Argo finds ‘boring is good for strategy’: Gary Grose
From its very public row with activist investor Voce Capital to surprise senior exits and now news that Argo is considering a potential sale or merger, the last word most people would use to describe the global re/insurer is boring.
But “boring” was exactly the word used to describe strategy around leadership, people and the wider business when Intelligent Insurer spoke to Gary Grose, president, commercial specialty, US operations at Argo Group.
Speaking in April, prior to the potential sale revelations, Grose said: “Everybody is pretty much aware of the Argo story since chief executive officer Kevin Rehnberg came on board as far as divesting of underperforming assets, which we’ve done, the focus on getting to the 36 percent expense ratio, and then strong growth in areas that we dedicated ourselves to and spoke publicly about in our investor day.”
Grose said the re/insurer is “constantly striving” to improve transactions to make doing business with Argo easier, which includes some product innovation as well as its focus on expertise within its ranks.
“When Kevin came in, we as the leadership team all said ‘let’s dedicate ourselves to continuing to remain focused on our expertise and making it easier to do business with us from a transactional standpoint’,” he said.
“We said ‘boring is good’ but that’s what our focus has been. And as we see with the US results, it has paid off.”
Rehnberg stepped aside to take a leave of absence in March 2022 but his vision for the business continues under interim chief executive officer Thomas Bradley. It was Bradley who announced a review of strategic alternatives on April 28, 2022, that could include a potential sale or merger of the firm.
“The attitude from the organisation is ‘what else do you need?’.” Gary Grose, Argo Group
Growth areas
With a major strategic overhaul on the cards, it’s no surprise that Grose emphasised the firm’s focus on growth areas such as surety, casualty and construction.
“This focus says: ‘you’re here, you’re in one of these growth areas, so your goal is to grow and be profitable doing so’. It’s just a reiteration of existing strategy.
“I often say to our folks: ‘is our strategy boring compared to where we were in the past?’ because of so much that’s in the news, but the fact of the matter is that the employees enjoy that.
“It takes a little while to realise ‘oh my gosh, this is a huge focus, I’m in a business unit such as surety, construction or casualty that is getting the resources it needs and is growing strongly’,” he said.
“The attitude from the organisation is ‘what else do you need?’. The leaders we’ve put into place are the type of people who embrace that.”
In the past two years there have been a number of external and internal hires and promotions that, Grose said, clearly show that the firm’s succession and recruitment strategy is working.
He pointed to the recruitment of Chris Haarmann, SVP casualty, from outside the business, who has led the casualty team to some “incredible growth”, Grose said, and Kristyn Smallcombe, SVP construction, who joined from Swiss Re with a wealth of experience.
Grose highlighted the re/insurer’s succession plan under which people such as Brendan Keating and Mark Farina have stepped up from within the business to co-lead surety at Argo.
In another example, Kyle Struble was ready to move into the chief financial officer role straight away when his predecessor Will Chen left the business.
“These appointments have been seamless because of the work that we put in a couple of years ago regarding succession planning,” said Grose.
Succession planning goes beyond the executive team.
“We’ve gone down several layers. I’ve never seen that in companies I’ve been in previously, being able to go to this level. It’s work, as you can imagine, but it’s really paid off.”
“We’re figuring out what the new world of work looks like.”
Macroeconomic challenges
Argo does not exist in a bubble and, like many in the industry, the re/insurer is looking at the broader macroeconomic challenges ahead.
“I’m on the Insurance Information Institute board and I participate in the APCIA group too. We are inherently watching the larger litigation cases coming through, things such as litigation funding. We’re watching these large claims and what’s happening in the legislature as far as litigation reform,” Grose explained.
He and his peers are also watching the broader issues around the cost of living and inflation in general.
In terms of other challenges for the re/insurer, people strategy comes “a close second” to macroeconomics, he said. “We’ve gone through the COVID-19 pandemic, which we’re still experiencing of course, and then we all experienced the ‘great resignation’ and now we’re asking ‘what is next?’.”
For Grose, the answer is retaining and nurturing important employee expertise and supporting this with flexible working. He said he has had many conversations with clients about how people feel about returning to the office, and the jury is still out.
“We’re figuring out what the new world of work looks like. Part of what’s helped our recruiting is our flexibility around work; our size—Argo is viewed as a relatively small re/insurer—significantly helped us with that.”
The initial move to remote and flexible working was “seamless”, something he gives particular kudos to the human resources team for. And in a similar vein, the firm has recorded in-classroom training sessions so people working remotely can access development.
The movable feast of flexible home/remote working can be complex for businesses to manage and it’s something Argo has not shied away from as it opens a new office in New York. Moving to remote working during the pandemic was the first step, Grose said. Then as things started to open up again the firm had to think about how many people would want or need to come back to work in the office.
“We realised we had an opportunity to look at expiring leases and decide: do we want the same footprint, the same location? We took advantage of that. We realised we had some real estate we didn’t need any more, so we got rid of it and we were able to downsize,” he said.
The New York office, which opened in April in Midtown, is a case in point. Grose said the firm was able to downsize its footprint there but still accommodate people who want to come in to the office.
“New York is a perfect example: some people live far away and they want to come in once or three times a week so they can have meetings with people who are essential to driving results. But they don’t want to come in every day,” he said.
Argo’s senior team plans to learn from the New York office over the coming months and draw on this experience when other leases come up for renewal.
“For each location we’ll decide whether it should be the same size or smaller.”
Chicago is a perfect example of where the firm realised it wanted the same floor in the same building, but with a restructured setup to bring people together on the business side. The restructure also created an area where Argo could have the executive team together for discussions.
“It’s been an experiment, and we’re pulling it off. We’re all figuring our way through this pandemic and post-pandemic time, so the revisiting of each lease as it comes up is very important,” he concluded.
