a superstar out there in the marketplace.

And if you don't invest in those superstar products and ways of doing business, you're going to be sad as a shareholder, I think, in three or four years. So that's what I feel really, really incentivized for is that we've got these really exciting things that we can be doing, but I completely acknowledge that we need to be good every day as well.

Lance Glinn:

Sure. As any public company doesn't, as we get toward or close to the end of our conversation and you look forward and we're going to talk about looking ahead now and you look forward and try to forecast the evolution of this specialty insurance industry, what will define the winners in the landscape moving forward? How will people know that Markel is the one to go to?

Simon Wilson:

For a long time, and I think we and some of our peer companies have always described ourselves as underwriting companies. So getting the risk selection and the risk pricing right has been really important and being good at underwriting is incredibly important because what creates long-term value for shareholders is just consistently hitting what we call combined ratio. So your profit margin quarter-on-quarter, year-on-year, that's a really important indicator. So that's very, very important. We've always talked to ourselves about an underwriting company. I now think for sure that with the latest technology, the importance of business operations, technology, and AI is on a par with our underwriting capability. In fact, they're all integrated now to a much greater degree than they have been for a long period of time. So absolutely, the winners in this particular area are those who are going to be best able to co-join underwriting capability with technological advancements.

And that's why I was saying earlier about AI. If you wait for another 6 months or 12 months to get something out there, on the front end of your business where you're utilizing this stuff, someone else is going to have figured that out. And I feel like we've made progress in about two or three really important areas on that and there's another four, five, six coming through. And so I am wholly on AI transforms the industry mentality, gives our people so much more power in being able to get to things at speed and research the whole of a customer's risk rather than just what's submitted on a form that came from a broker. And so I think the winners are the ones that are going to be able to co-join those two areas.

Lance Glinn:

And so as we wrap up, bringing now back to Markel Insurance, just quite frankly, Simon, what excites you most about the future?

Simon Wilson:

Well, as I said, everything that happens in the wider economy, all of the advancements that you have in technology or in transportation, and we've got people going up into space now and things like that, all of them require insurance companies to understand that part of the economy, those risks, those customers. Every time something new comes out, I just go like, "That's the potential for our business to grow." Wherever it might be, it's the potential. We won't always take that. There's always potential to grow. And I just think human ingenuity, it doesn't suddenly stop. It's always happening. So giving our people the opportunity to understand these really quite difficult risks that they're going to have to be dealing with and saying, "You're going to have to go at that by understanding that product and understanding our technology and our product suite and our risk appetite," putting all those things together, I think gives us just a forever runway in terms of what we can do as being a great insurance business.

We write $10 billion in a $750 billion market globally. We're in 16, 17 countries. I expect we'll probably develop that number of countries over a period of time and I hope our share of those companies, the markets that we've been able to get to, that's going to increase over time as well. So more diversified, more specialized, more things for our people to do and all of it pretty much at the cutting edge of what humans are doing at this point in time. So insurance often gets a bad rap. I'll tell you, it is one of the most spectacularly interesting businesses that you could be involved with because you're involved with every economic and technological advancement that happens in societies all over the world. And that's a cool place to be.

Lance Glinn:

Well, Simon, I definitely felt that passion for insurance. Thanks so much for this conversation and thank you so much for joining us Inside the ICE House.

Simon Wilson:

Well, Lance, it was a pleasure talking to you. Thanks for inviting once again.

Speaker 3:

That's our conversation for this week. Remember to rate, review, and subscribe wherever you listen and follow us on X @ICEHousePodcast. From the New York Stock Exchange, we'll talk to you again next week Inside the ICE House. Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.