Breathing life into CNA

It is a bright May morning when Insurance Times meets Julian Enoizi, the president and chief executive of CNA Europe at the insurer’s new offices in the shadow of the Tower of London.

Enoizi appears relaxed and good humoured as he discusses the challenges of reversing the fortunes of CNA Europe over the last two and half years.

He describes the smart new offices overlooking the Thames, into which the company moved six month ago, as symbolic of the CNA’s re-birth from a loss-making business into a profitable one.

Gearing up for growth
Now, after a difficult and at times painful two-year reorganisation of the business, Enoizi says CNA is gearing up for growth. Last month he secured investment from the company’s American parent with a plan to double the size of the business in five years’ time.

He says: “They [the US parent] like the geographic distribution, the product distribution and the potential [for growth],” adding: “There is a lot of excitement now.”

In Europe, CNA focuses on specialist lines of business, such as financial lines, marine cargo renewable energy and large property and casualty risks. It writes business in 14 European countries from offices in 11 regions.

Its UK business, which has operations in Lloyd’s and the London markets as well as the regions, currently writes approximately £110m in annual premiums.

Enoizi was appointed to his current role in October 2005. He had previously run the company’s continental operations, based in Paris, since 2002. As president and chief executive, he inherited a business that had never made a profit for its US parent. It was burdened with legacy issues and had an expense base that was choking it. It was Enoizi’s job to sort things out.

“When I took over I knew I had 18 months of tough decisions. The European arm was forgotten by the US. The pre-9/11 soft market was biting and the US was spending its energy on US issues leaving Europe to lie fallow. There was no incentive to deal with it from UK people,” he says.

Enoizi quickly executed the first phase of his three-stage battle plan – the 'fixing phase' as he dubs it – selling off a reinsurance business that was in run-off, restructuring its reinsurance programme and commuting the expensive 25 year lease on its former UK headquarters, in the heart of the City of London. Loss-making business lines were also excised.

Inefficient infrastructure
He also had to deal with a grossly inefficient infrastructure of regional offices that the company had inherited from a previous acquisition which had not been properly integrated. This was done and the costly network of UK regional offices was cut back to just two, in Manchester and Norwich.

“We restructured our regional offices to enable us to write SME risks more cost effectively,” says Enoizi. An online system was launched for administering cargo business, one of CNA’s key regional business lines.

The changes saw the business’s headcount reduced by about a quarter. All the managers are new recruits. Enoizi says the business had too many staff to operate efficiently, but also freely admits that many staff left.

“It has been a huge challenge. We have lost a lot of people because of the changes

“It has been a huge challenge. We have lost a lot of people because of the changes,” he says.

“It did surprise me how many left. I had such a passion in the opportunity that CNA presented and it stunned me how many people wanted to stay with the old way. I said we would challenge the status quo.”

It was tough love, but it worked. In 2006, CNA’s expense ratio fell by 12 points and produced a sub-100 combined operating ratio. Each of the business’s five operating divisions were profitable, and growth was 6%. A similar performance was achieved in 2007.

“When I took over the market didn’t know what was going on. Were we going to be sold? What was happening? Now there is genuine respect, we have turned it into a profitable business,” says Enoizi.

Recruiting new staff was a challenge. After rejecting the use of recruitment agencies Enoizi initially interviewed all candidates himself. “I was brutally honest about the changes going on. Half the people we wanted were frightened off, the other half jumped at the chance. It has taken us a long time as we have been so choosy. We are looking for people with diverse backgrounds. We are trying to do things differently.”

Core people, core products
Enoizi says he now has the core staff he needs, although he is still recruiting.

CNA is now moving into the next phase of its recovery plan, which Enoizi calls the prepare phase. This will see the product range extended (for example, it is looking to launch technology and contractors’ all risk products through its London market business), as well as investment in systems, such as its online cargo and directors’ and officers’ (D&O) insurance facilities, and brand building.

“I want to make sure the underwriters are underwriting and not administering,” says Enoizi, adding that the second phase will last as long as the soft market does. “I want to go into the hard market with a clean balance sheet.”

CNA launched its online D&O last month at the Biba conference as part of its move to tap into the SME sector in a cost effective way. Its online cargo facility was developed for a similar reason.

Enoizi says the middle market is an area where CNA is still developing its strategy.

At present, CNA’s property and casualty business is focused on larger risks.

Enoizi has appointed someone to develop a focused regional strategy, which is likely to involve professional indemnity insurance with a connected property and casualty element.

Due to the soft market, Enoizi is not expecting growth in 2008 or 2009, but over the next four years he is looking to double the size of the business. “It is a big challenge and if the market doesn’t help us [through hardening rates] it won’t happen. But it is possible.”