The Figuration Clerk

IFNY Free Enterprise Award honoree Don Kramer, easily one of the industry’s top exponents, recalled a bit of his history in the First National City Bank building that now houses Cipriani. He recalled the teller window just to the left of what is now the stage and the lines there, but most importantly, he traced his early progress in business and shared with the students present for the IFNY scholarship program, just how things can happen and where they can lead.

We excerpt from his remarks:

“Thank you so much for honoring me today. … I have to tell you that this is a very emotional moment for me…being in this building today brings me back to the very inception of my career. Exactly 58 years ago I opened my first checking account at First National City Bank in this very building…at the window at the back of this hall.

In addition, when I was growing up I never knew where Wall Street was because the train I took from Brooklyn to Manhattan made its first stop at Canal Street, about half a mile uptown from here. But then when I finally did come to Wall Street from Brooklyn College, I was able to take the subway directly to the Broad Street station which is directly in front of the Treasury building and the New York Stock Exchange just about a block from here.

I got my first job in Wall Street at Oppenheimer & Co. during my last year of college. Initially I was hired as a billing clerk typist. You know in 1957 all trades on the New York Stock Exchange were calculated by hand. We had no calculators — they didn’t exist. … I typed the handwritten calculations on an Elliot’s billing machine which would print the confirmation if the calculations were correct. The people who did the calculations were called Figuration Clerks.

Every one of you sitting here today has a phone in your pocket or purse that can not only calculate complex formulas but also run 90 percent of your day-to-day life both in business and personally.

But 57 years ago I was just a motivated employee looking to advance. I wanted to step up to the high level job of “Figuration Clerk,” so for three weeks I calculated trades.

You know, you learn how to speed add and subtract the same way you learn speed reading. You just do it.

So once I was error free for three weeks they let me go live. I did one-third of the firm’s trades…and proudly initialed my work with DK for Don Kramer. Unfortunately in Wall Street DK means “Don’t Know.” It’s like bouncing a check… The result is that the New York Clearing House had the largest number of Fails it had ever experienced from one firm. I got calls from screaming parties saying “My man met your man on the floor of the Exchange.” I said we honored the trade, he said “You jerk, they bounced it.” Realizing my error they changed my initials to FK. I won’t tell you what it means but for sure it was humbling.

I did this for a year and learned an amazing amount as I watched clients buy and sell stocks and bonds.

I was paid $65 a week.

In June of 1958, I graduated from University,… and so now I was looking to advance.… Oppenheimer & Company said Donald we like you. … How would you like to be a Margin Clerk for $100 per week. I said no, I want to be a Securities Analyst. They said we already have our analyst Leon Levy, we don’t need two. So I left and joined Moody’s as a municipal bond analyst for the same $65 salary per week.

But 10 years later I returned to Oppenheimer as a senior partner. In those days only partnerships were permitted on the New York Stock Exchange,…so we had unlimited liability. Well by then they knew my specialty as an Insurance Analyst pretty well and I was fairly well known in the industry.…so four years later, (like) most of us Oppenheimer partners (in) 1973 I joined Lloyd’s as a name.… We already had unlimited liability so the Lloyd’s risk was easy to take.

Only recently however did I realize that in 1973 I pioneered the Hedge Fund Reinsurance company business, or more correctly the investment oriented reinsurance company. This was 39 years before the next group of hedge fund reinsurers actually entered the business. Boy was I ahead of my time.

But in those days, 1973, Dreyfus and Oppenheimer were the number one and two performing mutual funds. They were generating 15% annual returns. To take advantage of this performance, I went to Bermuda and formed Opco Re. I figured that if we would write two dollars of premium for every dollar of surplus we would have three dollars of invested assets to manage. If we could earn 15% on invested assets we would generate a 45% return on equity. So all we had to do was break even on underwriting. So easy.So we gave our pen to Alexander & Alexander who put us in 200 treaties, … half in the US and half in Lloyd’s.

Shortly after we placed those treaties we received a very nice letter that said “Kindly favor us with your remittance.” I said “What’s this?” The manager at Alexander & Alexander said “A claim.” “Yes I know it’s a claim but on what,” for which they said “We don’t get the policy language til next year.” I said “But they haven’t paid the premium,” they said “Oh that’s all right just net it against the claim.” My partner Robert Rosenkranz and I looked at each other and said we are getting screwed.

Well after a flood of these letters, … we decided to shut the firm down. At the end of 1974 we put the company in liquidation. Believe it or not … in the year 2000 … 23 years later David Ezekial, a specialist in Bermuda, called me to say that we finally liquidated your company.

The result is that I have said many times that Opco Re earned me a “Doctorate In Failure.” And I have to tell you,…you learn more from your failures than you ever do from your successes.

Because since then I have started numerous companies,… Nac Re, Tempest Re, subsequently acquired by ACE, and then Ariel Re and now ILS Capital. … Clearly I owe those favorable outcomes to my mistakes rather than my successes.

And so I am standing here today as a former Figuration Clerk with a Doctorate in Failure to express my utmost gratitude for this wonderful recognition. Thank you all for participating in this magnificent luncheon. From the bottom of my heart I am truly grateful for today’s award. Thank You, Thank You, Thank You.”