Speaker 1:
From the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, welcome Inside the ICE House. Our podcast from Intercontinental Exchange is your go-to for the latest on markets, leadership, vision, and business. For over 230 years, the NYSE has been the beating heart of global growth. Each week we bring you inspiring stories of innovators, job creators, and the movers and shakers of capitalism here at the NYSE and ICE's exchanges around the world. Now, let's go Inside the ICE House. Here's your host, Lance Glinn.
Lance Glinn:
Intercontinental Exchange, that's NYSE ticker symbol ICE, provides powerful tools to help organizations manage risk across key markets like derivatives, including energy and soft commodities and fixed income. With cutting-edge market data, clearing services and advanced analytics, ICE enables institutions to hedge against price fluctuations with confidence. These solutions boost market transparency and liquidity, ensuring stability in a complex financial landscape. Now insurance companies are the ultimate risk managers and risk-takers, stepping in where uncertainty looms. They accept the unknown natural disasters, accidents, recently unexpected pandemics and turn it into opportunity by pooling risk across millions of policyholders. Every policy sold is a calculated gamble where insurers leverage data, analytics and expert judgment to cover potential losses. By doing so, they create a safety net for individuals and businesses while fueling economic growth, proving that risk is not something to be feared, but something to be managed.
Juan Andrade, president and CEO of Everest group, that's NYSE ticker symbol EG is no stranger to risk. Before his insurance career, he served the U.S. government combating drug cartels across south and Central America. Now, with 30 years in the insurance industry and nearly five years at Everest's helm has transformed the company into a global leader in risk management. Today, Juan joins us inside the ICE House to share his unique career journey from aspiring journalist to head of a global underwriter. We'll dive into the state of the insurance and reinsurance industries and discuss Everest's growth since he took over on January 1st, 2020. Our conversation with Everest Group President and CEO, Juan Andrade, is coming up right after this.
Speaker 3:
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Lance Glinn:
Welcome back. Remember to subscribe wherever you listen and rate and review us on Apple Podcasts so that others know where to find us. You can also now find full video episodes of the Inside the ICE House podcast on tv.nyse.com and on the NYSE YouTube channel. Our guest today, Juan Andrade is the president and CEO of Everest Group, that's NYC ticker symbol EG, a leading global insurance and reinsurance company serving customers in more than 115 countries across six continents. Juan joined Everest as CEO on January 1st, 2020, bringing with him 30 years of experience in the insurance industry. Prior to Everest, Juan served as executive vice president at Chubb and president of their Overseas General Insurance division. Before beginning his career in insurance, he worked in national security and international Affairs within the U.S. Federal Government's executive branch and the executive office of the President. Juan, thanks so much for joining us Inside the ICE House. Welcome to the New York Stock Exchange.
Juan Andrade:
Thank you, Lance. It's a pleasure to be back.
Lance Glinn:
So, Everest Group in 2023 celebrated its 50th anniversary, marking a half century of disciplined underwriting, capital management and risk mitigation. Having led Everest for soon to be the last five years, as I said, January 1st, 2020, is when you took over as president and CEO and Everest having a now 51-year history, what does it mean to you to guide the company at this significant milestone?
Juan Andrade:
Yeah, thank you for the question. It's been a terrific experience, and more importantly, it's been the imprint that we have put on the company really over the last five years. We have transformed the company into what it is today, which we're essentially the fourth-largest property casualty reinsurer in the world with a tremendous franchise value. We also have an insurance business that's now going global at the same time. But it's been an honor really to share the heritage of the company to be able to build on that and have the successes that we've had so far.
Lance Glinn:
So, Everest founded in 1973 as the reinsurance arm of Prudential Financial and went public as Everest Re in 1996. So, you're nearing the 30th anniversary of that original IPO. Over the last 50 plus years, and particularly during your tenure as president and CEO, the company's experienced remarkable growth. What do you believe has been the key drivers in that growth that have benefited stakeholders across the board, whether it be shareholders, employees, and ultimately customers?
Juan Andrade:
I think it always starts with a clear vision and a world-class executive team, and that is one of the things that we've been able to do. If I go back to 2021, it was really the first time in the company's history that we actually had an investor day where we showcased our first essentially three-year strategy for the group. It was a very clear and very focused strategy. It was really about diversification, about the fact that we wanted to increase the franchise value of our reinsurance business but we also want it to get scale and expand on the insurance franchise. Once you have that roadmap and that vision and you have excellent people, it's amazing what you can accomplish.
I look at where we are now five years later. Basically, the company has more than doubled in size. Our stock has gone up over 60% over that period of time, better than the S&P. Our book value per share, which is a critical measure in insurance, is also up over 60%. And we have improved pretty much every facet of the company from underwriting discipline to operating discipline. But one of the most important things we have done is we have created a culture of inclusion and collaboration. That's frankly what allows us to accomplish with what I just discussed.
Lance Glinn:
You've had, as I said, 30 years in the insurance industry. So, throughout those experiences, you just spoke to the great growth at Everest, the great culture at Everest. What do you think though separates Everest from the competitors and gives you that edge?
Juan Andrade:
I think there's a few things. I think number one is the secret weapon of our people and our culture. Our industry is a relationship business where business is local. So, I think we have a unique formula that says we deploy capital centrally. We have a very good enterprise risk management system where we can identify where we get the best return opportunities and we deploy that capital to our regional and local leaders. They in turn are able to execute. So, I think that's part of it, which is culture based. The second thing is we're very entrepreneurial. If you look in our industry, we actually have the lowest operating expense ratio in our industry, which means we can be very nimble. When we see an opportunity, it's very easy for us to basically, pivot and go from one end to another and take advantage of market opportunities as they arise.
I think number three is we're very entrepreneurial, and it goes back to the operating expense ratio comment that I made. We all roll up our sleeves. We're hard workers. At the end of the day, if we find an idea, we will innovate on it, particularly if it's to the benefit of our clients and our customers. That's a big part of it. And then front and center or true north is our total shareholder return objectives. We are a leading financial return player in our industry, and that is something that we work hard every day to be able to get to it. So, I would think those are some of the key advantages.
Lance Glinn:
I mentioned 2023 Everest celebrating its 50th anniversary. And that year, there was also a rebrand to Everest Group as well as a ticker symbol change here at the New York Stock Exchange from RE to EG, just what was the strategic thinking behind making this name change, changing the ticker symbol and charting a new path for the company?
Juan Andrade:
Oh, absolutely. This really goes back to the strategy that I mentioned, going back to really the first year when I became the CEO and assembled our new management team. It's the fact that we wanted to be both a re-insurer as well as an insurer. As we started getting bigger on the insurance side, it was important to be able to recognize for all of our stakeholders that we were a hybrid company with both. That was one of the key strategic reasons for being able to do that. The other part of it was to really turn the page and really look forward and say, okay, we honor the company's history. We know where we came from, but we are now much larger, much more complex, much more profitable. So, we deserved a different name, a different brand for the future.
Lance Glinn:
In a few months, you'll be celebrating your fifth year as president and CEO of Everest, but before insurance, you had the dream or maybe the aspiration of being a journalist, a storyteller. And it's funny, right now two of us are talking, we both have journalism degrees. Yours from the University of Florida, mine from Rutgers University just across the river in New Jersey. What initially just drew you to this passion for journalism and storytelling, and how did you begin your working career in that field?
Juan Andrade:
Yeah, no, it's terrific. If you look at my career, it's anything but linear. You're right, I did start in journalism. I wanted to be a writer, and I was a writer. It's the main reason why I went to journalism school at the University of Florida. I used to write, now I'm going to age myself, for the UPI when there still was a UPI. I wrote for a newspaper in Jacksonville, Florida as well, and I wrote for the school newspaper at the University of Florida at the same time. For me, I've always been very inquisitive and asked a lot of questions, and that was a big part of what drew me to all of this. I was interested in things, I read a lot and I had a skill for writing. And so, for me, that became a natural thing. I'm also a big believer in the First Amendment, and so for me, going to school to get that degree at the time was something that I thought I really wanted to do from a career perspective.
Lance Glinn:
Was there a particular field of journalism that you wanted to cover? News, business, sports, et cetera?
Juan Andrade:
Sure. It starts with the fact that I was a print journalist back when print journalism was actually even bigger than broadcast journalism, back in the day. But I actually started in covering the courts, covering the cops, covering crime and those kinds of things, which eventually leads to probably something else that I ended up doing in my life. But for me, those were very interesting kinds of things, trying to understand why people did things to people, that kind of thing.
Lance Glinn:
You mentioned leading to your sort of next career, we can say. You spent a time during the Reagan and H.W. Bush administrations working on foreign policy and national security at the executive office of the president, the Department of Defense and the DEA. I imagine these roles were both exciting and obviously challenging right alongside it. How did working in such high-stakes environments prepare you at the time and then ultimately for what the rest of your career has become?
Juan Andrade:
It was a terrific experience. And to be honest, I go back to my grounding as a journalist because people often ask me, "So, what did you learn in journalism school that then allowed you to do those jobs for the government and now to run a company?" And to me, it was the ability to communicate, the ability to ask the right questions, to be inquisitive, to learn a lot about different things and to along with people, to develop a rapport. When I eventually ended up working for the government after I got my master's degree, it was a lot about that. It's understanding people, understanding motivations, being able to communicate well, particularly when you're communicating with a host government and you're trying to encourage them to do something that they may not necessarily want to do at that time but you have to drive U.S. policy and you have to do different things. And that's where a lot of those skills really come in. Ultimately, everything is about people at the end of the day, and if you can relate and if you can communicate, it's a powerful tool.
Lance Glinn:
Columbia, Panama, Peru, Bolivia among others that you spent time in during your time in the federal government. I'm just curious what these experiences were like traveling across South America, working for the federal government against drug cartels, really trying to just make the United States and the world really as a whole, just a better place.
Juan Andrade:
Thank you for that. Those were interesting times because those were in some ways the topics of the day. So, if you think about what counterterrorism is today, it's really what we did in Afghanistan and Iraq and these kinds of things. In those days, counterterrorism was really fighting against some of the issues in Central America, whether it was the Sandinistas and some of the communist influence in the region. It was the waning days of the Cold War. And then as soon as that was over in the late '80s, you really started with the rise of the cocaine cartels, particularly in Columbia. Essentially, they weaponized the drug trade. For us, it was really about how, as you said, protect U.S. citizens from essentially this poison that's coming into the country. At the time, particularly during the Reagan administration and continuing under the George Bush administration, it was really about supply-side control.
How do we mitigate the impact of that? How do we identify labs, destroy labs? How do we find the money, confiscate the money, and ultimately, how do you go after the people that are behind the drug trade? That was a very interesting time. It was also a very violent time in a lot of these countries. If you go back to 1989, when the U.S. invaded Panama back in December of 1989, it was really about taking general Manuel Noriega who had turned Panama essentially into a money laundering center for the cartels out, so you could reestablish democracy and essentially deal a blow to those organizations. As a young man, you experienced a lot of different things, you saw a lot of different things, and frankly, a lot of life lessons come out of that for me.
Lance Glinn:
Now, federal government work often isn't a lifelong post. And when it came time for you to transition, how did you kind of approach the question of what's next in your career? Was it immediately like insurance is where I'm going to go? How did you dictate your path moving forward?
Juan Andrade:
Yeah, it's a great question because it's funny. In our industry, one of the great things about insurance is that we have jobs for everybody regardless of where you come from. But no, I did not think that insurance was going to be where I ended up. I had gone to the Johns Hopkins School of Advanced International studies for my master's. I have a master's in international economics. I speak three languages, and I had a lot of experience in Latin America. So, I thought there's got to be a multinational company out there that could use somebody with my talents. But I didn't know what industry, and I didn't care what industry at the time, to be perfectly honest. So, I had applied to different companies. And the way I ended up in insurance is my older brother who had worked for McKinsey & Company for a long time had said, listen, AIG likes people with your background.
So, I applied to a couple of other multinationals, and then I applied to AIG, got different offers. And the most interesting offer was actually to come here not very far from where we are sitting right now to start my career at 70 Pine. That's how I started. The deal was move from Washington, D.C., come to New York, we train you, and then we send you back overseas, and that's what they did. And 30 years later, I'm still in the industry and I have found that it's a very challenging, complex, but also very rewarding industry because at the end of the day, what you're doing is you're helping people during their most terrible times, whether it's a business or an individual. And for me, that was terrific. It actually matched my values and sort of what I enjoyed doing.
Lance Glinn:
Was it a little bit of a culture shock going from the traveling through South America Central America lifestyle that you were obviously living beforehand to now coming up to New York City, 70 Pine, being trained in the insurance industry? I can't imagine how much different the two environments were.
Juan Andrade:
Oh, yeah, it was completely different. You come out of an environment that is team oriented, 100% mission oriented. There's clear right and wrong goals that you need to accomplish, et cetera and all of a sudden, you're in Wall Street. For somebody that didn't think they would ever be in Wall Street and all of a sudden, you find yourself there, it took a period of adjustment because I had colleagues who were in a similar program that I was but had gone to business school, had their MBAs, had already maybe worked in banks or done different things before being in this program. But ultimately, what I found is that the things that really transposed from one job to the other is the fact that you work hard. You were focused, you could relate to people, and you just did your job. Ultimately, I became much more accustomed to the private sector, to the point that I've been in it now over 30 years.
Lance Glinn:
After AIG, you move on to Progressive Insurance, the Hartford, Chubb, and then eventually, as I said, in January 2020, become president and CEO of Everest Group. Now, before that January 2020 day, you spent a few months as chief operating officer for Everest. That gave you a three-month window before stepping in, obviously to this new role. How important was this period for you to learn the company, integrate yourself with the employees, and sort of identify how you could be, when the time came on January 1st, 2020, the most effective leader,
Juan Andrade:
It was a critical time period. The great thing about it is the board had organized a very orderly CEO transition. My predecessor was scheduled to retire at the end of 2019. They had hired me to essentially replace him. So, I came in to spend essentially the last three or four months of the year basically learning the company, learning the people. It became very critical because none of us knew the pandemic was coming. So, those three months, gave me the opportunity to frankly meet our biggest customers, meet our employees, travel worldwide, to see our people in different offices, in different continents. And at the time, it's just what I did. That's how I was getting my hands around my new responsibilities. But it proved incredibly critical because when I had to shut the company down on March 12th, 2020 and go fully remote, if I had not done that, it would've been very difficult to maintain, develop those relationships, and at least I had met people, shook hands, et cetera, et cetera. That period of time became even more important than your typical CEO transition.
Lance Glinn:
Let's talk about those first few months. You step into the role, as I said, January 1st, 2020. You then say, March 12th, 2020 is when you had to shut the company down. Now, every CEO goes into a new role, whatever executive you could really say goes into a new role with their 30, 60, 90 plan. Here's what I want to do next month, two months, three months. I'm sure you had one in place. I'm sure you had in your mind what the next frankly, whole year was going to look like. But then obviously, this unexpected pandemic comes around, and I'm sure that really changes everything. How much did you have to shift those goals, shift those ambitions, shift those priorities when it came mid-March 2020?
Juan Andrade:
Yeah, for sure. It definitely threw a curveball at you because all of a sudden, you're going from, okay, I've been in the job now five months from that perspective since I started, and I did have a pretty good idea of what I wanted to do, strategy with people, et cetera, et cetera. But all of a sudden, you have something much more important, which is the health and safety of your employees around the world in a very uncertain environment. And then the other thing that happened, and I think to some extent still happening, is the fact that there was a large loss of faith in institutions, meaning the government, et cetera, during that period of time. So, your employees really turned to you as the CEO to help pave the way for reassurances, for et cetera, et cetera. All of a sudden, I'm assuming a role that I never expected that I would have to assume.
In addition to that, you have all the social justice issues that took place in the United States in that period of time. So, the focus changed for safeguarding people's lives, trying not to make decisions for the long-term when you really didn't know what the long term was going to look like. I still remember in those early days thinking, okay, this will be done by June or July of the same year. And here we are a few years later and we all know what happened. That certainly probably slowed down some of my plans. At the same time, we still move forward on changing some of the leadership and really setting the time to develop the strategy, et cetera, et cetera. But in some ways, the priorities did change in that point in time because when you're thinking about life and death issues, particularly when it was very unclear what the future was going to look like, it really became a different story.
The other part of it is you didn't know what was going to happen with the economy in the U.S., world economy. Are you going to have another credit crisis? Was this going to be similar to the GFC, the global financial crisis back in '08, '09? All of those things are running through your mind. And particularly as a brand new CEO, that was a challenging period of time because there was no blueprint. All of us developed our own blueprint based on our style or experiences, et cetera. But this, I go back to not a linear career path because I leaned back on what I had dealt with in the government, what I had learned, what I had learned in my prior life, also as a journalist, et cetera, et cetera. And I'm a calm person to begin with. And for me, it really became an issue of my priority is my employees and their safety, the company, absolutely. But at the end of the day, don't make final decisions at a time where you have no information on what to do.
So, you manage it one day at a time until things become clearer, and then that roadmap begins to develop on its own. The other part of it was really starting to hire a terrific team around me. Some of my colleagues are in this room today that helped me really advance the agenda because at the end of the day, you are in an echo chamber by yourself, and it's good to have other voices that ultimately are saying, do this, don't do that, et cetera. It was an interesting, challenging period of time. I'm glad we're past it. Once we were, that really allowed me to set the strategy. That's why our first investor day was in 2021 as opposed to 2020. Otherwise, it probably would've been accelerated some.
Lance Glinn:
Were there a lot of sleepless nights?
Juan Andrade:
Oh, for sure. I can still remember, probably one of the most enigmatic things for me was we would be on these Zoom calls or video calls with people all over the world, clients because I am a very people-centric individual, and so I still wanted to maintain the relationship with our biggest clients, et cetera. And I would talk to them on video calls, and then I would realize, wait a minute, this person is in their house in Paris. This person's in their house in Munich or in Sydney, Australia or in Tokyo, Japan. This is global.
This is a big deal. And that's when you start getting the perspective that this is beyond New York, New Jersey, Connecticut, the Northeast of the U.S. It's a big deal. And then you start getting very concerned about that because you started seeing the death counts and all this stuff that was happening, particularly places like Italy and Spain that really got hard hit at the time. It was an interesting time because number one, you're trying to look out for your employees, but you're also a new CEO trying to make the most out of the company that you just took and accelerate your plan. Definitely a challenging period.
Lance Glinn:
As you approach five years leading Everest and you look at the industry as a whole with a 35,000-foot view, what would you describe just as the key trends over this last half decade that have had the most significant impact in obviously, shaping what Everest does?
Juan Andrade:
Yeah, absolutely. I think there's a few, some manmade, some not. Natural catastrophes has been a big part of this. We're in a cycle that really started back in 2017 where natural catastrophe losses have just become more deadly, more costly for everyone on the planet and for the industry. Give you a couple of data points. Five years ago, we would probably take, as an industry, something like 50 billion in losses a year. Now, it's probably about 150. Things are speeding up. A lot of this has to do with the oceans are warmer. We have a hurricane right now as we speak in the Gulf of Mexico, Helene, that went from nothing three days ago to probably be in a category four storm as it hits later tonight, somewhere in Florida. That's what we're seeing now. Those kinds of issues, we're seeing more wildfires, more floods, those kinds of things.
So, natural catastrophes has certainly had an impact. But this is also where we come in as an industry because yeah, sure we will take losses but what's that money going for? It's to restore people's lives and restore businesses. It's not an economy that functions without us. Governments are not restoring people's livelihoods. It's our capital, our money that's doing that. But that was, I think, probably the first key thing. The second one, I think, is the economic issues that came out of the pandemic that ultimately resulted in inflation, which now is being brought under control. But that certainly increased the loss costs for our industry because if all of a sudden you can't find car parts, or if you can't find tiles to replace your roof or whatever it happens to be, then everything goes up. Then there's additional inflation that's created. Natural catastrophes, I think inflationary pressures in the macroeconomy. And then geopolitical crisis, I think, is the other one.
As you said, we are a global company. I do have customers in 115 countries around the world. So, anything that happens anywhere impacts us one way or the other. All of those things become very relevant. And then you put on the social and political issues that have happened in the world at the same time. I like to tell people that in our industry, we're creatures of an economy. If an economy does well, the industry does well. If economies are not doing well, the industries don't do as well because our job is to ensure risk. We like growth, we like peace, we like prosperity because then there's more opportunity for business to develop, et cetera. But at the end of the day, for us, it's about risk taking. So, if there is a problem somewhere. We're the ones that are going to be there, pay your claims and make sure that you can get back to business as soon as possible.
Lance Glinn:
And where do emerging technologies like AI, big data automation factor into how the industry has changed, where the industry is going? These innovations have really impacted sectors across the business landscape, whether it's insurance, reinsurance, anything. How have they impacted your industry?
Juan Andrade:
I think there's great potential for all of this. AI is not new but ChatGPT has really raised visibility in the stakes and frankly accelerated a lot of this development. Our industry is ripe for that kind of innovation, and we use it, and we have been using it within our company because our job, frankly, is we process thousands if not hundreds of thousands if not millions of transactions a day. So, the efficiency that you can get from this technology is huge. What I care, however, beyond the efficiency, is how you can transform your business model and the potential that having data and information at a much rapid pace than you ever had before can help you. As insurance companies, we have tons of data, particularly in the claims organization where you have a lot of unstructured data in different files and that sort of thing.
Being able to glean insights for better risk selection, better pricing, better assessing an exposure, paying claims faster, et cetera, is going to be tremendously useful to us. We have spent a significant amount of money over the last five years in technology data and analytics. For us, we were actually quite ready for when these developments came for ChatGPT because it's the old adage of garbage in, garbage out. If you don't have good data, you're not going to get good outcomes. For us, we're in a pretty unique place right now, and we have a number of use cases throughout the company where we're looking to leverage this technology to figure out how we ensure better risks or newer risks. I, Think about the energy transition. There's $3 trillion worldwide spent in energy every year. One trillion of that is for old energy, fossil fuels, et cetera, et cetera. Two trillion is new energy.
We have to figure out a way to get our arms around that as an industry. And for me, there's a promise here that with this new technology, we might be able to get there faster than we normally would. In our industry because we tend to look at the rear-view mirror. We tend to learn from experience and look at losses in the past and make decisions looking forward. I think this data can help us do other things. However, there's also another side to this, which is the cyber threat that any of our companies face because the bad guys also have access to the same level of information. So, the way I tend to look at it is offense and defense and we're playing hard on both.
Lance Glinn:
You mentioned these changing industries, changing energy sector. I would think along with these changing industries, there's also a changing customer base, or changing customer expectations, we could say. You started in the industry 30 years ago. I'm only 28 years old. Me and people like me have different expectations for any company we work with than say those who are 58 or 68, whatever it may be. How have these customer expectations evolved and how is Everest adapting to the growing demand for digital, fast and potentially now personalized insurance policies?
Juan Andrade:
Oh, you're absolutely right. This is one of the challenges of any leader. How do you understand younger generations and how do you understand how to adapt to them, whether it's business or in leadership, et cetera, et cetera. I think one of the things that things like AI provide companies like ours is how to create better digital relationships with our customers, at the end of the day. How do you build digital trust, ultimately? Younger generation, not as used to face-to-face, not as used, picking up the phone, making a call, et cetera, et cetera. It's all more digital. And for us, that's huge. One of the great benefits about our company is we did not have a lot of legacy technology. So, we have investing significantly in technology, as I mentioned before, and a big part of this is all digital. For us, it's about efficiency, but it's also about customer service.
I think this brings huge changes in the way we think about the world. And this is frankly what I'm preaching to all my executives now. We're putting them all through training in the company on how to become an AI leader for the future because I have an idea of what I want to do with this technology, but not all the good ideas come from me. I need them to come from people within the organization that are maybe closer to the cold face of our business on a daily basis. We have a great governance structure to allow for this innovation to come up and for people to think. But part of that requires folks of all different ages and different generations to truly understand the potential and what our customers really want.
Lance Glinn:
Earlier we discussed Everest growth over the past five years, and it's clear that recent organic investments are aimed at sustaining that momentum. Just a few weeks ago, Everest Insurance announced the launch of Everest Evolution, a new brand dedicated exclusively to U.S. wholesale customers. Just what was the strategic rationale behind that launch and behind this thinking?
Juan Andrade:
No, it's great, Lance. So, I go back to the initial strategy that I wanted to deploy, which we've executed upon, which is to globally diversify this company. For me, diversification is about a few things. It's about geography, it's about line of business, so property insurance, casualty insurance, aviation, different kinds of things. It's about insurance business and the reinsurance business but it's also about distribution. In our industry, you have wholesale distribution and retail distribution. And the one thing that's pretty clear is that the wholesale business can be very different than the retail business. It's different brokers, it's different people, it's different exposures.
Actually, the exposures to risk in the wholesale business tends to be riskier in some cases. So, for us, it was very important to create a very separate, to make sure that we were serving the wholesale market with our own brand, our own executive team, our own sales force, and our own products. And that basically is what's there. If I look at the market right now, particularly in insurance, wholesale is growing much faster than retail, particularly in the United States. So, business-wise, that makes a lot of sense. In the future, that might change, but having that presence in that sector is very important. That was the why behind Evolution.
Lance Glinn:
This investment comes on the heels of establishing a global broker management team in August. Given that strong broker relationships are a cornerstone of what Everest does, how will this new team enhance these already existing relationships, new relationships, and what are your key objectives for its success?
Juan Andrade:
Yeah, terrific question. This goes back to what I was saying earlier about the culture of our company. One of the things that I did when I took over Everest, was try to eliminate the silos within the company and get the company to really operate in a more collaborative and united fashion. This is a part of all of this, right? It's the fact that we have brokers that work with us heavily in the reinsurance side, others that work with us on the insurance side, but some of them aren't the same, and it's important that we bring to them all of our solutions, insurance, reinsurance, investments, whatever it happens to be. What this team that we just created is doing is really selling the firm as opposed to selling a specific product line, a specific silo. It's really creating stronger relationships at the enterprise level, at the group level with some of our key global brokers.
Lance Glinn:
A few more organic investments to discuss. In January, Everest Reinsurance launched a unified global specialties business aimed at enhancing its expertise and offering in sectors, including aviation, marine, cyber, engineering, and parametric solutions. How does this new business position Everest to meet the increasing market demand and tackle these unique challenges and opportunities within the industries?
Juan Andrade:
Absolutely. Two very important rationales for why we established that business. One is those specialties that you mentioned, aviation, marine, engineering, parametric cover, cyber are very profitable businesses that are growing around the world. We have a big business that are in a big footprint, but we were not managing them as a unit. And because they are specialty, it defines that they're not vanilla. And so, they're different than sort of your property and casualty type products, et cetera. We believe that by putting them together in that organizational structure, we would be able to ensure greater growth, greater profitability over time. That was an important part of it.
The other part of it goes back to the question you asked me before about the brokers. The brokers were also organized this way, particularly the global brokers, so it made the interface much better between our company and their broking centers once we approach them from a specialty perspective. It also brings a tremendous amount of focus because while these are profitable and they can be very good growth type industries, they could also be very volatile. And it's very important that you keep a very close eye on these types of products.
Lance Glinn:
We spoke earlier to the culture and the people at Everest and the great culture that the company has. Everest leadership and employees are actively involved in supporting the surrounding communities worldwide, volunteering and participating in initiatives organize by groups such as the American Cancer Society, United Way, Habitat for Humanity, Covenant House among others. What's your own philosophy and what do you believe is Everest's role in fostering brighter, more resilient communities?
Juan Andrade:
I think we play a very important role because at the end of the day, what we do in our industry is support the ability of people to get on with their lives, to get on with business. As our tagline says, we underwrite opportunity and it's opportunity for our clients at the end of the day. We are in 115 different places around the world. We have different locations. For me, it's very important because as I said earlier, business is local, relationships are local. We need to be good stewards of our community in these areas. I've accelerated the philanthropy at Everest since I started because I fundamentally believe in that principle. We have also been very focused in what we do. We don't spread our money around as if it was peanut butter. What we basically focus on are things that are important to our values and that are relevant to our industry.
Things like natural catastrophe relief, hunger, and those kinds of issues, inclusion type issues around the world. So, we focus our giving on those kinds of things. You gave some great examples of some of the things that we do. We also support organizations like Word Central Kitchen medical type organizations that do different things around the world, but we believe it's an important part. We also give our employees time to volunteer and to do these kinds of things because we believe that by them being in the community... It goes to the question you asked about generational understanding. Particularly our younger people love to help and they love to be involved. For us, that's terrific. I'll give you one example, in Chile where we have a good operation. There was some incredible wildfires about three months ago, four months ago, our employees, on their own without any prompting from their local leadership, organized to basically take day off from work to essentially go clear debris, bring food to people, et cetera. These are the kinds of things they're doing on their own, and that's what I love about our culture. People are service oriented.
Lance Glinn:
I personally believe that a perfect culture is unattainable. I think culture is something that is constantly being worked on, something that constantly needs to evolve and improve as companies grow and companies change. How are you and your team working to maybe not reach that perfect culture but try your hardest to get to it and constantly change and evolve as the employees change and as the company continues to grow?
Juan Andrade:
100%. A culture is a living organism because a company is a living organism. And for us, it's something that we think about a lot. As a matter of fact, I just came back from two weeks in Europe, and last week itself, I was in France. Our leader for culture in the company happens to be there. And I've spent a bunch of time with her essentially talking about how do we ensure, particularly since we're a growth company, where we're hiring a lot of people every year into the company, how do we make sure we don't Balkanize our culture and how do we make sure that we are able to onboard people, et cetera? A big part of that to me is how we act as leaders in the company. We have to walk the talk, and my leadership team does that. That's an important part of that.
We have to communicate constantly on what we value. We also have to take action when we see people that are not acting in accordance to our values. So, all of this to me is incredibly important. The filter that we put on how we hire people, how are they going to fit into our culture, becomes also very important, just as important as their technical skills and other things that we do. But you're absolutely right. This is not something that we take for granted. It's something that we constantly are thinking about building upon, et cetera because doing things like creating a collaborative culture just doesn't happen. You can create the management mechanisms to force people to work but then they need to feel encouraged and empowered to be able to do that. I'll give you one simple example of something that I just sat through over the last two days, and to be honest, was one of the coolest things that we've done.
We held a raffle, as silly as that may sound, last year, to basically identify a number of our colleagues from around the world to give them an experience paid by the company to go to an office anywhere else in the world that they didn't live in, paid by the company to go imbue themselves in that culture and in that business. What they had to do was come back and brief me and my executive team on what they learned, what they like, what they didn't like, how they have now changed as a result of that. They've just come back and they've been briefing us over the last two days, and it's the coolest thing because the one theme across all of that was how they now saw the culture alive in other offices that was similar to their office. If you had people from Warren, New Jersey, going to London, or from Singapore going to Santiago, Chile, they experienced essentially the same culture that they experienced in their own office, and that was terrific.
But more importantly, it gave them an opportunity to walk in somebody else's shoes for a period of time to learn about their business, learn about their market, learn about the culture. That was a pretty cool thing.
Lance Glinn:
Juan, as we begin to wrap up, we've obviously discussed, over the course of our conversation, the changes and evolution in insurance and reinsurance over the past years, as well as the changes that have obviously taken place under your leadership at Everest. Looking ahead, what trends and changes do you anticipate could potentially shape the future of these industries, whether it's 5, 10, 15 years down the line?
Juan Andrade:
Yeah, I think there's a few. I go back to climate change and natural catastrophes. I think that's obviously a big part of what we do. This is also where artificial intelligence, large language models, all of this comes in because the better modeling capabilities we have to truly understand what's happening around the world, incredibly important. Incredibly important for us, so we know how to better price and how to take risk, but incredibly important for the customers that we support. So, I think anything related to data and climate change and modeling becomes incredibly important to all of us. Frankly, getting a better understanding of macroeconomics in different parts of the world becomes very important because it goes back to what I said, we're a shadow of an economy. So, if you go into a recession, the chances for growth are going to be lower. It's one of the reasons why I like geographic diversification. Different regions move in different cycles, so that becomes very important.
I think ultimately, what happens with some of the instability that we're having around the world I think that is certainly something that's out there. But I'm an optimist what I see, particularly from this technology that we were talking about, are potentially some very positive changes that can really impact the world. And to the discussion we were having earlier, there are industries in business that haven't been born yet that we can't envision. To me, that's opportunity because it goes back to what I said, insurance is what fuels the world economy. You can't do business without us. You just can't. And so, we have to be on the forefoot on that and really try to anticipate what's next? What's the next industry? How do we think about it? How do we help them? To me, that's one of the most amazing things of the time that we're living in right now.
Lance Glinn:
Everest has had 51 years of success, and specifically under your leadership, five years or the last five years of growth, and again, increased success. How are you planning the company's future for the next half decade and full decade really to ensure that that growth doesn't stop? As we talked about earlier, complacency, that doesn't occur.
Juan Andrade:
Absolutely. It's all about sustainability of earnings at the end of the day. For us, it's really all the work that we have put into the last five years, but really also even prior to that, to make sure that we have an operating model that can flex to the opportunity, that can stay nimble. It's one of the reasons why I was focusing on our entrepreneurship, innovation, operating expenses, et cetera, because we have that ability. Some of our bigger competitors in the world are just too big and bureaucratic. They can't see the opportunities. Or if they do, they can't lean into them like we can. So, I think what we have done to essentially hardwire our model over the last number of years, it's really what's setting up this company for success. That and the diversified nature of our business.
If the U.S. were to go into a recession, I know I can grow in Latin America and Asia, no problem. I know I can grow in insurance of reinsurance, goes through a soft pricing cycle when pricing comes down, or our capacity is no longer as much in demand, et cetera, et cetera. Those opportunities have given us the path for a future that says, you know what? You may not grow at the same pace that we've been growing in the last five years, but there will be growth opportunities and absolutely there will be profitable opportunities for us.
Lance Glinn:
Juan from one person with connections to Warren, New Jersey to another person with connections to Warren, New Jersey, thank you so much for joining us Inside the ICE House.
Juan Andrade:
My pleasure, Lance. Thank you very much.
Speaker 1:
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, expressed 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 preceding conversation may have been edited for the purpose of length or clarity.