On March 1, C. Robert Henrikson will become CEO of MetLife, which is by most measures the largest life insurance company in the U.S. He’ll add the title of chairman on April 25. A recent conversation with National Underwriter at MetLife’s Long Island City headquarters covered a wide range of topics, including Henrikson’s 33-year career at Met, growth opportunities for the company and important issues facing the business.
SP: I notice that your bio says you started at Met over 30 years ago as a sales rep. How long were you an agent?
RH: I started in 1972 and was an agent for two years. Then I moved over to focus on pension sales in ’74 and really enjoyed it. I moved into the pension business more because I found a mentor. Also, the timing was good–the company was looking to expand the Atlanta office. Later I went to Chicago and sold a pile of business in Iowa, Wisconsin and downstate Illinois. I’ve been in sales virtually my entire career, one way or another.
SP: You’ve had responsibilities all over the company, which area did you enjoy the most?
RH: This one [as president and COO]! It gets better every day. I’ve enjoyed it all along the way. I’ve had many and varied opportunities at one company for 33 years, from selling individual policies to mega contracts to huge corporations. Then later being asked to run the institutional business. And I’ve had phenomenal teammates along the way.
SP: Many people have a hard time making the transition from sales to management. To what do you attribute your exceptional transition?
RH: All I can say is activity followed. It’s been a natural evolution. I’ve always been excited by talking to people about solutions, building credibility in terms of understanding what their needs are and then being able to tailor solutions. There’s very little difference in the transition to sales management from sales to having responsibility for client relationships with all those big companies. Then going in to run and manage the entire division was a natural progression.
It’s been a continual and logical path. Take, for example, when I became president and COO, having responsibility for the individual side, as well. The timing in terms of marketplace need is phenomenal because years ago in the employer plan sponsor community the main customer was either the treasurer of the company or the head of employee benefits. Years ago, neither they nor we talked about the employee being our customer. Today the employer wants to know how you can provide decision support and make offerings suitable for employees. They welcome our competencies around that area. Twenty years ago some of those competencies would have been linked only to retail products.
The ability to bring together and leverage the power of this company in the product design on both the individual and institutional sides and to see problems on a common platform basis, the opportunity is immense. I don’t think I would have been as strong a leader in that particular marketplace had I not had experience dealing with individual clients.
SP: When you become CEO the company will be going back to being headed by an insurance man. Will you have a different perspective going forward [than Robert Benmosche, the current CEO, who came to Met from outside the insurance business]?
RH: I may surprise you with this answer. I said this to myself years ago and to remind other people, as well: I wake up in the morning, look in the mirror and say, ‘Wow, there’s a guy who’s never worked anywhere but MetLife; is that a liability or an asset?’
If you’re worried about it being a liability, you’re in great shape. But when you surround yourself with great talent you can be looking constantly for the strongest team of people with different experiences.
On the other hand, I’ve had over 33 years of experience where I’ve seen some things in a prior iteration coming back in the marketplace. We can’t go backward, nor would we want to, but there are capabilities we’ve developed over the years that can be levered over new circumstances and that is very exciting.
SP: What is the one thing that has changed most for you since Met became a public company?
RH: Let me answer for somebody else first. I think it’s the best thing that ever happened to our clients. The reason I say this is that as a mutual we were always strong, but with some of the largest companies on earth as our business clients, sometimes they’d say, ‘Could you do this for us?’ It might be a product or a particular service and our thought process was to work hard to be accommodative as long as it didn’t have a negative effect on our client base.
But now as a public company, simply being in something means you have to commit to investing in it, commit to target returns on capital, commit to win. You can’t be in something as a hobby or merely as an accommodation. So today, if that client asked us if we were not going to continue to invest in that proposition and recognize it as a commercially viable model, we would decline and we would speak in this language to the client.
This has had a great effect on me because when we went public, I had to say to myself, ‘I’ve been here for a long time and being very much a bullish player in the marketplace representing a mutual life insurance company, is this good for our clients?’ It didn’t take me long to figure out it was excellent for our clients. That was an awakening for me.
SP: Anything you miss about being a mutual?
RH: Probably a few hours a day [laughter]. I don’t miss anything. We’re much more open, honest, straightforward, market-driven and client-focused than we’ve ever been.
SP: If there is such a thing, what is a typical day like for you?
RH: Extremely busy. There’s always something exciting going on. I travel a lot, visit clients, agencies, do town meetings with employees around the country.
SP: How long has it been your goal to achieve the top spot at Met?
RH: This may sound strange, but I never woke up years ago and said I wanted to be CEO of MetLife. When Bob announced his intention and said this company deserved the best CEO it could possibly have, I didn’t think there was anyone better suited than I am. But keep in mind that I’ve been a member of a very focused and winning team.
With Bob retiring, one of the things that me coming in as CEO provides is a great deal of continuity. Our styles are different and we have different strengths and weaknesses, but this team has worked together very hard and it’s hard for me to separate our success from myself. I’ve worked very closely with Bob the entire time he’s been here.
SP: What will actually change when you become CEO?
RH: Well, the announcement is almost a year old. The first statement is to stay the course. This is not a situation of ‘now we have a new leader, let’s take a hard right or left’–that’s not the idea. We’ve done an unbelievable job under Bob’s leadership of removing what I call plaque from the system and creating a platform for further growth. We’ve created a lead in the market and I intend to expand that lead.
SP: Is your job more visionary as a CEO than as president?
RH: I don’t go for the visionary thing. This is not stand up on the hill; I have the answer; follow me. We have a strong team of players.
SP: Is there anything that keeps you up at night?
RH: There’s paranoia about missing opportunities. If I look back over 33 years, at the same time that we and the industry made great strides, there were also opportunities we missed. To the extent possible I’d like to minimize missed opportunities.
SP: Were you upset about group life not being included in TRIA?
RH: Not at all. I was more concerned that life might be linked in with other types of risk products from insurance companies such as property-casualty products.
SP: Why do you think the industry has the reputation as a sort of punching bag in Washington?
RH: When I talk to people in other industries like pharmaceutical or oil, they feel like they’re punching bags, too. The world we live in today, almost every industry feels like it’s misunderstood. I spend a lot of time positioning Met and myself as a resource for senators and congressmen on topics like Social Security, long term care, pension issues–all of which are hot topics in Congress today. For us, Washington has not been a bad place but a place for us to show what the unintended consequences might be of certain actions. We don’t say, ‘This is the way to go,’ but rather, ‘If you do this, these are the unintended consequences.’ That’s been helpful to people on both sides of the aisle.
SP: How well positioned is the industry to deal with the first wave of baby boomers retiring soon?
RH: The need for products and services is unprecedented because of the demographics, which are working in favor of an industry that offers what we do. The demand will only increase. There is a direct relationship between this demand and education about the need. The challenge is to educate not only the public, however, but legislators, as well.
Looking toward retirement, people’s biggest risk is their mortality risk. Most people get a bag of cash when they retire, but they don’t know how to turn that bag of cash into income for life. We can help them because we’re in the business of mortality pooling.
SP: Why do you think long term care insurance sales have never really taken off? Are people in denial?
RH: I think the topic of caregiver is starting to resonate with a lot of people today. If you’re my age, chances are you connect to the challenge because of the relationship you have with your parents.
The economics of LTC insurance are easy to illustrate because of the amount of savings people have or don’t have. You can’t invest against mortality risk, you have to insure against it. You can’t invest against LTC expenses, you need to insure against them.
The challenge is in addressing the consumer and the risks and rewards, not developing the products.
SP: Do you see much future in so-called combo or transitional products, such as DI that turns into LTC?
RH: There are possibilities in all kinds of combo products; the ideas can be designed. But the bigger question is: Do people understand the fundamentals? If people don’t understand what an annuity is, a combo product like LTC/annuity makes it even more difficult to understand. The key for people is: Do they understand what the mortality risk is? Let’s get them to understand that before we start talking about combo products.
When we ask people what their dreams and concerns are, they answer in terms of the way they live and the decisions they make. They don’t dream about riders on life insurance policies! One of the things this puts an emphasis on is talking to people about what their objectives are, what they are trying to achieve and then presenting solution-based products.
People are challenged by having so many options today–take 401(k)s, for example. We need to continue to make the tools we have easier to understand and provide people with decision support. Today people like to do research and have information available on the Net, but ultimately they want someone to help them take action.
We need to make it easy, convenient and attractive to deal with us.
SP: Easy, convenient and attractive. Not exactly the three words that come to the public’s mind when they think about insurance companies.
RH: That’s why we’ve done so much with technology to make it easier to do business with us. That goes for producers, too.
SP: Speaking of producers, Met has many distribution channels. Have you experienced any distribution channel dissonance with your agents?
RH: No. It is valuable for us to maintain a career agency force. We now have about 11,000 agents. And I think the value proposition is greater for agents today because of the complexities of the world. But we have other distribution channels, as well–a General Agency system, AARP, independent reps, banks, wirehouses, brokerage firms.
For us there is no conflict. From the customer point of view you want to be able to accommodate customers with how they want to deal with the insurance company.
In fact, the MetLife agency force was excited about the Travelers acquisition because they felt it showed Met’s strengths.
SP: What are your thoughts on an optional federal charter?
RH: It makes a lot of sense, but I don’t know when it will happen. There are pros and cons to both sides. In a business with national and international scope, it’s not as if we don’t know what federal regulation is like–we deal with ERISA plans, variable products with SEC and NASD oversights–so the concept makes sense.
But the challenge is you don’t know what a federal regulator will look like. Some say that speed to market is an argument for a federal regulator, but it’s possible it could slow down speed to market.
We’re not campaigning for federal regulation because we’re regulated by strong insurance commissioners. Basically we’re following the ACLI’s approach.
SP: Do you see much more consolidation in the industry in the next 3-5 years?
RH: I do, but maybe somewhat differently. People usually think of consolidation in terms of whole companies, but there are other ways to consolidate–acquiring blocks of business, for example. We bought John Hancock’s group life insurance business and TIAA-CREF’s long term care business. I see a lot of opportunity in this space.
SP: Your thoughts on life settlements?
RH: This is a tremendously important issue for the industry and potentially devastating. It perverts what life insurance is all about and because of that, could have negative effects on the tax treatment of life insurance. It certainly would have negative effects on the pricing of products and could make it impossible for consumers to even afford life insurance.
Any time that Wall Street gets into the business of selecting out of the general insurance pool certain liabilities and then packaging them in such a way that investors are looking at the present value of death benefit and turning that into an investment which carries with it the fact that the government has been giving certain tax preferences to life insurance for societal good–then those societal reasons are down the tube.
I get crazy about this because you have a society that is underinsured.
As soon as the whole structure around life insurance is something that can be levered by Wall Street as a securitized investment then life insurance is in terrific danger. We’re against it in every way, shape and form.