It follows RSA announcing that Steve Lewis will be stepping down as chief executive after four years
By Saxon East
Stephen Hester didn’t mince his words. The press release at first offered praise for UK and international head Steve Lewis’s ‘notable successes’.
But then came the verdict that ‘UK results in 2017 and 2018 have disappointed’.
Lewis will be stepping down and Scott Egan moving from finance chief into the vacant role.
Where has it gone wrong and what next for Egan?
The Lewis years
The garden was a lot rosier for Lewis back in 2016 when his division made an underwriting profit of £123m.
But the next year, it sank to a £116m underwriting loss hit by natural catastrophes, a slowdown in its commercial motor book and an increase in household claims.
Lewis and his team, who had worked tirelessly to restructure the business and position it for better times, remained upbeat.
“Our confidence remains high that we can improve further,” he told Insurance Times. “The focus for 2018 is to see the UK bounce back.”
It never happened.
What followed was a profit warning and a group £70m underwriting loss in the third quarter of last year, with the marine division causing headaches with losses.
Underpinning all of this was a personal motor book that had fallen behind competitors and failed to beat the market average in the majority of years over the past decade.
Lewis, who was rated highly at Zurich UK and did have some good years at RSA despite the recent shortcomings, will bounce back as senior executives always do.
RSA’s issues
In some ways, Lewis was handed a very difficult challenge from the off.
RSA by its nature is a tough business. It has a big commercial property book and large home book, which hurt badly in poor weather, causing volatility in results.
Arguably, the biggest issue is that RSA has lost ground following the £200m black hole found in the Irish business in 2013.
Steve Lewis: Had some successful years, but 2017 and 2018 have been difficult
This distracted investment and management attention in the things that really mattered, such as moving quicker to upgrade its technology to compete with rivals who had ploughed vast sums in the retooling themselves with better IT and data.
RSA was once a fearsome player in UK motor, but it has fallen behind rivals such as Hastings who have invested to compete strongly on the aggregators and direct market.
The Egan has landed
Egan is widely regarded as capable, but his ‘to do’ list would make the eyes water of even the most seasoned insurance professional.
The good news is that the exits and cutbacks are already on the way in marine. Meanwhile, investment and claims restructuring has been made on personal motor to target 2020 as a realistic date to begin competing seriously with rivals again.
RSA’s London Market operations have been going through a restructuring process. New divisional heads were appointed in the first quarter of last year, and a new chief underwriting officer hired from Zurich in the third quarter of last year. International wholesale premiums were reduced by 60% after 2017 losses.
Ultimately, the best Egan can hope for is to hold the line on UK and international by slimming down the business, continuing to invest prudently and praying for some good weather.
If he can do that, than perhaps he will be the rightful successor to Hester.
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