“Frank, over the long, storied history of Holborn, you and others have hired, trained and developed some of the very best and brightest in your industry. This does not go unnoticed. You and your entire team always develop a value-driven strategy to best position your clients for success.

“We so appreciate everyone’s professionalism, advice, care and genuine concern for our best interests. You must know that Holborn makes Federated better and making us better brings more value, more success to our clients.”

That quote is an extract from a letter sent to Frank Harrison, the chief executive of Holborn, by the senior leadership team, including Jeff Fetters, chairman and chief executive officer, of Federated Mutual Insurance Company. The letter was sent to congratulate Harrison and his team on the company’s 100th anniversary, an event it is celebrating this year.

The advent of COVID-19 has curtailed the company’s plans. It had planned a gala celebration in London’s Kensington Palace in May but, Harrison says, letters such as this one mean more to him than any physical celebration ever could.

“That message resonates with me and it sums up everything we are about and everything we strive to achieve,” he says. “If we make clients better, then we have done our jobs.”

Harrison is only the third chief executive in the company’s history. He took the reins in 1998 when he spearheaded the buyout of the previous owner John Gilbert, successfully implanting an employee-owned shareholder structure at the business. That move cemented the cornerstone of a set of values that make Holborn different—and it was no coincidence that it was done after Harrison consulted with the company’s clients.

“That was an important milestone for us. The proprietor, only the second in our history, was seeking an exit strategy. We could have been sold or merged with another firm, but he asked me to consult with our clients,” he recalls.

“The overwhelming consensus was that they liked our independence, they liked the ethos of our firm and they valued their relationship with us. To put those clients first, the clear best option that emerged was to be employee-owned—and we remain that today.”

Harrison is clear that the employee stock ownership programme informs the rest of the values of the company for the better. It means there is no pressure on the business to grow for growth’s sake; staff are incentivised on a fundamental level to work together and support each other; and they can truly put the needs of the client first.

Staff are incentivised and rewarded based on the long-term success of the company—as opposed to the short-term profit targets listed companies must manage.

“The shares are valued annually, and they form the basis of people’s retirements. From the guy in the mailroom to receptionists to the experienced brokers, it creates a very strong culture where everyone bands together and works hand in hand.

“At the heart of that are the relationships we have with clients—those are what we nurture always and what drives us every day.”

Together with this focus is Harrison’s other mantra: the importance of never stopping learning. With no physical celebrations around the 100th anniversary, he has had time to reflect a little on his own 20+ years as CEO. It is this attribute he says he values most—and which is the quality that truly sets the firm and its staff apart in such a competitive landscape.

“That is the big lesson for me: never stop learning,” he says. “I know we have some exceptional challenges today such as the COVID-19 pandemic and things such as cyber risk and climate change, but that got me thinking.

“When we were founded 100 years ago, the main form of transportation was the horse and cart. Imagine being the first person to try to underwrite a motor vehicle or an aeroplane.

“The fact is that the world is always changing and therefore risk is always changing—but that is what we do as an industry: we assess and price risk. The insurance industry is actually an incredibly simple business and the chain from policyholder to insurer to reinsurer to the retro market has remained unchanged for a very long time, regardless of the type of capital underneath.”

Limitations

Harrison acknowledges that on rare occasions the industry loses its equilibrium—and he says that has happened now.

“Everyone has to be paid a fair price for the risk they assume and I think it is clear right now that this was not the case in the retro market.

“That has a knock-on effect and is influencing the hardening of rates we are seeing now. Some reinsurers are now heavily reliant on the retro market and they are under strain as a result,” he says.

He adds that the COVID-19 pandemic has highlighted the limitations of insurance. He stresses that, regardless of the legal language in contracts, it has become clear that the industry never intended to cover the implications of countrywide government-initiated lockdowns.

“They had no intention of covering that risk, that is a governmental problem. But that creates an imbalance,” he says.

He adds that there are often lesser events that illustrate the importance of constant learning. In August, for example, the Midwest of the US was hit by severe windstorms of a specific type known as a derecho (Spanish for ‘straight’), which caused devastating damage to farms across the region and which will result in a severe insured loss. But the loss is one that has defied the expectations of the risk models used by the industry.

“What seemed like a good old-fashioned windstorm has done devastating damage, with some clients hit on three levels: insurance, reinsurance and crop insurance,” he says. “The lesson of the event is that we are always learning.”

Numbers are not the full story

As a private company, Holborn has no reason to share its financials. It did, however, in line with its centennial, release its revenues for recent years. Its turnover of $45 million puts it at number 10 in the broker rankings, which Harrison says he was pleasantly surprised with. But he stresses that numbers alone tell little of the full picture.

“We don’t care about size but around a billion dollars in premium annually is ceded through us, making us very important to markets such as Bermuda and Lloyd’s,” he says.

“But it is the relationships with our clients that we focus on first and foremost. We always seek to understand what makes them unique and ensure that we manage their risks in the most effective way. Most of the time that is through the use of good old-fashioned reinsurance—still the most effective method of spreading risk around the world.”

The company has three offices: in New York, Minneapolis and Kansas City. Harrison says that, while growth and expansion are not necessary for the company, he feels there are many other potential clients it would like to work with across the US.

“We have only scratched the surface,” he says. “There is ample room for growth in many more parts of America where we have had little presence historically.”

To achieve this, he says, it will come down to one thing: the quality of the people Holborn is able to hire, train and retain.

“The last five years have seen us grow the team and clientele steadily and I expect that to continue,” he says. “We have excellent talent and training programmes and we look forward to passing the ownership into the safe hands of the talent of future generations.

“And, whatever happens, we are not for sale.”

Frank Harrison is the CEO of Holborn. He can be contacted at: frankh@holborn.com

Main image: Shutterstock / corran09