we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

>> this is 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'd often thought was private equity. then i started interviewing. i watched your interview because i know how to do it. i learned from doing my interviews how leaders make it to the top. >> i asked how much he wanted, he said 250. i did not negotiate and i did note due diligence. >> you don't fill an adequate now because you're only the second wealthiest man in the world, is that right? he's one of -- he is the ceo of the world's largest insurance company. i recently sat down with him. particularly to talk about war and climate change.

explain to people who aren't familiar with life insurance or health insurance or any kind of insurance, what is the main business? underwrite what the risk is, make the profit on the premiums you charge then take those premiums and invested in do well on the investment as well, is that right? thomas: yes, and we have to pay claims. we receive a premium, invest a premium and when the claim happens, we have to pay it out and all of that should be managed in a way that we protect the number of people that ensure and make a profit. david: on the premium you charge, the underwriting risk is very complicated. you have to assess with the risk is, if somebody will live or die, a property will be damaged. did you try to make money on the underwriting or are you trying to break even? >> there is capital that needs to be put behind the business. what we basically look at, 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 remediator a our shareholders. david: what type of return do try to get on your investments and do you have thousands of people to invest the money and who does the investing? >> we are not speculators. we very much look at all of our liabilities. we invest in duration, exactly in the same way we expect the liabilities to come. 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 a reinsurance company years ago. he takes the premiums and he infests. is that a model you use, which is to get really good investors

that you give money to and tell them they get a higher rate of return than they would normally get if you did it yourself? thomas: we split our assets across many asset managers to make sure we have a high degree of diversification. we have a false area of business, which is investment management. it has around 700 billion of assets. and we obviously invest a lot through them. but, we certainly also do a lot with external asset managers to make sure that we play the markets, but also optimize the return. david: in era when we have high inflation rates, what kind of raider roof -- rate of return do you need to be comfortable? 7% to 10% or higher than that to feel you are doing a good job investing the money you have for the premiums? thomas: it depends on the liability profile. we always look at liability relative to how we need to invest.

it is clear that in an environment like this, we need to get much higher of a return than we use to in a zero interest rate environment. therefore, the insurer is a very slow investor. so we invest around 10% of our balance sheet every year. so, it is not that when market changes we immediately change everything to change the return patterns. david: if i wanted to go into the insurance business myself, would you recommend i go into a life insurance, automobile insurance, elf insurance, what is the best business to go out of those for? thomas: property and casualty insurance and health insurance. those are the two businesses that are growing the most on the property and casualty for companies. you put all the new risks, supply chain risks, cyber risks, climate transition risks. on the health side, the longevity and how could you help

people to live a better life. those of the areas i would recommend. david: is the biggest risk now climate change are things that are changing the way that the earth deals with weather and things like that? thomas: when you look at natural catastrophes, the number of events have increased. not only big events like hurricanes, but also secondary powers. wildfires, flooding's and drought. this leads to the fact that you have far more events, and therefore a much higher cost of all the natural catastrophe. david: how do you assess the risk of climate change? how do you know if there's a hurricane or flood, is this based on the past, projection of the future, how do you do that? >> we use data from the past. but since it has change, we need to look forward. we work a lot with scientists to understand what the warming of the earth and climate change will mean for the question of

taking risks. secondly, we take much less risks than we used to take because we have to be careful. david: let's suppose there's a lot of hurricanes, is that good for property and casualty? people say there will be more hurricanes, i should buy more insurance are not good because you have to pay a lot of claims. thomas: i would say it's good because it creates the awareness to do more prevention. what we see today is, as i said earlier, there are more events. it becomes more difficult to insurer. therefore we work a lot with our customers along preventions. if you look at the large hurricanes, hurricane katrina and hurricane irma, they are about 15 years apart. cost have come down over time, despite inflation. 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 so they don't claim if insurance or are you better off if they die sooner? thomas: it depends.

dying sooner is mostly better because of people live longer, you have the longevity risk and you never know how long people live. but that really depends country by country. we have made the choice of being relatively cautious around life insurance. we used to be 80% life insurance, for portfolio. we are now to what he percent life insurance. life insurance is very much financial risk, which is not diversifying. secondly, it is very much linked to a high degree of regulation, which makes the business very, very different. 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, you have to send your bmi, which is the proxy around the question are you obese or are you not? even for this we are at the

beginning of a big rave the -- 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. david: the united states has a complicated health care program, but some call it obamacare, the affordable care act, is that program better or worse for health insurers then whatever you have in europe? >> both have this same issue, which is a demographic issue. if you look in the u.s., i think 10 to 15 years ago, about 20% of the federal and fiscal budgets were related to welfare. today we had 39% due to the fact that people are getting older. you see the same pattern in europe. the same question around a more public type health care system will come on the table and new solutions will be needed.

david: insurance companies have a reputation for saying, we will show you insurance, but when the claim comes they say, 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 insurance industry in 2005, this image was already there. at the time it was also justified, to a certain degree because we were not engaged enough to work for the broader society. we were still very bureaucratic. if you fast-forward now, almost 20 years forward, it is not the case now. we are extremely engaged in society, take the topic around climate change, social inclusion , and we have significantly changed customer service. most of it today is very digital. it's much easier, both in the administration and the --

david: do the insurance people come to you and say we have a big risk, we are going to underwrite or do they leave you out of the underwriting of business? thomas: 99% of all risks is done in the entity's interest. there are some risks that come to me and i have to take a decision. ♪

david: let's talk about your background for a moment. where are you from originally, where were you born? thomas: i was born in germany. david: did you go to school? thomas: i went to school in germany. david: you were a german speaker , did you speak french as well? thomas: i learned french in school. it was my third language period i did latin, english, then french. at the time, i didn't know how valuable it would be that i learned french. david: in the united states you often hear people say i want my little boy to grow up to be an investor, they want them to be a doctor, a lawyer. you never hear people say i want my little boy to grow up to be an insurance person. how did you become an insurance person? thomas: when i studied, after i finish my studies, i wasn't

really ready to decide in which industry i went. so i went into consulting to prolong the journey and test the certain industries. in during that consulting time i did imaging progress -- projects. somewhere in insurance, others were in women's underwear, others were an i.t. distribution. 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. it was a question around a very bureaucratic industry. at the time, i wanted to make a difference and wanted to go in there. david: right before you join akzo, you were working where? thomas: i worked for consulting. then i went to the company and the second signature was the nda. then i went to zurich and

switzerland and backtracked that to run the germany portion. david: you've been a ceo since 2016? the stock is up 20% since that time. -- 60%? thomas: today close to 31. david: market capitalization is up almost an equivalent amount? thomas: we have about $71 billion. david: france is a wonderful country with great companies. usually they are headed by people born in french. -- 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. the board it ran a process, they looked at external candidates and internal candidates. there were several internal candidates. over time the process took three years. they eliminated it.

at the end of the day there were two left, one french person and me. the board looked at essentially three criteria, which was very much away from nationality. one was track record. the other one was, what is the value set of the person. the third one, what is the capacity of the person to reinvent him or herself. david: in many persons, the large french companies are run by french people, typically men, who have gone to these elite power schools. but you did not go to one of those schools. does that mean you are an outsider in the french business establishment or have you been able to work your way in? thomas: i have been able to work my way in but needed two things. one, the curiosity of french ceos, but also my ability to then fully dive into it. what i did, for example, with my rudimentary french knowledge that i had from school and studying, i only spoke french

the whole day to make sure that this would work and i integrated myself wherever i could. this point around the university is a very good one. in france, you compare the very good schools with the less good schools. i was neutral because i came from a university that nobody knew, so i was placeable in the hierarchy of investors. david: when you conduct business, do you speak french, english, german? thomas: i speak no german. whenever 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. what is the biggest place where you have the most people, is that france, europe, the united states? thomas: it's your. 20% of europe is in france. 40% of the business in europe, 20% in the u.s. in 20% asia.

david: any interest in growing your business by making an acquisition or doing something like that. thomas: we have done a few acquisitions. i started with 80% life insurance and we are now a 20% life insurance having cap the same revenue, which meant we had to do a lot of transactions. the company you mentioned earlier, we are ipo to the u.s. we did transactions in the area of about 30 billion euro. david: as the ceo of a company, to the insurance people come to you and say we have a big risk here, we will underwrite or do they leave you out of the underwriting business? >> it always depends on what size you talk. they are doing as their own business, so we have a clear grit of competence for underwriting at about 99% of all risks is done in the entities, so it should be. there are some risks that have

-- that come to me where i have to take a decision. david: let's suppose i'm in business school and want to go to the business world, why would i go to the insurance world? thomas: we get a few young people today in the business. when you asked them why are they in the business, the number one reason they always say is the purpose of insurance. because the insurance companies to protect individuals, but they are also -- they also help society to develop. that's the number one driver of why people are there. second, we have a lot of people with analytical backgrounds. people that love data. our industry is data. 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.

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david: let's talk about the economy. united states has a situation where we have reasonably good girl -- good growth in 2023, over 3%. europe has not grown quite as well. why do you think the united states is pulling away from the european and chinese economies in terms of our growth. is it something about the american business environment that the united states has recovered from covid may be better than europe did or china did? thomas: a couple of factors, fiscal stimulus, the fiscal stimulus in the u.s. was higher than it was in europe and fiscal stimulus leads to more demand. secondly, there is a lot of on

shoring happening or reassuring happening from somewhere else into the u.s., which is obviously something that creates growth. certainly, when you look at your demography, this is much healthier than what we have in europe. david: recently we've had high interest rates are high inflation. i assume you got through that well, but now we will go into an error will -- where interest rates come down and inflation seems to be coming down. how will you really -- reposition your company? thomas: these changes produce a high volatility of the economic environment, certainly we spoke earlier about the geopolitical environment. in a highly volatile and highly unpredictable environment, it is important to take a strategy of low risk. essentially, what we have built as a 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 in the next phase. david: do you worry about russia and ukraine as a potential insurance risk? thomas: we worry a lot about these risks because they do create claims. the russia-ukraine situation did create a lot of claims on the political risk side, on the marine side, on the aviation side. for us, it's important to look out for them. and to see within a skies comes from. even if the ukraine-russia crisis was to be resolved, i'm sure the next one is coming. look at what's happening in the red sea, which has massive implications around maritime transport, or cover for maritime transport, supply chain risk and so on. i project myself in a world where we see many more of these crisis happening and we need to deal with it. david: how has technology changed insurance business and how do you expect ai will change

insurance? thomas: three phases. number one, technology has changed our industry. to handle large data and to do analysis and to have customer service and customer expertise, that is done. we now have ai coming in, making sure we use the unstructured data that we have them a lot of our data is unstructured and beneficiary to understand risk more. there is the third element i mentioned earlier about prevention. this is very much happening today through digital services. example, when we look at how to analyze the risk of a property relative to climate risk, we use a lot of satellite data or if we want to ensure marine transport and see where is the danger of theft and damage the highest, we use satellite data. all of this has a technological

component that will increase much more. david: you look like you are in good shape, are you an athlete? if you are the head of the insurance company, you cannot be overweight. so you are underweight or trim, do you exercise a lot or run a lot? thomas: i run every morning, i do five kilometers every morning and i'm a passionate horse rider. for the horse to support you, you cannot have too many kilos. david: isn't that dangerous because you are in insurance ceo, the horse could stumble and you could fall and the horse could fall on you. thomas: i have fallen many times and i where a helmet and a vest. apart from a broken finger, nothing. david: that's another sport i probably won't do. if i told insurance people i would do horse jumping, they 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 this?

thomas: it's great to work with so many motivated people. it's difficult to get good people, but we have good people and it's a pleasure to work with them. secondly, and ensure looks into every industry. from satellites to crocodile funds to travel insurance, it's a very broad view. certainly, it is really a place where you can do good for society. what i mentioned earlier around our approach on 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: the whole message you want to give is that insurance is doing a useful thing for society and no regrets about not going into investment banking, private equity, government, you're happy with what you are doing? thomas: i'm happy with what i'm doing, i don't know with the other things are about.

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