The power behind the throne at UK General Insurance Group says the company’s latest initiative looks set to be a success. He talks to Saxon East about the challenges he faces in his job and in long-distance running … but don’t mention the company’s eventual sale

If there’s one thing a marathon runner dreads, it’s the heat – just ask Michael Warren.

His ambition to beat the four-hour barrier in the Edinburgh marathon melted away on a hot May day this year. “It was awful,” sighs the lean 47-year-old, who came in seven minutes adrift. “It’s not what you’d expect in Edinburgh.”

There are many similarities between sport and business, and Warren has dealt with both challenges and unexpected happenings since becoming chief operating officer of UK General Insurance Group in 2008.

The week he meets Insurance Times is no exception: Warren is working flat out to secure renewals for brokers on social housing, and AM Trust has withdrawn capacity from the MGA, giving it until the end of the month to find other providers for renewals. It is a delicate situation, and understandably Warren can’t comment, apart from saying the decision is “disappointing” and firing off a message that he won’t let down the affected brokers.

Profit versus volume

As an MGA, it can be a battle to keep the capacity providers happy. In April last year, then AXA chief executive Philippe Maso banged the drum for “profit over growth”and AXA withdrew capacity on Primary General, which later became UK General. It caused a headache for Warren’s company, but Fortis, now Ageas, stepped in temporarily and later signed a long-term deal.

Maso has gone, but Warren is still standing and UK General is getting stronger. Interestingly, AXA wants growth again. Warren could be forgiven for having a feeling of Schadenfreude, but this calmly spoken and level-headed director isn’t the type to kick a man when he’s down. “The objective of big insurers will ebb and flow driven by the analyst investment community as to what is flavour of the month with their share prices,” he says.

“Some of the emerging MGAs may be about to replicate what happened in the past. There’s a push for volume through new MGAs. Fine if they want to do that, but we don’t want to do that. We want to grow profitably. The insurers that are setting up these new MGAs might be very comfortable with distributing loss-making income business if premium income drives their share price.”

Perhaps in the past UK General has been too focused on providing growth for its capacity providers – a trap that many MGAs fall into. Instead, Warren wants UK General to be part of the other breed of MGAs: the one focused on profitable niche products. Others claiming to be in the “get it tight, get it right” camp are Towergate Underwriting chief executive Clive Nathan and Thistle boss James Gerry.

How is UK General going to achieve this? The focus will be on stretching out scheme arrangements with brokers. In the past the company relied on word-of-mouth and renewals, but now it has hired a team of salespeople to win over grass-roots brokers. Led by sales director John Bibby, UK General aims to capture a tenth of the £1.5bn schemes market. The company is rolling out Smart Schemes, a low-entry facility that allows brokers to personalise elements of cover to build the products they want.

“We have upwards of 140 opportunities in the pipeline in various states, from initial enquiry through to going live. It’s a real opportunity for growth for us,” says Warren.

Looking over his shoulder will be Ageas chief executive Barry Smith and managing director Mark Cliff, two experienced heads. UK General Insurance Group will have to meet a return-on-equity target for Ageas, its main capacity provider.

Warren is not fazed by the pressure: “We’re not there as an extension of a generalist insurer; we’re there to provide infield products. That’s how Ageas perceive us, providing the products and specialist expertise in areas they don’t want to.”

Wider concerns

As if this isn’t enough to worry about, UK General Insurance also has two separately branded businesses: direct travel provider Simple Travel Insurance and agricultural underwriter Rural Insurance. It also owns Total Broker Solutions (TBS), which provides network and compliance services to brokers. Sitting above all of this is a Bermudan-based holding company called Primary Group.

Warren has spent two years putting in controls and compliances, as well as saving money by rolling up subsidiary companies into one business. Hard work it might be, but he relishes the freedom of his role.

Warren works hard in the office, but at weekends he spends time with his two teenage sons in Yorkshire. He also helps Scope, the charity that cares for people with cerebral palsy.

He is happy with this. Compared with his last role as finance director of Halifax Bank of Scotland, his circumstances couldn’t be more different. He says he might be doing 12-hour days, but they are “enjoyable 12-hour days”, and it is a contrast to HBOS, where he worked 12-hour days and weekends in a “slow-moving bureaucracy”.

He reflects: “At HBOS, every decision needed a 15-page paper to support it. Everything was slow moving. Nowadays, a 12-hour day might include three hours’ thinking.

“With fabulous hindsight, HBOS was in difficulty because it was being taken over by Lloyd’s. I didn’t appreciate that at the time.”

Vote of confidence

Warren’s current post arose through his connections with Howard Posner, the chairman of UK General Insurance and the managing director of Halifax general insurance for 10 years until 2005.

Since Tim Rolfe departed as chief executive of UK General Insurance in January, citing personal reasons, Posner hasn’t replaced him directly. Instead, in a vote of confidence, he has allowed Warren to continue as chief operating officer, running the company on a day-to-day basis.

It means Warren has the responsibility of building up the company before its eventual sale. (UK General Insurance shareholders are a small group of private investors. The main one is Philip James, who owns 80% of the company.)

Warren hopes that the prospect of a future sale will remain low profile for the time being. “People get incredibly nervous about the thought of a potential sale five years down the line. We stay well clear of this internally and in the broker market. We’re building a strong well-governed company. Anybody buying it would want to put more volume into to it. It would not be an asset-strip.”

After an hour, the interview is up. Warren is heading back to Leeds, with his mind turned to planning a winter campaign of training runs on the cold and windy streets and hills of Yorkshire.

Getting his marathon time under four hours is a challenge that will mean hard work – but that’s what Warren is all about. IT