2019 marks the beginning of MAPFRE’s New Triennial Strategic Plan through 2021
To remind our readers the year 2019 is a strategic and important one for the global insurer that is MAPFRE. Every three years the company presents a new Triennial Strategic Plan, outlining the major goals and objectives the company hopes to achieve within each of the major markets in which it operates. As a publication focused on the Massachusetts insurance industry, which happens to be MAPFRE’s largest marketplace within the U.S., Agency Checklists was invited to attend the meeting in Madrid as part of a three-day tour to learn more about the company and its mission. After the conclusion of this year’s Annual Meeting, Agency Checklists, published a special section focusing on the insurer. The links to those articles follow at the end of this interview.
During the conference in Madrid, we had the opportunity to meet and hear from the company’s current Chairman and CEO Antonio Huertas. What we learned about his drive, dedication, and love of insurance left us wanting to learn more. His unique perspective and breadth of experience, beginning as an intern with MAPFRE in 1988 to his current position, is a personal history many insurance professionals, both inside and outside Massachusetts, would admire and appreciate.
With that in mind, we contacted MAPFRE last week to see if Mr. Huertas might have a moment to answer some additional questions and to share his insights from his 30-plus years’ career in the insurance industry. He kindly accepted and emailed his responses to us. We are delighted to share the interview with our readers below, giving insight into the philosophy, perspective, and dedication of this learned man currently leading MAPFRE.
Many in Massachusetts may know or even work with the name MAPFRE on a daily basis, but in truth, may know very little else about the company and how it got its start. Could you share when and why MAPFRE was founded and how it grew to become the global insurer it is today? What do you think has been the secret of MAPFRE’s success over the years?
MAPFRE was founded in 1933 as a mutual insurer, to protect both farmers and their employees in Spain against work-related risks, and the name of this mutual association gave birth to the MAPFRE acronym, which we still use today to identify our company. For much of its first few decades of existence, it was a relatively small undertaking, but by the 1980s it had reached a leading position in the Spanish insurance market. At that time, we realized that we had to diversify geographically if we wanted to keep growing. Diversification is one of the hallmarks of our continued success. We firmly believe that if you don’t diversify, you concentrate the risk a lot more, and you’re not managing it adequately.
We then developed some reinsurance activities at international level by creating MAPFRE RE, which is now 40 years old. And after that, MAPFRE’s natural diversification process meant we expanded into Latin America.
We had developed a great knowledge of the Latin American market, obviously because of the closeness of the language and the culture, and because it was an under-developed insurance market. With tenacity, we developed a long-term project that brought us a lot of success. MAPFRE successively acquired numerous insurers in different Latin American countries, ultimately creating the first multinational insurance company in Latin America, with a presence in nearly every country in the region and leading many of these markets. And then, quite organically, we saw that we could reach other markets through reinsurance and other activities.
Our operations in the USA kicked off with the acquisition in 1989 of Puerto Rican American Insurance Company (PRAICO) in Puerto Rico, and then a couple of years later, we bought Consolidated Insurance Company in Florida, (the first MAPFRE USA effectively). MAPFRE RE was also writing business in the country then through a subsidiary. In 2008, MAPFRE bought Commerce Insurance, the largest acquisition in the company’s history, and it gave us a very strong competitive position in the North East of the country.
But our aspirations went further than that, and we saw ourselves as a truly global player, so we also boosted our presence in Europe, entering Turkey, one of the fastest growing insurance markets in the world in the past decade, along with other mature markets such as Italy or Germany. We’ve started to grow in Asia as well, and enjoy a solid presence in the Philippines, and Indonesia.
In parallel with this, our three business units, MAPFRE RE, MAPFRE GLOBAL RISKS and MAPFRE ASISTENCIA, expanded their international operations organically worldwide too, with the result that today we have employees in 45 countries and clients in more than 100.
All in all, MAPFRE is now truly a global insurance company. We are the benchmark insurer in the Spanish market and the largest Spanish multinational insurance group in the world. The company is among the Top 10 in Europe by premium volume, and we employ more than 35,000 professionals, generating annual revenues of more than 30 billion dollars.
In the general meeting, your last statement really resonated with many in the room when you said “No somos una empresa más, Somos MAPFRE“.” Could you explain what you mean by that phrase, “we are not just another company, we are MAPFRE” for those in the US who might not know MAPFRE as well as those in Spain do?
MAPFRE remains heavily influenced, in a good way, by its mutual origins, and has always been a deeply committed company, to its people and to the environment it operates in. What I am saying is that MAPFRE is a human company – we really do believe in economic development that is linked to people and the communities they live in. Of course we need to turn a profit, but we are fully committed to leaving a positive social footprint in the societies we do business with, so that they are better off with us than they are without us. The numbers are very important, but they are not the whole story either.
We aim to earn people’s trust through what we do, not through what we say. We really do believe that we are not just any other company. We are MAPFRE. That in itself is a declaration of principles and values, shared by every one of our more than 35,000 employees and 200,000 collaborators around the world. People who, through their dedication and effort day in and day out, demonstrate their willingness to build an even better company.
And we all know that commitments can only be made good on if the required strength is on hand to help make it happen. Financial strength for sure, but also in terms of aligning with a strategic project, having a real vocation for service and buying into the conviction that we are going to be around for a long time. We want our legacy to be meaningful and enduring.
I know I just said the numbers aren’t everything, but let me just give you a few relevant ones related to what I am talking about.
Last year, MAPFRE paid out 19.6 billion dollars in benefits, 6.4 billion dollars went to our network of more than 150,000 providers and 1.7 billion dollars was paid out in salaries. We distributed almost 1 billion dollars to our shareholders, and 880 million to public administrations in taxes and social security. And that is just the business numbers. That is an almost 30 billion-dollar direct economic contribution that we make to the societies we operate in. When you factor in the multiplier effect, that figure balloons to 150 billion dollars. That is pretty significant by any measure. And beyond that, we contributed on so many more levels too – we helped more than 1,000 students complete internships in MAPFRE last year; we invested over 17.5 million dollars in 1.5 million training hours for our people – 100% of our workforce received some kind of training. 97 percent of our people enjoy the security of permanent contracts; we have got over 900 fully integrated people with disabilities on our payroll. We have cut our emissions by 51 percent with respect to the baseline we established in 2013, and by 2021, our Spain and Portugal-based companies will be carbon neutral. 18,000 employees have now received some form of environment-related training. 16 percent of our global workforce has experienced volunteering in some form, and just last year, 7,800 corporate volunteers gave of their time to participate in 1,600 activities that benefited more than 111,000 people. That’s what we do for our people, and that’s what our people do for others.
That is our difference. And the big challenge for us is to ensure that our clients really understand why they are with MAPFRE, year after year, which proudly continues developing a profitable, ethical and responsible business model. With great humility, we have serious ambitions to contribute in our own way to changing the world and making it a better place to live.
We totally get that doing business doesn’t justify everything. Solvency, vocation for service and leadership are among our values, but in there also is a sense of integrity, which permeates everything we do and embeds itself in all of our teams.
In one of your biographies, I believe it stated that you started as an intern at MAPFRE in 1988. Is that correct? If so, how did you come to work for MAPFRE? Did you always plan on having a career in insurance?
Yes, that is right. I had finished my degree in law when I saw an ad in the newspaper from a company looking for “recent graduates” and I sent off my resume. At that time, I didn’t know much about insurance, and less about MAPFRE, but I thought it was a great opportunity to get a foothold in a new sector with huge potential. I quickly began to fall in love with the world of insurance, which has only grown stronger with the years, because throughout my career, up to and including when I became chairman and CEO, MAPFRE has given me the chance to hold different positions right across the whole business, including my time as CEO in Puerto Rico, which was a really exciting period for me.
So far, it has been 31 years of continuous learning, with a lot of perseverance and humility, combined with a good measure of wanting to improve and give the best I had to give to the company, whether it was for my colleagues or clients. When you start to work in a big company, you cannot foresee your own professional development, but I have been aware for a long time that insurance really is the most socially-oriented activity there is out there, because the name of the game is to help others. Working in technical areas, sales, technology, management – all of them were stimulating phases in my professional development.
We know that many insurance professionals in the U.S. would appreciate your story of having started in a small town in Extremadura and rising through the ranks to become the head of one of the world’s largest insurers. What do you think were the most important lessons you were taught while growing up, particularly with respect to how they helped you achieved all that you have achieved?
As far as the personal side goes, there is no great secret – work. Work hard, passionately, give yourself over to your professions, stay on top of what’s going on around you, be flexible when it comes to change and learn as much as you can from those who know more than you do. MAPFRE is a great role model in this respect, it is a genuine meritocracy, in that it allows you to grow professionally as you keep learning more and more from the various job positions that you hold. It is a mix of having the right attitude and maximizing the chances that life presents you with.
Obviously, not everyone can become chairman and CEO. In my case, I had mentors who helped me a lot, including my predecessor, who obviously proposed to the Board that I should take on the role.
To a large extent, education and personal effort are what allow Western societies to progress and get on in life. I firmly believe that there are opportunities there for all us to seize, but we have take risks and go for it. It is essential to keep investing in better training for young people so they aspire to do better. There is no rule out there limiting the opportunities open to young people from rural areas compared to those in large cities, especially today, with digital technologies and learning tools that are equally available to everybody.
Aside from being the current CEO of MAPFRE, you are also a published author. Could you tell our readers a little bit about your book “La Revolucion de las Canas” and what inspired you to write it?
The book came about with three objectives in mind. The first was to start a conversation around the changes we have to tackle in various sectors of society to adapt to the reality of enhanced longevity. The second was to tell a positive story about the opportunities that this new reality opens up, and the third objective was to promote the changes that facilitate us in making the most of this new digital and connected world where, not only are people living longer and better, among the changes we are seeing is a realization that measures need to be taken to redistribute current income from today to tomorrow so as to ensure that the economy remains functioning properly when more than third of the population is over 65, which will be a reality in Europe within a matter of decades.
There is also a fourth motivation behind the book, and that is to celebrate what the gray brigade bring to the table in terms of experience. In many European countries, they find it difficult to keep up in the labor market, and with many years of their potential working lives still ahead of them, it would be a shame not to make the most of the knowledge they have to share.
Turning back to your role at MAPFRE, what do you see as the greatest successes and challenges that you have faced as the head of MAPFRE?
When I became CEO in 2012, I had three core personal goals.
You have to accept that you have to gain the respect and credibility of those you are going to lead. At MAPFRE, by the time you reach a senior position, you have been working in the organization for a long time, so you are more than likely going to become the leader of a team where one of the members has previously been your boss before. Handling that the right way was the first goal.
The second was understanding the success model. When I took the reins, MAPFRE was enjoying the most successful period in its history. Leading a team where I was the youngest, I had to convince my team that the project had to undergo some changes, some variations, in order to address the challenges that we ourselves had already determined. We completed a global strategic analysis at all levels, thoroughly reviewing who we were and who we wanted to be, which brought us to a new business model. So the second important goal for me was successfully delivering on that new business model, and I am confident we’re getting there.
The third goal was to enhance the concept of being a socially engaged company, which is deeply embedded in MAPFRE’s DNA. Ours is a company built on values, with a set of institutional principles and an internal culture that respect and drive these values. We were already doing this really well internally and through our foundation, Fundación MAPFRE, but I felt it needed to be reactivated globally. It is not just about charity and donating money – it is about being engaged effectively to collaborate and improve the way things are. And I am delighted to say that we are reaching this goal too.
So for me, it was all about the people, a business project and the social footprint of the company.
What do you think has been your most important achievement, thus far?
Looking back on what we have done over these past seven years, I am proud of a few things:
We have developed a new organizational structure and governance system, and have implemented a universal, company-wide corporate strategy, we have developed global policies, and we have simplified our corporate and governance structures.
We have broadened our geographic reach even more, so we are not dependent exclusively on Spain and Latin America. In Brazil, which is our second largest market after Spain, we have consolidated a successful joint venture with Banco do Brasil, which is going to boost future expansion.
In Spain, we have been able to maintain leadership in the main Non-Life segments, even against the backdrop of an increasingly competitive environment and a challenging economic crisis. An important highlight there is the number and quality of the bancassurance agreements we have signed with financial institutions around the country, which has really strengthened our reach.
We decided to focus on direct insurance as a platform for the development of our digital business, first creating VERTI in Spain, and then acquiring the Direct Line operations in Germany and Italy. And we also incorporated InsureandGo, the UK’s leading online travel insurer.
Our Global Risks business unit serves the needs of large corporate clients in global sectors such as aerospace, energy and construction, and MAPFRE RE, with more than 40 years of experience, has grown its reinsurance business year after year to become one of the drivers of the company’s growth.
We have also strengthened the investment area, to enhance the value contribution of our asset management business. And most recently, we created MAPFRE Economic Research, which has quickly established itself as a benchmark in economic, insurance and regulatory analysis.
So when you step back and look at the big picture, we are sustaining revenue growth across every geographic area and all our main product lines.
The programs we have implemented to enhance efficiency, automation and reduce costs are transforming the Group and helping us exceed our annual savings goals, and we are reinvesting most of these savings straight back into digitalizing operations to produce higher returns in the mid-term.
Our financial performance is also improving, thanks to the highly professional management of our assets, which is particularly important in this persistent low-rate environment we are in.
The MAPFRE business model and the strategy of focusing on profitable growth, accompanied by a very high solvency margin, largely made up of top-tier capital, and very low debt levels, guarantee healthy growth in the coming years.
This seems like a watershed moment in insurance with the arrival of insurtech. What are you most excited about in terms of how insurance innovation will help not just MAPFRE, but it’s insureds and partners as well?
New algorithms, ever greater computational capacity and big data are unleashing a technological revolution in our business, and I believe insurance is going to face more dramatic change in the next 10 years than it has seen over the past century. Insurance as we know it, buy it, sell it, underwrite it and service it, is changing beyond all recognition.
We are witnessing changes in the essence of the insurance model, with the emergence of new cyber risks, with the mutation of other risks, to cover the manufacturer’s risk instead of the driver’s, and reduced accident levels.
The backbone of all the changes we are seeing focuses on the empowerment of the connected client. Nowadays, control is neither in the company’s nor the providers’ hands, it is squarely in the client’s, and that is giving rise to changes in processes, business models, and ultimately sparking a new digital and connected reality.
A key element that shouldn’t be overlooked when analyzing the impact that digitalization is having on the business world is the human element, in other words, how all these changes affect employment, business and the organizational changes it is provoking.
What do you see as the greatest risk to established insurers like MAPFRE from the convergence of technology to insurance? E.g. driverless vehicles, the Internet of Things, and real-time monitoring of risks? Where do you see the greatest opportunities for MAPFRE as insurtech matures?
Such wholesale change in the very fabric of the society and business will inevitably bring some anxiety for brokers, intermediaries, underwriters and service providers. How will they be affected, both personally and professionally?
Disruption obviously involves risks and opportunities. The key to survival will be the ability to minimize the former and maximize the latter. That depends largely on attitude and preparation.
I strongly believe that for those who embrace innovation, there is a great opportunity ahead to leverage technology and data to create innovative solutions, reduce costs and capture greater value for the client.
But our main objective should be even broader than that. Insurance has always had a strong social dimension it. Radical innovations such as deep learning, blockchain and genomics technologies have real capacity to improve financial inclusion and better meet the needs of the under-insured and uninsured segments of the world we live, and pursuing that as a parallel goal is something that I believe strongly in.
You announced in the MAPFRE Strategic Plan for 2019 that one of the insurer’s goals was to maintain its leadership in Massachusetts and other core states. That sounds like MAPFRE is sending a strong message that it is planning on staying in Massachusetts as well as the U.S. marketplace. If there is anything else you could say to the insurance industry there, what would it be?
That is correct. Going forward, in the US we will be focusing on maintaining our leadership position in Massachusetts, on improving our distribution capabilities and on implementing a new technological platform.
All of that is also key to start improving profitability in our core states. As you know, in 2018 we completed a restructuring of our US operations that resulted in us exiting five states. MAPFRE will concentrate its operations in those states where the company has the best infrastructure and distribution capacity, which allows us to better exploit economies of scale, thereby accelerating the profitable growth objective in the United States.
We are also going to continue our digital transformation push to enhance client experience and operational efficiency, and we aim to increase digital revenues in both MAPFRE and VERTI, the direct auto insurance business we launched in Pennsylvania last year.
Any final thoughts you would like to share with our readers in Massachusetts and the United States?
At MAPFRE, we have always had the aspiration to be a serious player in the US insurance industry. It is the number one market in the world, accounting for more than 30 percent of global premiums, and it is very sophisticated, very technology-driven and highly innovative. Having said that, it is very challenging, with strong competition and a very demanding regulatory framework. Generating adequate earnings and margins is not easy, but we are fully committed to both maintaining our leading position in Massachusetts and growing nationwide. As you can see, the goals of our Group are very ambitious, but we have our feet firmly on the ground. The world is changing and we have to change with it. But at the same time, it is imperative for us to ensure the sustainability of our ongoing business and keep working as fast as we can to improve the profitability of those businesses or those states where we’re only now reaching minimum profit levels, and to take the right decisions, based on expert knowledge and technical discipline.
It is a question of future survival. Companies that don’t think about the future, and focus instead on protecting the present, become decapitalized and end up disappearing. But, MAPFRE aspires to be one of the winners in this brave new world that is more global, more connected, and more digital than ever before.
Our Special Section on MAPFRE
The following are links to the articles from our recent special section on the insurer
- Massachusetts, Profitability In Key States, And Innovation Are MAPFRE USA’s Main Focus For 2019, In That Order
- Fundación MAPFRE – The Heart & Soul Of This Massachusetts-based Insurer
- How MAPFRE Is Inspiring Insurance Innovation From The Inside Out
- A Cure For What Ails US? MAPFRE’s Savia Might Be The Prescription We Need