CHAPTER XI — Free e-book.
PANAMERICAN LIFE
At the end of 2007, I was driving my car going to visit a potential client for ASSURANT, when I received in my cell phone a call from Carlos Mickan, a Finance ex-executive from CIGNA LATAM Regional area, with whom I had worked in the past.
Carlos wanted to know if I was interested in a position with his current employer, Pan American Life Insurance Company, out of New Orleans, USA, to, among other things, direct the company’s operations in Latin America (Palic had operations in Guatemala, Honduras, El Salvador, Panama, Colombia and Ecuador, all markets I was familiar with.
The truth was that I missed Latin America, as the Spaniards were very difficult. Difficult to do business with, as they trust no one. Rude in their behavior (Especially people from Madrid), because as a defense mechanism I suppose, they cover themselves with an armor of rudeness, almost hostility, against anything unfamiliar to them, rudeness easy sometimes, to be confounded with bad manners.
I told Carlos that I was interested in the job opportunity, and that he could set an interview with the C.E.O. of the firm, a Mr. Suquet, who was bilingual, Spanish-English, as he was originally from Cuba.
At the end of December 2007, I went to New Orleans, USA, to interview with Mr. Jose Suquet and with Carlos Mickan, whom I hadn’t seen for many years.
I think that the last time I’d seen Mickan (Originally from Colombia, although living in the USA for a long time) had been in 1993–94, some 25 years ago, when both of us coincided in the Regional L.A. office in Miami, he acting as LATAM Regional Finance V.P.,while I was LATAM Regional V.P. of A & H, both of us reporting to Basilio Pugatchenko.
In spite of not having maintained a strong relationship with Carlos in those days, I had a positive opinion about Mickan and his work, evidently mutual, I think.
My affinity with Jose Suquet was instantaneous during the interview. Later I received a generous offer of salary and bonus from him, which I accepted without the need to much thinking, and in the second week of January 2008, I traveled to New Orleans, USA, hired by Palic as Executive V.P. of Life & International business.
In Palic, in the office in New Orleans, I was given a corner office on the 28th floor of the building, with excellent views of the city and of the famous river Mississippi, whose name comes from the Indian word “Misi-zippi”, which means “the big river”, name by which the Algonquin Indians, among the first inhabitants of the area, knew the great water current.
The river bordered a part of the French Quarter of New Orleans and with its many meanders, from the height of my office looked like a silvery giant snake that crossed the ground getting lost into the distance.
New Orleans had suffered a lot during hurricane Katrina (It’s estimated that the hurricane took the lives of 1.500 people and caused many disappearances), with the water inundating 80 % of the city.
As some residents later explained to me, the area surrounding the city is limited on one side by the river, and on the other side by lake Pontchartin, leaving the city and its surrounding area in between, in a concavity with the shape of the mouth of a standing cup, with many areas under the sea level and only protected of the water’s action by a succession of dams or levees, built and maintained by the Engineering Corps of the U.S.’ s Army.
Army levees that hurricane Katrina’s action easily overflowed.
Nowadays, the U.S. Army is reinforcing and expanding the levees to improve the area’s protection against floods, but no one can guarantee that New Orleans will be out of danger if another natural catastrophe happens in the future.
I soon realized that each of the country operations was doing things differently, without order or homogeneity.
However, the company had an Operations Director based in New Orleans and reporting to me.
So, one of the first things that I did was to talk to the person occupying that position, looking for answers.
Rapidly, I realized that the holder of that position knew very little, almost nothing, about the functioning of an insurance company.
A trip to Panama to attend a meeting already programmed, with the attendance of the Operations Director and the Operations Manager of each country-operation, just corroborated my opinion.
As it happened, the holder of the position didn’t open his mouth during the entire 2-day meeting, in spite of the many operational errors that I could identify, during the presentations made by each of the countries’ Operations Managers.
So, returning from my first trip to Panama I talked to Mr. Suquet and told him I was going to fire that person, telling him also why.
The man hadn’t said a word in the Regional meeting (With his own people, as all Operations Managers were reporting to him), simply because he didn’t know anything about insurance, and therefore had nothing to say!
A quick look at his C.V. showed that his previous job had been in Operations but at a major credit card, never having worked at an insurance company before.
Mr. Suquet understood my reasons and asked me to take care of the dismissal himself, as the holder was working at Palic’s H.O. in New Orleans.
To replace him, I thought of an ex-CIGNA guy, Arturo Ronderos, who had also worked at CIGNA’s Regional office in Miami, and in spite of not being the ideal candidate, the replacement would be almost immediate and the new candidate was an insurance guy who had already been in some of the countries involved.
Over the phone I talked to him (Who after CIGNA had been also employed by another USA insurance company, Metropolitan Life, and currently he was acting as a consultant) and we reached an agreement, so I made an appointment for Arturo to see Jose Suquet, and he was hired.
I also spent a lot of time with the General Manager of the operations in Colombia and Ecuador, based in Quito.
I talked extensively with Ecuador’s General Manager. He was a Colombian, still young (Some 42–45 years old), but excessively concentrated on his own businesses and money.
He had had some relevance in the Company in the past, as he had visited all of the country’s operations, supposedly commercially working, with his pompous title of President of Latin America.
The fact was that in Colombia, a country he also was responsible for, we hadn’t done anything new for years, and administratively, the operation at Ecuador, where he was based, was a disaster.
Thus, after a while I prohibited him from visiting another country for business purposes— even Colombia —, and asked him to concentrate on Ecuador.
Simultaneously, I also forced the retirement of a lady who had been working at Palic Ecuador for many years, very often assuming an administrative role.
Given the long and repeated absences of the General Manager, the lady had really directed Ecuador’s operation for many years.
The lady in question, well intentioned and full of goodwill, but with limited intelligence, had ordered doing things as her scarce intellect suggested her, resulting in a company in Ecuador with a lot of employees, all badly paid (as she used her low salary as a benchmark for new salaries), making too many mistakes and doing a lot of unnecessary work.
Thus, the Ecuador’s operation was leading the pack in terms of the costly operational mistakes committed by our employees, as measured by our System.
Convinced that the situation had no remedy for as long as the Colombian “Manager” was still in charge, I managed to convince him to “resign”, enticing him by describing to him the amount of indemnity to which he would be entitled to, given his many years of service (As I have already said, he was extremely interested on his own money), plus the company’s Pension he was also entitled to receive at age 65, and he eventually “resigned”.
Afterwards I contacted a Chilean, Manfredo Ferrada, also ex-CIGNA, who had already been Ecuador’s Country Manager based in Quito, and who had replaced me as Country Manager of Colombia.
He also had been Auto manager, under Basilio Pugatchenko, at Liberty Mutual in Argentina; a professional manager who would reestablish order in the Ecuador’s operation. Simultaneously, I also hired a Commercial Manager and a Country Manager for Palic Colombia, as paradoxically, Colombia was Palic’s country-operation with the smaller level of premiums of all, in spite of being the bigger insurance market, and also the bigger country in terms of Geographical extension, but also in Population and P.I.B..
With the pass of time, Palic Ecuador accumulated many successes (In growth, as well as in functioning) under the new Management, not so our operation in Colombia, which in spite of our efforts still showed very slow growth.
Also in Colombia, during a visit I made with Jose Suquet, a broker proposed to us a business which, in principle, sounded interesting. It involved Palic offering coverage to a predetermined monetary level, to medical expenses arising due to medical complications derived of aesthetic surgeries (Very popular there, especially among women, although there were also operated men) performed in specialized clinics all over Colombia.
The broker took care of enrolling the specialized Clinics in the insurance Plan (Which the Clinics sold and collected the premiums, later paying us in block, through their Association).
As Palic had no previous experience with that kind of coverage, Mr. Suquet correctly so, asked for a monthly Claims Report on the account, to follow it and to avoid potentially unpleasant surprises.
A year later, I was happy to report that the account had reached $ 1 million dollars in premiums with acceptable results.
With the principal problems of Human Resources solved, and more or less the right people in place we attacked another problem that the operations had.
On each country, Palic had a Client Service Department (CSD), which employed some 40 people in all at the Region, and whose main job was to attend and service the issues raised by our clients by phone (Almost always brokers and agents contacted us by telephone).
By talking to the employees involved, I was made aware of the fact that more of 95% of the calls, referred to themes related to Claims, but the Service personnel taking the calls not having authority, or System access to the details of each claim, put the call in “waiting” mode, went to the Claims Department, and obtain the necessary details, which were later disclosed to the client, who waited in the phone line.
Evidently, it was a costly service, slow and inefficient.
Then, with the agreement of the Country Managers and the Operations Managers of each country, we eliminated the DSCs, reinforcing some of the Claims Departments with the best employees of the old CDS, and from then on, the Claims Department was going to attend directly the client’s calls.
If the call involved another department, then Claims would transfer the call to the respective department.
The Country Managers and the commercial people were charged with informing clients of the changes.
This way, not only our service passed to be more rapid and efficient, but also the changes allowed us to reduce the regional headcount by 30 people, and our expenses by some $ 350.000 dollars annually.
Finally, I also discovered the existence of multiple Internal Audit’s reports, which had been totally ignored by Country Managers of all Palic’s operations.
I then formed an Operations team in HO, and ordered ALL old Internal Audit recommendations by country, placed in a spread Excel sheet format, and its implementation revised in weekly telephone calls, with the participation of the team formed in HO, the Country and Operations managers of every country, the Operations Manager Arturo Ronderos, and myself.
Although those 1 hour weekly calls went on for months, representing an enormous effort by a lot of people, we finally implemented corrections to all items contained in old Internal Audit reports, also making the Country Managers responsible for execution of any new Internal Audit recommendation, and making sure that everyone understood the importance of a timely implementation of the correction of any issues uncovered during Internal Audits.
PALIC COSTA RICA
The one country that attracted more my attention and time during 2010 was Costa Rica, which in 2009 opened its market to competition after more than 80 years of state- monopoly, ran through the National Institute of Insurance or NII.
Initially, we tried to establish an alliance with the NII, under the premise that given its size and annual volume of premiums, even the 50 % that we expected to retain in our possible alliance with the Institute, would be substantially bigger — in dollar amounts — than anything we could subscribe by ourselves.
However, after 3 or 4 meetings with the principal executives of the NII, it was evident to me that a partnership with the Institute wasn’t going to be possible, in terms acceptable to Palic.
In effect, the NII recognized Palic’s ample experience and know-how in Medical Insurance and valued our contribution in that field.
However, they believed that didn’t need anyone in Life insurance, nor in any other field of insurance.
In fact, they seemed to suggest an alliance by which the partners would be competitors in every field, save Health Insurance!
Our argument stating that employers normally purchased the coverages of Group Life and Group Health together as a package was not listened to, their attitude and way of thinking making the partnership impossible.
Facing that situation with the Institute, left me no option, but to propose Mr. Suquet that we entered the Costa Rican insurance market on our own, abandoning the conversations with the NII.
Having reached an agreement with my boss, I started to look for a Real Estate Agent, which helped me to find adequate space for our office in San Jose.
I saw 6 or 7 prospect offices before I selected a space in a nice and modern office and commercial complex located in San Jose’s new financial center.
The site had a nice reception’s counter already built, as well as an area separated from the rest by a glass partition, which would be good to place personnel with need of some silence to carry on with their duties.
With the help of H O’s. specialized H.O. personnel sent to Costa Rica to help me, Palic entered into a lease contract that gave us the right to an address for our new office in Costa Rica.
At the same time, we coordinated with personnel in New Orleans, the preparation and gathering of the great quantity of documents required by the newly created Insurance’s Superintendence of Costa Rica, to grant Palic an insurance license to operate in the country.
I visited the Indurance Superintendence many times, first alone and later with the person selected as Country Manager, and also with the H.O. people helping us to prepare the documents requested.
We were also able, taking us several months and with the inestimable help of our local corporate lawyers, to visit the 20 largest agents of the NII, which without exception, were at different levels of advancement in converting themselves to brokers, as required by the new Insurance Law recently issued in the country.
To all, we let them know of our plans to operate in the country, offering Palic as a new option with vast experience, which would offer solid security to their clients in the insurance fields of Life, Accident and Health.
To direct the new operation as Country Manager we had several candidates in mind, all of them working for Palic at present, as we valued a lot transmitting Palic’s way of doing things to a new market like Costa Rica.
Finally, we offered the job to a Venezuelan, Alfredo Ramirez, who had several years of working experience with Palic and who, at present, was in Guatemala as Director of Life. He accepted the position and eventually moved to San Jose with his family.
To direct the Operations area we transferred from Bogota a Panamanian lady, Sueli Ramirez, also with several years with the company, who at present was our Operations Manager in Colombia, as we wanted the new employees from Costa Rica, to do things the Palic’s way from the beginning.
We only needed then to hire the rest of the new employees and, indispensable, the insurance license to operate in Costa Rica.
The Insurance Superintendence took a good 12 months, from the delivery of our application and all requested documents, to grant us the license, but in 2010 Palic obtained from the Costa Rican Government body the long-awaited insurance license to operate in Costa Rica.
Many years had passed since the last time Palic had entered a new country!
Finally, we completed the task of interviewing — along with the Country Manager — candidates applying for the new opened positions, and eventually hire the rest of the employees (initially, 6–7 people).
Due to the accident I suffered in February 2011, by which I had to leave the firm, and the many events in the company since, I lost track of Palic Costa Rica, that’s why it was very satisfactory to learn that the company in that country had reached $ 50 million Dollars in written premiums in 2015.
When I began visiting the countries, I lived in a hotel in New Orleans (NOLA), but very soon I realized that that city location was not good to travel frequently to Latin America, as there wasn’t any direct flight to any city there (at present, COPA airlines flies directly to Panama from NOLA, but not in those days), having to go first to Miami or Houston and there take a flight to the city you were going, wasting that way a full day.
I began to ask myself whether New Orleans was the best location for me, given the anticipated frequency of my business trips to Latin America.
I talked then to my boss, Jose Suquet, and we concluded that Panama was the ideal location for me, as not only that country was the base for COPA airlines, which had flights to all countries in Latin America, but Palic also had a big operation there, and one of the Regional executives reporting to me — Rob Suchecki, the VP in charge of Health — and his Regional team were also located in Panama.
Therefore, we decided that I’d be residing in Panama, travelling to New Orleans as needed.
We rented a small furnished apartment temporarily in Panama, as our intention was to buy some property there.
As it happened, we ended up living in the rented apartment for almost three years.
Panama was ideal for my business trips, as COPA offered direct flights to all the cities I had to travel to (the exception of course, was New Orleans, city I visited frequently) and I was located at a max of a 2 hours flight from any operation.
I did all in my power to visit each operation every 1 or 2 months, except for 2010, year in which I invested a lot of time trying to relaunch Palic Colombia and collaborating to initiate operations in Costa Rica.
Also, in 2010, Mr. Suquet invited me to participate in a meeting in Houston, USA, with key personnel of Metropolitan Life, company that looked like the buyer of AIG’s Alico worldwide.
With a great sense of opportunity timing, Mr. Suquet had written well in advance to the CEOs of the big companies opting to buy AIG.
In his letters Mr. Suquet, giving proof of a great vision for the future, exposed to the CEOs, Palic’s interest in acquiring those operations of AIG which they might consider too small for their companies, like Costa Rica and Panama, for example.
Now the CEO of Metropolitan Life, a company that looked like the winner of the contest for AIG, had contacted Mr. Suquet to talk about it, hence the meeting at Houston.
I came out of the meeting with Met Life, convinced that Mr. Suquet was right: they weren’t interested in the small operations of AIG.
I also was certain that, if Met Life was going to buy (As everything indicated) AIG’s ALICO worldwide, they would sell us the smaller ex-AIG operations.
I very much doubted — as Mr. Suquet did — that having just finalized the due diligence process of the big acquisition (Extremely complicated, I imagine), Met Life’s Management had the will or the necessary time (After all, they had to “digest” the big purchase they had made) to offer to various bidders the smaller operations, not to talk of the data confidentiality.
