The HRH takeover, the all-American business bravado, the tie pins… Willis chief Joe Plumeri has left the UK market in no doubt about his energy and influence. In a rare interview, he shares his frustrations and ambitions with Tom Broughton. Illustration by John Pritchett
It’s Friday morning in New York and raining. It is 3pm on a hot day here in London and the sight of Willis global chief executive Joe Plumeri proving he can more or less reach out and touch you from his live video link makes it feel a little hotter.
This interview has been arranged following much negotiation with “Plumeri’s people” and a couple of them are sat in on the video link, held in small rooms on both sides of the Atlantic.
There are a few elephants in the room too. The inevitable interest in Willis slashing costs and cutting its employee expenses, and the persistent question of whether Plumeri paid too much for the high-profile $2.1bn acquisition of US broker HRH last year. Not to mention the mischievous rumours surrounding Plumeri’s relationship with Brendan McManus, Willis’s UK chief executive.
To answer these questions and lay out his strategy for the months ahead, Plumeri has agreed to his first formal interview with Insurance Times since taking the reins nine years ago.
And what a nine years it has been. Plumeri is a fantastic orator. A big picture kind of guy. And you get the feeling he wants to leave a lasting impression on whoever he’s talking to, whether they like it or not.
In his unmistakable New York tones, he says of Willis before he took the helm: “There was no dreaming going on. People’s conversations centred on remembering things that had already happened. It was about memories.”
He quickly gets down to brass tacks. “It didn’t make any money,” he expostulates, with a fixing stare. “Now you are sat in that fantastic building.”
Indeed I am, on the 16th floor of what many say is a towering testament to Plumeri’s own ego: the purpose-built building that became Willis’s London home last year. It’s the stuff that rags-to-riches fairytales are made of.
So how does the epoch-making takeover of HRH fit in? The acquisition of the top ten US broker last June has taken Willis into new territories in North America. But commentators have wondered whether the multibillion-dollar price tag has overstretched Willis.
“You’ve got a pencil in your hand,” Plumeri snaps. “Take these numbers down.” He reels off a set of baffling figures that would have been worthy of former deputy prime minister John Prescott in his heyday. His point is that he paid about five or six times earnings before interest depreciation and tax, and that it worked out as a good deal.
Would he have paid as much in today’s climate? “Well, no,” he admits. “There would be different modelling.”
But he is keen to point out that the deal would still have gone ahead. He gives the impression that he wasn’t surprised by the economic storm – he could see it coming. Plumeri sees the current crisis as a giant “reset button” that has taken the economy back to its roots, where lavish lifestyles and executive indulgences are gone, and the system has been ripped back to the core.
He says there will be no more acquisitions to follow HRH. It’s time for Willis to do what it says on the tin for a while.
Market attention has increasingly focused on the company’s cost control measures, with staff being asked to cut down their hours and keep expenses at a minimum, but questions about it agitate Plumeri. He admits he gets “pissed off” reading about cost control. “It’s the culture,” he says, rolling his eyes. “We’re doing it all the time.”
He points to figures that prove Willis has not had to go through the kind of redundancy programmes its competitors have. And he says his clients aren’t complaining. “If we were losing clients, we wouldn’t have a margin of 24%,” he says. “Ask our competitors – you don’t see us losing clients.”
Plumeri is an aggressive interviewee, and he makes no secret of his frustration at what he sees as hostile questioning or criticism emanating from the rest of the market.
It’s a well-known character trait. One of his fiercest competitors says of him: “Plumeri is the only one who makes such a big deal out of market speculation as he doesn’t like to be seen to be taking a backward step or to admit to any imperfection. He sends his people in to aggressively deal with it, but surely he has to admit that he loves to complain about people talking about the Willis regime.”
Speculation aside, the man from New Jersey clearly has done a hell of a job. In the seven years since Plumeri took the business public, Willis’s share price has doubled from $13.50 to $27.00. Market capitalisation has grown from $1.7bn at the initial public offering to $4.5bn today – an increase of 169%. Its adjusted operating income has grown at an annual rate of 8.5% from 2001 through 2008. And its adjusted net income has grown at an annual rate of 13% between 2001 and 2008, from $158m to $379m.
But there’s an even more interesting story behind the numbers. Plumeri is renowned for the personal impact he has had on Willis. He has imprinted his character on the business, transforming a sleepy, traditional London broker into a global corporate machine complete with a client bill of rights, “Joe notes” sent to staff across the world each week, and an army of workers sporting neat little Willis badges at all times.
The Willis one-flag corporate culture is intended to unite Willis offices across the globe – “glocal” is the painful jargon Plumeri uses. But it has passed into folklore too, the subject of press and bar-room gossip that has attached more comedy to the Willis pin badge than any branding since housebuilder Barratt flew on to our TV screens in a helicopter.
There’s an urban legend doing the rounds: Plumeri is in a lift with an ageing Willis staffer. Plumeri stares at his lapel and sees he’s not wearing a Willis pin. The guy looks up, sees Plumeri staring and replies: “I’m sorry Joe. I must have left it on my pyjamas this morning.
But Plumeri is not one to laugh at himself. He insists he wasn’t trying to instil Americanisms into the Willis empire, just passion and energy. “We didn’t know the Brits didn’t like badges,” he says looking, for the only time in the interview, a little humbled.
But it’s not long before the brash New Yorker is back. “You’ve got to remember there were pictures of dead people on the walls,” he says, recalling the old Willis building and its culture. And boom, there he goes again, jumping in with both feet.
Whether Plumeri wants the badge yarn repeated or not depends on whether you believe his Americanisms are part of a deliberate ploy to shock the Willis organisation into wholesale cultural change or a reflection of what he is really like. It’s probably a mixture of the two.
Either way, it has worked and he has played up to the formula ever since. Plumeri took Willis and moulded it into an Italian-American, straight-talking, high-energy, customer-focused establishment that people couldn’t resist.
Plumeri didn’t just give Willis a lick of paint; he moved it from its old offices in 1 Trinity Square to an iconic headquarters next to the best feeding hub in town: Lloyds. And he fuelled the business with mesmerising management rhetoric, ambition and colourful style – although this has been labelled by one UK competitor as “front row megalomania”.
There’s little doubt Plumeri has had a huge personal impact on the company but his tight grip on the reins has also prompted speculation about his relationship with McManus, a former managing director at insurer RSA. The London market is full of rumours that they do not get on. So perhaps this interview is a chance for him to squash the rumours once and for all.
However, at the suggestion that McManus has gone quiet since joining Willis in August 2007 or that his new role may have changed him, Plumeri is bemused – aside from his obvious irritation.
“I don’t know where you get it from?” he says, before quickly turning the tables. “Brendan has only been here for a while and is doing a fantastic job. We get along great.”
You can’t help thinking that Plumeri understands exactly where this kind of speculation comes from – that it is a symptom of the ruthless chatter of the London market and his style encourages it.
For his part, McManus backs up Plumeri’s line, firmly denying rumours that the two don't get along. “The reason I came to Willis was Joe,” he insists. “He recruited me. He gives me a hard time sometimes but he also gives me tremendous support. He has helped me to make changes to the business. We speak every week. And I find it really quite hurtful that people say that.”
Away from the tittle-tattle and market-moving acquisitions, Plumeri is at his best when in visionary mode. He clearly loves it, and speaks at industry events with the guile of a showman – with entourage, anecdotes and all the tricks of the trade.
For this interview he articulates his enthusiasm for a federal regulator in the US. He is a big fan of the overarching authority of the FSA in the UK, particularly the work it has done on contract certainty, and he believes the model should be rolled out more widely.
Plumeri is proud that Willis is transparent post-Spitzer and that he was the first in the industry to put such a strategy into action.
It is clear that Plumeri wants to be seen as a global leader. “Insurance is the DNA of capitalism. It has power,” he declares, every bit the elder statesman talking on behalf of the global sector.
His enthusiasm doesn’t stop there. He holds forth on how the market controls spending, credit and confidence, and winds up the conversation with a tribute to American management guru Jim Collins’ book: “Have you read Good to Great? If you haven’t you should.”
So how long will the Plumeri bandwagon keep rolling? “Forever,” he beams.
Excellent work, Joe. Bring it on.