Where had his ‘values’ come from, that’s what Jack could never figure out. His mother was a classic snob who revered all things English, all persons of a higher social order, as she saw them. His father’s principles were elusive. But somehow Jack had developed a black and white view of some issues that wouldn’t leave him. His behaviour might wander at the margins but he believed he’d never walk away from his basic principles. On the other hand, he hadn’t really been tested before. And was he being tested now? That’s what was waking him in the night. If he knew for sure something was wrong he’d attack it, but these issues seemed to slip and slide, ripple and flatten like wind on a river. He couldn’t even explain them properly to Louise.
‘So are you saying you think they’re running the business inefficiently or recklessly or acting fraudulently or breaking the law or what?’
‘God no, not breaking the law. Well, I hope not. I mean, I’m not saying that. I don’t understand enough I suppose. The issues are very complex but I’m trying to make them simple.’
She rubbed the back of his neck again. ‘And that’s part of your talent and the value of fresh eyes. And part of mine, remember? So simplify them for me.’
It was like the old days when they’d sit together in their first ramshackle office above the delicatessen, the smells of cheese and salami and fresh bread drifting up the fire escape. He’d explain the brilliant design concept that short-sighted councillors couldn’t fit into the local codes and she’d tear it apart with logical precision, put it back together in almost the same order and make it fit. But she always left it as his idea.
He tried to lay out the shapes in his head now as lines on a plan, but they weren’t as straight, the corners weren’t as sharp. It had all started brilliantly. Mac had been right, the market loved him. The shares had jumped two per cent in three months despite his lack of major company, not to mention insurance industry, experience. He was a great story, just as Mac had predicted. ‘They love growth, son, and that’s what you represent. You’re a salesman. You know about increasing our share of new homes, forging bonds with property developers, driving the top line. That’s what matters. Let us worry about making the profits, managing the balance sheet, all that stuff that’s unbelievably complex in an insurance company. Leave it to the accountants and the actuaries. That’s what I do. You bring the business in the front door, the profits will fall out the back, I promise you.’
But would they? That was the part he couldn’t see. When Jack sat through the briefing with his CFO, Renton Healey, and later with the head actuary, he could see the policies marching in the front door in ever greater numbers-but at prices that left no margin for any profits to fall out the back. And when they gave the argument he’d heard so many times now-that most insurance companies don’t make money from their underwriting operations- he’d replied, ‘I know that. But the best ones do. They have insurance margins below one hundred per cent, not at one hundred and three per cent like us. And sure, they make the bulk of their profits by investing policyholders’ funds when the sharemarket’s performing well. But at least they won’t go broke when it isn’t.’
Renton Healey had just remained calm and grimaced, you couldn’t call it a smile, not in that squashed pumpkin of a face with a shock of pumpkin red hair above it, and looked at him in that paternalistic, slightly pitying way adults do with children who are struggling in their lessons.
‘Jack, isn’t it a bit early in the learning curve to be trying to reconstruct the entire insurance industry? We’ve been doing things this way for quite a while. The market fully understands the nature of the insurance cycle, the concept of the smoothing of profits, the orderly flow of releases from reserves. They’re fully aware of the swings and roundabouts of investment returns and the sophisticated systems of collars and caps we implement to assist in smoothing. And of course the very effective but complex reinsurance arrangements we have in place to limit risk and, to some degree, to protect financial returns. I think it’s fair to say, without wishing to be patronising in any way, this is an area you are still grappling with.’ Here the pumpkin crumpled again. ‘The point is, Jack, unless you have a clear overview of how all these factors come together, how all the levers are pulled, you can’t be expected to understand how the bottom line is derived. Or how the balance sheet fits together. They’re very difficult concepts for anyone from outside the industry, I grant you, but we’ll do our best to explain.’
He shifted his sizeable posterior in the expensive Italian chair.
Exercise and Renton Healey were not as close friends as cannelloni and a Margaret River pinot noir. Possibly a little cheese. At lunch. Despite the new CEO’s edict, banning alcohol for the management team during working hours. The new CEO had a great deal to learn, and not just about reinsurance contracts. Healey chuckled to himself. Indeed, he was unable to learn anything on that subject.
As Jack tried to explain now to Louise, if HOA was losing money on underwriting its policies, and their investment returns were below those of the previous year, how could they keep announcing record profits?
‘Well, maybe they’re right, darling. You said yourself this business is more complicated by a mile than anything you’ve done before. As much as one is loath to suggest that the boy genius is incapable of getting his Scouts badge for insurance basics, maybe you just don’t understand. Yet.’
He’d thought about that a lot, wondering if he wasn’t up to this challenge intellectually, but as he discovered more about the business his confidence was growing, not diminishing in awe at the majesty of it all. It wasn’t that difficult. He believed in his simple analysis-just people sharing risk to protect one another. All the rest was gobbledygook. But maybe this was something Louise couldn’t help him with. Maybe he needed an expert this time.
chapter five
The beds of red canna lilies waved softly as the nor’easter gradually picked up its afternoon velocity. It was Wednesday, so shortly the eighteen-foot skiffs would come rocketing out of Careening Cove and the Royal Sydney Yacht Squadron’s more dignified fleet would be gearing up at Kirribilli for a sunset race. Men with knobbly legs, white football shorts and salt-encrusted boat shoes would be rubbing their chests and peering aimlessly at their expensive boats, while younger crew members skipped about being genuinely useful. In the Royal Botanic Gardens, joggers, lovers, derelicts, old male backgammon players of vaguely European origin, gay boys suntanning, public servants in navy suit trousers with white belts and synthetic shirts, businessmen in earnest conversation about events of shattering importance walking very purposefully, politicians from nearby Parliament House walking more purposefully, old ladies in wheelchairs, gardeners in khaki with leather pouches on their belts hiding in the shrubbery, more lovers loving on rubber-backed blankets-all this gallery of Sydney’s humanity presented itself to the lunchtime spring sunshine. The harbour sparkled and jazzed as a few whitecaps flecked the deep blue and the sails of the Opera House stood stiffly against the breeze.
Jack found the seat as described (under the Moreton Bay fig, opposite the Bronwyn Oliver sculpture), set down his brown paper bag and waited. It was peaceful beneath the massive spread of the old ficus with its gnarled aerial roots snaking down to the earth like some tropical growth from a rainforest or a Tallahassee swampland. He watched the carefree throngs jogging and pacing by and wondered if anyone was ‘carefree’. It sounded like something from an Enid Blyton novel or a shampoo commercial. But he had been, pretty much. And now he was in the swamp, without any roots.
Before these black thoughts congealed, the lean figure of the Pope strode into view through the water glare. To Jack, the Pope always looked like Clint Eastwood on holiday-spare, rather taciturn, relaxed, yet in total control of all around, knowing something he might tell you on a good day. Because the group always used the nickname at their luncheons, he’d forgotten that the Pope’s real name was Clinton Normile. It seemed an oddly formal name for this good-looking character who no one knew much about. He’d had to ring Tom Smiley to get the phone number and was amazed when the Pope had answered the call himself, rather than some secretary or personal assistant. The Pope was fabled to be wealthy beyond counting but the origins of this wealth, if it existed, were the subject of wide speculation.
‘I see you found my office.’ He glanced at the paper bag. ‘And Vera’s, I trust. Leg ham on the bone and the rye bread?’
‘Exactly as ordered.’ Jack laughed. ‘Although I must say this isn’t quite the venue I expected. Do you always hold meetings here?’
The Pope took a sandwich from the bag. ‘As often as possible and as little as possible. I don’t like meetings, but if I have to take one, as the Americans say, I might as well take it here.’
They munched silently for a while. The Pope was outstanding at silence. Finally Jack started. ‘I need your advice. Tom Smiley said you might be able to help.’ He paused. ‘What should I call you, by the way? The Pope
