Greg Hendrick, CEO, Vantage Group Holdings
1 July 2022

Perfect blend: combining analytics with talent

“I’m a math major by education and a deeply analytical person. And, as many young folks do in the business, I started in insurance completely by accident,” said Greg Hendrick, chief executive officer of Vantage Group Holdings, the Bermuda-based re/insurance group founded in 2020.

“I was going to teach math, and went to the placement office at St. John’s University where I attended college, and they gave me three interviews—one of them was with AIG. That was a likely starting company for those of us in the US, and in New York particularly, who got into the insurance business,” he recalled.

That “accident” led to a hugely successful 30-year career comprising AIG Risk Management, Winterthur Re, Mid Ocean Re, XL, XL Catlin and AXA XL. Starting his career as an actuary, Hendrick ran the Bermuda reinsurance operations for XL Re and was responsible for strategy implementation at XL Group. He went on to lead XL’s global insurance business, and XL Catlin’s global reinsurance business and then was president of all P&C operations at XL Group before its acquisition by AXA Group when he became chief executive officer of AXA XL.

“Accessing talent from a broader pool is important to making progress towards a more diverse workforce.” Greg Hendrick, Vantage Group

Change management

Hendrick came first to Bermuda in 1995, to work for Mid Ocean, one of the carriers that started after Hurricane Andrew.

“That was a great experience because the market was booming here,” he said. “I spent most of the next 15 years of my life in reinsurance. XL bought us in 1998 and we formed XL Re, and I ended up running the Bermuda reinsurance operation here for a number of years.”

He weathered the storm of XL’s crisis after the credit crunch in 2007/08 and drew the attention of its new chief, Mike McGavick.

“He came to me and asked me to lead the strategic work of repositioning XL as we emerged from our crisis. He said: ‘You seem to have this reinsurance business figured out; you’re very comfortable. How about a new challenge?’.

“That started my pivot from reinsurance to insurance, and I ended up running insurance for a while at XL, and ultimately running AXA XL after AXA bought us in 2018,” Hendrick said.

“Bermuda is a big part of my history, which is why I’m always so passionate about being here. The opportunity at XL was fantastic for 25 years and I enjoyed every minute I was there.”

On how the industry had changed in that time, he said an “easy example” was that a property catastrophe reinsurance submission in 1992 would involve “three pieces of paper” that were either mailed, faxed and or telexed. It would include the premium, some loss history and a brief text about the insured. Now, a reinsurer receives the entire exposure portfolio of every one of its client companies, generating terabytes of data, he said.

On the insurance side, the biggest change over the last few years is the contraction of the limits that carriers are willing to put out on placements.

“In the old days, it wouldn’t be uncommon to see people write $50 to $100 million lines for large corporate casualty or directors and officers programmes, but now you’re seeing $10 to $20 million lines. Where we haven’t changed as much on the large commercial insurance front is around embracing the latest technology.”

Melting pot

Founding Vantage was an opportunity to do things differently, Hendrick said, not least in terms of diversity.

“When I came to Bermuda 25 years ago, to find a single female underwriter leading a business was very unusual. In our Bermuda operating entity, Vantage Risk, three of our five re/insurance business leaders are women, and we have some very strong senior-level female underwriters and operations professionals.

“Our president, COO and chief pricing actuaries are women. We have intentionally shaped our team not just to include gender and ethnic diversity, but we are also mindful of bringing on talent with diverse personal and professional experience,” he said. “Accessing talent from a broader pool is important to making progress towards a more diverse workforce.

“A wonderful thing about Bermuda is that Bermudans grow up knowing about the re/insurance industry. There’s a generation of younger folks who have grown up and gone to college with the idea that they will work in the insurance industry. The talent who are interested in joining Vantage today are much more representative of the demographics of the Bermuda population than 25 years ago. That signals progress, and that we are doing something right that we need to continue to work on.

“The industry on the Island is close-knit,” he added.

“It’s a very small market—you can walk from one end to the other in about 10 minutes, if that much. You’re living together on an island of 60,000 people, which is like having everyone who worked at Lloyd’s of London living within a 10-mile radius of the City. That means, in Bermuda, it’s easy to get access to the market very quickly. The challenge though is to make sure you don’t get into ‘group think’.”

Bermuda is a “very North America-dominated marketplace”, he said. “This is an open, competitive marketplace with people creating new products. We do write business from around the world, just not as much of it flows to Bermuda as it does from North America, mostly due to geographic proximity to the US.”

Vantage point

Hendrick left AXA XL in February 2020 and planned to go travelling with his wife and family, when two things happened.

The day after he left AXA XL, Dinos Iordanou, another industry veteran, formerly of Arch Capital, called Hendrick to tell him another hard market was coming and that they should form a new company. The second thing was the start of the COVID-19 pandemic.

“My wife and I had just one trip—to Florida in early March, to visit family and friends. By the middle of March, we were all in our homes and it became apparent, with the outbreak of COVID, that yes, we could entertain starting a new company sooner than we expected,” Hendrick recalled.

Iordanou and Hendrick aligned with The Carlyle Group and Hellman & Friedman which, together with management, invested approximately $1 billion of equity capital in Vantage.

“We all knew each other,” Hendrick said, since Hellman & Friedman had been an investor in both Mid Ocean and Arch Capital, while Hendrick knew people from Carlyle from previous engagements, and its CEO had previously served at a different firm that had also invested in Arch.

“There was an alignment of understanding in how we think about risk, of the opportunity, and so forth. We ultimately launched in October 2020 after the end of my gardening leave.”

For Hendrick, the lure of creating Vantage came from being a “big believer in analytics” and the fact that the pandemic was accelerating the industry’s move towards the latest technology.

“COVID-19 forced people to do things differently and the technology is adapting quickly,” he said. “We are a company that’s much more driven by better technology with no legacy issues, and by a deep commitment to data analytics.

“That opportunity blended with the fact that the marketplace was going to experience another loss it didn’t need, and that a lot of the lines of business we were interested in were going to be short of capacity. That meant we could enter the market and not have to compete head-to-head to do something; we could come in and fill the gaps in that capacity,” he explained.

Vantage represents something very different from existing industry players.

“Vantage is not trying to figure out how to get legacy technology systems to communicate with each other to share data. Instead, Vantage has built everything in the Cloud and designed its platform to feed a single data warehouse to allow us to move information faster and provide better risk insights,” Hendrick said.

“Vantage is already harnessing the benefit of that, along with better data, better analytics and better ways to make a difference. And that is a huge change from what used to happen across the industry in the past,” he added.

“Great talent blended with great data analytics is going to make a big difference as we move forward.”

Strategic goals

With Hendrick as chief executive officer and Iordanou as non-executive chairman, Vantage aims to have a 70:30 split as an insurance and reinsurance carrier. Its reinsurance is predominantly focused on short tail lines of business, including property, marine, aviation, energy and crop.

On the insurance side, it is focused on longer tail lines of business, including casualty and D&O. It is also currently operating in lines covering political risk and construction—areas where, Hendrick says, there has been “dislocation”, meaning an opportunity to provide capacity.

“It has been very challenging to launch a startup in the middle of a pandemic, with all kinds of delays in the system, from regulatory approvals to getting some of our furniture because of supply chain issues,” he said. “But we’re on-path now and accelerating.”

Hendrick and Iordanou want Vantage to be known as “a tech-enabled insurance and reinsurance company, which has the best talent”.

“Great talent blended with great data analytics is going to make a big difference as we move forward over time.

“Our vision is that there is a huge lift to be had from embracing technology and analytics and adding it into the human component of underwriting, claims and finance talent. That to me is the biggest opportunity in re/insurance,” he said.

On insurtech, Hendrick said Vantage was following a model of “buy and build”.

“For the core systems, we’re licensing them from existing software providers and then we’re building our own value-added technology which we call an underwriting workbench,” he said.

“It’s marrying together all the analytics, data, views of risk quality, risk pricing, and risk selection. In terms of insurtech overall, we’re working with a number of startups trying to assess where they are heading, who’s going to be successful, and ultimately who we should reinsure.”

A SWOT analysis

The main risk globally is “real” inflation, while a related, second risk in the US, is social inflation, Hendrick said.

“Verdict awards for damages are getting bigger, as corporations and insurers in general fall out of favour with the public. We’re seeing that in a meaningful way in North America, but it is creeping into the UK and Europe as well.”

Cyber is another big risk, both to Vantage as an insurance carrier trying to provide protection and services to its clients, and also for running a business.

“We made a big commitment to protecting ourselves with a much higher level of infrastructure and security than I would have said was usual for a startup company, just to make sure we’re as defensive as we can be around this risk,” he explained.

The catastrophe reinsurance business is “dramatically” evolving because of climate change, he said.

The Bermuda market has all these risks, plus the “logistical challenge” of being an island in the middle of the ocean which tends to make it an expensive place to live.

Better behaviour

To better understand climate risk, Hendrick said, re/insurers first need to appreciate it is not simply a new lesson in their already long education in catastrophe coverage.

“We have historically said that climate risk means catastrophes so we can claim we’re ‘doing that already’, but climate is a much bigger topic,” he said.

“In assessing the broader climate topic in terms of risk to us as an industry, we need to ask whether we are doing our part, and what the role is between government and industry to improve some of these complex situations. There is an opportunity to build new products to help protect against climate change, but that is a complex design question.”

Vantage and other companies are working on a number of new insurance products to better protect society against the effects of climate change. One opportunity is designed to encourage the planting of mangroves as damage prevention for condominiums, he said, adding that such products will encourage “better behaviour” around climate change.

Crystal ball

Given how rapidly the world changes, with his pandemic-interrupted retirement plan as an example, Hendrick said he was “loath” to make a 10-year prediction about the industry, adding that three to five years from now was “a reasonable ask”.

“What we believe at Vantage is that we will see more technology applied to the industry. We see it already in a lot of the personal lines carriers, but I think we’ll see it continue to play out across the industry in a way that will lead to better data and analytics.

“That will let us innovate and create new products,” he said.

“We have had some success. We’ve done some small innovative things here, around film and TV cancellation coverage for the peril of COVID-19, and we’ve worked on a number of opportunities around wildfires in the western US.

“They are two examples of a number where we’re not just benefiting from technology for our own efficiency, or using better analytics, but are providing new products that didn’t exist before.”

The next big challenge for re/insurers will be a move towards providing coverage for “intangibles”, Hendrick said.

“The industry has historically been very good at insuring tangible things such as the desk and the laptop, but it hasn’t been as good about intangibles.

“We’re starting to see new products around intellectual property and a number of other areas that recognise there is a lot of value bound up in things you can’t hold in your hand or touch, and about asking how we can do our part to insure those intangibles over time. That is definitely an area in which we can expect to see continued growth,” he explained.

As to whether AI would one day replace large commercial re/insurance underwriters, he said: “In the next three to five years? No. In the next 10? No. I see it being a blend of human talent and the technology-driven data analytics that helps people make better decisions, and that will continue.

“Will there eventually be enough computing power and applications to eliminate the need for humans to underwrite risk? Maybe, but I would anticipate that happening well beyond the 10-year horizon.

“To feel comfortable that I’m getting the right price and taking the right risk isn’t an algorithm, particularly in low frequency, high severity classes—it’s a human being using judgement. Some people call it their ‘gut’, but I’ve always thought of it as blending an enhanced and better view of the risk profile with a human who needs to synthesise the information and make decisions.”

Full circle

Hendrick highlighted a mix of his education and his parents’ attributes as the main reason for his success in the industry.

“I would say the reason for my success is threefold: having an analytical mind that I developed through pursuing a math degree and analytical roles, an ability to communicate and a clear sense of purpose. My father and stepmother were professors and I’ve been lucky to have exposure to people who communicate very well, and I was able to learn from them.

“Most people are usually strong in one or the other of those skillsets, but not both,” he said.

However, that mix would not have sufficed had he not enjoyed his work, he added.

“My mother always instilled the need to have a sense of purpose. I love this industry and what we do because, at our core, we put things back together for people, families or businesses that have been damaged by something.

“That could be a catastrophe, an automobile accident, a lawsuit—any number of things, but that’s the social good that we do.

“I’ve always felt our purpose is a great thing, although it has never been talked about enough. Embracing that early on helped me to help others see that we’re not just pushing around dollars and cents—we’re doing something to help society and the economy.”

Although he is happy with how his career turned out, there are two things Hendrick might have done differently.

“I would have finished my actuarial exams because I passed only two-and-a-half of them,” he said.

“You could say: ‘Well, it still worked out pretty well for you’, but it would have been a more certain thing had I stuck to it and finished those darn exams. That’s one thing I always tell my younger colleagues when they’re thinking about further education: ‘If you want to be educated, go and do it and stick to it’.”

The second is that, despite having great colleagues at AXA XL and building an amazing company with them, as well as having survived a number of challenges together, those 25 years took the larger portion of his career.

“XL was such a big part of me that I never really looked at anything else. Maybe, in retrospect, I should have tried something else a little sooner than I did. But life has a way of working out, and the moon and the stars aligned when it was the right time for me to go—when the people from XL were settled within the AXA group.

“Then I felt it was time for me to move on, but maybe I could have done that a bit sooner.

“The industry changes that have been accelerated by COVID-19 needed to play out to make Vantage emerge from an idea to a reality. The timing on a startup is very hard to plan, but without a doubt, this time was the right time for Vantage,” he concluded.

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