Will Covid-19 infect your corporate strategy?

Liberty Mutual Re’s Dieter Winkel highlights the importance of flexibility when planning in a postpandemic environment.

In today’s world the question of what makes a successful business has become highly debated and reams of column inches are devoted to the debate over what it takes to transform an opportunistic start-up into a multi-billiondollar enterprise.

I don’t have the answer. But anyone with common sense can see there are a few prerequisites. A good product is one. A leader with the ability to motivate and empower people is another. And then there’s a sound plan.

Strategic planning is the foundation on which every reinsurer is founded. While some may see it as an art akin to alchemy – promising much, occasionally mysterious – planning is the lodestone by which each reinsurer sets its direction. Without a plan, we don’t know where we’re going, how we’ll get there or how to recognise our destination once we reach it.

But Covid-19 has disrupted many corporate plans, including our own. The question facing reinsurers now is whether to change course or to take emergency action in order to get back to their original position.

Let me answer using my own organisation as an example. The roots of Liberty Mutual Re go right back to 2002, when a reinsurance operation in Cologne, Germany closed down, a group of us joined Liberty. Although we faced some heavy cat losses in 2004–2005, our reinsurance operation flourished and began to establish an international network of offices. By 2018, we had reached the conclusion that in order to develop into the major global reinsurance player we knew we could become, we needed to reengineer the business and give it its own brand: Liberty Mutual Re.

That decision, I’m pleased to say, has been a considerable success. Our gross written premium has risen from $1.7bn to £2.2bn with further growth planned.

Those aspects of our plan remain very much on track. We are constantly evaluating how we will achieve our targets. For example, we opened our latest international office in Singapore at the start of 2020. With hindsight, we were fortunate that this was our final planned geographical expansion for the time being. Covid-19 has changed the way in which we conduct business, particularly internationally. Whereas prior to the pandemic, I spent much of my time flying from one destination to another, today I speak to people all around the world from my desk in Cologne. The need of any reinsurer to expand internationally, buying up expensive office space is no longer the cut-and-dried decision it once was. Nevertheless, the local presence with close and also personal contacts to our clients and brokers will remain essential once restrictions have been lifted.

The pandemic has also thrown every organisation’s dependence on its people into sharp relief. We’ve all seen examples of loyalty and commitment from our people during the darkest months of the pandemic. That dependence and the resultant gratitude shown by employers is likely to result in a wave of investment in people. That investment may show itself in greater flexibility, increased training and development or remuneration.

Any mariner will tell you that there’s a point during a storm when, if you don’t change course, you’ll capsize. For reinsurers, the situation isn’t quite that dramatic but we do need to take stock of what’s happened and review our plans in the light of those changes. Any strategic plan framed on the ‘normal’ of 2019 and prior years is potentially out of step with the reality in which we find ourselves. I began this article by listing a series of prerequisites for a successful business. Let me add one more to that list: flexibility.