The Travelers Companies, Inc. (TRV) Earnings Call Transcript & Summary

Good afternoon, and thank you for joining us. I'm Joan Woodward. I'm honored to lead the Travelers Institute. Welcome to Wednesdays with Woodward, a webinar series where we host leading experts for conversations about some of today's biggest challenges. Before we get started, I'd like to share our disclaimer about today's webinar. A very special thank you to our partners today, the RAND Corporation, MetroHartford Alliance, the American Property Casualty Insurance Association, and the University of Connecticut School of Business MS in FinTech program. Since the start of these webinar series, we've hosted programs looking at the economic and geopolitical risks and how business leaders, like ourselves, can navigate through them. Today, we have a laser focus on geopolitical risk with former U.S. Secretary of Defense, Chuck Hagel. Today's session comes at a previously unimaginable moment. We are now 3 weeks into a horrifying war in Ukraine, the unprovoked attack by Russia on a sovereign nation of 40 million people, has really sent shock waves around the globe. Ukrainians, who were going to work and school and eating out in cafes just a month ago, are now hold up in basement shelters, trying to flee to safety, fighting for their very existence. Today, President Zelensky gave a historic speech to the U.S. Congress, showing the world a video with cities and villages in Ukraine in a desperate, desperate situation, without food, water, electricity, with apartment buildings and hospitals being leveled. The UN reports that 3 million refugees have fled to the neighboring countries. The U.S. and EU have responded with sanctions that have had a devastating impact on Russia, the economy and are having an impact here at home, as we all know as well. Here to help us understand this crisis in Ukraine and some of its really big potential ramifications for the world is former Secretary of Defense, Chuck Hagel. Secretary Hagel was the 24th Secretary of Defense, serving under President Obama, a Republican serving in a Democratic administration. He's the only Vietnam veteran and the first enlisted combat veteran to serve as Secretary of Defense. Prior to his service at the Pentagon, Secretary Hagel was a U.S. Senator from Nebraska from 1997 until 2009. He was a senior member of the Foreign Relations Committee, the Banking Committee and the Intelligence Committee. Prior to his election to U.S. Senate, Mr. Hagel was President in McCarthy & Company, an investment banking firm in Omaha, Nebraska. He currently serves on several boards, including as a trustee of the RAND Corporation. Mr. Secretary, welcome. We are grateful to have you and give your insights with this terrible situation in Ukraine. Let's start with the latest situation, as we know it. We've all been watching the terrifying footage on TV and in social media. So give us your thoughts on President Zelensky's speech to the U.S. Congress today, and how he really wove in parallels to Pearl Harbor, for example, or 9/11 for Americans. And again, thank you for being with us.

Joan, thank you. I assume that you have my video on, and we're all good. Thank you very much.

We are.

And I appreciate an opportunity to share some thoughts with you and all of your friends and colleagues who are on this call. This is a very difficult time, probably as difficult a time in the world as we've seen since World War II. And this time that we're going through -- and no nation is untouched by the events in Ukraine. But this time, we'll usher in a new world order. The 75 years that we've had -- the world order that we built with our allies has generally prevailed, and it's prevailed very effectively and very well. When you think of 75 years of no world war, no nuclear exchange, the capabilities and capacities of most nations, not all, have improved dramatically. People are better educated. There are more people free, more opportunities, more education, more exchange programs, still a lot of problems in the world. But the last 75 years, I think, historians will write, have been pretty good for most people, not all people and we're still working on it. But what this represents now, what we are going through in the world, will be a change. And we've got now 3 big nuclear powers in China, Russia and the United States, other nuclear powers as well, but threats of more nations and unstable nations wanting to join that club. That's just one peek at what we're going to have to deal with and what kind of world order we're going to have to rebuild after this is over. No one will be untouched. It will hit us all economically in every way. Obviously, energy is a big issue. That's already being affected by this war. But there will be more, banking, supply lines, exchanges in every way, educational exchanges. I don't think we should run from it or wring our hands. It is what it is. It's a tough world, 7 billion people, all rumbling around in this thing, trying to do something good and bad. So we're going to have to rebuild and restructure. We can do that. And last point I would make, I mentioned capabilities and capacity. With the challenges being more significant for mankind, each generation in history has had challenges, of course, but this time and the generations coming in behind us have more capability and more capacity than any nation in the history of man to deal with these complicated problems and challenges. And I think we will. This is a difficult time for a lot of people right now, especially the poor people of Ukraine. How it ends, when it ends, I know we'll talk about some of those things here in a minute, but that's all unknown. But anyway, as serious as this is, and it's damn serious, it's the most serious time since World War II in this country, there's still a lot of hope. And there's a lot of sacrifices going with it, as President Zelensky mentioned in speech, but we can get through this, and we will.

Thank you for those opening remarks. You were Secretary of Defense in 2014 when Putin decided to invade Crimea. You've met Putin several times. What did you learn from your experiences with him? And I think George Bush said something about, "What did you see in his eyes?" Tell us -- I'm sure all of my viewers on this have never had an opportunity to meet Mr. Putin, and we'd love to hear your perspective on how we should think about him.

Yes. Well, I think in describing Putin, you've got to -- like any of us, you've got to review where he came from, what shaped him, how was he formed, why was he shaped in the way he was. He's a KGB man. And that doesn't say everything you need to know about him, but it says an awful lot. It says that he became a master at deception, dishonesty, disinformation, misinformation, lies. And he runs his country, he leads his country in every way based on those KGB principles. And he is smart. He's ruthless. When I looked into his eyes the first time, I didn't see anything going quite like President Bush did. I saw a cold, steely, inhumane individual, that he will risk anything, and he will do that in a way that's very deceptive. But now he's been on the world stage for so long, it's not as disarming because we know what he is. We know what he's done in Chechnya. We know what he did in Georgia, 2008, when I was Secretary of Defense in 2014. And you've seen the pattern of how he works and especially deceiving his own people. That can only last for so long, and I think he knows it. But this guy is someone who we have to take at face value for really what he is. I've always believed in my life in different jobs I've had, private sector, public sector, that you can find something redeeming about anybody if you look hard enough, you go deep enough. In his case, I can't say that.

It's really chilling to hear you say these words about someone who clearly is intent on massive destruction for the Ukrainians. So as we sit here, it's day 21, Mr. Secretary, of the war. How has it gone for Russia? And did you expect the Ukrainian defenses and the Ukrainian, I think, they call them the Civil Defense Forces, just people, average people picking up arms to defend their cities, how is it going for Russia? How is it going for Ukraine?

Well, for Russia, it's not going well. Yes, they've got the manpower and the armaments that outnumber the Ukrainians in every way. But this has been a disaster for Russia, total unqualified disaster. Whether you judge that from where they are now after 21 days, the casualties they've taken, the defections of their own troops that they've seen, the information now, reality, real information, starting to seep in to the Russian public, the unrest in Russia, civil disobedience, thousands of people being arrested. You add all that up, that's not good news for Putin. That's not good news at all. For Ukraine, obviously, not been good news, the kind of casualties they've taken, this random slaughterings in some cases by the Russians, the destruction of their infrastructure, many historic sites and historic buildings. But that said, on the Ukrainian side, they have a spirit that, I think, the world, but especially Mr. Putin, totally, totally underestimated. He misjudged that completely. I'm no scholar and no one has ever accused me of being a scholar, but I don't know a lot about a lot of things and I'm no specialist in anything. But when I went to college -- actually went to 5 colleges.

Five.

Before I got out, but I took 16 hours of Russian history. And one of the things -- I was just interested in it, one of the things I learned, and then I've been to Russia many times, about Russia, their people. 500 years ago, when that Russian Empire began, it began in Kyiv. That's where it started. And the Russians and the Ukrainians have always had a very strong, close relationship. That's going to be one of the problems, I think, most difficult problems that Putin is going to come out of this with. They've got aunts and uncles on both sides. And so you're asking young Russians to go kill their aunts and uncles, who live in Ukraine, and he lied about why he sent them in. So when you add all this up, yes, it's been bad for Ukraine, terrible for Putin. But at the other end, and as the great hockey players always say, I don't -- I never skate to where the puck is. I skate to where I think the puck will be. Well, where the puck is going to be in the Russian-Ukrainian conflict, not with Putin, he'll be a pariah and the Russian people will be outcasts for many years.

Yes. The economy of Russia, as we all know, the market has been -- the stock market has been closed there. The ruble is completely devalued. U.S. and other Western companies are pulling out rightfully so. So you're right. The pain inflicted on Ukraine is vast, but also the Russian people as well. So let's talk a little bit about the U.S. government and NATO. So the U.S. has really made clear that we were not going to put boots on the ground or planes in the air. We've recently kind of scratched the idea, at least temporarily, of helping Poland give those MiG fighters to the Ukraine. How can we help Ukraine defend itself? Is it really just about the Javelin and the other kind of shoulder-launched weapons to get to their tanks?

Well, let's start with what President Zelensky continued to ask for in his speech this morning to the Congress and what he's continued to talk about over the last 3 weeks. I think what you're seeing is, in his request for now a humanitarian no-fly zone, not a total no-fly zone, which the United States and our NATO partners have not agreed to, as it was presented a couple of weeks ago, a no-fly zone total. The humanitarian no-fly zone represents, I think, a realistic possibility now after we've seen for 3 weeks the world and the United States, and you know what the polling is on this. The polling is overwhelmingly in favor of Mr. Zelensky and his request here in the United States. The Congress is moving in that direction, too. The continuation -- and I think the President is going to have to really seriously consider a humanitarian no-fly zone, and he's got to do that very, very quickly. I think the pressure is going to increase on him and his own party as well. My sense of that is I think it's the correct thing to do. I think that it's the -- we haven't talked really yet about the humanity here, what kind of people are we, what kind of people really reside in this world. Yes, we have bad people. We know that. We've always had bad people. But there's a humanness to this and a humanity that we can't escape, and we've got to step up to it. And I think for those reasons, military reasons as well, strategic reasons for not just Ukraine, but for NATO nations, especially those Eastern European NATO nations that were once under the influence of the Soviet Union, I think it would be the right thing to do. We'll continue to provide Javelins and Stingers and very, very effective military weaponry for -- and drones, intelligence, also for the Ukrainians as well as cyber. The cyber is important here as well. And a lot of intelligence sharing is going on between NATO countries, the U.S. and Ukraine. It's something that no one can talk about. But I mean I know that's going on, and that's very effective. And that includes what's going on in Russia. I think we have to continue to do that, plus the humanitarian, food, medicine, all the things that we need to get to them for help. But I think bottom line is we're going to have to step up. And the NATO, European Union nations are going to have to step up and do more. One other thing on that, too, Joan. This isn't just for right now or for the next week or the next 2 weeks. This is for the future as well because we cannot allow this to stand. I mean, history has taught us a lot over the years. Go back to 1938 and move forward. And when you're dealing with guys like Putin, if you don't stop him, if you continue to appease him, "We'll take a little of this, take a little of this," they'll just keep coming back. And the message that sends to the world, to China, very significant in this -- in how this is all playing out, to Iran, North Korea. We don't want that signal to be sent and received. So we've got a lot at stake here.

Thank you for that. Let's talk just a little bit about the humanitarian no-fly zone. So there's now some suggestions that maybe just do it over Western Ukraine. Is that possible that we would have our U.S. military and NATO put a no-fly zone around Western Ukraine to get those refugees safely out? Because we saw when -- I think it was Mariupol. There were supposed to be some ceasefire to get the refugees out and then the Russians didn't respect that and the refugees got trapped. So is it possible now, do you think, the next step for the U.S. is to agree to this limited no-fly zone in Western Ukraine?

Well, there's going to have to be something like that. I know the Defense Department, our intelligence agencies, are working very closely with our NATO partners. As a matter of fact, Lloyd Austin, as you know, is in Brussels today with the other ministers of defense from the 30 NATO countries. But there's going to have to be something like that. Can we do that? We have the capability, NATO has the capability, to do something like that. The reality for Putin here is he's got big problems. We've talked about some of them, but they're only going to get worse. I mean just getting fuel to his tanks and armored cars and the large package of logistics, food, all of it when you're moving 100,000 -- over 100,000 troops with the kind of armaments they're moving and equipment they're moving, that's essential. Go back just to study World War II a little bit. I mean Patton got stopped in Europe because he couldn't get his tanks refueled and food for his troops. Those are realities that sometimes are overlooked. That's one dimension of Putin's problems. And he doesn't have the kind of capacity to take on NATO and the United States in something like this. I mean, he's already got a huge problem in Ukraine. I mean a huge problem. I mean -- then to add, going after the United States or NATO countries, is this a risk, whatever we do? Yes, it's a risk. That's why we have to play it out carefully and so on. But the much bigger risk to me is the consequences that will come out of this if we don't do something more. We're doing a lot, and we should be doing a lot. But if he's not stopped, Putin is not stopped, the consequences, in my opinion, are far worse for the long term in the world than the risk of alienating him and having him try to stop us. I don't think that, that risk overrides the huge consequences that are coming. But make no mistake, again, Austin is in Belgium, meeting with ministers of defense and NATO. And what they've been trying to do and figure out, Pentagon here has been, is what are the ways we could stop this. I mean we're on a diplomatic track as well, but you can never count on that. Putin's very clever at that. He plays the diplomatic -- he lies. He sends Lavrov, or one of his top people, to a diplomatic meeting. Well, maybe we can do something, maybe. Well, let's meet again next week. Well, that's what he's been doing here. I think they've met 4 times. All the while he's bombarding Ukraine, stepping up the intensity of that bombardment. And yes, we'll meet next week, we'll meet next week and so on. That's his game. So we're going to have to, again -- and I think President Biden and his -- Blinken and all of them understand this. We're going to have to, like I said before, all of us step up our game here.

Yes. Well, this is really just terrifying. What about -- Putin has just hundreds, if not thousands, right, of fighter jets in his arsenal. And I guess I'm curious why he hasn't used them yet. If he's losing this war and losing the ground war and maybe getting ready to go directly into Kyiv, why isn't Putin pulling out his bigger guns on some of his air force fighters?

Well, good question. Yes, I don't know. But what I think he's doing and what's happening is that I think he never believed that he would have to use his air force.

I got it.

And they're very vulnerable, his air force, because you've got to come in -- at least for the fighter jets, you've got to come in low enough to be in the range of our Stinger missiles and Javelins and other shoulder-fired weapons, that you can take down those planes. So they're not invulnerable. I think another reason, too, is that he probably was smart enough to understand that some of those planes could be lost. When you lose a plane, as you know, in combat or anything, but especially something like this when the whole world is focused on this, that's a big deal. And the news leads tonight, 2 MiG-29s, 30, whatever, shot down over Ukraine today. And that's something he doesn't want to see. If you lose a tank or an armored personnel carrier, well, that's a little lower profile than losing a sophisticated fast jet that Ukrainians bring down, and they can bring them down and they have been bringing planes down, especially helicopters, Ukraine have.

Wonderful. Well, interesting. What about your thoughts on this notion that he might actually use chemical, biological or vacuum bombs in Ukraine? Does that change the chessboard for you in terms of how you think about NATO and U.S. response, if chemical, biological, vacuum bombs are introduced in this conflict?

Sure. It has to change. And I'm sure Pentagon -- and I haven't been talking to a lot of them over there. I stay out of their way. But the ones that I've been talking to at Pentagon, they have been thinking -- that's what the Pentagon does. That's what part of the defense capability of our national security system is all about. You plan for every, every, every eventuality, nuclear warfare, chemical warfare, I mean the whole thing. So I'm sure they have been planning for this. What would we do? How would we do it? Coordination with NATO partners. What kind of equipment would we need? And all that comes into a planning equation. And as Putin has rattled the cage on this and he's drawn out his nuclear saber and his chemical weapons sabra, that makes a little more difficult. But it is -- it's not anything that I'm sure our people didn't anticipate at all, that he would say something like this. I don't know what he would do in that -- if it gets to that point where he's really losing badly. My guess is he would try to pull some diplomatic rabbit out of the hat before he would resort to chemical weapons, biological weapons, even nuclear weapons because he is smart enough to know that if he did that, then we would truly have to respond in some very, very bad way. And he's smart enough to understand it. He's smart enough to know too that he's alone in the world. And I know the Chinese play this little game, "We're in with you, we love you very much and so on." The Chinese and Russians don't like each other. They never have. They've been up and down. And what binds them together in any way today over the last few years is the United States. They are both opposed to the United States in every way. The Chinese more on the economic side, that's why they steal all our secrets, also on Taiwan. But the Russians are a little different. But Russia has no friends. It has no friends, I mean, after that United Nations vote a week ago, where 141 nations voted to condemn Russia for what they were doing, 141, 5 voted against it. And then the rest abstained, as China did. But China didn't vote against it. They abstained. And the nations that abstained, Russia's only friends, Syria, North Korea, Eritrea. So it's -- you can see where Russia is in the world and threatening the world, threatening the Ukrainians, with chemical, biological or maybe a tactical nuclear weapon, that's something I don't know. I mean you've got to get and be prepared for every eventuality. That's something I think would be far from his present thinking on what he should do. Again, my guess is that he would try to diplomatically get something and diplomatically end this that way rather than taking it to -- take to an extreme.

Thank you for that. So you mentioned China. I want to talk about China for a minute. Do you think this emboldens China kind of while we're still focused on the events in Ukraine? Does China maybe take this opportunity to do something in Taiwan and -- because we're so focused on what's going on in Europe, that maybe he feels he could take on Taiwan now, and we would have to kind of think about fighting 2-theater war?

Well, again, that's a possibility, eventuality. We plan for it, have to plan for it. My guess is that China would not do that right now. And the reason I say that is because China doesn't have to do that. I think what China is doing, and I think it's evident over the last 21 days, is they're carefully assessing all of this. They are carefully assessing European, NATO, U.S. weaknesses. I think the Chinese probably have, like Putin, have been very surprised at the unity of the West in the United States and NATO and European Union holding together. And I think surprised at the world reaction to this. So my guess is that China would wait this out and would watch and would assess. They're assessing the Russian weaknesses, too. They may be a little surprised at what's going on. I was given a pretty good piece of advice in China back in January of 1983. I had started a cellular telephone company and then we started an international company as well because I always thought if cellular telephone were good, important, beneficial for the United States and developed countries, then it would be 10x more efficient and effective for developing countries. As for us, it would just be a luxury for us back in the age. But for them, with no infrastructure, it could be an immediate answer for no telecommunications. Well, I went over to China in January of 1983. I was on the first or maybe second flight out of New York, one flight from New York to Beijing a week. We would fly over and a week later we would come back. And we got there on New Year's day, 1983, and got off the plane and Mao uniformed security guards were walking around with their automatic weapons around the airport. There was no other plane on the tarmac. We went to Tianjin, Beijing, Shanghai. We were there about 10 days. I took a Motorola telephone engineer with me with my team of 2 other engineers because in those days Motorola was the only American firm that was making cellular telephones, the size of your shoe. And I was giving these explanations of cellular telephony, really all of this is wireless telephony. And about the fifth day, sixth day I was there, this old Chinese engineer walked me out of the meeting. He spoke very good English. And he said, "Mr. Hagel, that was a very interesting presentation." But he said, "You better remember one thing." He says, "You have to remember one thing about the Chinese." He said, "We've been around a long time, close to 5,000 years." He said, "We're very patient. We're very patient people in everything we do." And he looked at me, and it was like my grandson talking to me. Very serious, didn't blink, and we kept walking. I've always remembered that in dealing with the Chinese. They're patient. They know what they want. They know how they're going to get it, but they're patient, they're patient, and they'll wait until they think the time is right. So I mean I may be totally wrong on this, on everything I've said. I could be wrong on everything. But I don't think the Chinese would move on Taiwan at this time. And they have more reasons, too.

Yes. Good. Well, that's good. That's good to hear. Do you think the Chinese will arm -- first of all, give financial support and somehow prop up their economy in Russia in some way through the banking system and/or do you think they would actually give them direct military assistance?

I think it'd be very doubtful, in my opinion, that the Chinese provide military assistance to the Russians. On the other elements, the banking work through Chinese banks and so on because of the sanctions, the embargoes and because the world is so interconnected, as you all know. I mean everything we do, we have, we sell, we buy, everything that you get out of the store and get is somehow connected with a supply chain issue with energy. Russia, big supplier of aluminum parts, copper. All countries -- most all countries have something. But Russia and China, both are large exporters. But the significant thing about China and their exports, they do 10x more business with the Europeans than they do with the Russians. And maybe it's greater than 10x, but significant, significant difference in their business economic relationships with Europe than with Russia. So I think, again, the Russians will be very patient, be very careful. I'm sure there's going to be some interconnect with trying to launder money through China. That's the way China operates as well. But I don't think they're going to get themselves too far out in supporting Russia. I mean they'll say the right things, but they've been pretty quiet. And so we'll see. But I don't think they'll do much. And also, they don't like to get dragged into messes, especially war military messes. And I think they'll be very careful there. I don't know what Xi's -- all these dictators appear on the outside to be very strong, very dominant. But it's such a close society in China. You don't know really how strong he is. And that's both good and bad, because the military has always been behind the leader, whoever the leader was. And the military would make the most significant decisions on what China would do. That's been eroding somewhat over the last few years as Xi has been leading the country. But he's done some things that I know the military doesn't agree with. And so you never know when the politburo gets together and decides, well, is Xi going to be with us, leading this country for another few years or not? We need a new leader. You don't know. It's so close. And Russia has got some of that same thing, too. It's who influences and who really influences, not just Putin, but the direction of the country. Those are always wildcards in these things that you're never, never sure of. And if things go badly for a leader -- I mean, Khrushchev is a good example of that. They dumped him after the Cuban missile crisis. I mean this is not now in the early '60s. We're eons past that. But in totalitarian societies and authoritarian governments, that's always something you watch carefully. Our intelligence is also watching that carefully, both China and Russia.

Okay. Thank you. We have over 100 questions coming in from the audience. And so we're going to try to get to a number of them, but I do want to hit on 2 other topics before we go to audience. One is on cybersecurity. And as you know, we sell a lot of cyber insurance to a lot of businesses throughout the world and especially in the U.S. And this is a great concern that this war can cause a lot more cyber attacks on businesses. And then also, can you talk about state-sponsored cybersecurity. The Russians and the Chinese kind of taking advantage of this period in time, hacking all sorts of businesses in the U.S. and critical infrastructure. Do you think that Putin is capable of enacting another cyber attack to bring down our critical infrastructure, like pipelines or electrical grids? Do you think we should be concerned about that?

Damn right, we should be concerned about that. We're not, I don't think, in particularly good shape when it comes to hardening our infrastructure capabilities in business. A lot of reasons for that. We're getting better. But first, our government agencies, we have the best, smartest, most difficult to penetrate cyber capabilities and very significant, offensive cyber capabilities in the world. The Russians are very good. They're very good at this. The Chinese are good. But the Russians are very good. And so we have been dealing with this for years. But the vulnerability, a lot our corporations, our private sector domain, is a concern. They're not good enough. Defenses are not hard enough. And we all need to do more. One of the problems, maybe the biggest problem here, is that when the Congress -- and I was in the Congress at the time when 9/11 hit, and for about 1.5 years, we were focused every day in the Congress, how do we get better? How can we reach out and understand, stay ahead of the game, terrorists? This has never happened to us before. Who failed? What happened? Well, we did a number of things. One thing we did was we developed a new department, the Department of Homeland Securities. We rolled up 22 different agencies and departments into 1, Department of Homeland Securities. That was one thing with broad new powers. We passed laws like the Freedom of Information Act in different ways. We brought on a new department out of the Department of Defense, the Cybersecurity, NAS -- I mean, NSA. And we put within those departments the capabilities, the dollars, professionalism, the engineers to work on cyber. All of that came in about the first 1.5 years after 9/11. But the thing that did not happen has not happened since. We had a problem between the private sector continuing to protect their internal security, their freedom, so that they wouldn't be under the control of the bureaucracy of the government in order for the government to protect them. And we had all the capability over in the government side, over NSA, Cyber Command, Department of Defense, so on and so on. But the private sector kind of got left out. And so we needed to pass a law to bridge that. So like I said, we would honor the privacy, security of private sector -- of the private sector, but at the same time, still benefit from the immense ability and capability that the government had. Well, that's never really been done. We've never done it, and that's a failure, and it hurts business. And we don't talk about it anymore. So I think the private sector is getting better every day. They're being -- becoming more aware of it every day. They're hiring the capability they need to hire, the people they need to hire or the experts to do this. But it's a vulnerability. It's always going to be a vulnerability. And like anything, you try and stay ahead of it through good intelligence, but everybody has got to be smart here. And we just got too many areas that just aren't very smart.

Okay. Thank you for that. We are on the job in terms of helping businesses mitigate the risk of cyber and that's something that we are -- it's a very large part of what we worry about in the insurance industry, writ large, not just at Travelers, but it is definitely on the top of mind for our business clients. So let's talk about...

Well, Joan, I'd just add one thing to what you said. I've said at a RAND Board meeting, I don't know a few years ago, that I thought cyber was the most difficult threat to this country and the most real threat to this country. I mean we talked about nuclear weapons, chemical weapons. All that's true. Those are threats. But cyber, it's deadly, it's quiet. You don't know where it's coming from. I mean it is deadly. And you talked about taking out power grids. It could take down the banking system in New York. I mean it could touch anything. And it does. They try all the time. But no, it's going to continue to be a vulnerability of our country. We're getting better at it and we're smart. We've got the best people, but it's still a vulnerability.

Thank you for that. We really appreciate this. Again, for us, it's a huge focus. So thank you for that. So let's bring it home, Mr. Secretary. We have all watched the political landscape over the past number of years kind of change and shift. And the blame game is real, right? Whoever's sitting in the White House generally gets the blame or the credit for how people are feeling in their own economic situation. So with the gas prices, with inflation, with supply chain challenges, Russia is the largest producer or exporter of wheat, right, and iron and nickel and palladium and steel and other commodities coming out of Russia. And of course, there's lots of disruptions that we're facing now in the U.S. because of that. We saw the protest just for a few days in Canada and the trucks trying to come over the border while with just-in-time inventories and a lot of our car manufacturing, all of those parts weren't getting in. So they were shutting down plants for a week at a time. So this disruption of, again, the global supply chain, not just because of pandemic, because we've experienced that, but now with the war. How do you think -- how much tolerance do you think the American people have for even higher gas prices, higher inflation to support the people of Ukraine? I mean it is inextricably tied to each other, the amount of economic pain in the U.S. that we're feeling directly helping the Ukrainians to fight off Putin. So how do you think -- you were a politician, obviously, for a bunch of years. You were a businessman. I didn't know that you were one of the first to go over to China and work on what then we would call the iPhone, the early iPhone probably. So give us your perspective on how the American people can support the Ukrainians by having these higher prices, disruptions in our economy?

Well, everything you said is absolutely right. I mean starting with the fact -- and I've always believed it, too. A president, most times, gets too much blame for things he really can't control and often too much credit for things he didn't control. But that's just the business. If you want to be president, you're just going to have to accept that. That's -- but that's the way it is. So far, as you know, the American people have hung in there pretty well. I mean the polls show that. And I think every night, people watch the news, read a paper, however they get their news and communicate. They see these terrible scenes of Ukrainians being killed, a maternity hospital being hit and so on. But as this goes on -- I mean, you're right. I mean how much will the American people take. And I do think that in some ways, maybe in many ways, what is happening to the Ukrainians and what the American people are seeing around the world and what's going on and the acts of kindness by people all over the world for the Ukraine and America, I think that's touching them in some way that maybe nothing else has touched them in a long time. Certainly Vietnam, they weren't touched. Iraq, they weren't touched. Afghanistan, they weren't touched. But something like this, for a lot of different reasons, I think they're seeing something in themselves. We talked about humanity before, in the humanity of what's going on in the world. What is going on in the world? How can we stand by and let this happen? I know I'm going to have to pay more for gas and more for milk and hamburger and so on. But I think that American people will hang with the President in our country and our policies for a while. Now if this goes on for 6 months, 8 months, a year, I don't think it will, or whatever that time period is where people just say, "Enough is enough here. I just can't do it anymore. We've got to change." And you've got an election coming up in November. And that's the way people display, indicate where they are on that political spectrum on "Do you think the President and his party are doing a good job? Or do we need a new party and a new leader?" And so the American people will have that opportunity as they do every 2 years for Congress and every 4 for a President. And that's why our founders wanted the House of Representatives to have just 2-year terms, so the American people had some control of their government. So we'll see in November, I think, is somewhat of an answer to what you're saying. But so far, I've been impressed with where the American people are generally. I mean, I know people have different opinions on different things. But generally and a majority of the American people are hanging in there. So we'll see.

Okay. Thank you for that. We're going to get to a couple audience questions now. This is from Javier Perez at Lockton. Do you foresee the disruption to oil and gas production accelerating the globe's transition to fossil fuels from fossil fuels to renewables? So the wind, solar, hydro, is this disruption to our oil shocks around the world can accelerate that or do you think it's going to be just par for the course?

Well, that's a good question because, first of all, it puts the President, President Biden, into a very tough spot. I mean he has said, ran on a platform of renewable fuels and downgrading, eventually eliminating carbon producing fuels, fossil fuels. So now we've got the reality of an energy crunch, not seeing enough oil produced and distributed around the world, prices go up. And I think he's going to have to move toward increasing fossil fuel production here in this country. I mean, there are just so many dictators that have oil that you can go to, like Venezuela, and we don't have much of a relationship with Saudi Arabia, and ask them to increase their production. That presents another problem for the President in this country when you do that to a dictator in Venezuela that we've cut off all diplomatic relationship. He then have to send a delegation down there with a hat in hand, and say, "Please, Mr. Maduro, increase your oil production." And so it brings into conflict so many of President Biden's priorities. And this won't end the day the Ukrainian war ends. This is going to continue to play out. And obviously, the Middle East and OPEC have their own view of this. And I think the young leader of Saudi Arabia, MBS, is kind of enjoying sticking it to Biden because Biden has not been particularly attracted to him and has not been particularly enamored with him. And UAE is kind of in that position. So it's a difficult situation. But the United States could produce more and could -- I mean, it won't be tomorrow. They have to gear up in the drilling and especially if they do more fracking. But yes, it's going to be -- it's a difficult situation now. It's going to continue to be a difficult situation. And that comes on top of the other problems that we -- and still have, COVID, and the supply line change that are problems that are coming back with the cargo ships anchored off a number of our ports. I read the other day where they've doubled in the last 2 weeks. So all of these factors coming down on us at the same time and the war, of course, inflation, which is a product of a lot of this as well. And where the Feds are going to come out on continuing to increase interest rates, if that's the direction they're going to take, and they started yesterday or day before. So your question is a very valid one and a good one.

Okay. Another one coming in from Peter French. Mr. Secretary, do you believe Russia will totally overcome Ukraine? If so, what will the aftermath be in Ukraine? And will we let that happen?"

Well, I don't think that the Russians will completely overtake Ukraine. Meaning I don't think that they -- first of all, the difficulty of doing that, a country as large as Ukraine with a population of 44 million people, most of them pretty educated, sophisticated cities. We realize that over 3 million have left the country, of course. But to occupy -- Russia occupy Ukraine, that would be a very difficult thing. And I don't think Ukrainians will let that happen. I mean I do think they'll fight to the last person. If they did, if the Russians did occupy Ukraine, that would be a different story and moving the world in a different direction because what that would say that the free world, consisting of most countries in the world, would allow a dictator to invade, occupy and take control of another independent country in Europe. The consequences of that would be horrendous, I think. That would embolden China. That definitely would embolden China. And there'll be other consequences, like North Korea's rockets, what they're doing. Iran needs help. Iran needs to renew that 2015 JCPOA deal, but they won't renew just at any price for. But this is thrown -- that process, JCPOA, back into a cocked hat with Russia now getting involved, as you know, and wanting certain demands and changes in what I understand to be pretty much an agreed deal. And I think it's the right thing to do, too, by the way. I helped -- when I was Secretary of Defense, with John Kerry and the White House on that JCPOA deal was eventually signed in 2015. It's the right thing to do. And as you know, the signers included China and Russia as well as Germany, France and Great Britain and Iran and the United States. That was significant, significant. So Russia is screwing around with this renewal of JCPOA, which could end it. So bottom line on your question is the consequences for a complete occupation of Ukrainian -- of Ukraine by Russia would be, I think, devastating, but I don't think that will happen.

So thank you for that. And I'm sorry we didn't get to more audience questions. But in the last couple of minutes that we have with you, Mr. Secretary, fast forward a month from now, where do you think we are in a month, 2 months?

Well, we may need that big red umbrella of yours, bigger, to help us all. And again, I've been wrong on a lot of things, and I may be wrong on this, too. But I think you mentioned a time frame, a month or 2 months. I think the war will be ended in 2 -- within 2 months. I don't think the issues will be solved, like what Putin's demands were and still are, which started the whole thing. I think there will be a lot of issues and problems that we'll have to deal with. But I think the war itself, in 2 months, will have ended. My guess is there will still be skirmishes around -- especially the eastern part and still the issues that will flare up. But the bombardment of Ukraine, I think, it will be over. Again, your audiences' evaluations on this are as good as a lot of people, certainly as good as mine. I mean I've got a lot of experience in this business, but not in fortune telling and not being able to really understand because there are so many variables here, so many variables. And as Don Rumsfeld used to say, unknowables, and there are a lot of unknowables because it's global. Yes, it's right there, Ukraine, the war's in Ukraine. But it's global and its affects, consequences, actions certainly consisting all of Europe, Canada and the United States and other nations as well.

Well, I cannot thank you enough. Your wisdom and your insights and your experience, we're just so grateful for your time today. We really, really do appreciate your thoughts on this and your insights. And let's just all hope, for the good of humanity, that the war does end very quickly. And if Putin has to save face in some way, I mean, is the U.S. -- do you think the U.S. could find a way for him to get out of this without egg on his face and we'd be okay with that? Is that a scenario that we would hope for, right?

Well, he won't get out of this, no matter what, without egg on his face and worse. But I think the essence of your question, is there something that we can do to incentivize him, to get out and he can still say, "Well, I got this. We won this." I know the diplomatic community in Europe, certainly the United States is leading that effort, is trying to figure out something that will help incentivize that agreement, that deal.

Well, we hope they are successful and quickly. Mr. Secretary, thank you for your time. We're eternally grateful for your wisdom and sharing that with us today.

Thank you all very much, and have a good day. Beautiful weather in Washington.

Yes, it is. Yes, it is. Also to my audience, I just want to let you know our next couple of upcoming webinars. March 30, we're going to kick off Distracted Driving Month of April with a look inside the Insurance Institute for Highway Safety, where they crash all the vehicles. On April 6, we're going to do 60 Minutes Personal Insurance with Michael Klein and Loree Toedman. And then April 13, this is a very unique webinar. We're going to host with someone from LinkedIn and another expert in social media. We're going to tell you -- give you tips and tricks to Level Up Your LinkedIn. That LinkedIn can be extremely helpful with your social selling, your personal brand, your network. I was not a believer several years ago, I have to tell you. I just joined LinkedIn a few years ago, and I'm just amazed at the -- just the platform, it is, for getting your messaging out and social selling. So please join us on April 13. You can register for all these programs at our website, travelersinstitute.org. Connect with me on LinkedIn. Go ahead if you're not already on LinkedIn. You can get on. And then in April 6, we could tell how do you enhance your personal brand. Also, in the next few weeks, we're going to announce our programs for the third quarter. So -- I'm sorry, for the second quarter. So for the second quarter, we've already lined up 22 speakers and 10 webinars for you. And we're going to announce those some really exciting and high-profile people and exciting topics and topics that are really going to help you with your business and personal life. So thank you, my friends, for joining us. We really appreciate it. Give us your feedback, fill out our surveys. We'd love to hear from you and stay safe.