Charles Earle

It’s four years this month since Charles Earle signed the final papers that brought Arista into being, before rushing out to buy his wife a Christmas present. Since then, the underwriting agency has forged relationships with 300 broker partners and is on track to secure an annual operating profit in 2010. Earle, who has had a long and worthy insurance career, is now the affable public face of a small business that is fast making a name for itself.

In his first formal interview as chief executive of Arista, Earle arrives at the Insurance Times offices in London’s Cannon Street chatty and smiling. Even being waylaid by our photographer in the reception area doesn’t really phase him and, snaps duly taken, he sits down to recount his journey from the country’s third-biggest insurer to running a start-up in the midst of a recession and a soft market. He also offers some clues as to the big plans he has for the future.

Earle was the managing director of NIG when it was acquired by The Royal Bank of Scotland as part of the Churchill Group in 2003. Although he stayed for two years, he quickly found that the corporate life was not for him.

“I stayed for a while but it just wasn’t working,” he admits candidly. “I couldn’t understand why certain decisions were being made, of the goal of the change. Clearly, I didn’t fit in with whatever vision RBS had for commercial underwriting within its insurance division.”

So off he went; though the departure was tinged with sadness, he says, particularly for the colleagues he left behind. But despite the pleas of his wife for early retirement – “she would have changed her mind soon enough” – he felt that was some way off yet.

New beginnings

Earle went to see his pal Neil Utley, chief executive of IAG UK, to talk business ideas. “He was very supportive; it was he who suggested the agency route. He said: ‘Start something and I’ll back it’.” Here it seems Earle is just being modest, as Utley insists that an agency was not his idea at all.

Whoever should take the credit, from that brief conversation Arista was born. As an underwriting agency, the idea was that it would be lean and quick, taking products to new areas of the market and new brokers, with minimal expenses and overheads. The hybrid model came naturally to Earle who, previous to life at NIG, had a few years at a broker under his belt too.

As well as investing in the business, Utley’s IAG agreed to provide capacity for motor products, through its Equity business. Earle went out looking for other insurer partners to underwrite non-motor products, and eventually settled on another Lloyd’s broker, Canopius, which conveniently shared a private equity backer with Equity. Canopius also took a stake in the Arista business.

Before he knew it, it was Christmas; the t’s were crossed, the i’s dotted, and the department stores beckoned as time ran out to buy his wife’s pressie. But Earle wasn’t relaxing too soon: a sanguine, unflappable man, who insists he never falls prey to sleepless nights, he still knew there was a long haul ahead. “There was a great sense of relief that we’d finally got it all signed off – but we also knew that as soon as Christmas was over, the really hard work had to start.”

If only he had known just how hard it would be. As well as a lingering soft market, the newly born business soon had to contend with economic meltdown on an unprecedented scale and a subsequent recession. “I thought: ‘Oh God, I know I said I wanted to be tested, but not like this!’” he says.

Earle had to face facts: given the economic climate, the business was not going to grow as quickly as originally envisaged. “We had detailed financial plans, which we have undershot,” he admits. “At the beginning of 2006, I would have liked to have been writing £75m by the end of our third year. In fact, we’ll be at between £60m and £65m. That’s a sensible place to be, given the wider picture.”

Earle also had to face stiff competition in the form of some of the largest insurers, such as Aviva, actively targeting the small brokers that were Arista’s natural customers. “It’s hard work, but we feel we can offer a level of service they can’t match,” he says. “We know we’re doing well when our competitors get desperate. It happens all the time: there are salesmen out there trying to knock us because they know they can’t get anywhere near us.”

Flattering as that may be, Arista still had to scale back its ambitions. “We’ve hired less staff, spent less of our investors’ money and we’ve got a slightly smaller business.”

It’s not doing too badly, though. In July, Arista posted a pre-tax loss of £4.5m for 2008, down from £6.8m in 2007. Earle says the firm will make an operating profit in four out of the last six months of the year, and he hopes to make an operating profit in 2010 – though he would, wouldn’t he?

Staying put

There are some big plans afoot: Earle is on the hunt for acquisitions. He doesn’t have a dedicated war chest, but reckons IAG and Canopius would be keen to back him if he found the right fit. Some time back, there was a speculative story doing the rounds that Arista could buy back its alma mater NIG, which is of course back on the market following a government decree to state-owned parent RBS. Would he be keen?

He laughs. “If someone sent me the memorandum, I would have a really good look at it.” Don’t hold your breath though – Arista is far more likely to buy a business half its size, whether a fellow MGA or a wholesale broker.

So what else is on the cards? Arista is already trialling a professional indemnity product, underwritten by Canopius, with selected brokers and will look to roll this out further, possibly with some other products.

Earle will be sticking around for a while, anyway. Although he’s edging towards retirement age, and speaks vaguely of plans to “build an orchard” when the time finally comes, he has given his backers an initial commitment of at least five years. “Within my team, there are individuals who could run this business, and I will get to a point where I start to hear them saying: ‘why are you here?’” he says.

Given his obvious enthusiasm for the job, it seems Mrs Earle will have to wait a while yet for her orchard. But let’s hope that her husband does at least have a little more time for Christmas shopping this year. IT