A View From the Top With David Howell, CEO, Pacific Life Re
By Ronald Poon-Affat
Reinsurance News, February 2021
Ronald Poon-Affat (RPA): Tell us a bit about yourself.
David Howell (DH): I am originally from Toronto Canada and I am a reinsurance “lifer” having started working with M&G Reinsurance (later acquired by Swiss Re) in 1987 while still in university. I never left the reinsurance industry after that first work-term. Having worked for M&G/Swiss Re in Toronto, Cheltenham, London and Zurich, in 2005 I decided to take the opportunity that arose to lead a smaller firm which is now Pacific Life Re (PL Re).
My wife and I have recently moved to Bermuda after spending the last 14 years in London.
RPA: Tell us a bit about PL Re.
DH: Pacific Life is a very successful US mutual insurance company that in 2008 invested in what is now PL Re in order to improve diversification. PL Re delivers that diversification both in terms of geography and by the nature of our product profile. Like many insurers, Pacific Life’s major lines are market driven whereas PL Re’s are insurance driven; specifically, our major lines are mortality, longevity, and morbidity.
Having Pacific Life as a parent is important to PL Re. Not only does it provide us with a very strong credit rating but the mutual nature of Pacific Life also allows us to take a long term view that is so much more suited to the nature of reinsurance than the quarterly results focus seen in many listed companies.
PL Re’s early origins were in the UK and Ireland and it is still our largest market. We are a leading player in both life and longevity markets in these countries.
We have also been actively developing our business in selected other regions. PL Re’s Asia business has been steadily building up for over 15 years and now includes offices in Singapore, (our regional hub), Korea, Japan, and China. We opened an office in Australia in 2015 and are active in both the group and individual markets. In addition to reinsurance, we acquired a leading retrocession franchise in 2008 that is run out of offices in Toronto and Boston. In 2012 we invested in UnderwriteMe (Ume), a technology start-up that specializes in the automation of underwriting and claims processes.
A key overall Pacific Life Re focus is innovative collaboration with our insurer clients. We aim to use both our technical product and pricing expertise and our Ume technology to support our insurer clients in growing their businesses. We want to be the reinsurer of choice for insurers who look for a creative, technical and forward-thinking reinsurance partner. We generally want to challenge and improve what we are involved in rather than just participate in what already exists!
RPA: Did I read recently that the business has relocated to Bermuda?
DH: That is correct. Historically PL Re’s main reinsurance carrier has been our UK company, its various branches and a sister company in Australia. We are in the process of moving to being centred on a Bermuda carrier with a similar underlying structure. PL Re’s existing structure has really evolved organically whereas the one we are moving to is designed from scratch as being most appropriate for our current business and our expected future growth.
We have found Bermuda to be a highly suitable jurisdiction as it has a robust and respected capital framework that is focused on the risks and issues of reinsurers. In most markets the regulatory focus is by necessity on insurers but a specialty jurisdiction such as Bermuda can be more tailored to reinsurance.
RPA: You mentioned your automated underwriting software, Underwrite Me, earlier. Tell me about that.
DH: Our initial Ume investment was in developing the Protection Platform. This is a UK digital offering where our distribution partners can complete a single application that enables instant fully underwritten price and product comparisons and completion capability across an insurer panel. The process delivers the type of buying experience customers have come to expect. The Protection Platform has now integrated 14 insurance brands and has become a leading market player. Our aim is for the Platform to become the default partner for distribution due to the value it adds to their businesses and the positive outcomes it provides for their customers.
Ume technology is also offered to insurers to support digital transformation projects. The business has over 25 partners across UK and Ireland, Australia and New Zealand, and Asia markets. A particular focus of the offering has been to put each client in control of their proposition development without the need for IT change projects. Ume has an exciting suite of next generation products emerging that will support our partners in extending automation of their key processes. These include a text mining AI module that allows automation of unstructured medical data—a very exciting development! Ume is playing its part in transforming how our life markets are engaging with customers, which is what we set out to achieve.
RPA: How did CoVid-19 Impact PL Re?
DH: PL Re writes a relatively balanced portfolio across mortality, longevity, and morbidity. Clearly the mortality line has been adversely affected but there is some material offset from our longevity portfolio. While many morbidity products, such as critical illness, were not materially affected, disability income has been impacted by both interest rates and the general economic conditions. However, the total impact to date has been far less than the assumptions on pandemics underlying our capital models and is really an earnings event rather than a significant capital stress.
The logistical impact of a sudden move to working from home was significant. I am happy to say that both our technology and our people rallied to the challenge and I have been very proud of the results. In fact, we will be making working from home a much larger part of our normal practices in the future.
RPA: I’ll move onto some more personal questions now. What can you tell us about your personal leadership style?
DH: For an accurate answer you would probably have to ask the people who work for me. If you did, then I suspect what you would hear is that I am direct, informal, and open, but also impatient at times. I am also probably a bit more detail oriented than the average CEO, which can be a strength in moderation, but is very easy to overplay such that it becomes a weakness.
RPA: What advice would you give actuaries about making the transition from technical to leadership roles?
DH: This transition is a difficult challenge for many actuaries and I would include myself in that group.
My first advice is that you need to look out for an inflection point in your career where the rules will change. As a junior actuary you are encouraged to understand all of the details of the piece of work you are carrying out and this makes your output accurate and insightful. As you start to manage more people, perhaps particularly non-actuaries who have different skills, you will be faced with a choice to either work more and more hours to keep on top of every detail of what your team is working on, or to place more trust in their work to represent the team that you lead. The detailed approach will both impair your work/life balance and will create a cap on the seniority of any role you can perform effectively. Trusting your team does not come easily to a professional trained to be on top of the details, but is essential if you wish to progress beyond managing a team of more than a dozen, or at most 20, effectively.
Obviously, if trusting your team is my first piece of advice then making sure your team is high quality has to be the second. There are some really positive aspects of this about recruiting great people, training them well, and making sure that they feel valued and empowered. All of those positive things are important, but equally important is dealing effectively with poor performance or poor attitudes. Dealing with those situations is not comfortable or enjoyable, but addressing a single troublesome member of staff does more to build an effective and engaged team than recruiting three good ones. I have never heard a manager regret dealing with a challenging staff issue quickly, but I have repeatedly heard managers say that dealing with the issue made things much better and they wished they had acted sooner.
Finally, and seemingly at odds with the first statement, you need to listen to others (inside and outside your team) and value their opinions but, in the end, you must trust your own judgement. You were smart enough to qualify as an actuary and by the time you have a senior role you will have a significant amount of experience. Your employer pays you to exercise your judgement not to pass on the views of others or to count votes. That does not mean that you need to make every decision nor that you should ignore your team. In fact, the most important decisions you will make in many cases will be who to have on your team and how to deploy them to use their own judgement without any further involvement from yourself.
If you use your expertise to build an effective team and trust them to do their jobs properly then you will consistently position yourself well for the next available promotion.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.
Ronald Poon Affat, FSA, CFA, FIA, MAAA, is CEO for RGA Global Reinsurance Company, Ltd. He can be contacted at rpoonaffat@rgare.com.