Heath Lambert chief Adrian Colosso gained a reputation as a hard man in a struggle to get the broker back into shape after years of turmoil. He tells Danny Walkinshaw this is the first time he has been able to speak openly about the set-backs and outlines his plans for a rosier future.
One day in Adrian Colosso’s eventful career at Heath Lambert stands out firmly in his mind. In the years of upheaval since he took the reins as group chief executive, it’s the only time he took events personally. On a normal working day in March 2004, 50 of his staff dropped the kind of bombshell that gives chief executives nightmares: they were defecting to a rival, in this case, Willis.
In his most candid interview to date, Colosso explains what was happening behind the closed doors of Heath Lambert’s offices in Houndsditch, EC3, as senior staff poured out the door and rumours flew. Eventually, part of the business was sold to Cooper Gay in a deal believed to have been worth between £6m and £7m. Colosso told Insurance Times how the sale came about, and his plans for the future – including a possible stock market flotation for the slimmed down business.
Colosso was appointed UK managing director of Heath Lambert, stepping up from from head of global broking, in November 2003, following the departure of David Margrett. More than a month later Heath completed a financial restructuring, cutting its debt by £133m and reducing interest payments. A new management team was formed, led by executive chairman Ian Martin, finance director Richard Sansom, overseas managing director Surinder Beerh, UK chief operating officer Mike Bruce and of course Colosso himself.
Early in 2004, Heath’s leaders brought its senior staff together to outline the future of the business. A source close to the broker said they told staff they would be changing the shape of the business after the previous management’s unsuccessful attempts at floating and their failure to find a buyer.
Massive c hange
“The meeting took place in a hotel on the outskirts of London and they were basically told at the start that this is how we are going to operate,” the source said. “If you did not agree with it they said ‘there is the door and you can leave’. They were announcing a massive change in the business. They had ambitions to be as big as Willis at one point and then they started selling off all the overseas business.”
Colosso remembers the day well. “We said to the troops this is what we want to be and these are some of the things we need to do,” he said. “You are either on the bus or off the bus and since that time the company is just so different.”
Colosso was promoted to group managing director in June 2004, in an apparent reflection of the company’s progress since its November 2003 restructure. The following year, Heath’s executive chairman Ian Martin retired and was not directly replaced, but Colosso took on his duties.
After it completed a capital restructure in May 2005 and despite a bank debt of almost £400m and a £211m hole in its pension fund, Heath Lambert’s finances were seemingly under control. According to when the business got back “on the running track to the new world” because it had dealt with the pension problem.
Colosso’s next big challenge came when rival broker JLT began negotiations with Heath with a view to merging the two businesses. The high profile deal, which Colosso admits could have created a “great business”, never came to fruition.
“On several occasions I have canned my best mates.
“What became apparent very quickly in the process was that it was going to be a JLT acquisition,” Colosso said. “The Heath Lambert people would get slaughtered and half the business would get lost. Now, it didn’t bother me from a financial perspective, but it did bother me that what we had created up until that point would have just been decimated.”
But the buzzards continued to circle. In 2007 there were reports of a failed bid from another broker, THB for Heath’s UK wholesale business. It emerged that following the collapse of the talks, two senior managers from the Heath Lambert division had defected to THB. They included Graham Lawrenson, managing director of FSJ, Heath Lambert’s London market wholesale team, and a £4m business at its “absolute peak”, according to Colosso.
Looking back, Colosso insists that the long list of senior departures were a positive step for the beleaguered business.
Speaking about Lawrenson’s exit, Colosso said: “At that time this [Heath Lambert] was a £130m business, so that’s nothing. Notwithstanding that was wholesale, general wholesale, so not a line we were excited about. The only thing we got excited about was the manner in which he did it.”
One of the next departures was Hugh Champion, managing director of Heath’s facilities division, who left to join RFIB, the international Lloyd’s insurance and reinsurance broker, to lead its own facilities team. Colosso said: “It did not impact our business.”
Heath Lambert National’s managing director Tom Ernoult was another surprise departure. He joined Oxygen in March. Again, Colosso is dismissive about the impact of his departure.
According to sources, many of the departing staff left at Colosso’s behest. One source close to the broker said: “Adrian Colosso is no nonsense. He has a reputation in the market of being a hard man. A lot of people that left were pushed and there were no significant efforts to retain them.”
Colosso himself admits to ousting even his closest friends. He confided that recently, a friend of decades’ standing was sacked. “On several occasions I have canned my best mates,” said a ruthless Colosso. “Everybody has their day in the sun, it is as simple as that if you can’t do your job you have got to go.”
According to Colosso, the departure of almost 50 of the broker’s real estate team was the only troubling event, on that fateful day in March 2004. “The one that hurt was when the real estate team went because it was right out the blue, completely out of the blue. Out of everything that was the only one that has actually hurt.”
In May 2007, Insurance Times reported that Heath Lambert representatives had approached a number of companies offering to sell its specialist wholesale operation, including FSJ. Sources said that Heath Lambert could possibly sell its wholesale operation to a business such as Cooper Gay or another company with an international focus. The broker insisted that its non-retail operations were still core to the business.
“Everybody has their day in the sun, it is as simple as that if you cannot do your job you have got to go.
However, a year later and Heath Lambert had completed the sale of its aerospace and reinsurance business, broking arm FSJ and elements of its Global Business Solutions unit. The buyer: Cooper Gay.
Two months on and Colosso sits relaxed in Heath’s offices, takes off his suit jacket and admits: “It has been very difficult to tell the press the whole truth and nothing but the truth. Sometimes you can’t because you are part of a strategic plan to get over that hurdle, to get over the next one and so on.”
Colosso says now the sale of the non-specialist wholesale business, a “dying model” as he calls it, was always going to happen. The protracted sale of Heath’s non-specialty wholesale business came after a series of failed bids and challenges that faced the business.
“This business was in a terrible state, in October 2003 it had nearly £400m of bank debt and was not making any profit. Here we are today with £18m of profit, minimal bank debt and absolute clarity about its strategy.”
The deal with Cooper Gay, like previous attempts to sell the business, had its distractions. The broker had originally agreed to transfer 120 staff to Cooper Gay, but ended up completing an unexpected deal with another broker, Arthur J Gallagher that saw 18 staff transfer from its GBS unit. Colosso seems angry when he recalls how the 18 staff refused to transfer to Cooper Gay and attempted to sell their part of the business to Gallagher, but insists he had the last laugh. Eventually, Gallagher was forced to settle a deal with Heath Lambert for the GBS business.
Positive about growth
Now that he can sit back and relax, Colosso admits the past 18 months have been a mixture of “irritation, challenge and frustration” but is positive about the growth already occurring in certain parts of the business. Indeed, just two weeks ago Heath announced that it had won the tender to arrange insurance for the £15.9bn Crossrail project. Other deals of a similar scale are in the pipeline, says Colosso.
Despite whispers in the market that Heath Lambert is already negotiating a sale, Colosso insists that the firm’s selling days are over. “There is nothing else for sale, this is all now about growth.”
Would he sell to a consolidator? “We might talk to them but we would not enter in to anything,” he comments, rather mysteriously. “We have hired 200 people so far this year, that is a lot of people and we are not stopping.”
Colosso admits the business could float, but says: “It’s years away, there is no rush. It is something to consider.”
After years of biting his tongue, Colosso has clearly enjoyed the opportunity to speak openly, and share his rather forthright views on what happened at Heath Lambert. Like the business he runs, he has come a long way since that dark March day in 2004. IT