The head of a 300-year-old insurance giant in Europe’s finance capital has explained how his career started in the small town of Rotorua.
Aviva Group CEO Mark Wilson was given a distinguished alumni award by the University of Waikato in Hamilton, where he studied economics, and after the ceremony Wilson revealed that growing up in Rotorua and Hamilton had equipped him with a unique skill set.
“When you are from Rotorua, you are brought up in cultural diversity and so I’ve worked in China and Hong Kong for 14-years and then the UK,” he told Fairfax Media.
“I built my career doing the jobs everyone else runs away from because that’s the most fun,” he explained.
Wilson said it was university, school, and family that held him in good stead as he left New Zealand two decades ago to work in the Asian financial markets.
He was credited for saving insurance company AIA from bankruptcy during the global financial crisis when, in 2008, its parent company AIG collapsed and had to be bailed out for some US$180 billion, the report said.
It took him more than eight months of hard work, as well as the support of a team of people “who are agile in thinking and can cope with stress,” to keep AIA afloat.
Wilson was appointed Aviva group CEO in 2012. When he joined the company had no capital. Last year, it posted a £3 billion profit - a rise from the previous year’s £2.7 billion.
However, despite his international success Wilson retains an eye on his homeland noting that “New Zealand has a way to go” when it comes to fulfilling its social purpose.
“Have a look at Maori culture. It’s into sustainability of land, and business should be the same,” he told Fairfax.
“If you’ve got the privilege of running a company like Aviva, like I have, you’ve got to be doing some good.”
It’s clear why Marsh would want to buy Bluefin from AXA and, if reports are to be believed, pay nearly 15 times earnings for the broker.
Bluefin is the last of its kind: a UK SME broker that has not already been snapped up and that is big enough to transform the fortunes of its buyer.
Last year’s acquisition of Jelf certainly gave Marsh a big boost in the UK SME broking market, but Bluefin would take the company to a whole new level and make it market leader by revenue.
The deal would also put even more distance between Marsh and its old rival Aon in the UK SME market. If Aon snapped up Bluefin, it would more than make up the ground won by Marsh through the Jelf acquisition. Marsh buying Bluefin denies Aon this opportunity.
But what is in it for AXA? While it will gain £300m from the sale, if the rumoured acquisition price proves correct, AXA will lose the chunky dividend that Bluefin pays to it every year. Bluefin has paid a total of £91.8m up to AXA since 2010, when the annual payments started.
Bluefin paid a far smaller dividend in 2015 than it had in the previous two years, but nonetheless, this is a regular source of income that AXA will wave goodbye to if Bluefin goes.
Even so, there is also a lot to gain. Taking Bluefin out of AXA would remove a perceived conflict of interest. While AXA keeps Bluefin at arm’s length and treats it as just another broker, the insurer benefits from Bluefin’s success through the dividend.
Despite keeping one another at arm’s length, neither AXA nor Bluefin has been able to shake criticism that they are favouring each other. For example, Hiscox accused Bluefin of favouring its parent when placing risks back in 2011, which then chief executive Stuart Reid flatly denied. Selling Bluefin would remove suspicion, however unfounded, completely.
Selling Bluefin could also improve AXA’s relationships with its brokers. Insurer/broker relations in general are under strain because brokers feel they are increasingly competing with insurers’ growing direct arms in personal and very small commercial business. The fact that AXA owns one of the UK’s leading SME brokers in addition to a powerful direct business could arguably make broker relations even tougher than they would otherwise be.
On top of this, Bluefin is clearly not firing on all cylinders. The broker’s performance is by no means poor, but neither is it stellar, and profitability has been sliding over the past three years (see chart).
Revenues grew modestly in 2015, but, by Bluefin chief executive Robert Organ’s own admission, the bulk of this growth has been through acquisition, and as the chart below shows, the company is only just ahead of where it was five years ago.
Given its size and the respect it has in the market, Bluefin is surely capable of more than this. Being independent of AXA, either on its own or part of a larger broking group such as Marsh, may help it realise its true potential.
Bluefin has been the subject of sale rumours for many years. As far back as 2009, just months after the Bluefin brand was launched, then AXA UK boss Philippe Maso had to bat away suggestions that the broker was up for sale.
At the time, Maso said that in theory Bluefin would be up for sale, but there were no plans and the acquisition would be “very, very expensive” for the buyer.
But the rumours are stronger this time, possibly because of Marsh’s ambition, and that it is not reluctant to pay high prices for good businesses.
It may be that the talks come to nothing and a deal is not signed. But Bluefin takeover rumours will continue, and it is becoming increasingly apparent that a separation would be better for both Bluefin and AXA.
Covéa Insurance has announced it has agreed terms with Dean Clough to carry out a multi-million pound redevelopment of the historic Grade II-listed A & B Mills in Halifax to provide spacious new offices for its staff.
After completion of the restoration works, Covéa’s employees in the town, currently spread across three buildings, will move to the single-site location.
Chief executive James Reader said: “Halifax has been an important base for our business for almost 50 years and we’re delighted to have secured the future of these historic mills as a long-term solution for our office needs. For some time, it’s been our ambition to have a single site in Halifax to meet both our current and longer-term requirements.
“We considered a number of potential solutions, but the renovation opportunity at Dean Clough was by far the most attractive and the best fit. We’re all thrilled to have secured this opportunity and are really looking forward to seeing the mills brought back to life and to moving in.”
A & B Mills are the final two of Dean Clough’s ‘Great Mills’ yet to be renovated, and the work will commence towards the end of 2014, finishing in 2016.
The renovated premises will provide 75,000sqft of contemporary offices able to accommodate up to 825 people.
Direct Line Group reported a combined operating ratio (COR) of 89.6% in the first half of 2016, almost unchanged from the 89.4% it reported in the same period last year.
This was despite the insurer being hit with a £24m levy for using the Flood Re affordable flood insurance scheme, which added 1.6 percentage points to the COR.
These negatives were offset by a 9.8% increase in reserve releases to £236.1m (H1 2015: 215m), which shaved 16 points from the COR (H1 2015: 14.9%).
Direct Line Group’s profit before tax fell 5.2% to £298.5m (H1 2015: £315m) because of a 17% drop in investment return to £91m (H1 2015: £109.8m) and a drop in profit from run-off operations.
Gross written premiums grew 3.9% to £1.61bn (H1 2015: £1.55bn) thanks in part to 9.5% of rate increases in personal motor, as well as a 2.5% increase in motor in-force policies.
Direct Line Group chief executive Paul Geddes (pictured) said: “I am pleased with our results over the first half of 2016, as we delivered an excellent performance against a very strong comparator from the previous year.
“We have generated operating profits of over £320m in spite of weaker investment markets and the addition of the new Flood Re levy.
“Our customers continued to respond well to the refreshed propositions of our brands, which is reflected in another increase in the number of our own brands policies. Together, this demonstrates the benefits of the improvements we have made to strengthen our business.”
He added: “Although there remains a range of uncertainties in the macro-economic environment, we gain confidence from the strength of this performance, the transformation of the business and the approval of our partial internal model.”
Direct Line Group said it was “well prepared” to the UK’s pending exit from the European Union. It said there was no operational impact, and that it had managed the immediate investment volatility.
Hyperion is likely to make a statutory accounting loss for the next two years because of costs relating to its 2015 acquisition of UK broker RK Harrison (RKH), according to the broker’s chief financial officer Oliver Corbett.
And chief executive David Howden said that Hyperion’s statutory results for the year to September 30 2015, which showed a £81.4m loss, were “almost irrelevant” for measuring Hyperion’s performance given the number of acquisitions and related costs during the year.
Speaking to Insurance Times about Hyperion’s 2015 results, Corbett said that because the RKH acquisition included deferred payments to RKH’s shareholders, the acquisition costs would continue to affect the results until April 2017.
He said: “The next two lots of statutory accounts from the group are almost bound to produce a loss as the RKH consideration is forced through the profit and loss account.
Despite the loss, Hyperion reported a strong increase in underlying profitability in 2015. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 31% to £56.7m as revenues jumped 50% to £299m.
But Howden said even these results hide part of the picture as they only include five months of figures for RKH and nine months of results for German broker Schouten Sicherheit International. He said that had a full year of numbers for the recent acquisitions been included, Hyperion would have reported EBITDA of £105m and revenue of £388m.
He said: “That is the way we are looking at the business because looking at it on a statutory basis, considering the number of acquisitions we did, doesn’t paint a true picture.”
Hyperion’s main focus is now making the group work as one following the acquisitions. But Howden added that this did not mean a halt in acquisitions.
He said: “The group continues to look at how it is going to position itself in two key areas: What products we want to be in and have expertise in, and distribution in certain countries.”
Lloyd’s will allow syndicates to sign delegated authority underwriting contracts that last up to three years from 1 January next year.
Syndicates are currently restricted to signing contracts of 18 months with their coverholders - the underwriting agencies and brokers they hire to write business on their behalf.
The change is part of the delegated authority workstream of the London market Target Operating Model (TOM) project, which is intended to make it easier and more efficient to do business in Lloyd’s and the London market.
The project is being run by trade body the London Market Group (LMG), which is made up of representatives from the International Underwriting Association, Lloyd’s, the Lloyd’s Market Association and the London & International Insurance Brokers’ Association.
LMG operations director and TOM sponsor Shirine Khoury-Haq said: “Our coverholders have told us that the ability to write multi-year binders at Lloyd’s will make it easier to do business and we are delighted to have come up with a process that delivers this requirement.
Lloyd’s broker Miller’s head of programmes Gary Clark added: “Coverholders have raised concerns that restricting binding authority contracts to 12 months puts the market at a disadvantage to domestic markets around the world where longer contracts are already available.
“Multi-year contracts is an example of the London Market listening to and addressing the concerns of its clients and member firms.”
In the next few months the London Market TOM delegated authority project plans to deliver more improvements, including enabling straight through processing, as well as further improvements to both centralised audit provision and coverholder applications.
Towergate executive chairman Alastair Lyons has defended his company’s decision to opt for a takeover deal that will render its shares worthless and cause a part of the company to go into administration.
He also revealed that he will leave Towergate this year after finding a replacement chief executive.
This morning Towergate announced that it had accepted an offer from its secured creditors, which account for £715m of its £1.05bn debt. Under the deal, intermediate holding company Towergate Finance, which issued the group’s bonds, will enter administration.
Also, the deal means that current shareholders, including private equity owner Advent, founder Peter Cullum and other shareholders will get nothing.
Speaking to Insurance Times following the announcement of the deal, Lyons said: “The only part that goes into administration is the intermediate holding company which has the debt.
“This is a completely standard part of the delivery of this type of restructuring and it doesn’t affect at all any of the operating companies within the business.”
He added: “No extent of the administration applies to the contracts we have with our people, customers, suppliers or insurance partners.”
Also under the deal, shareholders will get nothing in return for their Towergate shares as ownership will transfer to unsecured creditors.
Those that accepted Towergate shares as incentives or in part payment for their businesses may be unhappy with this arrangement.
Towergate incentivised some employees with shares and also paid for parts of some of its acquisitions in shares.
Lyons said that Towergate had been “very clear” that ownership would transfer from the existing shareholders to the secured creditors under the deal.
He also pointed out that the company expects to pay out up to £33m as part of employees’ long-term incentive plans and deferred considerations for acquisitions. These payments were triggered by the transfer of control.
Lyons also said the secured creditors offer, which values Towergate at £716m, was higher than the other bids. Marsh, for example, was reported to have bid £650m in cash for Towergate.
Towergate has now resumed its search for a chief executive to replace Mark Hodges, who left the company last October.
The search was postponed because of the uncertainty about the company’s future, but Lyons said: “Now that we have complete clarity as regards our financial basis going forward, we will dust off those dialogues and bring something to a conclusion. It is high on the list of priorities both for myself but also for our new shareholders.”
Lyons, previously non-executive chairman, became interim executive chairman following Hodges’ departure. He says he will revert to being a non-executive, but not at Towergate.
He said: “I had already said to Advent that I didn’t intend to carry forward into a further cycle and that is also what I’ve told the various parties that we have been talking to . I will transition the chairmanship.”
If you are not getting a benefit from your traditional therapy, if you do not want to keep taking medication or if you want a more self-help physical therapy that will involve long-term changes, then acupuncture and Alexander technique would be good options.
A recent trial of 517 patients showed that these two alternative therapies, acupuncture and the Alexander technique, appear better for the long-term relief of chronic neck pain.
For the study, the researchers (including Hugh MacPherson, Clinic Director of the York Clinic) randomly assigned more 517 patients from the United Kingdom who had chronic neck pain to one of three treatment groups. One group received usual care for neck pain that may have included medication or traditional physical therapy. The other two groups received either 12 acupuncture sessions or 20 Alexander lessons. Each treatment group received 600 minutes of the intervention.
The report, which was published on the 3rd November 2015 in the Annals of Internal Medicine, concluded that acupuncture sessions and Alexander technique lessons both led to significant reductions in neck pain and associated disability compared with usual care at 12 months, and both were linked to better pain relief than either painkillers or physical therapy as scored on a pain questionnaire. Neither of the alternative treatments appeared to offer a significant benefit over the other, and neither alternative treatment was linked to any serious adverse side effects.
“In general, it is difficult to find long-term treatments that have a positive effect on chronic neck pain. But, both acupuncture and the Alexander technique lessons did. The patient could make changes in coping that didn’t involve medication and they were able to apply what they learned in a way that made a difference.”
During acupuncture, patients have thin needles inserted into specific points on the body to relieve pain. The Alexander technique is an educational process that teaches people how to avoid unnecessary muscular and mental tension to help restore natural balance. This may help reduce pain during everyday activities.
To book an appointment with an acupuncturist or our Alexander technique therapist at York Clinic, phone 01904 709688 between 9am and 6pm on weekdays, or between 9am and 2pm on Saturdays. Alternatively, email us at email@yorkclinic.com, or use our contact form. We will respond to you as quickly as possible.