Under the influence

Few things have demonstrated the City’s regard for general insurance quite as starkly as the behaviour of Aviva’s share price following the news that Mark Hodges would take over in the wake of Igal Mayer’s departure.

It barely flickered. While brokers were rolling in the fountains like Spanish football fans on World Cup final night, traders and analysts registered the news with a stifled yawn before shrugging it off as ‘market neutral’.

We may think we’re pretty important down here, but sadly GI is rarely a top priority in the wider financial sector. It’s complicated and counter-intuitive, and as it’s not wildly lucrative either, the big cheeses with many other divisions to run can justify devoting little of their time and energy to it as they jockey for their next promotion.

This can make for some pretty interesting dynamics between group chief executives and the bosses of the general insurance divisions, with all that ambition and ego ricocheting around the upper echelons of the largest companies.

GI’s low profile can be an upside if the divisional heads would rather be left alone to run their businesses without constant intervention from the chief exec. The downside is that they may struggle to be noticed when musical chairs starts again and they want that job themselves.

All that mere mortals may see of these storms in Valhalla are the thunderbolts, but brokers can’t fail to have noticed the impact that a new face at the top can have on rates and commissions, so it pays to know who is really making the decisions. How much do these bosses care about general insurance, how much do they understand it – and how much does it matter if they are about to be promoted into another stratosphere anyway?

Here, Insurance Times takes a look at the familiar and perhaps not-so-familiar faces at three of the UK’s top insurers, and considers which direction they will turn their attention and influence to next.

Andy Haste, group chief executive, RSA

When Haste took the reins at RSA in April 2003, he was a relative unknown in the City, and there were questions over whether he had what it took to steer an insurer considered a basket case back into the black.

Though Haste had impressed as chief executive of AXA Sun Life and director of its UK life and pensions arm, his background was in finance and he was new to general insurance. But he was adamant that his £600,000-a-year job was an “opportunity” not a poisoned chalice, and set about disposing of non-core assets, axing thousands of jobs and restructuring the business to transform it into an attractive, and certainly not cheap, acquisition target.

Seven years later, 48-year-old Haste has become one of the most respected and admired chief executives in the business, though he is still something of an unknown quantity. RSA’s recent emphasis on cost cutting and efficiency meant it weathered the downturn better than its peers: it returned to growth in the first quarter of 2010, with UK net written premium increasing by 7% to £697m.

Haste’s renown among brokers is by reputation rather than familiarity, and though he has proved himself a no-nonsense, hands-on manager, he leaves the day-to-day running of the GI arm to the more approachable Adrian Brown. With his reputation assured, there have inevitably been rumours about what Haste’s next move might be, particularly after he took his first outside directorship at ITV in 2008. Last year, it was rumoured he had been headhunted for the top job at Zurich. Analysts continue to hold their breath to see what the man described as “the best chief executive in the sector” will sink his teeth into next.

Adrian Brown, UK chief executive, RSA

With RSA’s stuffy reputation, it’s something of a surprise to find this ebullient Bristolian in the corner office. Brown threw down the gauntlet to any broker who dared accuse him of being boring before the company’s 300th birthday bash at Biba – but he has taken some sensible decisions. Since taking over from Bridget McIntyre in September 2008, he has split the business into eight units each with their own P&Ls, cut costs by £70m and shed 1,200 jobs. With a background in personal lines, he needed to get to know the broker market quickly. Judging from the praise Brown’s name prompts, his schmoozing seems to have paid off.

Nicolas Moreau, group chief executive, AXA UK

When Moreau arrived from Paris to take over the UK chief executive role from Dennis Holt in July 2006, he admitted that he was less of a manager than a “change agent”. Last month, the fruit of his labours became apparent with the proposed sale of AXA UK’s life and pensions, protection and group pensions business to Resolution for £2.75bn. Moreau billed it as a step in a growth strategy, with a company statement reaffirming the insurer’s commitment to the UK.

Moreau’s own connection to the UK, however, remains the subject of fevered speculation. The long-term prospects of French executives are customarily met with scepticism in Britain – there is a suspicion that this difficult market is seen as a tour of duty, to be endured before a return to glory back at head office. Moreau’s heart, it is sensed by some, is in Paris. In April, he was appointed to the AXA group management committee, which perhaps indicates that the feeling is mutual.

Moreau’s hands-off management style means he’s not a well-known face on the broker scene. However, the 45-year-old commands a great deal of respect in the sector, and is said to be approachable and good company by those who have managed to tempt him out of the City.

Moreau attended the prestigious École Polytechnique in Paris, a former military academy, and holds a degree in actuarial science. He started out as an auditor with Arthur Andersen in Paris, joining AXA in 1991 as vice-president of the finance department, before moving to AXA Investment Managers in 1997 and rising to become chief executive in 2002. After four years he moved on, looking for a new arena to flex his entrepreneurial muscles.

Philippe Maso, chief executive, AXA Insurance

French-born Maso took over from Peter Hubbard in April 2008, and despite some tough calls on rates, commissions and cost-cutting, the former finance director commands grudging respect in the UK market. He has already been in post much longer than anyone expected, and in June declared his intention to remain in the UK for a while yet: “I’m not the sort of guy who moves in the middle of a race.” Said to be extremely intelligent, Maso is not afraid to say what he thinks, criticising Aviva’s pricing strategy as an attempt to “defy gravity”. He has also been a vocal critic of MGAs, and done some tough talking to the consolidators.

Mark Hodges, chief executive, Aviva UK

Few insurance appointments have received the kind of rapturous welcome that greeted the news that Mark Hodges would be replacing Igal Mayer as head of Aviva’s UK general insurance business, as well as its life arm.

It wasn’t just that Mayer had made himself unpopular as the scourge of the consolidators, forcing commissions down and rates up.

Hodges himself was already known in the broking world as a former managing director of the GI division and seven years as its finance director, bringing a friendly face and a “good bloke” reputation.

Now nearly eight months into his tenure, the smile has barely slipped as Hodges’ charm offensive to the broking community continues, even though he has been diplomacy itself on the subject of his predecessor’s mistakes.

With commercial premiums taking a £1.1bn hit in 2009, Hodges had a lot of work to do. He’s had to be a lot more hands-on than many group chief execs, and even following the appointment of former chief operating officer David McMillan as GI chief executive, there is a sense that Hodges is still a greater force in the market.

McMillan stepped back somewhat with the announcement that he will leave dealings with brokers to intermediary director Janice Deakin, marking a contrast between his approach and that of Mayer. In practice, this means that Hodges himself may remain brokers’ second port of call, given his rapport with the market.

But the more interesting dynamic may be between Hodges, McMillan and Aviva chief financial officer Pat Regan, all highly ambitious and gunning for Andrew Moss’s group chief executive role. Expect to see some sparks.

David McMillan,?general insurance chief executive, Aviva UK

David McMillan was a surprise appointment to the GI chief executive job last November. Formerly Aviva’s chief operating officer, he was seen as something of a “backroom boy”: good on the details, but lacking a profile among brokers.

However, McMillan seems content to stay out of the limelight. Under his leadership, Aviva has rebuilt its broker relationships, softened its stance on rates, and is on the way to boosting its premium, which dwindled significantly under predecessor Igal Mayer. It has also made waves with a much-trumpeted return to the corporate risks arena. So what’s next? You’ll just have to watch this space. IT