“Quite frankly, while we're an insurance company, we really view ourselves as a risk management organization first and foremost,” says FM Global’s CFO Kevin Ingram. Ingram spoke with FEI Daily about how his company is handling COVID-19, their Business Continuity Plans (BCPs), and the financial and leadership challenges he and his CEO are facing.
FEI Daily: Tell me about the challenges you’re facing as CFO.
Kevin Ingram: All of our offices, with the exception of some in Asia that have reopened, are working with split teams, where team A will work two weeks in the office while team B works from home. And then they'll flip the next two weeks, to avoid having any possible contamination of the whole team if something happens. We're still closed now throughout all of Europe, Australia, the U.S., Canada, Latin America. That creates all kinds of interesting opportunities.
Now the great thing is, we had business continuity plans in place, and many have been tested. As executive management, we've been very pleased with people's abilities to function from home, and the tools that we've provided to people, like Microsoft Teams, and Skype, and Zoom meetings, that allow people to function not exactly the same as you would in an office, but very close to when they were working in an office-based environment. It's been incredibly promising and rewarding from our perspective that everything we did before hand, in relation to the business continuity plans, actually have paid dividends for us as we've gone into this process. We certainly would've preferred not to have the pandemic happen, obviously. But it has happened, and business has been able to respond in a way that we are quite proud of.
FEI Daily: How has the virus affected the company from a financial perspective?
Ingram: As you'd expect, in everything you're reading, cash is king. Fortunately, our company has always had a position where we tended to have more liquidity than the industry average level. So the risk management strategy to reduce our potential exposure to a down market, and if something bad happens and we need to pay a bunch of claims when the stock market is as down as it is today, we don't want to be in a situation where we would have to liquidate securities in a down market. We want to be able to sell securities when it makes sense for us. So we keep more cash, more short-term money available to us.
But I think the biggest thing, from a financial perspective, is are you able to pay your bills, do you have the liquidity to meet the business needs? And that's true for every company, not just true for my company. And if not, what are you able to do to generate that liquidity? A lot of companies have gone and drawn lines of credit and done other things just to try to ensure that they've got as much as they can possibly get. Because no one knows how long this is going to last.
FEI Daily: How far into the future are you and the executive team looking right now?
Ingram: There's certainly a fair amount of uncertainty. We're still renewing insurance policies, we're still transacting business, we're still billing, collecting insurance premiums from our policyholders. We're still providing claims services to our policyholders when they have losses. We're still cutting checks and issuing wire transfers to pay for losses in the payroll and to pay other bills that's become due.
We're B2B. We ensure only commercial property. So the companies we transact business with are very large corporations. If you're in the medical device business, you're moving full speed ahead, right? Utilities, you still need to generate power.
But other clients, retail stores, and hospital that have now just shut down elective surgeries, which is a big revenue generator for a lot of healthcare organizations, they may be in a different position. So the question is, how can we, as a mutual insurance company, how can we best provide flexibility to our clients relative to their property insurance coverage in a way that's meaningful to them?
We think we have a pretty good idea of where the market is today, and what we need to do. We have a team of people looking at what should we modify, if anything, and how should it be applied. I think we can look fairly well into the future for the short to intermediate term. But quite frankly, I think that's all we can do typically anyway. But there is a lot more uncertainty today with COVID-19, then there typically is.
But we never know nine months out or a year out for sure what the market's going to do. In our business, you don't know if you're going to have a major hurricane, or earthquake, or something else that's going to cause the market to react in a certain way. So you need to be nimble anyway. I think this is just another case of where you need to be able to react if necessary when more information becomes available.
FEI Daily: What are some of the leadership tactics you’re leaning on?
Ingram: We're a global company. What's happening in, say, New York, is not the same as what's happening in Dallas, or in Asia, or in Europe, right? So, a different situation everywhere. I think your leadership is going to be a little different as well.
Our CEO has done a really good job working with our communications folks to ensure we have regular communications with all employees. And as I said, most of our employees are working remotely, so most of them are not in the office. The only people that are in offices are people that they need to be there, and they are very, very few people that are in the office today. Our CEO has done a great job of stressing to everybody that we need to continue to transact business, continue to provide services to our policyholders. And some of that may require some travel. You may have to drive with engineers to go to inspect client sites regularly, if the engineer is comfortable making the visit, that the client is comfortable with having the engineer on site, the management at the local office is comfortable with the engineer making that visit to go and do the inspection, then they should continue on and do that.
In term of leadership, the biggest thing is making sure that the communication is very clear, and the message is very succinct. And for us the key message is, it's about the safety of our employees. If you don't feel comfortable for whatever reason, don't worry about it. If you're working from home and you have young children, and that impacts your ability to deliver the same level of service, level of work that you typically deliver, don't worry about it. There won't be any long-term ramifications from that, and we understand. We have also told our employees, a great example is our cafeteria workers, we are going to continue to pay you even though we're not serving food in the cafeteria.
And we tell our clients the same thing. It’s about the safety of our employees, and secondly it's the safety of our clients, and the integrity of our relationship with the clients. And I think they appreciate that.
We've tried to encourage people to take breaks. It's really hard because when people are working from home you tend to lose track of time. Maybe you're working longer, and it's not as healthy. We want people to still get away from their computer, we want people to still get outside, get some exercise. You have got to take care of yourself as well, and it's important for managers to communicate that too.
FEI Daily: What advice do you have for other senior-level financial executives?
Ingram: My words of wisdom would be to ensure that you learn from this. Either now, as things are going on, but certainly when you're back and the business is running back in whatever the new normal is in the future, that we not get too far down the path before we make a concerted effort to document what happened: what was good, what was bad, what should we change. How do we make our BCP more effective going forward? Let's be honest, this will happen again.
Whenever something of this nature happens, how can you make your business more resilient to ensure that you're better able to serve your clients and your customers, and deliver your products. I think that's the biggest thing, making sure that when you get back to work you don't just focus entirely on how do I make my business as profitable as we can, but let's learn from what happened, and let's make sure that you take the time, you get the people to make that investment to ensure that your resilience is there for the next time something happens.
At the end of the day, we're all doing the best we can. Let's learn from it and try to make your business as resilient as it can going forward. Because we all tend to go from crisis to crisis, and we'll fight our way through it, and then we'll get back to work and then something else we'll come up and we'll forget about it. Let's just not let that happen.