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Feature BEST’S REVIEW Share of CEOs Who Spent www.bestreview.com November 2014 Their Entire Careers in

65% Follow the40% Leaders Appointed Appointed Before 2012 Since 2012 A background in finance, business development or operations/IT, plus foreign experience, can give a career edge, a survey shows.

by Mark Adams, Limore Zilberman andSector François in KouroriezWhich the CEOs Spent Majority of Their Careers Group CEOs DivisionalKey CEOs Points

o enable insurance compa- The Path Upward5% ▼ 4%The Background: The past two nies to identify and acquire The majority of5% insurance com- years have7% seen a significantOther shift 8% in insurance11% company CEO profiles, best-in-class leadership, Rus- pany CEOs profiled were appointed T 8% according to a recent study. sell Reynolds Associates recently con- internally—a statistic unique to Management Consulting cluded a study that profiled 65 chief the industry. They have spent the ▼ What’s Trending: Insurance CEO profiles stress anBanking increased executive officers at 38 insurance majority of their careers within the focus on innovation, technology and companies worldwide. Among this sector, with nearly74% half the sample international78% experience.Insurance group of chief executives were 38 working exclusively in insurance.

▼ Watch For: While insurance “lifers” group CEOs and 27 divisional CEOs. Breadth of experience tends to be still dominate the C-suite, the study The study assessed insurance gained instead through a variety of uncovers greater willingness on the leaders against their peers to deter- functional roles—an30 CEOs average Have Neverof three Worked part Outside of companies of Insurance to consider external mine competencies and experience per CEO—with the most common CEO candidates. needed in potential CEO candidates. Its findings revealed important infor- Functional Experience mation related to: • The path to the CEO position. All CEOs at Top-Performing Insurance Companies • The difference in the makeup Previously Held a Profit & Loss Role of group CEOs at leading insurance More Experience In companies. • The recent shift in CEO profiles and future trends.

Contributors: Mark Adams, François Kouroriez Finance Business Operations Risk/ and Limore Development/ & IT Underwriting/ Profit & Loss Role Actuarial Zilberman Adams Kouroriez are members +19% +16% +16% +11% Share of CEOs Who Spent of the Global Insurance Their Entire Careers in Practice, Russell Reynolds Less Experience In Insurance Associates in New York. They can be reached 4 in 10 CEOs at at: mark.adams@ Top-Performing Zilberman russellreynolds.com, Insurance 65% francois.kouroriez@russellreynolds. Companies Held a 40% Investment com or limore.zilberman@ Management CFO Role at Some russellreynolds.com Point in Their Careers Appointed Appointed -6% Before 2012 Since 2012

68 BEST’S REVIEW • NOVEMBER 2014 • REPRINT Copyright © 2014 by A.M. Best Company, Inc. All Rights Reserved. Reprinted with Permission. www.ambest.com

Sector in Which the CEOs Spent Majority of Their Careers International Experience Internal vs. External Group CEOs Divisional CEOs Group CEOs Group CEOs 5% 4% YES 5% 7% Other 8% 11% NO 61% Investment Management 39% 8% Management Consulting

29% Banking

External 74% 78% Insurance 71% Internal

30 CEOs Have Never Worked Outside of Insurance

Functional Experience All CEOs at Top-Performing Insurance Companies Previously Held a Profit & Loss Role

More Experience In

Finance Business Operations Risk/ Development/ & IT Underwriting/ Profit & Loss Role Actuarial +19% +16% +16% +11%

Less Experience In 4 in 10 CEOs at Top-Performing Insurance Companies Held a Investment Management CFO Role at Some Point in Their Careers -6%

International Experience Internal vs. External Group CEOs Group CEOs YES NO 61% 39%

29%

External 71% Internal Share of CEOs Who Spent Their Entire Careers in Insurance

65% 40%

Appointed Appointed Before 2012 Since 2012

Sector in Which the CEOs Spent Majority of Their Careers Group CEOs Divisional CEOs 5% 4% 5% 7% Other 8% 11% 8% Investment Management Management Consulting mix at both group and divisional Shifting Insurance CEO Profiles Participating Companies in levels including business develop- The past two years have seen a Banking ment, finance and risk/underwriting/ significant shift in insurance com- Russell Reynolds 74% 78% actuarial management. pany CEO profiles, marked by an Associates SurveyInsurance Approximately 60% of CEOs have increased emphasis on growing Ace worked in multiple countries, con- business in a rapidly changing and Aegon Financial noting that international experi- low-margin environment; creating Mapfre 30 CEOs Have Never WorkedAetna Outside of Insurance is highly desirable. Highlight- and implementing strategy often Aflac MetLife ing these crucial core capabilities taking capital position into account; AIG through the study helps companies and driving innovation. recognize candidates with the high- FunctionalMoving forward, Experience likely trends PartnerRe Share of CEOs Who Spent est likelihood of making it to the top. include increased focus on innova- Their EntireAll Careers CEOs at Top-Performing in Insurance CompaniesPrudential tion,Insurance technology andPreviously international Held a ProfitAXA & Loss Role RGA DNA of Top Performers experience. These changing areas Baloise To help understand what makes a of focus point to an evolvingMore Experience skill Cigna In successful CEO, the study compared set for successful CEOs. China Life the profiles of group CEOs of the top- Interestingly, while 65%insurance CNA Travelers quartile insurers with the rest of the “lifers”40% still dominate the C-suite, Delta Lloyd Unum WellPoint group CEO sample. The total return the study uncovers greater willing- Fidelity Generali XL to shareholders, or TRS, over the past ness on the part of companies to Appointed Appointed Great Eastern Zurich five years was used as a benchmark considerBefore 2012 external CEO Since candidates, 2012 of performance, with top performers vastly increasing the talent pool and Finance Business InsuranceOperations Australia Risk/ providing at least 150% TRS during competition for the top Development/roles. BR Group & IT Underwriting/ that time. The results brought to light Profit & Loss Role Actuarial some interesting trends: +19% +16% +16% +11% • CEOs at top-performing compa- Sector in Which the CEOs Spent Majority of Their Careers nies are more likely to have held prior LessGroup Experience CEOs In Divisional CEOs roles in finance, business develop- ment and operations/IT. 5% 4% 4 in 10 CEOs at 5% 7% Other • At top-performing companies, 8% 11%Top-Performing more CEOs have international 8% InsuranceInvestment Management experience. CompaniesManagement Held aConsulting • More than half of CEOs at the top- Investment Management CFO Role atBanking Some performing insurance companies were 74% 78%Point in Their Careers appointed between 2008 and 2009, -6% Insurance during the financial crisis. Weaker- performing companies typically changed their CEOs more recently. Understanding the common traits 30 CEOs Have Never Worked Outside of Insurance that leading CEOs possess can help companies better evaluate their can- didate pool. InternationalFunctional Experience Experience Internal vs. External Group CEOs Group CEOs All CEOs at Top-PerformingYES Insurance Companies Share of CEOs Who Spent NO Previously61% Held a Profit & Loss Role 39% Their Entire Careers in More Experience In Insurance 29%

External 65% 71% 40% Internal

Finance Business Operations Risk/ Appointed Appointed Development/ & IT Underwriting/ Before 2012 Since 2012 Profit & Loss Role Actuarial

+19% +16%BEST’S REVIEW+16% • NOVEMBER 2014 • REPRINT+11% 69 Copyright © 2014 by A.M. Best Company, Inc. All Rights Reserved. Reprinted with Permission. www.ambest.com Less Experience In Sector in Which the CEOs Spent Majority of Their Careers 4 in 10 CEOs at Group CEOs Divisional CEOs Top-Performing 5% 4% Insurance 5% 7% Other Companies Held a 8% 11%Investment Investment Management 8% Management CFO Role at Some Management Consulting Point in Their Careers -6% Banking

74% 78% Insurance

30 CEOs Have Never Worked Outside of Insurance International Experience Internal vs. External Group CEOs Group CEOs YES Functional Experience NO 61% All CEOs at Top-Performing Insurance39% Companies Previously Held a Profit & Loss Role 29%

More Experience In External 71% Internal

Finance Business Operations Risk/ Development/ & IT Underwriting/ Profit & Loss Role Actuarial +19% +16% +16% +11%

Less Experience In 4 in 10 CEOs at Top-Performing Insurance Companies Held a Investment Management CFO Role at Some Point in Their Careers -6%

International Experience Internal vs. External Group CEOs Group CEOs YES NO 61% 39%

29%

External 71% Internal