With 24 locations spanning Europe, North America, Latin America and Asia-Pacific, you'd expect that even the most basic of Converium's (Zurich, $3.3 billion in net reinsurance premium) communications would be hindered by language differences. But instead of giving in to the traditional multi-national global organization model, thecarrier aims to gain competitive advantage by enforcing uniformity and leveraging resources enterprise-wide. And its strategy seems to be working.
Significantly smaller and younger than its reinsurance competition, including companies such as Swiss Re, Munich Re and General Cologne Re, Converium has only 800 employees and is ranked sixth in its space, according to Andrei Chivvis, senior vice president and CIO. The organization, whose IPO took place on Dec, 11, 2001, was a spin-off of Zurich Financial Services' (Zurich) reinsurance business and the result of Zurich's decision to concentrate on certain core lines of its business. Today, Converium's three major hubs are located in New York, Zurich and Cologne.
Despite the fact that there are variations in Converium's technical infrastructure from location to location, there are certain core, centralized applications that are leveraged throughout the global organization and used at all locations. Because the reinsurer takes advantage of a global enterprise data model that enables it to define data in a uniform way, according to Chivvis (who is based in downtown Manhattan), "we are managing one company, not three or four or five." An additional benefit of the data modelwhich ensures consistent underwriting, reserving and reinsurance accounting datais its ability to enable benchmarking across the organization.
Although Converium was launched only 15 months ago, the carrier's global philosophy of uniformity has been several years in the making, relates Chivvis. "Our integration strategy was jelled six or seven years ago," he says. "Converium has the same drivers today as it did before we were spun off. So when we were spun off it wasn't that big of a shock in terms of changing technology."
Seeking a Common Identity
In order to understand Converium, it helps to know the recent history of the company and its origins. The integration strategy of the businesses that form Converium began in 1997. During that time, Zurich Financial Services owned or partly owned several reinsurance businesses that lacked a common group identity. These businesses were the reinsurance department of the Zurich Insurance Co. (Zurich), 65 percent of Zurich Reinsurance Centre (New York) and 94 percent of Agrippina Ruck (Cologne) and Zurich Re (London). In addition to operations in these locations, the Zurich Reinsurance department had offices in Buenos Aires, Mexico City, Singapore and Tokyo. Because it was decided that in order to succeed the companies needed to share a common global identity, the companies were branded under the name Zurich Re, and Dirk Lohmann, formerly of Hannover Re, was brought in to integrate the businesses in the late '90s.
In 2000, another effort towards globalization was made when Zurich Re opened offices in Paris, Milan, London, Labuan (Malaysia), Kuala Lumpur, Sydney and Sao Paolo. Finally, in March 2001, Zurich Financial Services' CEO, Rolf Huppi, announced that Zurich would exit the third-party reinsurance business, and the company did so in December 2001.
Chivvis, who was global CIO with Zurich Re before Converium's IPO, continued on in the role after the spin-off. Allocating Converium's $350 million budget for the technology needs of 24 disparate locations seems daunting, but his load is lightened from help delivered by regional IT leaders. The technology problems and opportunities occurring at these locations are referred to by Chivvis as "bottom-up" needs. "Some individual locations have immediate needs and if they are small enough, local management can take care of them," explains Chivvis. "For the more substantial projects, however, Converium relies upon a project portfolio board."
Balancing Local & Global
The board, relates Chivvis, consists of executives who review all proposed projects. Besides Chivvis, individual location CEOs and Converium's CFO, Martin Kauer, sit on the board. Although Chivvis concedes that individual locations are given some freedom when it comes to IT spending, global IT operations are managed through his office because "Converium wants to ensure that projects done locally will not interfere with the company's global approach," he says. This global approach and other corporate strategies are relayed to Chivvis from the "top down."
Because he is aware of the enterprise's goal of common key systems and an integrated technology infrastructure, Chivvis can support the reinsurer accordingly. "Technology can only be leveraged if it can unite the business," says Chivvis. "In many companies, IT initiatives fragment the business. Although some carriers operate in one building, they are utilizing five different applications that are doing totally different things."
With these corporate goals of uniformity in mind, Chivvis and the 110 IT employees in his charge have embarked upon several application development initiatives aimed at the leader's IT goal of keeping things homogeneous and thus simple. Most of these projects are completed in-house. In fact, according to Chivvis, all applications other than the carrier's general ledger and human resources systems have been built without the help of a technology vendor. A recently completed in-house project involved the integration of three similar accounting systems housed in three disparate locations. In order to achieve uniformity, Chivvis and his team merged the systems into one.
Another initiative that is bridging gaps among separate locations was the implementation of IBM's (Armonk, NY) QuickPlace, which was completed a year ago. The tool is Web-based shared workplace software for real-time collaboration among geographically dispersed participants. Through the use of QuickPlace Converium employees, customers, partners and suppliers can be linked together in an online structured workplace. "Converium has major distance and time differences to contend with," explains Chivvis. "QuickPlace is helping to cut those down." Although Converium has had the resource available since the first quarter of 2002, training on the system recently became more readily available. Because of that, its acceptance is spreading throughout the organization.
Taking the "Top-Down" Approach
Chivvis is further encouraging Converium's "top-down" strategy of interconnectivity by investigating projects aimed at the use of wireless devices. Actually, Converium employees are no strangers to wireless. "Converium invests a lot to enable our employees access to the company's systems while they are at home or traveling," says Chivvis. "We aim to do it in a way that is not painful." Currently, members of the organization working remotely can stay connected wirelessly through the use of RIM (Research in Motion, Waterloo, ON) Blackberry wireless devices and through the use of Citrix (Ft.Lauderdale, FL) virtual private network (VPN) software. Additionally, in order to keep Converium's employees connected to their benefits and other company information, Chivvis is in the process of producing a corporate intranet. According to the CIO, the project does not have an expected date of completion: "It's a continuously evolving application, so it will never be completed."
Although Converium's geographically dispersed locations sometimes place a burden on technological resources, there are advantages to having locations throughout the worldthe biggest of which is the availability of locations to house back-office systems for better disaster recovery preparation. Currently, says Chivvis, "Converium is looking at leveraging our multi-location structure to set up information hubs."
COMPANY: Converium (Zurich, $12.04 billion in assets).
LINES OF BUSINESS: Life reinsurance, property and casualty reinsurance.
KEY EXECUTIVES: Andrei Chivvis, senior vice president and chief information officer; Dirk Lohmann, chief executive officer; Martin Kauer, chief financial officer.
IT STAFF: 110
IT BUDGET: $350 million
COMPANY HISTORY: Converium was spun off from Zurich Re in December 1999. Although the company is only a year-and-a-half old, its integration strategy was formed seven years ago when Zurich Financial Services decided that the different reinsurance businesses it owned or partly owned needed to share a common global identity.
KEY INITIATIVES: A common reporting framework for financial and reinsurance accounting data; the implementation of QuickPlace; ongoing development of the corporate intranet.
I&T: WHAT IS YOUR GREATEST BUSINESS CHALLENGE?
ANDREI CHIVVIS: "My greatest business challenge is dealing with the cyclical and competitive reinsurance market. Technology plays a key role in assisting with that."