Interview: Jim Stanard


Lessons learned: Bermuda legend Stanard reflects on a remarkable career

Industry pioneer and entrepreneur Jim Stanard has spent 50 years building companies and learning about risk. He shared some of his life lessons and revealed his new and somewhat surprising passion when he spoke to sister publication Intelligent Insurer.

“I feel very lucky to have had a number of really good mentors.”
Jim Stanard, Ariel Re

The name Jim Stanard sits comfortably on any list that might consider key individuals who have shaped the risk transfer landscape of Bermuda. His role as a founder of RenaissanceRe, a company that pioneered the modelling of catastrophe risk for the industry, would alone ensure such an accolade.

Add to that his role in founding TigerRisk Partners and the recent buyout of Ariel Re and his long-term influence on the industry is unquestionable.

Yet for all his successes as an entrepreneur within the industry, it isn’t business that Stanard wants to discuss. In recent years, alongside his business ventures, he has reinvigorated an earlier passion of his: music. Speaking in a Fireside Chat on Intelligent Insurer’s Re/insurance Lounge, it is that he wants to discuss first.

“I actually spend more time on music now than I do on business,” Stanard admits. “Before the pandemic stopped live music, I was enjoying playing live at local bars and coffeehouses. I spent a lot a lot of time doing that.

“Paul used to say: ‘we’re not in business to subsidise stupidity’.”

“I kind of challenged myself to get back into music; to see to see how far I could take it.”

He has recently released his second album, “Color Outside The Lines”, and he is as keen to discuss that as anything. But his success in music has been born of the same mantra he has believed in when it comes to business.

“My advice is to find a mentor to learn from. And if you’re in a place where you’re learning, don’t leave,” he explains.

In the case of music, his mentor was Kip Winger, of rock bands Winger and Alice Cooper. “I couldn’t have done it without his help and encouragement, but I also realise that being a professional musician is very hard,” Stanard says.

“The money that they make, especially now with streaming, is not that good. I feel I dodged a bullet by not taking that career path.”

Follow the knowledge

When it comes to business, Stanard praises a series of mentors. After an early career with the Prudential in the US, he followed mentor Paul Ingrey to found F&G Re in 1983, initially as a unit of USF&G. Later, he joined the parent company to help with a turnaround scheme before being tempted by the opportunities in the reinsurance space in the aftermath of Hurricane Andrew in 1992.

“I feel very lucky to have had a number of really good mentors. The first was Paul, who I met at Prudential Re,” he says. “He brought me to USF&G Re. I was pretty scared about that, but I had a lot of confidence in Paul.

“It was the best decision I’ve ever made. I got to see how to build a company from scratch and that gave me the confidence to do it again at RenaissanceRe.

“Another important mentor was Norman Blake at USF&G. He brought me into help turn the business around. That was a large public company and I learnt a ton from Norm. It was really hard and I was getting burned out.

“When Hurricane Andrew happened I knew I had to go back to reinsurance because the opportunities were there and I knew how to do it.”

That led him, in 1993, to form RenaissanceRe on Bermuda. Despite being one of the smaller startups of that period, the company went on to become a pioneer in the development and application of catastrophe risk models and achieve an almost unparalleled record of profitability. By the time Stanard left in 2005, the company’s market value had increased from $140 million to more than $3 billion.

He says he could never have envisaged that RenaissanceRe would become as successful as it eventually did. In fact, he admits it was not clear in the beginning, launched as it was in very specific hard market conditions, that the company would even have longevity.

However, he points to the quality of some of the people it attracted, who changed that mentality. In turn, that led to its developing risk modelling technology that gave it an edge in the market—one that stood it in good stead in the long term.

“We were never trying to disrupt for the sake of disrupting.”

“We thought it may have been only a window of opportunity. As it turns out, I was fortunate to attract some top people who helped me build the company.

“There was Neill Currie, Bill Riker and others and, a couple of years into it, we realised we had something that we could build to last,” he recalls.

“Then we started using risk modelling technology. It was very crude then, but it sure was a lot better than not using it at all. That gave us a huge advantage, even if it only kept us away from doing the most stupid deals in the market. The market was very inefficient, so you only needed a modest edge to beat it.”

Stanard adds that the company was very focused on marketing and being client-centric.

“I had come from a primary insurance company. I knew how primary companies viewed the reinsurance market, what they wanted, how to treat clients with an appropriate value proposition.

“We weren’t going to offer capacity at stupid prices, but we said we provide continuity. Once we got in, we’d stay on at our pricing. Paul used to say: ‘we’re not in business to subsidise stupidity’.”

Another secret to RenaissanceRe’s success was its discipline around capital management. “The wealth we were creating was for management, and a lot of capital was expensive, so we wanted to use as little as possible,” he says.

“We were the smallest of eight cat companies that started in that period. There was almost a competition for who had the biggest capital base. In contrast, I wanted to have the smallest capital base.

“We built our capital through profits—that’s how we grew the company from $140 million to a market cap of more than $3 billion. I’m proud of what we achieved. My biggest legacy, I believe, is that the company did great after I left. I was trying to build an institution that wasn’t just about me. It has a culture that could keep going through management changes.”

New horizons

At this point, and with that track record, many expected Stanard to retire. However, he again confounded the market by partnering with another industry veteran, Rod Fox, to form a reinsurance broker, TigerRisk Partners, which is now a top five reinsurance broker globally.

He admits he contemplated retirement but ultimately decided he wanted to stay involved in the industry. After initially doing some work with Jeff Greenberg at private equity fund Aquiline, he partnered with Fox to launch TigerRisk—a venture that, he admits, was harder than he imagined.

“It’s funny, the grass is always greener. Rod wanted to go into the reinsurance business; I thought a reinsurance broker would be easier. He cautioned me and I must admit it was quite a bit harder than I expected,” Stanard explains.

“I had not realised the barriers to entry for something like a reinsurance broker. It’s easy to start an underwriting operation, but in contrast, very few brokers of significance have started since we launched Tiger.”

“We want excellent quality underwriting but a cost-effective basis for capital.”

As well as the steep learning curve at TigerRisk Stanard developed a deeper sense of the importance of culture.

“We were disruptive in some ways. Any time you start a business, there has to be a competitive advantage. But we were never trying to disrupt for the sake of disrupting.

“In many ways the most important thing is the culture of the business, respect for the client and the value proposition you offer,” he says.

“We were smart and creative. We were the first broker to act like a direct market. We used modelling in a very sophisticated way and we were very disciplined about capital management.

“But it was also about building the culture and having fun when you come to work in the morning, and to ensure everyone in the company understands what the plan is and what you’re trying to do.

“I stepped down last year to focus on other things. I love TigerRisk but, basically, they didn’t need me any more.”

Putting 50 years to work

In 2020, Stanard stepped down from TigerRisk and, through his venture capital business Pelican Ventures, he masterminded the buyout of Bermuda-based Ariel Re from Argo. He remains chairman of Ariel Re and has ambitious plans for its future. But, he admits, getting that deal over the line at all was not easy.

“We saw the market opportunity and then this company came available. It looked like a good fit, but it was a tough deal to get done. “It was the first time in my career I’ve been involved in an acquisition that was a competitive auction, and I’m not doing that again. But we won and I’m very happy with where we’re heading with Ariel,” he says.

Ariel started in 2005 and Stanard describes it as a very successful cat underwriter. But, he believes, it has suffered from having a sequence of owners.

“The goal now is to build a premier reinsurance risk manager. We have a platform at Lloyd’s and we will be writing catastrophe reinsurance and some other speciality lines,” he says.

“Our goal is to be top quartile in terms of results for our capital, and in the bottom quartile in terms of expenses. We want excellent quality underwriting but a cost-effective basis for capital.”

Stanard acknowledges that the current hard market makes the plan easier to achieve, but he is equally keen to ensure the business can succeed in the long term.

“For me, a hard market is a window to be able to start a business. The hardest thing for any startup is getting the business in the first place.

“Our challenge is we have a window where we can get business, but we want to build an organisation that can operate successfully through both hard and soft markets.

“We have the advantage that as an existing organisation, we have over $500 million premium already. It’s not as though we’re starting from scratch,” he says.

After 50 years of mostly success in the industry, it seems tough to bet against Stanard achieving his new set of goals. He acknowledges that the industry is changing fast in the way it is using technology and has increasingly converged with the financial markets.

“It’s become much more sophisticated from technical modelling and capital management points of view, which seems to me to be natural because it is a financial business.

“There’s no reason it shouldn’t be acting like other financial businesses.”

The fundamentals for Stanard remain the same.

“The more organisations I am involved with, the more I realise how important culture is. Getting the culture right is absolutely necessary to be successful,” he says.

To view the full Re/insurance Lounge session click here.


Image: www.jimstanardmusic.com

Share this page

SPRING 2021


Stay up-to-date with the latest news. Subscribe for FREE