david: this is, uh, my kitchen table, and it's also my filing system. over much of the past three decades, i have been an investor. the highest calling of mankind,

i've often thought, was private equity. [laughter] and then i started interviewing. i watched your interviews, so i know how to do some interviews. i've learned from doing my interviews how leaders make it to the top. jeff: i asked him how much he wanted. he said $250. i said, fine. i didn't negotiate with him. i did no due diligence. david: i have something i would like to sell. [laughter] and how they stay there. you don't feel inadequate now because being only the second wealthiest man in the world, is that right? [laughter] thomas buberl is the ceo of the exhibit, one of the world's largest insurance companies. i sat down with him to talk about the risks facing global insurers, particularly the war and climate change. explain to people who are not familiar with life insurance or health insurance or any kind of insurance, what is the main business. it is to underwrite what the risk is, make a profit on the premiums you charge and take those premiums and invest and do well on the investment as well,

is that right? thomas: yes, we have to play claims as well. we received a premium at the beginning of the year, we invest the premium, and when a claim is made, we pay it out. all of that should be done in a way we protect the people we ensure and also the business. david: on the premium you charge, the underwriting risk is complicated. you have to assess the risk that someone will live or die or get an illness or property will be damaged. do you try to make money on the underwriting or try to break even? thomas: we have to make money on the underwriting because there's capital that has to be put behind the business. we have a lot of historic data that we can use to price a building and then make sure that over the duration of a contract, we make sufficient money to remunerate our shareholders and get remuneration for the risk. david: what type of return do you try to get on investments?

do you have thousands of people to invest money? who does the investing? thomas: we are not speculators. we very much look at what are our vulnerabilities, so we invest in terms of duration exactly the way that we would expect my abilities to come, and we mostly hold our assets to maturity. therefore, it depends what the liability looks like. this determines the return unit, and the longer the liability, the higher the return. david: warren buffett famously bought some life insurance or i guess reinsurance companies some years ago and he takes the premiums and invested, and he's obviously a really good investor. is that the model you use, where you get investors and tell them to get a higher rate of return? thomas: we split our assets across many asset managers to make sure we have high diversification.

we have axa investment management, and we invest a lot with them, but we certainly also do a lot with asset managers to make sure that we play the markets can also optimize the return. david: in an era where we have high inflation and high interest rates, what kind of rate of return do you need to get to be comfortable? 7%, 8%, 9%, 10% or much higher than that to feel you are doing a good job investing the money? thomas: again, it depends on the liability profile. it is obviously clear now that in an environment like this, we need to get much higher return than we used to in a zero interest rate environment. therefore, the insurer is a very slow-moving investor. we invest around 10% of our balance sheet every year. when the market changes, we immediately change everything to

change the return. david: if i wanted to go into the insurance business myself, would you recommend that i go into life insurance, automobile insurance, health insurance, property, casualty? which is the best to go into? thomas: i would say property and casualty insurance for commercial business and then health insurance. those are two businesses that are growing the most. property and casualty for companies, you have all the new risks, supply chain risks, cyber risks, calamitization risks. david: the biggest risk in property and casualty, is that climate change or things that are changing the way the earth deals with weather and things like that? thomas: yes, absolutely. when you look at natural catastrophes, the number of

events has significantly increased and not only very big events like hurricanes, but also what we call secondary, so wild fires, flooding, and drought, and this leads to the fact that you have far more events and therefore much higher cost. david: how do you assess the risk of climate change? how could you possibly know when there will be a hurricane or flood? based on the past or projection of the future? how do you do that? thomas: as you say, we use data from the past, but since the dynamic has changed, we have to look forward. we work with scientists who understand what the warming of the earth and climate change will mean for the question of taking risk. secondly, we take much less risk then we used to because we have to be careful. david: let's suppose there are a lot of hurricanes. is that good for property and casualty insurers or not? good because people say they should buy more insurance are not good because you have to pay

a lot of claims? thomas: it depends. i would say it is good because it creates the awareness to do more prevention. but as i said earlier, there's more events. it becomes more and more difficult to ensure, and therefore, we work a lot with customers on prevention. if you look at large hurricanes, hurricane katrina and hurricane irma for example, they are about 15 years apart. costs have come down over time despite inflation, so prevention does work. david: let's talk about another type of insurance, which is life insurance. are you better off if people live a long time and don't claim life insurance are better off if they die sooner? sonal: thomas: it always depends. dying sooner is mostly better because if people live longer, you have the longevity risk and you never know how long people live, but that depends country by country. we have certainly made the choice of being relatively

cautious around life insurance. we used to be 80% life insurance, our portfolio. we are now 20% life insurance because life insurance is very much a financial risk which is not diversifying, and secondly, it is linked to a high degree of regulation, which makes the business very difficult. david: let's talk about health insurance. there's a lot of obesity going on in the western world. a lot of drug abuse in the western world. do you take that into account when you sell health insurance? thomas: yes, obviously. you have to give your bmi, which is the proxy around how obese you are or not. in this area, we are at the beginning of quite a big revolution. if you look at all the new drugs like ozempic and others, they could change the pattern of obesity significantly going forward, which is an exciting journey to go on. david: the united states has a complicated health care program.

i don't know how it works in europe, but our program in the united states, some call it obamacare, the affordable care act. is that better or worse for health insurers then whatever you have in europe? thomas: both have the same issue, which is a demographic issue. in the u.s., 10 or 15 years ago, about 20% of the federal budget and fiscal budget were related to welfare. today, we are at 39% due to the fact that people are getting older. you see the same pattern in europe. the question around a more public type health care system will come on the table and new solutions will be needed. david: maybe unfairly, but insurance companies have a reputation for saying we will sell you insurance, but when the claim comes, they say maybe it's not as much damage as you claim, and they take a long time to pay out. is that a fair portrayal of the way some insurance companies are

and how do you deal with that image? thomas: when i joined the industry in 2005, the image was already there, and i would say at that time, it was also justified to a certain degree because we were not enough engaged to work for broader society. we were still very bureaucratic. if you fast-forward almost 20 years, that's not the case anymore. we are extremely engaged in society. take the topic about climate change. take the topic about social inclusion, and we have significantly changed customer service. most of it today is very digital, and it's much easier both in administration and case management. david: do insurance people come to you and say, we have a big risk here, we are going to underwrite, or do they leave you out of the underwriting business? thomas: about 99% of the business is done in the entities, but yeah, there are some risks that come to me where i have to take a decision.

♪ david: let's talk about your background for a minute. where were you born? thomas: i was born in germany. david: where did you go to school? thomas: your dusseldorf, in germany, and spent all my

childhood in germany. david: you were a german speaker, i assume. thomas: yes. david: did you learn french as well? thomas: i learned french in school. it was my third language. at the time i did not know how valuable it would be that i learned french. david: in the united states, you often hear people saying i want my little boy to grow up to be an investor. they want them to be a doctor or lawyer. you never hear them say you want my boy to grow up to be an entrance person. did your parents tell you to be in the insurance world? thomas: not at all. after i finished my studies, i was not really ready to decide in which industry i went, so i went into consulting to prolong a little bit the journey and test certain industries. during that consulting time, i did amazing projects. somewhere in insurance. others were in women's underwear. others were in i.t.

distribution, so i saw very different sectors. i really liked the insurance sector at the time because i saw exactly what you mentioned earlier, that there is an industry that is deeply rooted in society because we are basically promoting and ensuring social cohesion. yet, the industry was not recognized for it. at that time, i wanted to make a difference. david: right before you joined axa, you were working where? thomas: i worked for boston consulting. then i went and ran zurich insurance in switzerland and then back to germany for axa. david: the stock is up about 60% since you have been working there. thomas: i think it is more than that.

david: and market capitalization is up almost an equivalent amount? thomas: about $71 billion. david: france is a wonderful country and they have a lot of wonderful companies, usually headed by people born in france. how did a german get to be the head of a french major company? thomas: you would have to ask my board of directors. no, essentially, the board ran a process. they looked at external candidates and then internal candidates. if i remember correctly, there were seven internal candidates. over time, the process took three years. they eliminated and we were just at the end of the day two left, one french person and me. the board looked at essentially three criteria, which was very much away from nationality. one was track records within axa. the other was what is the value set of the person.

the third was the capacity of the person to read. david: in many cases, the largest french companies are run by french people, typically men, who have gone to these so-called elite paris schools, but you did not go to one of those schools. does that mean you are an outsider in the french business establishment or you have been able to work your way in? thomas: i have been able to work my way in, but i needed two things. one, the curiosity of the french ceo's in me, but also my ability to then fully dive in. what i did, for example, with my rudimentary french that i had from school and studying, i only spoke french the whole day to make sure this would work, and i integrated myself wherever i could. this point around the universities is actually a very good one. in france, you compare very good schools with less good schools. i was neutral because i came from a university nobody knew,

so i was not placeable in the hierarchy of investors. david: at axa headquarters, do you speak french or german or english or what? thomas: i speak no german. when there is a person in the room that cannot speak french, we only speak english, but i still do as many of my meetings as i can in french if possible. david: your business is a global business. where is the biggest place where you have the most people? france or europe or the united states? thomas: it's europe. we have about 20% of the business in france, 40% of the business in europe, 20% in the u.s. and 20% in asia. david: any interest in growing your business by making an acquisition or doing something like that? thomas: we have done quite a few acquisitions, as i said earlier. i started with 80% life insurance and we are now at 20% life insurance, having kept the

same revenue, which meant we had to do and transactions. we ipoed in the u.s. we did transactions probably in the area of about $20 billion. david: as the ceo of a company, do insurance people come to you and say, we have a big risk here we are going to underwrite or do they leave you out of the underwriting business? thomas: it always depends on what size of risk you took. normally they are doing their own business so we have a clear grid of competence for underwriting, and about 99% of all risks is done in the entities, and so it should be, but there are some risks that come to me where i have to take a decision. david: let's suppose i'm in business school and i say i want to go into the business world. why would i want to go into the insurance world? thomas: interestingly, we get quite a few young people today in the business and when you ask them why they are in the

business, the number one reason they always say is the purpose of insurance because insurance companies do protect individuals, but they also help society to develop. that's the number one driver why people are there. second, we have a lot of people that have analytical backgrounds, so people that love data, and obviously, our industry is data which with the revolution and wave of ai coming, we now have the ability to analyze unstructured data, which would broaden this much more. those are the two areas why you have a lot of talent coming downstream. david: in the united states, people might say you are a really attractive businessperson, why don't you go into government?

you might be a cabinet officer or something. you have any interest in that or in france you cannot quite do it that way? thomas: obviously in our job, i do have a lot of links to politics. when you touch social security systems, touch the question around petrol catastrophes, when you are the biggest insurer of satellites, you always have ties to government. obviously, part of my job is also to be in that sphere and help where i can. david: do you have any aspirations to do something beyond what you are doing? you are not going to go into government, you said. go into philanthropy at some point? thomas: no, i have been in my job eight years. i have a lot of fun in my job and there's also still a lot to be done. i will continue on my journey. i will not be seduced by politics and when you think about philanthropy, we do a lot of philanthropy in axa. we go running for money that we then donate to charitable

institutions. we do a lot as well on the art side and helping artists and helping restoration of art in france. you can do a lot while being a company ceo. ♪

david: let's talk about the economy. the united states has a situation where we have reasonably good growth in 2023, over 3%. europe has not grown as well. why do you think the united states seems to be pulling away from the european and chinese economies in terms of growth? is it something about the american business environment, that the united states has recovered from covid other than europe or china did? thomas: i think it's a couple of factors. number one, the fiscal stimulus in the u.s. was much higher than it was in europe, and obviously, fiscal stimulus leads to more demand. secondly, there is a lot of on-shoring happening or re-shoring happening from elsewhere to the u.s., which creates growth as well. second, when you look at your demography, this is much healthier than what we have in europe. david: recently, we had high interest rates and high inflation.

i assume you got through that reasonably well. now we are going into an era where inflation seems to be coming down. how are you going to deal with that? thomas: these changes produce high volatility of the economic environment. certainly, we spoke about the geopolitical environment. in a highly volatile and unpredictable environment, it is important to take strategy of low risk. we have built now at platform that is working very well. we are the biggest insurer now of enterprises across the world. we are one of the biggest in europe. we want to make sure that we scale up this business more the next phase. david: do you worry about russia or ukraine as a potential insurance risk? thomas: we worry a lot about these risks because these risks do create claims. the russia-ukraine situation did create a lot of risks, so for us, it is important to look out

for them. and certainly, to see where the next crisis comes from. even if the ukraine-russia crisis was to be resolved, i'm sure the next crisis coming -- look at what is happening in the red sea now, which again has massive implications around maritime transport, supply chain risk and so on. i project myself in a world now in which we see many more of these crises happening, and we need to deal with it. david: how has technology changed the insurance business and how do you expect ai will change the insurance business? thomas: number one, technology has changed our industry. in order to handle large data sets, to do analysis, to simplify the customer service and the customer expertise, so that i would say is done. we now have ai coming in where i said earlier we are making sure we use the unstructured data

that we have, and a lot of our data is unstructured. it's really beneficial to understand risks more. i think there is a third element. i mentioned earlier the topic around prevention. this is very much happening today through digital services. the example -- when we look at how to analyze the risk of a property relative to climate risk, we use and satellite data or if we want to ensure marine transport and see the danger of theft and damage, we use risk assessment. david: you are in pretty good shape. are you an athlete? if you are the head of an insurance company, you cannot be overweight, i assume. do you run a lot or exercise a lot? thomas: i do five kilometers every morning.

david: you are an insurance company ceo. you could stumble and fall. do you ever have that problem? thomas: i have fallen many times. i wear a helmet and vest. so far apart from a broken finger, nothing. david: that's another sport i probably won't do. i told your insurance people i would be doing horse jumping, they probably would not give me life insurance. thomas: yes, they would if you don't do it professionally. david: what is the great fun of running a multinational like axa? thomas: it's great to work with so many motivated people. you say it's difficult to get good people, but we have good people. secondly, an insurer looks into every industry. from satellites to crocodile farms to travel insurance, so it's a very broad view.

certainly it is really a place where you can do good for society. i mentioned earlier our approach around climate change and investing in a different manner and underwriting in a different manner. you can see the change you can make on society. david: on the whole, the message you want to give people is axa is the best insurance company you can use an insurance is doing a good thing for society? thomas: exactly. david: no regrets about not going into investing, private equity, banking? thomas: i'm happy with what i'm doing and since i don't know what the other things are about, i will stay where i am. ♪