Finding Gutsy Leaders Among Bermuda Challenges: Wyman

Oliver Wyman, a management consulting unit of MMC, announced the opening of a Bermuda office today, concurrently releasing a report outlining challenges facing Bermuda insurers and the qualities of leaders needed to handle the challenges.

"No matter which routes they choose, the challenges facing Bermudian insurance companies are diverse and complex," Wyman experts said in the report, titled "The Road Ahead."

Challenges, the report said, are high local operating costs, a limited talent pool, a changing regulatory environment and emerging competition to traditional reinsurance products--catastrophe bond growth, in particular.

Routes to success, the report said, include adopting active portfolio management strategies, improved risk management, the development of more sophisticated products and balancing capital reinvestments with shareholder dividend demands.

Meeting the challenges and executing such strategies "calls for very specific leadership competencies," the report said, identifying the right leaders as those who are "multidimensional--[those] who know how to lead from their heads to analyze and manage complexity, their hearts to inspire and develop talent, and their guts or raw courage to choose among multiple right answers and resolve conflict."

According to the report, one reason why multidimensional leadership will be critical to the future of the insurance industry in Bermuda is that companies having such leadership "will be more likely to come out ahead in the mergers and acquisitions game."

The report found that "study after study paints a dismal picture of the long-term success of many strategic combinations, with the more conservative sources suggesting that less than half of these deals succeed in achieving the results forecasted in the business case."

"In our experience, far too many mergers and acquisitions fail because their leaders focus exclusively on the financial aspects of the deal, overlooking key strategic, organizational and people issues," the report said. By contrast, "multidimensional leaders" are "able to see the big picture view" to manage integration, make required strategic choices "and keep people motivated through the often uncomfortable process."

Other highlights of the report include:

o A chart plotting the degree of product and geographic diversification in the insurance and reinsurance portfolios of two dozen Bermuda companies.

o A "regional insurance heat map"--essentially a world map with color-coded indications of "business attractiveness" of developing global markets, together with recent premium and growth figures.

o A graphical snapshot of key financial indicators for Bermuda companies and their European competitors--namely price-to-earnings ratios and returns on equity.

Commenting on the new office in Hamilton, Oliver Wyman (Bermuda) Limited, Chief Executive Officer John Drzik said, "Oliver Wyman has been working with clients in Bermuda for more than 10 years, and now the time is right to establish a formal presence."

He added, "Having an office in Hamilton underscores our commitment to growing our business here."

To kick off the office opening, Mr. Drzik co-hosted a lunch for local business executives and government officials with Brian Duperreault, president and CEO of MMC and a native of Bermuda.