All in the Family
BY SHELLY REESE
The co-CEO model is a rarity, particularly among the ranks of Fortune 500 companies. Some management pundits describe the model as the “knuckleball” of leadership: unconventional, tricky to execute, but with the potential to be exceedingly effective when mastered.
If that’s the case, Cincinnati-based American Financial Group’s Carl H. Lindner III and S. Craig Lindner, who have served as co-CEOs since 2005, have perfected a pretty wicked knuckleball. What makes the Lindners’ model work? The brothers say it’s the right combination of common values, different talents and teamwork.
Simply stated: “There’s a bigger skill set between the two of us,” says Carl.
Leaning on Experience
It’s impossible to truly understand the Lindner brothers’ successes as both business leaders and philanthropists without knowing their backstory.
Craig and Carl’s father, renowned business leader and philanthropist Carl H. Lindner Jr., formed American Financial Group (AFG) in 1959. During their father's tenure as chief executive, AFG served as the umbrella for a sweeping array of holdings including stakes in broadcast and media companies, insurance and banking concerns, food producers and the Cincinnati Reds baseball team.
To Carl Jr., there was only one way his sons could learn the scope of AFG’s operations and that was to jump in and experience it. That feeling perfectly aligned with the cooperative education (co-op) model that the University of Cincinnati (UC) pioneered in 1906 and still flourishes today as one of the nation’s top-ranked experiential learning programs.
“My father loved the co-op concept, and he put a customized co-op program together for his sons,” says Carl, who graduated from the University of Cincinnati Carl H. Lindner College of Business in 1975 with a degree in finance and was awarded an honorary doctor of commercial science degree in 2016.
Carl recalls working 25 to 30 hours each week at AFG while a freshman at UC. “During college, I did everything from being a repo man to counting change in the vault to underwriting car loans. For me, it gave extra meaning to what I was learning in school because I had a rare opportunity to see things coming out of management and finance classes through the co-op experience.”
Craig graduated from the UC Lindner College of Business in 1977 with a degree in finance and was also awarded an honorary doctorate of commercial science in 2016. He remembers listening to a UC professor describe what happens to policy holders when an insurer fails.
At the time, his father and a team of other insurance executives were working to restructure the faltering Government Employees Insurance Corporation (GEICO).
“We really started at the bottom rung of the company, but at the same time Dad would pull us into high-level meetings to observe what took place.” Combining an academic understanding with real-life experience “gave us a great view of the business world,” he says.
While the senior Lindner served as their primary mentor, Ron Walker was also an important mentor in their early business careers. Carl and Craig both worked closely with executives throughout AFG, all of whom shared a similar ethos. Working with those leaders helped the Lindner brothers recognize the value and effectiveness of high-functioning teams and a cohesive corporate culture – aspects of AFG they would cultivate years later as co-CEOs.
Those early years at AFG enabled them to do more than just learn the business under the guidance of seasoned mentors; it afforded them the opportunity to learn about themselves and explore ways to match their skills and interests with the needs of the organization.
"My father loved the co-op concept, and he put a customized co-op program together for his sons."
—Carl H. Lindner III, Co-CEO, American Financial Group
Carl, who describes himself as “an entrepreneur and calculated risk taker” gravitated toward AFG’s property and casualty operations.
“With every policy you write you are making a bet,” he says. “You are taking a calculated risk.”
Under Carl’s direction, AFG strategically repositioned its property and casualty operations, moving away from more commoditized offerings and into diversified, highly specialized niches. It launched a myriad of new divisions, including environmental, public sector, professional liability, aviation, and mergers and acquisitions liability and made several major acquisitions, bringing the total number of property and casualty businesses it operates to 34. During the past few years, AFG also expanded into Asia with the opening of Great American's Singapore branch.
Craig, who considers himself a team builder and a mentor, was drawn to the annuity and investment operations. Anticipating demand for a more value-oriented, consumer-friendly model, he revamped the company’s annuity business, lowering commissions and reducing expenses. This allows the company to give more value to the customer and still meet profitability targets. Today, AFG’s investment portfolio, which Craig and his team manage in house, is $45 billion.
The brothers work together on acquisitions, startups and decisions regarding capital allocation. During the Great Recession, when many of AFG’s competitors were watching their balance sheets dwindle, they used AFG’s strength as a diversified company with excess capital to dramatically expand the company’s annuity business. The investment paid off, and between 2010 and 2012, pretax core operating earnings within AFG’s Annuity Group grew at a 26 percent compounded rate.
Building Teams Starts in the C-Suite
The Lindner brothers have capitalized on their common foundation and shared values as well as their distinct skillsets to create a very effective partnership.
Recognizing that sibling rivalry would doom any future partnership, Carl says he and his brother “got over the unhealthy competitive spirit that maybe we had with each other in our 20s pretty quickly. The most important thing we learned was to try to communicate often and try to be as transparent as we can with each other. When things don’t work well, we aren’t doing that, and when things do work well, we are. The good news is that probably 95 percent of the time it works pretty well.”
Craig agrees. “As equal partners in the business, we need to be open- minded and listen to each other’s ideas,” he says. That imbues the organization with greater flexibility and creativity because “we have to be open to ideas that we might not have come up with on our own.”
From an organizational perspective, AFG’s joint leadership structure provides an added measure of organizational stability as the brothers serve as each other’s designated successors.
But one of the biggest benefits of the shared leadership model is that it provides a prominent example of the type of teamwork AFG expects throughout the organization. AFG’s 35 specialty property and casualty and annuity businesses operate as specialized, entrepreneurial teams, and the firm’s corporate culture extols qualities such as integrity, clear and open communication and respect for others – concepts that promote team building.
Fitting into the corporate culture is important. Because the Lindners attribute much of their success to their co-op experiences within the company, AFG is a strong proponent of the UC Lindner College of Business’ professional experience program. During the most recent academic year, almost 50 students co-oped or interned at AFG or within one of its subsidiaries.
“It has worked out incredibly well for us,” says Craig. Students gain real-world work experience, the company has an opportunity to identify talent early-on and both parties get a chance to try the relationship on for size.
“We’ve made some great hires. UC students are extremely smart and have an excellent work ethic, but there is a humility there that enables them to fit in very well with the organization. We have a bunch of superstars interested in building teams as opposed to individuals looking to get all of the credit for the successes.”
Recognizing that sibling rivalry would doom any future partnership, Carl says he and his brother "got over any unhealthy competitive spirit that we had with each other in our 20s pretty quickly."
Business is About More Than Just Business
Although the Lindners could justifiably boast about their corporate triumphs— shares of AFG stock are trading near an all-time high and the company has climbed to No. 411 on the Fortune 500 list — the brothers are reserved when discussing their business successes. Carl and Craig are even more humble when talking about their philanthropic contributions.
They say their father and mother Edyth led by example and laid the groundwork.
“Our mother nurtured a faith in Jesus Christ in each of us, and our father gave us the legacy of his giving heart," say Carl and Craig.
Carl and his wife Martha, BBA '78 in finance, support numerous charities focused on promoting education, aiding vulnerable and at-risk children and international Christian ministry. Carl and Martha, along with his parents, were instrumental in founding Cincinnati Hills Christian Academy, a non-denominational school serving 1,300 students from pre-kindergarten through 12th grade, and its sister school, the Otto Armleder Memorial Education Center. They also support Back2Back Ministries, an international Christian relief organization dedicated to meeting the spiritual, physical, educational, emotional and social needs of orphans.
As in his professional life, Carl says immersive experiences, such as visiting orphanages in Mexico and India, have been transformative for him. “When you go and you are a part of things, that’s where you begin to develop your passion and your focus.”
Having witnessed the devastating effects of mental illness on friends and others close to them, Craig and his wife Frances dedicate themselves to advancing research, improving care and removing the stigma of mental illness through the Lindner Center of HOPE. The nonprofit psychiatric treatment facility and an affiliated addiction-treatment center are jointly operated by the Lindner Foundation and UC Health. Since opening its doors in 2008, the center has treated roughly 30,000 patients from all 50 states and from 15 different countries.
"Our focus as CEOs is making sure we have the next several generations of leadership in place."
—Craig Lindner, Co-CEO, American Financial Group
Craig and Frances also worked with a group, spearheaded by brother Keith Lindner in 2001, to found the nondenominational Horizon Community Church, which now has more than 4,000 members. Craig and Frances have also been major supporters of several research projects related to blood cancers.
The University of Cincinnati has been a major beneficiary of the Lindners’ generosity. In 2016, the Lindner family and AFG made an $11 million gift to support the new $120-million home of the UC Lindner College of Business. The new 225,000-square-foot building will open in the fall of 2019 and alleviate the space constraints the nationally ranked business school is currently facing due to several consecutive years of record applications, record enrollments and record student quality metrics at both the undergraduate and graduate level.
In addition, the Lindners partner with and support many UC programs including the athletics department, UC Medical Center and the Carl H. Lindner III Center for Insurance and Risk Management within the business school. Carl served as a university trustee from 2013 to 2015 before transitioning off the board to focus on bringing professional soccer to the city of Cincinnati. He is now the proud owner and CEO of Futbol Club Cincinnati (FC Cincinnati), which began playing at UC’s Nippert Stadium in the spring of 2016 and has attracted record-setting crowds during its first two seasons in the United Soccer League. FC Cincinnati is one of 12 clubs currently vying for a Major League Soccer expansion berth.
“Our involvement with UC touches so many different areas of the school and our interests,” says Carl. “It’s been fun working with the school on everything from predictive analytics projects to partnering on FC Cincinnati and the insurance center.”
But the brothers say their involvement with the school isn’t just a matter of alumni pride. At this stage of their careers Craig says their primary business focus as CEOs is on “making sure we have the next several generations of leadership in place.”
And cultivating leaders – as the Lindners can attest – is a process that starts early.
Shelly Reese is a Cincinnati-based writer