Facing Disaster, Trustmark Launched a Renaissance

Setting tradition aside, the 95-year-old insurance company looked to Apple and American Girl as a guide to its future

By Jessie Scanlon

David McDonough, chief executive of Trustmark Insurance

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On a sunny day in June 2006, David McDonough, chief executive of Trustmark Insurance, was roaming Chicago's Navy Pier, talking to strangers. "We needed to understand what made people tick," says McDonough of the exercise, which was part of a two-day workshop designed to get his executive team to look beyond actuarial tables and stimulate thinking about the company's future.

After chatting up tourists at the lakefront amusement park, Trustmark's top six leaders boarded a bus for a tour led by a team from Play, a creativity and innovation consultancy based in Richmond, Va. (It has since been acquired by the San Francisco-based Prophet.) The bus stopped at CompUSA, Apple (AAPL), and American Girl (MAT) stores along Michigan Avenue before taking them to the Museum of Science & Industry, where they walked through an exhibit of Leornardo Da Vinci's journals, drawings, and models. "When they got back on the bus someone said, 'I think we're a company that is more like CompUSA. But what if we could be more like Apple,'" says Barry Saunders, the Play consultant who led the 18-month project.

The executive workshop was the first step in McDonough's attempt to introduce Trustmark—a 95-year-old Lake Forest (Ill.) health and life insurance company that embodied its traditionally conservative, risk-sensitive industry—to innovation. And it provided the inspiration for the internal branding that the 2,300-employee company would ultimately use: the Trustmark Renaissance.

A Turnaround Situation

Today, Trustmark is a company where fresh thinking is encouraged, whether it's a novel product or service, a new sales channel, or even a simple gesture to show appreciation to a co-worker. Play's Saunders says that after the official project ended, he still got calls from Trustmark employees excited to tell him that they had moved a team meeting from the conference room to a public spot where they could walk around and talk to people, or that they had created an idea-generating game.

The story behind the initiative begins before McDonough's 2002 arrival. In 1999, the company lost $12 million, as a result of settling several large claims in its group and individual medical businesses and overall consolidation within the health insurance market that was squeezing margins for midsize players like Trustmark. (The company has $1.7 billion in assets today. By comparison, Aetna (AET) reported almost $36 billion in assets in 2008.)

Worse yet, in 2005, after significant losses in its worker's compensation reinsurance business, Trustmark's financial strength rating was downgraded from A- to B+, a change that threatened its so-called voluntary business—options such as long-term disability or life insurance that employees can buy as part of their benefits package.

Revamping Conservative Thinking

From 1999 until 2005, the company focused on getting its financial house in order. Trustmark sold off businesses such as InfoTrust, a health-care software services business; stopped selling individual medical insurance; and invested its limited resources in streamling operations and improving its balance sheet. By late 2007, the company had earned back an A- credit rating. "But the dynamics of the industry hadn't changed," says McDonough. So with an ample cash cushion, McDonough decided to pause and figure out how Trustmark—and its employees—might evolve.

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