Chief executive scotches ‘ill-founded’ market speculation and outlines plans for future
Barry Smith, chief executive of Fortis UK, has ruled out the possibility of a management buy-out (MBO) and hit back at widespread speculation over the future of the insurer.
Smith told Insurance Times Fortis UK was not for sale and he was focused on building the business.
At the same time, Mark Cliff, managing director of Fortis Insurance, outlined plans to move into the fleet market next month, and to develop relationships with a wider number of brokers.
In their first interview since Cliff joined Fortis from AXA last October, the pair insisted market speculation over the insurer’s future was ill-founded. They distanced the business from its parent bank Fortis, which is entangled in a potential sale to French rival BNP Paribas.
Smith said: “It is the bank part of Fortis which has been bought by the various [Benelux] governments and it is the bank which is the subject of discussions with BNP Paribas. The insurance business – which includes the UK business – is still owned by the shareholders … there are no discussions on an MBO or anything of that nature.”
Market rumours have consistently linked Smith with an MBO, and suggested third parties, including private investors and insurers such as Zurich, Allianz and AXA, have looked at the business.
Smith conceded that the insurer might have received approaches. “It’s like the transfer market. It’s hardly surprising that a lot of people may be interested in buying Fortis. Why wouldn’t they?”
But he added: “The reality is, we are not for sale. The reality is, we are not spending one minute of our time focusing on these distractions. We are spending our time on how we can build our business, widen the products, offer high-quality service, service the needs of the broker and build an even bigger, better business.”
“'It's like the transfer market. Itâ€™s hardly surprising that a lot of people may be interested in buying Fortis. Why wouldnâ€™t they?'
Cliff, a well known figure among brokers who has kept a low profile since his appointment last year (see box, left), said he had been concentrating on getting to know the business and making plans for 2009.
“People will see a greater commitment to the broker market,” he said. “We deal now with 2,300 brokers and we’re trying to expand that. We have been adding product continually ... we will extend further into the commercial markets.”
He said Fortis would launch into the fleet market with a pilot scheme early next month and that other commercial lines would follow.
He declined to disclose internal targets for premium.
Cliff said Fortis would continue to offer high service at a low cost – this would distinguish it from its rivals.
“The decision lines are very short. There is no big monolithic structure and customers have access to any of us,” he said.
“My role is to lead Fortis UK, which is the manufacturer part of the business.
“We underwrite and we handle claims, through different channels. My role is to produce the right and profitable products into the right segments.”
Man with a plan
Five months into the job, Mark Cliff prefers to talk about his big plans for the broker market rather than his former role as markets managing director at AXA, where he memorably announced his resignation days after the shock departure of
chief executive Peter Hubbard.
"It was just a coincidence, the two weren't linked at all," he insists. So why did he leave a well established role in AXA for a new job at Fortis?
"There were four things that really made me want to move: Barry's vision for where he wanted to take the organisation; the opportunity of career progression for me; Barry himself, because we used to enjoy working together at AXA; and lifestyle, making sure to keep some balance."
He says he has been particularly impressed with the company's commitment to service, and intends to extend it into new commercial lines in the months and years ahead.