Free The Butcherbird by Geoffrey Cousins Page B

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