With Barry Smith at the UK helm, Fortis Insurance has turned in some good interims, mainly because of its motor business. But he 's nervous about household risks ...and Selby is an unmentionable. Andy Cook reports.
While the motor book is trundling along nicely, the fledgling commercial book has rocketed - even though our brokers are
It's eight months since Barry Smith took the helm at Fortis Insurance. And it is a nervous moment. Last week, Fortis Group reported its interim results for the first six months of the year. And there, buried among news of Belgium banking and Dutch life insurance, was news of the group 's UK subsidiary.
While it would be unfair to judge Smith by the figures, they are bound to reflect the aims and actions of the new boss. So what were the results like? Pretty good is the short answer.
Gross written premium rose to £256m - nearly 13% - compared with the first six months of 2001.
That's ahead of Smith's 10% target.
And shareholders' funds increased from £166.3m to £179.6m.
Fortis' key motor book (75%of its business is private motor) grew to £191m in the first half of the year compared to the first half of 2001. That 's a rise of 7.3%.
But, while the motor book is trundling along nicely, the fledgling commercial book has rocketed.
First half premiums were £11.7m compared to just £6.7m last year. Fortis Group rules prevent Smith from indicating profit levels on commercial motor. So it will be next March before we really know.
But, judging by the chirpy grin and cheerful tie embellished with a pink monkey motif, Smith has a few worries on that score.
Last year, Fortis reported a growth in profits from £26.5m in 2000 to £32.7m in 2001.With rates shooting up in commercial lines and motor reaching the top of its cycle, profits could well be up again.
The conservative philosophy of Fortis in the UK has also saved Smith from stock market pain.
Smith inherited a reserve based on bonds and gilts, not stocks and shares. Fortis UK reckons to have over 95%in bonds, gilts and bank deposits. And, says Smith, this has been the case for some time.
So any bad news? A little on the household front, admits Smith. "We didn't have a great first quarter because of weather and burst pipes," he says. Smith wants more to be spent on flood defences because weather patterns are changing. "It 's logical that rates should rise in this sector because of weather, but ...," he trails off with an unsaid: "It probably won't happen."
And what about reinsurance? Fortis insured the car that caused the Selby rail crash. Fortis took the first million of the £50m loss, with reinsurance picking up the rest. It was this event that caused reinsurers to threaten the withdrawal of unlimited liability treaties. Smith refuses to be drawn on whether this will be the case when Fortis' treaty is renewed on 1 January 2003.Ironically,while refusing to discuss the issue, he calls for greater clarity. Are reinsurers refus- ing to show their hand? Next week's Rendez-Vous at Monte Carlo may provide an indication.
Smith's mantra, as you might expect from a former customer services director, is service.
And, as Fortis is a broker-only company, that means broker service.Smith wants brokers to see Fortis as a premium brand.Smith boasts that research shows Fortis is ahead of the game. But, he warns: "We are not getting complacent." Smith has already been picking the brains of many brokers and has some ideas to "widen the footprint "of the motor book and add new products to the existing range, which include travel and warranty. What brokers really want, though, is a remedy to the commercial lines capacity problem. Can Smith come to the rescue? Fortis is a big European company that could give Smith a lot of money to grow a lot faster in an area he is interested in expanding into.
While Smith doesn't rule out an acquisition, organic growth seems to be the favoured route. And, with Fortis writing a fraction of a percent of UK commercial, Smith 's cape will probably remain in his cupboard.
What commercial lines brokers will see soon is quicker service. Smith says that from the last quarter of the year, commercial quotes will be generated through the company 's main IT system, rather than through a complementary one.
Smith is in a dilemma over growth. He would like to grow the company; he wants it to be big enough to "be an influence in our markets ".But he realises that being a medium-sized company provides flexibility and a size which allows the boss to keep a close eye on service.
Smith 's a safe pair of hands who, to be fair, appears to have created a bit of a buzz around the Eastleigh office. Low expenses are the corner- stone of financial success and Fortis is still ahead of the pack on this. For now.