Toby Esser says main savings will come from job cuts and shift to electronic accounting and settlement
Cooper Gay Swett & Crawford (CGSC) chief executive Toby Esser aims to return his company’s profit margins to their historical levels of between 20% and 25% with its cost-cutting drive.
Esser told Insurance Times that the company would produce a profit margin of between 16% and 18% this year, against expectations of between 20% and 25%. But he added: “When you look at where we have always been historically, where we expect to be in the future and where our peers are, there is no reason why we can’t be hitting that.”
Some of the cost-cutting has been done. While declining to give a precise number, Esser said CGSC’s London-based broker Cooper Gay & Co has shed “significant double digits” of staff numbers. This was achieved by not replacing departing staff and through redundancies after last year’s merger with fellow Lloyd’s broker Newman, Martin & Buchan (NMB), which Esser said resulted in “significant duplication of people”.
Departures included Cooper Gay & Co chief executive Sam Hovey, who joined rival broker Besso as chief financial officer and was replaced by NMB chief executive Gordon Newman.
Esser said: “A lot has been done already with regards to those people, but you are not going to see the savings coming through until into next year.”
Esser said bigger cost savings will come from CGSC’s planned shift to electronic accounting and settlement. “We are really at the forefront now of piloting what is going on there and trying to change.
“If we can do that on a global basis, which we believe we can, ultimately the savings are going to be enormous – you are talking about tens of millions [of pounds] of savings.”
CGSC announced on Friday that it was in cost-cutting mode after rating agency Standard & Poor’s downgraded the broking group’s credit rating to B- from B in response to a “continued decline in CGSC’s operating performance”.
Esser downplayed the significance of the S&P downgrade. He said: “It doesn’t impact anything other than the fact that it generates bad publicity. It doesn’t cost us any more. It doesn’t affect us in any way whatsoever.”