Who is the real Don Kramer? Helen Yates talks to the Ariel front man about his long and colourful career.
Don Kramer’s family wasn’t too concerned when he told them in 2005 that he was coming out of retirement at 68 to take the helm of reinsurance start-up Ariel Re. He’d done it before and Elizabeth, his wife, was in truth somewhat relieved. He threatened her, he says, that he’d join her at ladies’ lunches – “and that terrified her”.
Kramer is still wisecracking at 71. In one of his many past lives he was a stand-up comedian (while studying at Brooklyn College in New York). Michael Butt, the Axis chairman, once accused him of having a joke for everything. “That’s probably my single most defining characteristic, if it’s a choice between something serious and a joke, I always go for the one-liner.” His motto? “Don’t be afraid to use humour in what you do.”
He needed little encouragement to get back to reinsurance. “When the industry lost so much money after Hurrican Katrina it was clear the market was going to have to pay them back,” he says. I couldn’t resist the opportunity to form another company and take advantage of getting paid back for other people’s losses.”
Kramer has all the makings of a reinsurance guru. The sprightly New Yorker and adopted Bermudian has an impressive track record, boasting NAC Re and Tempest Re among his achievements. After
starting his career as a financial analyst on Wall Street, he went on to become an insurance analyst and set up his first Bermuda reinsurance company in 1974. It was a short-lived venture and one of his few hiccups. “Boy, were we dumb – we thought we were such great investment managers and we would get these great returns, and all we needed to do was break even on underwriting.”
Such lessons have served him well over the past 35 years, and at no time more so than in the current downturn. “Last year was really an acid test for us,” he says. “We had a confluence of catastrophic and financial events. While we actually lost money from our operations because of investment writedowns, our net change of value was actually relatively low compared to some of our peers.”
Kramer has clearly learned those early lessons and places great value on underwriting expertise. Not that he has anything to do with it. “The success of every company I’ve been associated with is that they’ve never let me underwrite a piece of business.”
Speaking on the day it’s announced that Jacques Aigrain has stepped down as CEO of Swiss Re, he notes their similar backgrounds, “I’m a chartered financial analyst – he had similar skills and obviously got caught on it.” Aigrain is held responsible for the firm’s exposure to two credit default swaps, which led to writedowns of $1bn in November 2007 and subsequent losses. Swiss Re reported a net loss of CHF864m ($744m) for 2008.
Kramer is relieved he left Wall Street to work in insurance and angry at the excesses that have been exposed in the banking sector. “When I see what these guys have taken in compensation and how poorly they’ve produced – I think it’s an outrage.”
Ariel remains a private company and, for now, that’s how Kramer intends to keep things. “We have one of the best Lloyd’s syndicates, Atrium. We’re also growing the US operation from scratch and I have an outstanding operation in Bermuda. Being private right now is good for us. In time we have to find some avenue to allow our investors to realise profits, but for now we’ll put our head down and do as well as we can.”
That he cares about his 60 staff is obvious. In every interview there is an update on the status of Ariel’s new office. “There are many things in our quarters that a lot of companies have never thought of. Bermuda is filled with bikes...one of the things we’ve put in is lockers for people’s helmets and jackets.”
The offices were originally owned by Rosemont Re, which went into run-off after being overwhelmed by losses from Hurricanes Katrina, Rita and Wilma. Ariel bought the renewal rights and inherited the management team and infrastructure. But the business grew in size and geographic scope. In 2007 it bought Atrium for $380m, quickly followed by Valiant Insurance Company from Zurich North America. This it set up as a US property casualty insurer licensed in 47 states.
So has Kramer done what he set out to achieve? Certainly he does not disguise the fact that he can’t remain chairman and CEO forever. Nor would he want to. “I really have to build in my successions. I don’t want to do what some executives have done and hang around too long.”
While he is a big fan of Hank Greenberg – “it’s unbelievable how energetic and attractive he looks at 84” – he wonders if he stuck at it too long. “Here’s a man who had a brilliant career creating the largest, most successful insurance company in the world, only to be taken down ignominiously. It’s unfortunate, because he’s so able and and motivated. But I think that work became his entire life and the question is, are there other things?”
There are other things for Kramer. He has passions far beyond insurance. First there are his eight grandchildren, then his charitable activities.
He is also on the board of Brooklyn College, where he likes to ponder the differences since he was a student. “When I went to school ‘grass’ was something you walked on and ‘outlook’ was your perspective on life and not your email repository. An MP3 was the bus to Coney Island.”
Should Kramer retire from the reinsurance industry for good, he is unlikely to sever ties with Bermuda. “I’ve built friends and relationships and other things that have nothing to do with the insurance industry. So I will keep my home here, as well as my home in Connecticut.”
To the wider Bermudian public Kramer is best known for his involvement in the island’s National Dance Foundation. This puts on four master classes and an intensive summer programme each year, flying in top dancers to teach local children. Actress Catherine Zeta-Jones is one of the foundation’s most supporters and was the star of the charity’s most recent annual gala.
Kramer himself is an accomplished dancer. Anyone who has ever seen him do a twirl on the dance floor has marvelled at his fancy footwork. So where did he learn it?
Long before Wall Street, Bermuda, the reinsurance industry and a CEO’s salary, Kramer was a struggling waiter in the New York’s Catskills Mountains. “The hotel asked most of the waiters during the week to be available to dance with the women. So I’d stay up nights and then I’d have to serve breakfast at 7 o’clock in the morning. I didn’t know the human body needed sleep in those days.”
It is no coincidence that Shakespeare fan Kramer named two of his reinsurance ventures Tempest and Ariel – “a tempest is a storm…what better name for a hurricane-based property catastrophe company?” he says.
Visit his office and you’ll see a small statue of Ariel, and a notepad with the old Tempest Re logo. “I still have a soft spot for Tempest. We created their logo which was a swirl.” Proud of his legacy, Kramer is also very clear about what has helped him on the road to success.
“I’m not a great day-to-day manager. I’m good at being in the right place and I’m lucky to have been associated with the right people.” He credits George Rivaz, a founding member and former chief operating officer and present Ariel president, with much of the success of the two reinsurers. Should he be preparing any succession plans it seems inevitable that Rivaz will be a strong contender.
But Kramer isn’t running out of energy any time soon. “I haven’t had tough days,” he insists. “I have exciting days. I come into the office and sometimes say I’m going to leave early, but I just keep on finding things to do.”
Helen Yates is a freelance journalist.
Born 17 November 1937.
1985-1993 Chairman of the board of NAC Re Corporation (NAC Re merged with XL Capital in June 1999)
1986-1991 Chairman and CEO of KCP Holding Company and of KCP’s affiliates, KCC Capital Managers and Kramer Capital Consultants
1991-1993 President of Carteret Federal Savings Bank
1993-1996 Chairman or co-chairman of the board of Tempest Re from its formation in September 1993 (it was sold to ACE in 1996)
1996-1999 President of Ace Tempest Re
2003-2005 Non executive chairman of Assured Guaranty (formerly AGC Holdings)
2004-2005 Executive of office of chief executive officer and executive of office of president of ACE Limited
2005-present President and CEO of Ariel Re
BA in economics from Brooklyn College
MBA in economics and investments from New York University
Chartered Financial Analyst Trustee, Brooklyn College Foundation
Honorary PhD in humane letters from Brooklyn College