'Groupama must act before it’s too late'

Groupama’s French management desperately needs to get a move on and make a decision on the sale of the UK business. The ‘will they, won’t they sell it’ speculation has been dragging on for six months. Meanwhile, brokers have watched Standard & Poor’s plunge its financial strength rating into junk status (page 9).

There’s a lot of goodwill among UK brokers towards Groupama as a small but broker-focused insurer. But that goodwill is being tested to the extreme as brokers, already scarred by the Quinn fiasco, wrestle with this test of loyalty. They wonder what to tell their clients and speculate who will eventually end up owning the business. UK chief executive François-Xavier Boisseau’s insistence that the UK is separately and strongly capitalised is not washing in many quarters.

The best thing Paris could have done is instigate a relatively quick and clean sale, or not embark on the whole process at all. But for whatever reason, be it unsatisfactory price offers or questions over the pension deficit, a quick deal has failed to materialise. Now everybody, including Groupama’s UK staff, is paying a price with each day this long-running saga drags on. The message coming from UK brokers to French management is loud and clear: get a grip.

McMillan’s poisoned chalice

Groupama’s larger rival Aviva is also suffering from weakened capital, albeit to a lesser degree. Former Aviva UK GI chief executive David McMillan is widely regarded as having done a good job in the UK, but his new role as transformation director is potentially a poisoned chalice.

He’s tasked with offloading 16 businesses to beef up capital by £2.5bn (page 5). But if the markets deteriorate further, Aviva could be overwhelmed and McMillan may end up as the fall guy. He’ll certainly need to act fast. As his namesake, former prime minister Harold Macmillan, put it when asked why governments get blown off course: “Events, dear boy. Events.”