INTERVIEW INTERVIEW

InterviewVIEW InterviewVIEW Creating a

INTER Insuring New INTER Different Experience Businesses

An Interview with Mark E. Watson III, President and Chief Executive Offi cer, Argo Group International Holdings, Ltd. (left) and Brad Handler (right)

I travel all over the world and I see the same There are also a number of new product ini- EDITORS’ NOTE In 2002, Brent Handler, along An Interview with Brent Handler, Chief Executive Offi cer, thing everywhere I go. Small businesses are get- tiatives. ARIS, our title insurance for personal prop- with a friend and his brother, Brad, co-founded and Brad Handler, Chairman, Inspirato with American Express ting going again. People are slowly becoming com- erty – mainly art and other collectibles – is a good Exclusive Resorts, a industry pio- fortable spending money again. example of that. There are probably half a dozen neer. Brent was the company’s president from 2002 We still manage and Sugarcane on the Kohala Coast on the Big Island, Hawaii the most respected brands How do you defi ne the insurance niche product initiatives that are truly new to the insur- through 2009. control the entire ex- for service and travel in the your products appeal to? ance space, which are just starting to gain traction. Brad Handler worked at Apple at the begin- perience but we didn’t world, they are the ideal In the U.S., 80 percent or more of our policy- We’re focused today on partnering with busi- ning of his career. He later served as eBay’s fi rst have to ask our customers to also be our fi nancing partner and together, we’re perfectly positioned to holders are businesses with a handful of employees nesses that are creating new products to help attorney and also held the positions of Chairman, source. In this way, we could build our portfolio, let more people know about our solution. We have Mark E. Watson III and revenue of $2 to $10 million. protect them against certain risks inherent in their CEO, and Vice-Chairman of Exclusive Resorts. which is now valued at half a billion dollars, and invested tens of millions of dollars into our infrastruc- We insure very large businesses as well, but business. We’re trying to help them manage those He is also a lecturer at Stanford Law School. pass on dramatic savings to our members. ture and there is no other option outside of Inspirato EDITORS’ NOTE In 1999, Mark Watson joined our focus is on the small businesses. They need risks and take the unknown off the table so that In January 2011, convinced that they could How have you avoided losing your in- that offers this caliber of vacation. the board of directors of Argo Group’s predecessor insurance so that, if something happens, they aren’t they can focus on selling their products. improve on the model they helped establish, the novative edge as the company has grown? The potential market for our product is in- company, Argonaut Group, and he has over- going out of business the next day. How critical is your leadership team when Handlers and two partners founded Inspirato, Brent: Our philosophy has been to be dif- fi nitely larger than our existing member base. In seen the organization’s development as a lead- Is there inherently more risk insuring it comes to growing the company? which provides luxury travelers with the benefi ts of ferent and not just to create a big market, but many ways we are still a relatively new offering. ing specialty underwriter since becoming its Chief smaller companies and is it tougher to evalu- For most service companies, their biggest in- a traditional destination club without the six-fi gure, to create a company that offers truly seamless, Brad: Every time someone who suggested Executive Offi cer in 2000. Earlier, Watson was one ate that risk? tellectual capital is their people. upfront fees previously standard in the industry. In holistic luxury travel experiences. We have been they were a competitor came into the market, of two founding partners of Aquila Capital Partners. This is part of our business model. There may A really strong business model matters a great March 2013, the company announced a partner- lucky over the past 11 years to follow a much they looked at the market as purely a business Before this, he was an Executive Vice President be no track record because many of these busi- deal and if you have that wrong, the best execution ship with American Express and the company’s new larger macro trend, which is one of people and would try to figure out a way to make and member of the board of directors of Titan nesses are brand new. The bigger companies we in the world won’t save it. However, you do need name is Inspirato with American Express. wanting to vacation in homes rather than ho- money. No one ever approached the concept Holdings Inc. from 1992 until its acquisition in 1997 compete against are focused on evaluating experi- good people to execute and make sure the strategy tels exclusively. We have chosen to address that the way my brother and I do, which is that we by USF&G Corporation. From 1989 to 1991, he was ence to make underwriting decisions but we have is right for the company. COMPANY BRIEF Inspirato with American through a club structure that is highly serviced. like to travel with our friends and family, and we an Associate Attorney with Kroll & Tract and, ear- been insuring new businesses long enough that we How important is it for the U.S. to en- Express (www.inspirato.com) is a private desti- We continue to innovate with initiatives needed a solution. The fact that we can build lier, was a legislative aid to Texas State Senator have a sense for the characteristics of a good busi- courage entrepreneurship and spur innova- nation club that provides the space and com- like Inspirato for Business, which provides a a business from that personal perspective has Donald Henderson. He graduated with a B.B.A. ness model. tion and technology? fort of a personal vacation home combined solution for companies interested in using pri- undoubtedly helped our success. from Southern Methodist University and a J.D. from How critical is management in your un- Job growth doesn’t come from large busi- with the fi ve-star service and amenities tradi- vate vacation residences for incentive travel, as What do you look for to determine if a The University of Texas School of Law. derwriting decisions? nesses. Small businesses create over half of the jobs tionally found in luxury resorts. Inspirato well as off-site company meetings and retreats. property is right for Inspirato? We have so many small accounts that we can’t in the U.S. members and clients enjoy exclusive access to We can very effectively cater to this market with Brent: It depends upon location and upon COMPANY BRIEF Argo Group International get out to interview management on all of them, so Over the past few years, new businesses more than 140 awe-inspiring homes in some the same infrastructure, quality, and service we factors that have to do with what our membership Holdings, Ltd. (www.argolimited.com) is an interna- we have to base our decisions on our own quan- haven’t been created. That is not because entre- of the world’s most coveted destinations, all at offer our consumer membership. needs. If it’s a typical resort residence, we want tional underwriter of specialty insurance and reinsur- titative analyses. preneurs were afraid to start them, but rather be- members-only rates. They are also treated to Brad: There are three reasons why we have the home to be ideally located within the resort, ance products in the property and casualty market. Over time, as our clients grow, we want to grow cause they were hampered by government. Federal dedicated trip planning, on-site concierge ser- consistently been able to innovate: the fi rst is that so we tend to have close proximity to the resort Argo Group offers a full line of products and services with them. We come to know the better managers regulators were not allowing banks to lend to vice, unique club benefits, and the luxury of we don’t come from this industry. Therefore, amenities. Our sweet spot in terms of the value of designed to meet the unique coverage and claims because they grow their businesses more quickly. small businesses for fear that the banks weren’t certainty that comes with knowing Inspirato is we look at problems differently than people who homes tends to be in the $4-million range. Also, handling needs of businesses in four primary seg- Is the U.S. your primary market or will solvent enough. We now have even more regu- committed to making each club vacation ex- have been trained in hospitality. because we manage and control the homes, we ments: Excess & Surplus Lines, Commercial Specialty, opportunities for growth also come from lation. Because of regulation and the diffi cul- traordinary from start to fi nish. The second reason is that we come from invest in refurnishing and improving them. International Specialty, and Syndicate 1200. Argo emerging areas? ties in raising capital and negotiating the hoops innovative backgrounds, which allows not only Brad: What also makes an Inspirato home Group’s insurance subsidiaries are A.M. Best-rated ‘A’ The growth coming from emerging markets has through which you have to jump to get off the Has Inspirato evolved as you expected? us but also our employees the opportunity to unique is that it has to be in a location where (Excellent) and Argo’s U.S. insurance subsidiaries are slowed down a bit. Most of our growth opportunity ground, the amount of time required to get a Where has the growth come from? explore a solution without the fear that they will we can offer the wraparound services for our Standard & Poor’s-rated ‘A-’ (Strong). today is in the U.S. where we have a bigger presence. business going today is extraordinary. Brent: Families and companies are interested be penalized for failure. We test and see what members, like on-site destination concierges. About 55 percent of our risk is underwritten in Is there a need for more business people in vacations that are highly experiential. Recently, works because we’ll only achieve true innova- In terms of the type of services you can Is true economic recovery taking place the U.S. Today, with the economy growing in the to serve in government? there has been a seismic shift in people’s vacation tion if we dare to try new things. offer, does that limit your membership? around the globe? U.S., albeit at a slow rate, it’s presenting some real There is more of a need for people in preferences from them wanting to stay exclu- The third reason is that our business is It doesn’t limit the size. It forces us as the cura- Most of the businesses we insure are small – a opportunities for us strategically. government like Mayor Bloomberg. We need sively in hotels – where a typical room is only 450 based in Denver. We’re in a great environment tors of these experiences for our members to make lot of start-ups. When the recession started, there Where is the growth coming from and people who are truly committed to public ser- square feet – to wanting to stay in private resi- where people like where they live and enjoy sure that we remain consistent to our principles. were few new businesses because banks weren’t how have you positioned the company? vice and not just there to further their political dences, where the setting is far more conducive coming to work. The result is a happy work- It’s easy to hang out a shingle and say, I’m lending money. New businesses are starting up In addition to opportunities from new ambitions. to spending quality time with friends and family. force that is dedicated to serving our members. going to take any house that is available even if again and we’re insuring them. We can see that in businesses, some of our competitors who are When people try to do the right thing, the When we launched Inspirato in 2011, we Is the true value of this concept really it doesn’t really serve our purpose. Instead, we our numbers daily. traditional insurance companies broadened right decisions get made. knew the market was large for people who wanted understood? really focus on providing members with amaz- We are based in downtown New York and their risk appetite more than they should Do you permit yourself the time to enjoy to vacation in a residential setting. The challenge Brent: With Inspirato, it hasn’t been dif- ing luxury properties and experiences, and we we moved our offi ce from Wall Street to SoHo when have and they’re now narrowing their ap- some of your wins and refl ect on your success? was how to get that setting while avoiding the six- fi cult because we have been able to attract over make that the number-one priority. the crisis was at its worst and things were quiet. The petite. So we’re seeing more opportunities We’re always looking to the next challenge. I fi gure, upfront membership fees previously stan- 4,000 members, who have fully embraced our Retaining these high standards doesn’t limit streets are now bursting at the seams and not just from brokers and agents who are coming to spend more of my time now coaching the people dard in the industry. It was once believed that a platform in two-and-a-half years. our ability to grow and scale. Being selective with locals but with tourists as well. Rents are now specialty companies rather than going to the that work with me. Watching them become suc- company had to own the properties. We realized we Our partnership with American Express speaks helps us fi nd the places that will be truly unique higher downtown than on the Upper East Side. more traditional companies. cessful is rewarding.• could instead take long-term leases on properties. volumes about the trust they have in us. As one of and memorable for our members.• VOLUME 36, NUMBER 4 POSTED WITH PERMISSION. COPYRIGHT © 2013 LEADERS MAGAZINE, INC. LEADERS 219