115-year-old Pan-American Life Insurance Group on track to surpass $2B in revenue

Insurance industry veteran José Suquet’s bags were nearly packed for a job in Miami in 2004 when recruiters looking to fill the top job at Pan-American Life Insurance Group in New Orleans came calling.

After studying the now-115-year-old company’s history, challenges and opportunities, he decided the role was too good to pass up, so he flew back to New York to pitch his family on a new game plan.

It turned out to be a good decision for all involved — especially for the legacy New Orleans-based insurer that was losing market share and seeing profits erode at the beginning of the millennium.

Since reporting for work in November 2004, Suquet has led Pan-American through a two-decade turnaround, helping boost its annual revenue from $284 million in 2004 to an expected $2 billion this year, an all-time high.

Today, the company’s 2,200 employees worldwide help sell life, health and accident insurance to groups and individuals throughout the United States and in 21 Latin American and Caribbean countries.

Suquet said he and his team reversed Pan-American’s fortunes by shedding unprofitable lines of business, selling the two New Orleans skyscrapers it owned, maintaining a conservative investment strategy and, most important, focusing on the markets that gave it its start — even though that means underwriting risk in some countries marked by political and economic volatility.

As a result, a business that at one point was in danger of getting downgraded by insurance industry ratings agencies instead began an era of unprecedented growth.

It’s a remarkable comeback for an enterprise that Tulane University business professor Peter Ricchiuti describes as the “biggest New Orleans business that few people have ever heard about” — and it’s a win for a city that has lost many corporate headquarters in recent decades.

It’s the kind of success that leaves Pan-American’s board wanting more — and Suquet said he plans to take the company to the next level.

The longtime CEO and chair of the board, who turned 70 in May, said a succession plan is in place but that he’s not retiring anytime soon.

“We’ve been able to bring this ‘grand old lady’ that had lost its luster to where we are now,” he said. “And we have very ambitious plans over the next five years.”

‘Lost their focus’

Pan-American Life was founded in 1911, when New Orleans was the largest city in the South and one of the United States’ most important gateways to Latin America.

Co-founder Crawford H. Ellis recognized an opportunity to sell life insurance to individuals and businesses throughout the Americas during his time as an executive at the United Fruit Co., the storied enterprise that a century ago was responsible for importing millions of bananas a year from Central America and the Caribbean.

One of the company’s first markets was Panama. Over the decades, it entered new countries and added new products, along the way weathering several wars, the Great Depression and all manner of political upheaval.

By the early 1950s, Pan-American was in business in nine Central and South American nations as well as half the U.S. states. And, by 1980, its New Orleans employee count had reached roughly 900, causing the company to move from its midcentury modern headquarters on Canal Street into a new 28-story granite skyscraper on Poydras Street in the Central Business District.

Crawford led the venture he co-founded for more than a half century before his death in 1966. Several leadership groups followed, including executives in the 1990s who prioritized expansion in the United States.

But that strategy didn’t pay off, Suquet said, which is why, by the time a recruiting firm was searching for new leadership in 2004, the firm’s board of directors wanted a course correction.

“Management at the time tried to be this company that they’re not, which is a large American insurance company, competing with the giants like Northwestern Mutual, Prudential and MetLife,” Suquet said. “But they had lost their focus on their core market, which was Latin America.”

‘All the opportunities’

Suquet, who began his career in the 1970s as a life insurance agent after graduating from Fordham University, had already notched nearly three decades in the industry when the opportunity to lead Pan-American came along. He wanted the job so badly that he hired his own consulting firm and spent time analyzing the company’s financials and strategy to create a business plan before he started.

His early days on the job were “rough,” he said, with unpaid claims piling up in one storeroom, and enough empty space on another floor to set up a volleyball tournament.

“We had just under $300 million of premium then for the total company, and no profits,” he said. “We were not making any money.”

One of the first things Suquet did was to ask ratings agencies, which were “knocking on the door to downgrade us,” for time to make changes. Then he began selling underperforming U.S. assets that were expensive to operate and required massive scale to be profitable.

These included a compliance-heavy broker dealership, a disability insurance business, and a product designed to cover funeral costs.

The insurer also got out of the real estate business, selling its headquarters building in 2006 and the InterContinental next door in 2013. The company now leases only two floors of the office tower that bears its name.

“We didn’t want to have 60% of our capital tied up in two buildings in the path of hurricanes,” Suquet said.

While Pan-American was making these changes, it also was reinvesting in Latin America — a largely untapped market that has been growing rapidly in recent years and shows no signs of slowing down.

It expanded in the region through a 2012 acquisition of MetLife assets in multiple countries, and it focused its efforts on existing in business in Colombia, where premiums grew from $1 million annually two decades ago to $200 million this year.

“We modernized it, invested in it and got a professional CEO down there,” Suquet said. “It’s been like that with every country we’re in.”

PALIG today

Pan-American is much bigger and more decentralized today than it was when Suquet arrived.

The company sells employee benefits and group insurance to a “who’s who” of American and international companies, including Walmart, Amazon, Dell and Microsoft — many of whom use Panama or Costa Rica as a hub for their operations in Latin America.

In 2004, the company had 500 employees in New Orleans and an additional 300 worldwide. Now it has over 300 in Louisiana plus another 300 across the U.S. The rest of its workforce is located in Panama, Costa Rica, Colombia and other countries.

Suquet said the company’s goal is to bring in more in premiums than it pays for claims and administration costs, while investing the money it collects in safe assets to generate additional income.

“As long as you manage the risk parameters on your investments, you’re going to do OK,” he said. “Ninety-seven percent of ours are in investment-grade corporate bonds. It’s not very exciting, but you don’t want to be exciting in insurance.”

These days, as three company presidents manage day-to-day operations, Suquet takes the long view, planning for the risks and opportunities created by the rise of artificial intelligence, ever-changing political landscapes and other factors.

“In our footprint, we have hurricanes, volcanoes, changing weather patterns, government turmoil, coups and everything imaginable,” Suquet said. “We’re always going to have the macro issues, whether they’re government inflicted, technology or catastrophes.”

He’s also setting ambitious goals.

It took Pan-American a little over a century to reach its first billion-dollar year — a milestone met in 2016 — and an additional decade to double that number. Suquet said he’s challenged his senior leadership team to hit the $3 billion mark within five years.

And at a time when a company like Pan-American could be headquartered anywhere, Suquet said he and his fellow leaders are resolute about keeping the business in the city where it all began.

“There’s just absolutely no reason to explore any other options,” he said. “We have a rich history here, and our costs would go up dramatically if we moved.”

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