160 Years of Risk Management


How do you manage through social and technological disruption over a century and a half? If you are John E. Schlifske, CEO of Northwestern Mutual, you build on your strengths while improving any weaknesses. That is his explanation as to how the 160-year old firm has underwritten over $2 trillion in life insurance, and has another $300 billion in client assets.

Schlifske discusses how he began scraping paint off of trucks for his father’s small trucking business, and it made him want to go to college ands work in an office. He joined the Fortune 100 company in 1987 as an investment specialist – his second job out of grad school – rising through the ranks over 34 years to become CEO 11 years ago.

He explains the headwinds low interest rates create for policy holders; in the 1990s, when long term rates were as high as 8%, the returns on bonds were significant when compared with the 3% yield long term bonds generate today. His visit to Japan in the 1980s showed firsthand the warning of what ultra-low yields meant insurers. He recognized that the downward trend for interest rates were likely to be persistent and long lasting.

Insurance is one of the industries that have not (yet) been disrupted by technology. The reason is likely due to the massive capital requirements of the industry. But he believes eventually disruption will eventually find its way to the insurance industry on both the risk side and the wealth management side.

A list of his favorite books is here; A transcript of our conversation is available here.

You can stream and download our full conversation, including the podcast extras on iTunesSpotifyStitcherGoogleBloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Rob Arnott, founder and chairman of Research Affiliates. The firm created & patented a methodology for basing indexes on fundamental metrics instead of market cap weighting, and its strategies runs over $160 billion in assets. Arnott is the author of over 100 academic papers, and is the co-author of the book “The Fundamental Index: A Better Way to Invest.”


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