As an underwriter-turned-broker, Willis’s UK chief executive is a true convert, eager to promote the sector and relishing its fast pace and client interaction. But behind the enthusiasm is a fierce protectiveness of his business
Brendan McManus is a man of contradictions. The industry’s best-known gamekeeper turned poacher, the one-time broker face of RSA is still the fast-talking everyman, complete with wisecracks and a cheeky smile. As the UK chief executive of Willis, however, he shows a different side too: a tough industry boss quick to come out fighting on behalf of his business.
But it’s good to see McManus. For such a big figure, he has kept a remarkably low profile since taking the helm at Willis in 2007. This is no accident; he reckons it’s more important now to be a face among clients than fellow brokers.
Today, at Willis’s imposing headquarters, McManus is smiling. And indeed he should be – it has been a good year. By the end of 2009, the broker reported a net income of $436m (£291.8m), up from $302m in 2008, and revenues had risen from $2.8bn to $3.3bn. While McManus concedes that a tough year lies ahead for clients, he is confident that 2010 will be equally successful, flagging up the major accounts business and employee benefits business as performing particularly strongly.
“I can’t think of any part of our business that doesn’t have the capability to grow this year, despite the economic head winds. It is a tough year but if we are doing the right things, then we will grow.”
Ain’t no competition
So where is the growth coming from? Towards the end of last year, Willis unveiled plans to make the Willis Network international. Willis Commercial Network represents 85 regional brokers which place in excess of £350m in premium; and Willis N2, which represents 21 smaller, community brokers which place around £50m in premium.
McManus says there are plans to expand on these numbers “significantly”. The network has recently signed with three Northern Ireland brokers, and McManus says it has also succeeded in picking up brokers from other networks and from those jumping ship from consolidators.
What of the competition from other broking giants? Last year, Marsh launched a rival broker network, while its merger with HSBC Insurance Brokers is imminent. But McManus is clear that Willis is focused on “organic growth” and has no plans to make a similar acquisition. “We don’t have any plans to do it,” he says, adding quickly: “That is different from having the firepower to do it. We don’t think that it is a route for us.”
Does he view Marsh as a threat? “We don’t focus a lot on the competition,” he says testily. “We are more concerned with how we develop our proposition, our segmentation and our specialisations. We will do well because we do stuff that stands out and make us different. I’m not really bothered about what anybody else does.” He adds that the time rivals spend gobbling up smaller brokers will leave them less chance to focus on clients – an oversight he believes will benefit Willis.
The thorny subject of contingent commissions is another area where Willis likes to distinguish itself from its rivals. While the ban on accepting them has been lifted, Willis chief executive Joe Plumeri has repeatedly maintained that the company will refuse to accept them. McManus fully endorses his boss’s stance, making a veiled dig at rivals such as Aon and Marsh, which are widely expected to start accepting contingent commissions again.
“My experience in Willis has been that transparency has been a force for good, not something that is destructive to your business model or forces your margins down. It may actually be the opposite of that. I can’t think of a single client that would not expect transparency.”
After nearly three years at Willis, he plays down speculation that he might be lured back to the other side, insisting that broking remains the more attractive prospect. “It’s a more exciting business. You can do things today that can affect your results tomorrow, and with an insurer you do something that might affect the result in 12 months’ time.
“Also, as a broker we are much closer to clients than as insurers. I think when I was at an insurer I was kidding myself about how close I was to clients. You can’t kid yourself when you are a broker.”
Immediate plans for McManus include moving the retail business onto the electronic platform Acturis by September this year, and getting stuck into his new role on the Biba board. Of the latter, he says: “Before I moved from underwriting to broking, I always had a fairly active engagement with the CII and ABI, and I wanted to continue making sure that we promote the industry. I was interested in being part of the Biba board to make sure that we keep giving something back, promoting the industry and broking in particular.”
There’s the slightly tense matter of the Willis MGA to mention too. It was confirmed back in June that Aviva, Allianz, RSA and Zurich will write its SME business, but little has been heard since. McManus confirms the business, Willis Underwriting, has been trading for the past 18 months and writes products including commercial combined packages, property, motor and financial lines. He refuses to disclose how much it is writing – “I’m not going to tell my competitors what I’m doing”– but simply says performance is meeting expectations.
He also rubbishes any talk by certain industry leaders that the end is nigh for the business model. “MGAs have been going in various shapes and forms now for well over a hundred years. You can point to any number of announcements over the years: company after company are announcing new capacity for MGAs or new MGAs starting up.”
But McManus has not always been so optimistic. As managing director of RSA’s broker division, he dramatically pulled the plug on the insurer’s mammoth three-year binder agreement with Primary after just one year. McManus bristles at the mention of RSA – “I work at Willis now”– but concedes that he does base decisions on past experiences and “all the mistakes I have ever made”.
So what were the main lessons? “I learnt that in any relationship in underwriting, you have to be extremely cautious about your partners and the capabilities of the people around you … I’m careful to ensure we have the right business partners, so we spend a lot of time making sure that we have a really good understanding of everyone we partner with, and making sure we know what to expect and what their appetite for business is going to be.”
What of the long-term future for the market and for McManus? He admits that his previous predictions for market developments have been wrong. “In ten years’ time, the market will be very different from today. We couldn’t have imagined some of the things that have already happened.”
But he is adamant about one thing: he will still be at the helm of Willis UK and Ireland while all these changes roll in. “I have a lot to do here, so I don’t really see myself being anywhere other than doing this job. That might sound a bit cheesy, but I’m having a great time. I’m working with a great team and I think I’ve got a lot to do in Willis over the next few years. I’m still learning and I‘d like to think that I will be here for quite a long time.”
The market will have to wait and see if that particular prediction proves right. IT