Tom Broughton, editor
“A great asset of the insurance industry is that feast always follows famine,” declares Robert Hiscox after posting a 56% fall in pre-tax profit amid declining investment returns. His rationale is simple. Following periods of capital restriction, limited supply and large losses, rates must increase. As a result, after ripping up all business plans prepared before the financial crisis, companies across the supply chain are positioning themselves for the beginnings of a recovery in 2010.
A battle for the regions is intensifying as insurers and broking giants flex their muscles. Marsh, which has set up a broker network this week (see page 7), is the latest to target the small and medium-sized enterprise market. You have to ask yourself why. Isn’t this play a little hackneyed by now? But as established broking empires begin to evolve or crumble, leading players are preparing to drive change and encourage entrepreneurialism from the bottom up. This rebuilding of a distorted marketplace can only be good for the UK regulatory regime, clients and the health of the transaction. Until the next deal, then …
Brit out, but why?
Brit Insurance reported strong UK growth this week, demonstrating the success of its strategy to target the regions (see page 8). But it has been the decision to move its tax domicile to the Netherlands that has captured the most attention. Brit becomes the latest in a line of businesses to stick two fingers up at Gordon Brown and the Treasury. The move flies in the face of Brown’s rhetoric on protectionism and the overhaul of the global market outlined in his speech to the US Congress last week.
What makes this latest move even more interesting, however, is that Dane Douetil, Brit’s chief executive, has spent many hours lobbying the Treasury to improve the UK’s competitiveness and to negotiate a better deal on the regime to tax UK firms on their foreign profit. Douetil has probably been one of the closest chief executives to the lobby but, after much debate and frustration, he has decided to vote with his feet.
If Brown isn’t careful, this pattern will continue.