Shipping out to the Netherlands as a consequence of the UK government’s foreign profits tax is a bold statement from Brit’s chief executive. Tom Broughton meets with the boss who hopes to create a legacy of business continuity.
“I don’t have a love for politicians generally,” says Dane Douetil with a sinister smile. And who can blame him? This is not another tedious reference to Westminster’s rogue expenses scandal, but rather the Brit chief executive’s exasperation at the Treasury’s failure to overhaul its onerous tax on foreign profits. It is a decision that will see Brit Insurance quit its UK headquarters for the swankier tax haven of Amsterdam by the end of 2009.
However, Douetil is past angry and more bitterly disappointed. He believes UK Plc will be out of pocket and he points the finger of blame firmly at the door of the Treasury. “It is at best careless and at worst … distracted,” he says choosing his words carefully. One can imagine he is more animated behind closed doors.
“It has had the necessary reports, views and information. But it has not taken a long-term view; there is a political agenda behind it,” he says. Either that, or Gordon Brown just simply disagrees with him and his argument, but it is not a debate that will be resolved today.
In his first interview with Insurance Times since Brit has grown to become a £1.4bn premium income business in a little over a decade, Douetil is ready to explain the rationale behind his thinking. He maps the next stage in the listed insurer’s growth since it surfed the wave of New Labour, even though he is not prepared to say a word about a possible takeover of rival insurer Chaucer.
Sitting in his city office with UK chief executive Peter Burrows, Douetil estimates that net savings will be made in the next financial year from the move, although it is estimated that it will cost millions to execute. He explains that Amsterdam is a “powerful base” but from the frustration and disappointment written on his face you can see when he says it is “missed opportunity” for the UK, he really means it.
“That’s the thing about Dane,” says a fellow chief executive who knows him well. “He’s a fighter, a Queensbury rules kind of chap. Very passionate. But don’t underestimate him; he would still fight dirty if he needed to, you know, like an old English gent in a Bridget Jones film. He’s determined to win believe me, even if he has to wait to do it.”
Following two years as Lloyd’s head of market reform, Douetil spent hours taking the fight and his lobby to Westminster. He explained the rationale and accompanying injustices to various ministers, civil servants and vested interests. “We were not the only ones telling them either, we’re at the end of a long queue,” he bristles, with an air of old-school British patriotism about him.
“It’s not just about the insurers; it’s the whole environment, the consultants, the lawyers, the suppliers … the people. We’ve got everything here; it’s about the environment it creates. It’s not a decision we’ve taken lightly, we didn’t want to take it, it’s inconvenient.”
Douetil explains that the sticking point has been “fiscal certainty”. He says that it is a 10-year decision and the business needed to be able to plan for the next five “with certainty”.
It is the kind of language that makes him appear statesman-like; even if the counter argument would be that he would simply land Brit in whatever region is the most advantageous. But his case is compelling and he is blunt. “You simply cannot run a business in this manner,” with suitable contempt for the powers that be.
However Brit is committed to competing in the UK and in particular the regional battlefields of the SME sector. Brit’s UK arm accounts for a sizeable chunk of the group’s business and UK boss Peter Burrows politely and gently maps the decline of the broker consolidator model before explaining that Brit will continue to build both deep and long-lasting relationships with chosen brokers.
“We’ve got about 100 brokers in the UK that we do business with and some of our brokers partners are the consolidators,” he says in a more reserved manner than his bullish boss.
“We believe we can take the cost out of the transaction, it’s about long-term commitment, innovation and good products, that is how we will differentiate” he adds.
Brit has continued to attack the regions after making its name as a player in the London market space. “The plan is to grow the regional business as a larger slice of a larger cake,” explains Burrows, pointing to a map of business in which the insurer operates.
The strategy is in keeping with Brit’s attempt to eat into the online revolution that he sees sweeping the sector. Brit strives for 15% of the book from its online operation and 25% from the regions, while maintaining its core London market share and competing within specialist lines.
But it is the issue of unfairness and the political landscape that again returns to Douetil’s rhetoric and you detect the passion and red mist returning. “There is an inherent unfairness in the market when we are competing on price against nationalised businesses in the regions,” he says as he fingers Royal Bank of Scotland arm, NIG. He explains that Brit has been competing against firms which have had their capital restricted, balance sheets taken over and who have been bailed out by governments but are still undercutting him. “I just find it very galling, but there isn’t much I can do about it.”
And Douetil points to the same scenario with rival AIG, noting that it is a situation that cannot continue for much longer, despite the troubled insurer posting excellent UK figures. He says that the climax of the situation will be insurer consolidation. And he separately declares that he has an appetite to make the right strategic purchases. He will not be drawn on any potential Chaucer deal, only to reveal that he’s “fed up” of “reading about who he is about to buy in the press”.
But you kind of get the impression from his body language that there must be something in it, should the price be right, that is. What Douetil does predict however is that over the next 12-24 months that there will be a continuing pressure on rates and a notable lack of insurer/capacity start-ups. “There will be no class of 2009, like there has been in previous years.”
Describing himself and his legacy Douetil says he’s the kind of chief executive who does not phone in when he is on holiday or check his BlackBerry. He has no plans to step down but believes that his legacy will be that the business can continue in the same spirit without him.
But his holiday line is a little difficult to believe given the monumental effort he put in to win the argument and stay put in the UK. It just feels so very personal to him. And on that note, is there any way back now that the decision to up sticks has been made?
“There’s always a way back,” he says with a cold stare. “But I probably shouldn’t say who I will be voting for in the next general election.”