Stretch Assignment

• Kate Smith
• October 2015
• 

Dinos Iordanou of Arch Capital Group and Brian Duperreault of Hamilton Insurance Group both launched their careers at the American International Group in the 1970s. Admittedly green when they arrived, they sharpened their management skills in AIG's "fast-track" program before venturing off to lead other companies. So many industry executives came out of that fast track program, including current Ironshore CEO Kevin Kelley and ACE CEO Evan Greenberg, that it became known as "a finishing school for CEOs." Best's Review spoke with Iordanou and Duperreault about the training they received and their approach to building future leaders.

Freedom to Grow

Philippos Iordanou set a rubber band on the table. His six children watched as he placed the tips of his fingers in the center of it and slowly began extending them outward, widening the band until it was close to snapping.

The oldest child, Dinos, listened closely as his father explained the lesson of the rubber band: "He'd say, 'As you're growing, you're looking for more space, and that's your job to do. But let me explain to you: Don't push too much because if you break the rubber band, we're going to start from the beginning.'"

Constantine (Dinos) Iordanou is now the chairman and chief executive officer of Arch Capital Group. He came up through American International Group in the "fast-track" training program established by then-CEO Maurice R. (Hank) Greenberg and went on to Berkshire Hathaway, where he learned from one of the country's most well-known investors, Warren Buffett.

While both experiences reinforced for him the importance of good training, Iordanou's approach toward developing people began with the rubber band. Sitting around a table with his father, he learned there is a link between stretching and growth and a correlation between responsibility and freedom.

Those lessons were the foundation of Iordanou's training, both as a child in Cyprus and as a young professional in New York, and they have shaped his views on how to prepare the next generation of professionals.

Training Ground

Growing up on the eastern Mediterranean island of Cyprus, Iordanou was given plenty of freedom. His father was a police officer who hated to micromanage. "He was a results-oriented type of individual," Iordanou said.

Iordanou never had a curfew, as long as he was out with other kids of good character. His father never asked about homework, as long as his report cards were good. He had freedom, as long as he handled his responsibilities.

"He was strict on one hand and very free on the other," Iordanou said. "He didn't have to babysit you [and ask] 'Did you write that paper?' My mother used to worry about all that. My father said, 'Bring me your report card. How well have you done?'

"We had that kind of independence, but also we had a sense of requirement to live up to certain expectations. He would set the expectations. Sometimes you would think they were unrealistic--call them stretch goals--but in the end he was expecting us to achieve those."

The biggest goal was education.

Iordanou came to the United States in 1969 at age 19. The plan was simple: Find a job and put himself through college. After a 17-day boat trip, he arrived in New York with a suitcase in his hand and $250 in his pocket. He phoned home to let his family know he had made it to America.

"The first words out of my mouth were, 'Dad, I have arrived. I'm safe,'" Iordanou recalled. "His first words were: 'Did you register at school yet? And did you get a job?'"

Iordanou got a job pumping gas and enrolled in English language classes. He was accepted into New York University and earned a degree in aerospace engineering. After a stint at Pratt & Whitney working on jet engines, Iordanou went to AIG, which was looking to hire trainees with an engineering background. He was brought on board to evaluate submissions for satellite insurance coverage.

"I didn't have any experience, but at least I could go and research the reliability of different rockets--the Delta 3914, Delta 3912--and advise the underwriters as to the probabilities of failure when they were launching these vehicles," Iordanou said. "I was an engineer helping in the underwriting process.

"I had the curiosity. I was always curious to learn about new things and how things work and why. I think that's a good trait to have if you're going to be in insurance because when insuring risks you're going to see everything, as they say in the Greek language, from the Alpha to the Omega."

Fast Track

Iordanou's early efforts got him noticed at AIG. He earned a spot in what AIG called its "fast-track" program.

"That meant that instead of working 40 to 50 hours a week you have to work 80 hours a week," Iordanou said. "They would give you the opportunity to spend time in other units--the actuarial department, the accounting department--but it was over and on top of your day job.

"I felt that working hard and learning every day was one of the goals, and your individual net worth is based on your knowledge, ability and desire to work hard. I wasn't building a big monetary net worth but I was building a lot of intellectual net worth. And that's what I tell young people, especially in our training program here or any other place that I've been: Everything that you learn, it improves your ability to convert that into a monetary benefit over time. Whether it gets recognized immediately or in the future, the more knowledge you have, the more ability you have, the more expertise you have, the better off you're going to be in the future."

Early on at AIG, Iordanou's life consisted of working and learning, without time for much else.

"For the first five or six years at AIG I had zero social life," he said. "It was work, learning, work, learning, work. After that I started getting the benefit of that effort. It was a sacrifice--a lot of movies I didn't see, a lot of dates I didn't make."

That was fine by Iordanou. In the Iordanou household, hard work was expected. His father was an orphan with a fourth-grade education who started working at age 8 and who didn't wear a pair of shoes until he was 16. And those shoes weren't even his own; he had borrowed them for a job interview.

"He would not allow us to go down that path, so to him education was big," said Iordanou, who at age 12 got his first job packing groceries and stocking shelves in a supermarket. "He felt the ticket to success was not an inheritance from him, because he had nothing to give us, but he could guide us to get educated and through education we'd have at least a chance to really get into the middle class."

At AIG, every day was an education.

"You were kind of thrown into the fire to see how you're going to survive," Iordanou said. "You had mentors. You had people that were older and more experienced than you. It was up to you to see how much knowledge you could extract out of it by doing things. I would go to the actuarial department and I would get a few assignments, and I used to spend hours and days to do them on top of my day job. That gives you the ability to learn something that otherwise you wouldn't have. And I viewed that as an opportunity for me to get to the next level.

"That was the culture at AIG. They would give you opportunities and they would see how well you did. The better you did, the more opportunity you got."

It was a concept Iordanou understood well. And so his career continued to stretch, like a rubber band.

Leadership Lessons

Iordanou's success at AIG landed him an offer from Berkshire Hathaway as president of its commercial casualty division. He then went on to various positions at Zurich before joining Arch in 2002.

Now that he's at the top of his career, Iordanou can see the influence his beginnings have had on his leadership style and his approach to training future leaders.

Those early days under Greenberg and his five years reporting to Buffett, the chairman and CEO of Berkshire Hathaway, were defining times, Iordanou said. They taught him the importance of identifying young talent, collaborating across departments and assembling the right teams.

"We're in a talent-intensive business and I know that success at Arch depends on leadership," he said. "I have to put in the right teams with the right individuals who have the right knowledge and ability. You feel like a coach, and you need to have the right athletes in the right positions in order for the team to perform.

"Culturally, you have to create an environment that not only has the right athletes, but where the athletes respect their coach and respect the game plan. And the game plan has to be in alignment with the abilities of the athletes that you have. Those are lessons I learned from Berkshire. What I learned from Hank is that you've got to be detailed. You have to understand all aspects of the business and develop a sixth sense to know when things are going well and when things are not going well and what corrections you need to make. Hank was more nuts and bolts, down to the details. Warren Buffett was more conceptual but he had a brilliance about that. If you listened to him and you understood his philosophy then you knew where to focus."

The training programs at Arch reflect Iordanou's own training experiences--starting with a New Hire program that gives recent college graduates an introduction to Arch and the broader insurance industry, followed by a Leadership Development program that gives high performers a chance to pursue stretch assignments in new areas of the company.

"Every professional that we bring into the company, my advice to them is: First of all, learn broadly about the business," Iordanou said. "Don't get pigeonholed. Have an understanding of how the industry works. Once you do that, you're going to gravitate where you like and gain as much knowledge and ability as you can."

Given the rapid changes occurring in the marketplace, Iordanou said it's important to recognize that knowledge comes from all sources.

"The ingredient that makes people successful in today's world, especially financial services, is the ability to collaborate," he said. "It doesn't have to be just your superiors. It can be your superiors or it can be colleagues or it can be subordinates. You can learn from all different places."

And sometimes, the biggest lessons come from a father and a rubber band.

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Thrown Into the Deep End

Brian Duperreault walked through lower Manhattan in search of the American International Group, a company he'd never heard of and was skeptical even existed.

After leaving the Army, he had been looking for a career where he could put his math degree to work. Someone recommended he become an actuary. After a trip to the library to figure out what, exactly, that word meant, Duperreault applied for a spot in the actuarial training program at the National Union Fire Insurance Company of Pittsburgh. In the meantime, he received a call from AIG, its parent company.

"The recruiter had my resume and he said, 'It's American International Group,'" Duperreault recalled. "I had never heard of it. It didn't even sound like a real name. I was a bit skeptical, but I went to New York for an interview.

"I went downtown and walked past the Home Insurance Company, I walked past the Continental. So I thought, at least I'm in the right neighborhood. I came across American International at 1 Maiden Lane. They had the name like a movie company; it was sort of painted on brick. I went into the building and it wasn't very good. I went up to the actuarial department, and I had better desks in the Army than they had. The linoleum was coming off the floor."

Before the day was ended, Duperreault wanted to work there.

Though the décor at AIG may have been lacking back then in 1973, the energy was not. There was an electricity in the organization that drew Duperreault in instantly.

"It was a very complicated, confusing company with a lot of moving parts," he said. "But I just liked the people working there. They were young, energetic, looked like they were having a lot of fun. I still didn't know what actuaries did, but they seemed to be having a really good time. So I said, 'Yeah, I'll come work with you guys!' And that's how I landed at AIG."

Duperreault, CEO of Hamilton Insurance Group, has had one of the more illustrious careers in the industry. He has been CEO of both ACE and Marsh McLennan and in 2011 was inducted into the International Insurance Society's Insurance Hall of Fame. But it all started with the training he got in his 21 years at AIG.

"I'm a product of my training," he said.

Disrupting Force

Having enlisted in the military after graduating from St. Joseph's University in Philadelphia, Duperreault was looking to make up ground in his career when he took the position at AIG. "I felt way behind because I was entering at 25 instead of 22," he said.

Armed with a major in math and a minor in philosophy, Duperreault was more comfortable with Kant and Nietzsche than he was with premiums and actuarial science. But a lifetime of Catholic schooling--where nuns taught him discipline and to focus on fundamentals and Jesuit priests taught him the importance of having a worldly view--gave him the foundation to learn quickly at AIG, he said.

"I had to scramble to get formal education on the actuarial side, but what my schooling did was give me an amazing spread of knowledge and experience," Duperreault said. "The commercial business really requires broad interest and knowledge, because you're touching every facet of society. You have to be numeric. You have to be social. You have to be able to deal with people and numbers at the same time. You have to be interested in a variety of things, whether it's the way a hotel chain works or the way chemicals are made. We're always thrown into something new. So you have to have an intellectual curiosity."

At AIG, there was a lot of independent learning to be done. "You were just thrown into the water," Duperreault said.

For example, Duperreault's first job at the company was to write a divorce insurance policy, a new product that never quite took off.

"These policies didn't exist," he said. "I had to go figure it out. I had to figure out what we were covering, how you would put that into contract terms, how to rate it, price it. But that was AIG--go figure it out.

"We definitely got trained by doing. We were highly motivated because we had some control over our lives and careers and what we were doing. There was no ceiling. It was a lot of fun and you learned so many different things."

There was constant opportunity to learn and move within the organization. Duperreault jokes that he should have kept all of his business cards from AIG, because the stack would have been considerable.

"I never had to leave the company because my job changed all the time," he said. "I never got bored."

As exciting as those times were, though, there was also a lot of pressure to succeed.

"It was very demanding," he said. "You had to put a lot of time in. There was an energy required. You had to have a voracious appetite for information and you had to make decisions. You had no time. You had to get as much information as you could, make a decision and move on. So it was very demanding, but exhilarating at the same time. For some it was too demanding, but for me the best part was being able to make decisions, take responsibility and succeed."

Developing that type of creative and energetic culture--where young associates are given freedom to learn by executing--can be a challenge in today's marketplace.

"AIG, at that time, was the disruptor. It was breaking the rules and writing new rules," Duperreault said. "So the question is: Can you duplicate that environment? Yeah, there are companies every day trying to be a little different and trying to do things a little different, where the management and staff are very energetic. So absolutely! But it's much harder to duplicate in a company that's more mature. It's not impossible, but it takes a lot of work. It's a cultural thing."

Creating a Culture

At Hamilton, Duperreault is aiming to build a culture that is welcoming to young professionals, where there is a focus on collaborative learning and associates are empowered to make decisions. The company is just 18 months old and has just 90 employees, so there isn't yet any formal training regime in place. But, Duperreault said, Hamilton does have a well-entrenched approach to development.

"Our employees are guided in what they need to do to develop," he said. "That may mean increased formal training--go get your designations. It may mean putting them in certain jobs or placing them in groups to increase their knowledge skillset. We don't have a grass-roots program where they sit around in lectures, but we absolutely formally think about their development."

In Duperreault's view, training should take two forms--formal education and hands-on application.

"You have to have some formal training and get your designations," he said. "You need that academic basis, learning the wisdom of the ages. But you have to apply that. We really do learn through our experiences--both the good ones and the bad ones. So you have to find a way to get the individual with the good academic training to actually apply it. In underwriting, in particular, where we take risks, you can read about it all day long, but you really don't understand it until you do it. And live with the consequences of it. Until you have a loss and then have to go back and take more risks.

"That combination of formal training and experience is the only true way to develop talent."

To that end, it's important to give employees a long leash, but still offer guidance.

"That's an art in itself," he said. "You need to let people go and then help them do the kind of course corrections that they need to do in order to get to the right place. But you absolutely have to encourage people to take initiative and find out how much they can do. What are you capable of? What is your limit? How high is your ceiling? They'll never know unless you allow them to find out.

"Figuring out how to grow people is a skill in its own right," Duperreault added. "You can't get your team to grow if you don't step back a bit, let them talk, let them make a mistake or two--not deadly ones--and let them learn from that."

Though the principle of "learning by doing" still applies, Duperreault said it's important to recognize that millennials--the leaders of the future--tend to prefer collaboration. So he suggests using group projects as a means of on-the-job training.

"You have to set up structures in which there is a nice blend of skills--theirs and ours," he said. "They do bring skills and you'll learn something from them. That's important in today's digital world because they have some skills that we don't necessarily have. And they need to draw from ours. So you need to set up structures so you have tasks that are completed by a team of people who are blended. I think that's where you develop people and where talent grows. The really good ones will rise to the top, showing leadership abilities and extracting greatness from the group around you.

"It's not formal. It can't be the old one-on-one, where you're learning at the foot of the master, step by step. The world is moving too quickly for that. You need to have a group approach. That doesn't mean you disregard formal training. I think you need to bring that to the table, but do that on your own time."

by Kate Smith, senior associate editor, Best's Review