Equity Insurance Group has arisen as a private company led by Neil Utley with a hand-picked team. Elliot Lane reports on its progress one year since his return
Neil Utley entered folklore 12 months ago. He became the equivalent of Victor Kiam, the 1970s business icon who fell in love with Remington electric razors so much he bought the company.
Utley was ousted from Cox Insurance in 2004, a company he helped build and loved dearly, and spent one year of his life cajoling equity firms to pull off one of the largest private deals ever seen on the London Stock Exchange.
Utley bought back Cox for £430m, quickly rebranded the insurer in the image of its core underwriting division within Lloyd's, the Equity Red Star brand, and today Equity Insurance Group is making in-roads.
Talking to a broad cross-section of the people working at Equity, the energy emanating from the Brentwood office comes from the sense of ownership that the delisting of the insurer has brought.
Roughly 60 employees have equity stakes in the company, ranging from directors to the claims staff.
Also the general consensus is the company consists of a group of "wise old heads" guiding a younger, ambitious generation.
Utley has galvanised his strategy by employing a raft of leading figures from various parts of the insurance industry he has known for many years.
In fact, the company is an interesting exercise in the concept of six degrees of separation. For example, Equity Red Star's team employed both active joint underwriter Keith Charlton and David Grant, ex-NIG marketing director, this year who both either worked or dealt with fellow Equity Red Star underwriter John Josiah at the motor insurer Dominion.
David Birch, who joined as affinity sales director for Equity Insurance Brokers, worked with Charlton at RBSI. Then Utley knew John Castagno, now managing director of Direct Broking while he was at Legal & General, and of course Andrew Gibson, now finance director, was poached by Utley after Cox tried to acquire his old company motor insurer Highway.
An eclectic bunch.
Charlton is pleased with the introduction of the new "granular" rating engine for the private car market this year. "We now have more differential scale between rating factors, namely the scale is now a rate for every age of driver 29, 30, 31," he says.
It has been about modernising the existing process and rolling out consistency in systems and underwriting discipline.
Underwriter John Josiah said that the change in the Lloyd's syndicate literature was to "take us away from the old-fashioned look" and to actually promote Equity Red Star products which had never been done before.
"A lot of regional brokers had no idea what we did, and we never had the resource to do something about it," says Charlton.
"Bringing David Grant on board is to set up meetings around the regional brokers, in fact one recently in Leeds, to explain what we do," says Josiah.
When Josiah joined in 1995 the syndicate was writing £125m premium income, but today it writes close to £500m. With rival motor insurers averaging combined ratios of 99.5%, Equity Red Star is 87% with around 5% market share and is placed fifth largest in the market.
Josiah says: "The market is very flat. But everyone is waiting for Norwich Union to do something.
"We are seeing incremental price rises by the direct writers on a weekly basis,"says Charlton.
He added: "We write one in three bikes in the UK which is at saturation point. Private car is going up and down due to the various opportunities, and I would like to see further growth in household."
Equity Insurance Brokers will be at the forefront of this drive. It has a £170m GWP at the moment but, through an aggressive acquisition strategy, seems likely to soon exceed this figure.
Managing director, branch network, Mike Hutton says that the uncertainty before Utley's return has been dispelled. "It was an open secret that the previous management were streamlining the group for a sale," he says.
Hutton has been in discussions with many brokers and last week's acquisition of the general insurance books of Somerset-based Yeo Brokers and Cirecenster-based EH Morgan should open the floodgates to at least 26 other deals.
"It is about timing and making sure the broker is happy with the right deal. Things have been a bit slower than we first thought but the deals are coming. By 2008 we will have 100 branches," says Hutton.
Birch says that the affinity business is close to signing a major motor manufacturer to join its recent Ryanair success.
"We are supporting clients with a new web-based facility this month where quotes and services are online. With everyone having an equity stake it is much easier for us to all agree to move in one direction," Birch says.
Castagno is about to launch a new schemes initiative based on "communities".
"It is something that we hope will be ready by the end of the year. We want to understand communities such as schools, churches, social clubs, specialist associations and build products around them.
"Once the data is captured we can then cross-sell our other products such as motor and household, and widen our distribution channels," he said.
He says that the next generation of consumers will want to use technology in different ways.
"My daughter wanted a new contract on her phone. Instead of free calls all she wanted to know about was how many texts were available.
"Her generation don't want to talk, just text. She will be the type of person we need to sell motor products to in the future, but we must get the timing right. I don't think the mass market is quite ready for it yet," he added.
Where next for Equity? Utley and his investors, Englefield and Duke Street, have always said that there is a three to five year exit plan.
"Our investors are very supportive and we talk constantly to them," says Utley. "My feelings is that in a few years a new equity house will look to come in.
"I have gained the quality of people because of delisting. Without going private I would not have been able to incentivise these individuals with equity stakes.
"The uncertainty is over. And I'm having fun," he says. IT
Jane Cook, Equity regional HR manager
Jane Cook's career stepped on the fast-track a few years ago.
At 28, she has received five promotions in five years and also became the joint winner of Insurance Times Young Achiever of the Year 2004. "The biggest change here has been since we delisted, because there is a greater sense of ownership in the company.
"It has given the whole company a new lease of energy," she says.
Cox was a well-known brand but underneath it had numerous firms, all with their own identity, which confused the client.
"The new name means we can build on the Equity Red Star brand. The marketing has improved and people now have heard of us," she adds.
Equity's HR department has dealt with the "inevitable streamlining" over the year, "centralising functions" and eliminating the "corporate fat that had built up", according to Cook.
Before Neil Utley's return she feels the company was "living in limbo" and employees felt the company had stood still waiting for an acquisition.
"Neil is popular because we trust him and his style is very genuine. He operates a meritocracy and the succession planning within the group is real," she says.
Employees are encouraged to circulate in the business and put themselves forward for new roles and challenges which is the formula she advocates for a culture which breeds award winners.
"I was thrown in the deep end and it is through that approach I got the opportunities to show what I can do," Cook says.
An internal staff opinion poll was an "eyeopener" because rather than an excuse to let off steam against the management it came back "very positive", says Cook.
"Local communication is very strong and the executive meetings I have attended in the various regional sites are informed and the energy of the new company is seen in each one," she says.
Turnover of staff is 20% since the restructure and that includes the closure of operations in Chelmsford and Bradford.
"This is not for the nine to five type. We all come back everyday for the buzz," Cook says.
Kerry Williams, business analyst
As with any company with equity firm investment, communication between management and the financial backers is constant and needs a level head.
Kerry Williams is that conduit.
She spent three years working on "underwriting finance triangulation reports" but in the past year now holds the position of reporting directly to Neil Utley communicating the figures to and from the group to Englefield and Duke Street, Equity's main investors.
"I have learned a lot from working with Neil who is very hands on, while my mentor at the moment is Andrew Gibson our finance director who has years of experience," she says.
She like a few employees who worked for Cox for many years and transferred to Equity, hold an equity stake in the company.
"So to answer the question will I stay or leave the company I have a personal stake in it now and Neil has a good eye for new talent and developing people's role," she adds.
Williams has high ambitions of smashing the glass ceiling and would like to be the "next Annette Court", RBSI's high-flying female chief executive.
"I have been encouraged to go back to university and then take my MA. I spend one weekend a month at university which is hard when you have to face the Monday morning fresh.
"I want to get into strategic and fund planning and I think Annette Court is an excellent role model," Williams says.
She, like many of the employees interviewed, thinks the broking and affinity developments in the business are the most exciting. Deals this year include Bradford and Bingley, Skipton Building Society and Ryanair.
On the company future, she admits the exit plan is being thought about at all times but there are "six or seven ways to approach it" with no set plan yet set in stone.
"This place has an open door policy and you can just walk into management offices and talk directly with anyone. This is perfect for me."
Julie Tate, strategic manager for customer acquisition, Equity broking division
Julie Tate joined Equity in January and was persuaded to return from travelling and working in the Middle East and South East Asia to experience the delights of Essex.
"I used to work for broker Colonnade and have known Mike Hutton and Neil Utley for many years.
When I gave a hint I was coming back to England Mike got in touch."
She works directly with Nick Potts, managing director and John Castagno, who heads the broking direct division.
"My focus is the internet and rebranding the company through the direct arm.
"This means dealing with the insureds through internet and direct channels," she says.
One project she has been piloting is the use of "magic pen" technology, where an electronic pen swipes and holds data, which was pioneered successfully under the title "Eye write" at Castagno's previous company GAB Robins.
"It has been very positive with staff and has the wow factor about it."
She admits Brentwood is no Dubai and is getting used to the "sleepy village I now live in".
Equity' s broking team has expanded rapidly and Tate enjoys the enthusiasm and strategic planning that Castagno, Hutton and now David Birch have instigated.
"It means we are all working in the same direction without deviation," she says.
"The developments on the 'community' schemes is very exciting.
"As the market is soft at the moment we must look for new business and new ideas," she says.
Laura Phillips, claims manager
Fun on a Friday in Brentwood does seem a challenge. But Laura Phillips is adamant it does happen because "Equity claims staff know how to party".
"At the Terrace Bar once a month the Brentwood claims managers meet and it does get a bit wild," she says.
She joined Cox at the age of 15 and has been impressed by the "open and free communication" between the divisions in the past year.
"Neil's [Utley]approach exudes vitality and is very positive. Since he returned the place has so many things going on and it has the cohesion back which we lacked before," she adds.
Her area of expertise is IT systems and is excited about the new system being developed for motor claims to be rolled out over the next six months.
"I remember starting in claims manually printing cheques and posting them to the insureds. We now use imaging systems which can move the paperwork around the world in seconds and the latest system has some of the best MI tools I have ever seen," Phillips says.
Two words to sum up an Equity employee?
"Vitality and vigour," replies Phillips.