Eye of the Storm

Disaster School

“I call Minneapolis the reinsurance India because we have such a depth of talent here,” says Paul Karon, chief executive officer of Benfield, Inc. Only London and New York, he says, are bigger centers of reinsurance brokering.

Both Karon and sources outside of Benfield attribute this to E. W. Blanch’s longtime practice of hiring people directly out of college, with no insurance-industry knowledge or experience, and training them to be reinsurance brokers. While the industry has traditionally operated on an “apprenticeship system,” Benfield’s training is more formalized, with classrooms that occupy the fifth floor of the Bloomington headquarters, a full-time training director, syllabi, and exams, “just like you’d find in upper-level university courses,” Karon explains. “The courses are very technical and scientific. They’re taught by actuaries, catastrophe modelers, and others, many of them with PhDs.”

Its talent gets poached as a result, but Benfield wants to ramp up training.

Chicago-based Aon and New York–based Guy Carpenter & Company—the industry’s number-one and number-two brokers, based on revenues—both have offices in the Twin Cities. So do Willis Re, Towers Perrin, and Cooper Gay, all of which follow third-ranked Benfield on the largest-brokers list published by rating agency A. M. Best. Ranked 10th on the list is Bloomington-based John B. Collins Associates, founded in 1987 by a Blanch alumnus. Karon says that most of these competitors’ offices are well stocked with former employees of E. W. Blanch—and now of Benfield.

Karon, 45, is himself a Blanch alum who came to the CEO job by a circuitous route. He grew up in Duluth and went to work for E. W. Blanch in 1985, shortly after graduating with a BA from the University of St. Thomas. He was an executive vice president in 2000 when he and another Blanch exec, Rodman Fox, left the company to help the Benfield Group (then called Benfield Greig) grow its fledgling U.S. operation.

Soon after they left, though, E. W. Blanch ran into problems, including a shareholder lawsuit and a board shakeup. Benfield decided to rapidly accelerate the growth of its U.S. business by acquiring Blanch in 2001. Both companies reported revenues of roughly $200 million in 2000; in 2006, Benfield Group, publicly traded on the London Stock Exchange since 2003, reported revenue of $699 million, with about $278 million coming from its U.S. operation. After the acquisition, Karon and Fox (who has since left the company) headed the merged entity that was then called Benfield-Blanch, and is now simply called Benfield, Inc.

“It was quite weird,” Karon says. “I quit my job to start my own deal, and a year later I was back in my old parking space with my old secretary.”

Now that he’s in the top job, does he see the poaching of Benfield’s talent by competitors as a problem? To the contrary. Karon says that investing heavily in training and producing sought-after talent is a competitive edge for his company.