Aon UK’s chairman has transferred to more non-executive posts in recent years – a “time of life thing”, he tells Ellen Bennett. But a long career in asset management makes him well prepared for any turbulent times as the company restructures and expands. Photographs by Carl Court
It is 8.30 in the morning, the Tuesday after a bank holiday Monday, but Aon UK chairman Paul Manduca has already been at work for an hour, briefing his board on a forthcoming strategy day.
“It would have been unusual three years ago, but it’s what’s expected now,” he sighs. It will be a busy day too: Aon is several months into restructuring, and what with a headline-grabbing reduction in pension contributions for its 5,000 staff and record-breaking £5.25m fine from the FSA, this chairman’s job is no cushy ride.
Manduca is well prepared for such a tough role, with a CV that reads like an A to Z of the UK financial services industry. As well as the chairmanship of Aon, which he took on in February, he holds non-executive roles at supermarket group Morrisons, real estate company Development Securities and three other companies.
His background is in asset management and, just before the financial crisis hit, he saw through the sale of Bridgewell Group to Landbanski. He has served stints as chief executive of three asset management companies, which gives him a wealth of experience when it comes to dealing with regulators and steering companies through turbulent times.
This may explain his elevation to the role of chairman following a three-year stint as a director. As well as dragging the company into the 21st century in terms of regulation, he plans to help chief executive Peter Harmer restructure the business and spearhead a drive for new clients.
But let us start with that fine from the FSA for failing to take sufficient anti-corruption and bribery measures on certain overseas business. This morning, Manduca is cool, dapper and smiling in his City office. Surely he cannot have been so relaxed when the news broke that Aon had been handed the biggest fine ever imposed by the authority?
“I didn’t take the job not realising that there would be issues,” he says in his clipped tones. “Of course there would be issues in a sector that had not been regulated before.”
Manduca is quick to point out that the FSA praised Aon’s swift action, and the company has overhauled its internal controls, now refusing to do any business in territories where it is unable to guarantee there will be no corruption. The era of light touch regulation is at an end, he says, and Aon, like every other financial services company, must be ready.
Clearly adept at dealing with the press, Manduca is equally smooth in his comments on the recent announcement that Aon is cutting its contributions to staff pensions – though if staff pay in more, it will match the amount.
“Every company in the world will have to look at its pension arrangements,” he says. “Any modern business has to think carefully about its long-term future liabilities in a much together, more competitive business environment. That’s tough for everybody.”
These anomalies aside, Manduca sees his role as largely one of guiding the company’s management, ensuring the correct team is in place, and acting as a “reality check” on Harmer’s plans. He readily admits that the role of a
non-executive, whether director or chairman, has become more onerous in the past year.
“It’s changed and it’s going to go on changing,” he says. “The pressure on non-executives in the past 12 months has been huge – all the companies I’m involved with are meeting twice as much as they were, and the responsibilities being put on a non-exec are much higher, both in terms of what you have to do and the reputation risk.” Hence he has reduced his roles since taking on the top job at Aon.
Manduca’s wide experience gives him rare insight into the financial crisis. He argues that insurance brokers have come out of it pretty well, all things considered, and blames weak regulation and self-interest for the banking collapse.
“The UK lost the experience that it had in the Bank of England when it gave up the governance of banks to the FSA, whose main brief was to look at the protection of consumers. It looked at regulation from a product point of view rather than from a business plan point of view.”
Moreover, Manduca believes the insurance industry is well placed to benefit from graduates becoming disillusioned with banking and looking to work in safer sectors. He says Aon has already seen a “massive influx” in graduate applications.
So what exactly is a chairman’s role? He has the answer off pat: “To ensure that the board is run well, that governance in the business is good and best practice, to ensure that there’s a strategy in the business against which the board can measure management.”
In Aon’s case, this is Harmer’s strategy to restructure – or “segment” the business – and grow organically over the next three years, following the huge acquisition of Benfield in the US last year. The away day on which Manduca has been briefing his board is designed to test this strategy – and it doesn’t sound like a simple rubber-stamping exercise.
“Any new structure needs to generate revenue growth,” he insists. “It’s a tough time to do that because our customers are feeling the pain, but the test of what Peter’s put in place is whether it will generate the kind of revenue the board is looking for over the next three to five years.”
Manduca is rather vague on the details of the restructuring – as was Harmer in an interview with Insurance Times earlier this year. But he does say: “The critical thing is to have specialists focused on the right areas of the business and for Aon to look at its business and say, where can we really add value.”
Then the corporate mask slips for a second as he laughs and asks rhetorically: “Is that all business speak?” Well, he said it.
Manduca is clearer on expansion plans. There are growth targets, which he skilfully refuses to detail, and no current plans for significant job losses. He expects the business to expand in all its current areas, including SME, and admits to the existence to a “hit list” of corporate clients Aon wants to get on board. And he confesses that this is an area that the company may not have excelled at in the past: “If there’s a criticism,
Aon UK might have been a little focused on retaining clients and renewals rather than going out and winning new business … Peter’s pushing that shift.”
For the 57-year-old Manduca, moving from executive to non-executive roles was a lifestyle choice, a “time of life thing”. He says he doesn’t miss the hectic 24/7 diary of a chief executive, and he is never tempted to grab the reins from Harmer. Still, he is hardly moving at a snail’s pace: it’s 9.30am, and time for another meeting. IT