Paul Donaldson

“Paul Donaldson,” joked one broker, holding his hand up as if clutching five cigarettes. “He likes a day at the races.”

It’s all good-humoured, but as the managing director of RSA’s commercial business and the UK market’s own token Irishman, it is true that Donaldson is well-known for his sociability, conviviality and love of a laugh – not to mention a whiskey and a smoke.

Or at least, he was. Donaldson suffered a heart attack earlier this year and, following critical surgery, had to take three months off work to recuperate. If nothing else, this has at least earned him the unique honour of a second Insurance Times profile in the space of a year, as he takes the chance to reflect on his time off, his rivals and RSA’s cosy relationship with some of its major distributors.

So let’s start with his illness. “I had something wrong with me, I got it fixed, and I’m better,” he says, as brusquely as he can manage in that brogue. He’s keen to stress that he is back at work full time, totally committed to the job, and that he kept abreast of market developments even from his sick bed.

Indeed, he made a “video link” appearance to an audience of key brokers at an RSA event at Goodwood in the spring, and even put in a celebrity guest appearance at this year’s Biba conference.

“I was conscious that people do forget, no matter who you are,” he says. “And it seems to me that we went very quiet while I was away.”

And what has the reception been like since he returned to the scene? “It has been very, very warm-hearted for a business that can sometimes be tense – with brokers, you can be their friend one day and then not their enemy but not necessarily their friend the next.”

Given the recent decision of Donaldson’s counterpart at Aviva, John Kitson, to switch his BlackBerry for a fishing rod, you can’t help but wonder if Donaldson’s illness prompted him to reassess his career. Did he think about maybe not coming back?

“Oh no, I couldn’t think of that because I missed you all so much,” he says, just this side of sarcasm.

“Was that a rumour? It didn’t cross my mind. Whenever you go through a period of major surgery and recuperation, you have to fix goals about what you want to do in two months, three months; so actually, sad as it may seem, me coming back to work was a positive thing that I looked forward to. I’ve been in insurance for two million years anyway, so what else would I do?”

On the edge

Since he has been back, and through no fault of his, the doggedly low-profile RSA has found itself in the headlines more than it would like. UK net written premiums of £1.3bn were down 3% on 2008, in this week’s third-quarter results, with commercial premiums down 5% to £1.15bn.

That’s not good news in anyone’s book, but in the context of the recession and rivals’ struggles, it’s a long way from disaster. There’s just less money around; Donaldson estimates that exposures have dropped by up to 10%, and says RSA is working with clients looking to cut costs. Because of this flexibility, he says, retention has not suffered at all.

In the broker world, the story emerged in September that RSA had made a multimillion-pound loan to consolidator Oval, in which it has a tiny shareholding. Since then, there has been a flurry of rumours linking Oval to a sale with Marsh, among others – vehemently denied by chief executive Phillip Hodson, who says the business will float.

But if Oval were to sell, would Donaldson want his cash back? “I can’t talk about that,” he mutters. For the duration of the chat about consolidators, Donaldson seems on edge and, dare we say it, a little grumpy.

“You’ve published the details anyway. How can I put it?” There is a long pause. “We will always look at business propositions that give us the returns we require. The Oval loan – and it was a loan – is something that makes sense to us.

We’ve had a minority shareholding in Oval for ten years, it’s diluted over time down to about 2% and when a proposition came to us, we reacted to it positively.

“There was no speculation about Oval and Marsh when we were looking at the proposition that we ultimately agreed to.” Party line toed, he looks up and smiles briefly. “That’s as much as we’ll say about that – but good try.”

Let’s have another go. Why did he say yes to Oval, but no to fellow consolidator Jelf, when its private equity backer 3i was knocking on all the insurers’ doors, looking for a buyer for its 28% stake?

“I’m not going to comment on that. You want something and I … No.” He pauses. “There’s a bit of movement in the consolidator area for different reasons at the moment and we keep a watchful eye on all of them. We’re fortunate that we have decent slugs of business with all the major consolidators and what we’ve got to remember …” He stops short.

“I know this tactic. You just let me talk and I’ll trap myself. Well I’m not going to. I’m going to stop talking about Jelf. They’re lovely people in the West Country.”

Discretion itself

Okay Paul, you win, no more talk of consolidators. But RSA has had some stories of its own, hasn’t it? There were the reports that group chief executive Andy Haste could be looking elsewhere.

“Andy Haste is still here, and as far as I’m concerned, he’s going nowhere,” he says. Then, returning to his more usual good humour: “I, like all the executives, feel the warm breath of his encouragement on my neck at all times. Print that.”

And Adrian Brown, UK chief executive: he’s quite low profile in the broker market, isn’t he? “Actually, he’s been getting about and seeing lots of people. He loves doing it and he’s learning a lot as a result of the contacts he’s made.”

What about that series of stories speculating that RSA was about to launch a £600m rights issue? “It didn’t happen. We have enough capital in our capital machine to do anything that we want to do. There’s no particular reason why we would need to issue any more paper.”

Haste has ruled RSA out of the bidding for the RBSI brands. No transformational acquisitions on the cards, then? “I won’t be drawn on that. We can’t get much bigger in the commercial market, anyway. It’s more about holding on to what we have.”

Blimey. Who would have thought an Irishman could be so discreet? Isn’t it time that RSA did something dramatic and exciting? “No, I don’t think that at all. It would be very bad for my new heart.”

Luckily for his heart, but perhaps not for the rest of us, the original plan for this interview to take place over a long lunch was abandoned. Instead, Donaldson is holding court in his glass-walled office, with orange juice and Pret sandwiches looking forlornly up from the table.

Perhaps post-heart attack, this is the new way. Somehow, though, you doubt it. Donaldson isn’t giving much away today, but never mind. It’s still good to have him back. IT