As companies grow and the world appears to shrink, business is increasingly becoming multi-national. And the insurance industry is no exception. Chris Wheal looks at how UK firms are dealing with foreign ownership and learns that a Little Englander mentality is no longer an option.

Sprechen-vous espanol? There is a xenophobic tendency to believe that being taken over by foreigners will be a disaster. The Dad's Army Home Guard fear that foreign companies will impose their national characteristics on their British underlings, stocking the canteen with garlicky food and insisting managers greet board directors with a kiss on each cheek.

This is nonsense, of course.

The reality is that the increasing number of foreign-owned firms in the UK insurance industry are not imposing foreign cultures on their UK subsidiaries. What they are doing is bringing a wealth of experience and industry understanding from slightly different markets. But it is a two-way flow and they are often learning as much from their UK managers and staff as they are teaching.

"When Allianz first took Cornhill over, there was no immediate impact," says Cornhill's spokesman Geoff Mayhew. "Allianz recognises the local differences. Its philosophy is to think global but act local. We have a high degree of autonomy to run our own business."

Cornhill itself decided to use the Allianz name to tap into the parent's capital clout to enable it to underwrite bigger risks in the London market.

"With the Allianz backing we have the capacity to write worldwide risks. We've been lead insurer on projects in Hong Kong and Kuala Lumpur as well as insuring the Channel Tunnel rail link and the Jubilee Line extension. We wouldn't have been able to do that without Allianz," he says.

Different language, same aims
Loss adjuster GAB Robins was recently sold by its Swiss owners SGS to a US equity investor Brera. Austen Slattery, GAB Robins' UK sales director, says the change is due to the different businesses of the parent companies and not their nationalities. "There isn't that much change because we're used to foreign ownership," he says. "There are cultural differences between SGS and Brera but that's because Brera is an investment firm so it is more interested in the in-house management rather than implanting its own people."

There has been an impact though - speed. "It is aggressively pursuing new opportunities and it is very keen to expand GAB Robins," he adds. "It is making much faster decisions. If it feels the business plans fit with the strategy then it gives the go-ahead. It has a group of seasoned investment professionals who know the banks and the individuals and they can raise the money quickly. They are looking for GAB Robins management to come up with ideas and they make decisions twice as quick and probably faster. It's more demanding but it's more exhilarating," Slattery says.

At Groupama, it's the mutual ethos, rather than the capital, that brings benefits. Paul Picknett, corporate strategy director, says the company takes a much more long-term view because of its mutuality, which will help develop markets and products without having to make a quick profit to pay impatient shareholders.

"It has been going for 150 years or more and the roots of the organisation are in the farming community and in villages throughout France," he says. "Farmers know that if their crops fail one year they don't give up farming - they try again the next year. Unlike US firms that want results immediately, Groupama takes a long-term view, which is particularly beneficial in the current market and will serve us well." And there is no chance of carpetbaggers ruining that. "It is illegal to demutualise in France," says Picknett. "If anything, we might become an umbrella for other mutuals to shelter under."

For Sedgwick, which since late 1998 has been part of the world's biggest broker Marsh, being taken over has presented new opportunities.

Historical areas of excellence
David Trezies, chairman of Marsh UK, says there have not been cultural changes imposed on the UK operation. "The cultural side is well-protected. The clientele is specific to the country. There are different practices and different ways of doing business," he says.

There are also significant business changes. "We have specialists around the world in particular products or market areas," he continues. "You'll have an Australian group that has best practice in sport and leisure. The US leads on transport and UK is the best practice centre for financial services and for developing products for accountants and lawyers. We can transport that expertise from one region to another."

At Axa, spokesman David Ross says the real difference has been nothing to do with nationality but rather Axa's experience of taking over and integrating firms. Instead of the problems some other industry takeovers and mergers have experienced, he says Axa's has been faster and smoother. Axa manages this by having a training policy that ensures all its managers are trained in the company's chosen style.

Ross, like many UK managers, has already been sent to Axa's university in the Bordeaux wine-growing region of France. "There are two chateaux in France. Managers are coached there for a week in Axa's style. Exercises are undertaken which relate to the job they perform at home but there are people there from France, Belgium, Hong Kong, Australia and Ireland. It teaches you the ability to see things from a different angle," he says.

Ross says the aim is to ensure that all Axa managers behave how the company wants. "The aim is to have a consistent approach. It starts at the top and at the end of the course you will have created your own action plan for how to get that message across to the people who work for you," Ross says.

International co-operation
Cornhill has managers on transfer to foreign companies and overseas colleagues working in the UK. It also has its share of the parent company's centres of excellence - energy, pet and fleet insurance. Another benefit is the international network of offices available to Cornhill. "We can write a multi-national programme and it will provide the servicing. Similarly, we will be the local servicing company for policies written in Germany," says Mayhew.

Groupama has learned from the UK about its affinity schemes business and is looking to use that knowledge to begin tie-ins with affinity groups. It is also studying Touchline's direct marketing techniques. "It is not too proud to come here and listen to UK managers," says Picknett.

The UK operation has followed the French model by devolving responsibility to regions in line with the French parent's regional structure. "There are 10,000 local mutuals within Groupama in France. They make up 24 regional mutuals, which are all insurance companies in their own right. What we have embraced wholeheartedly is the devolved structure and we have empowered our regions," says Picknett. "In commercial lines, the broker wants a decision made locally - a Manchester-based broker wants a decision made in Manchester."

Devolving power
The UK operation is hoping this devolved structure and long-term view will be recognised by customers as providing the best service levels in the UK. Groupama in France has 90% renewal rates on its policies, a fine record but a tough target for the UK. "We will do that through the service culture," says Picknett.

Marsh reckons it should not be looked at as having an international parent but being an international company. "Sedgwick was an international company anyway. It was third in the world and was taken over by the first in the world. In many cases our customers are international companies and that is growing. We had the resources for that kind of big business but it wasn't as big as Marsh," says Trezies.

And striking a balance between the US and UK is about perfect, according to Marsh. The US is becoming an increasing important area for insurance, both in resources and underwriting. But the UK remains at the heart of insurance business. It has the history and, because of that, a tried and trusted legal system that insurers and insurance buyers believe in. Straddling both is a sound business decision. And xenophobia is impossible because most of the major companies these days are foreign-owned.

"The US is the driving force behind the world insurance market. That's where the capital is and the underwriting. Around 70% of the companies we do business with are foreign-owned but we do business with them in the UK because London has the set-up that makes everyone comfortable doing business," says Trezies.

Internationalism is here to stay and in the insurance industry it is likely to increase further. They say no man is an island but in business, not even islands seem to be islands any more.


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