This episode features Ted Blanch. Ted to me is one of the greatest leaders the reinsurance industry has ever seen and one of the most underrated leaders of any industry in any era. Ted ran the firm EW Blanch, taking over at about 50 employees and growing it into a billion dollar company by the mid-90s. That alone puts Ted among the most successful businessmen in the world but EW Blanch was also a pioneer in catastrophe modeling and has as its legacy a reinsurance industry in Minneapolis. How many can say they reshaped the economic geography of the United States? How he did it, his philosophy of management and Ted’s downright humility shine through in our conversation.
Two things I learned in this conversation that I’ll carry with me for a long time are how catastrophe modeling as an investment for the firm (and they were a pioneer) followed the classic startup path: it was a stupid idea.. until it wasn’t. I’ll let Ted tell the story:
If we had laid a bigger egg, it would have to have been dropped by an albatross.
And then a wonderful thing happened. And the wonderful thing that happened was Hurricane Andrew. Where all of the people who had their own systems for measuring their cat exposures found out just how wrong they were. Did they have a desire to be right? I don’t know. But I’ll tell you one thing, the guy sitting in the corner office didn’t want to have to go to the board or the shareholders and say we’re not doing anything about this. So everybody started using modeling.
On the organizational front, two things stood out. First that he hired young and trained folks obsessively. Here Ted explains the development program:
TB: We had professional educators who were doing it. We never had them teach, we only had them organize it and help develop the curriculum. The teachers were always the people who worked at the firm.
DW: What did it look like for a new student coming into the program…
TB: Basically it was divided into two parts: one was classroom work and the other was we gave them jobs to do so they were always working…
The classroom work was basically half days to whole days and it went on for, I don’t know, my recollection is we were doing about 9 weeks of classroom work which was divided into sections in a syllabus to cover a bunch of different things. And then we would test them and they liked being tested…
Second, he shared in the equity of EW Blanch with his producers. Ted one last time:
TB: My belief was that I would be better off having a smaller share of a much larger pie than I would having a big percentage but not being able to attract and work with people who really felt good about what they were doing.
DW: did you always know that would work?
TB: No, no I didn’t know it would work it just seemed like the right thing to do.”
There’s so much more in our conversation, including what Ted thinks of Minneapolis, a discussion on whether or not he fired his father and what he’s learning about now after almost 60 years in the business.