Equity’s incoming chairman, David Pye, brings a wide knowledge of the industry and a track record of profitable underwrting, but he tells James Dean that it’s all down to a knowledge of history
For a man who numbers The Times’ chief sportswriter and a Towergate chairman among his acquaintances, David Pye has certainly kept a low profile.
A search of the archives for his name yields few results. In 2005, his appointment as a non-executive director of Hastings was briefly announced, and little is written about him before that. Is this a man who would prefer to remain out of the spotlight?
On Leadenhall Street, in the heart of insurance territory, Pye is in the Equity Red Star boardroom, well dressed in a grey suit, striped blue and white shirt and chunky gold cufflinks. There is a distinct Birmingham twang in his voice, and unlike many senior execs, no trace of public school in manner or speech.
At an impressively large and highly polished walnut table, the atmosphere, brought about by the warmth of the room and the manner of Equity’s new chairman, is one of calm.
Pye immediately sets out his fondness for the insurance industry, which he says is underestimated in its ability to provide a “fantastic” career and at the same time, excellent money. And he should know – he has been in the business for 40 years.
On first impression, Pye is very down-to-earth with a simple love of his work and the industry. He talks openly and directly.
His story begins in Birmingham, his birthplace and home for 15 years. His father was an engineer who designed and made the first self-grip wrenches, before expansion plans and unfavourable planning laws forced the company – and the family – to head across the border to Newport, Wales. A note of sadness lingers as he remembers the 300 jobs lost in the city.
It was in Newport that he continued the favoured family pastime – rugby. Going head to head with colliers from the Welsh pits, at a time when Welsh rugby was at its peak, he recalls: “When we played the colliery teams, we used to joke that they decided in the changing rooms before the game who was going to play in the backs and who was going to play in the forwards. They were all huge.”
These encounters left him with two bad knees, although his career as a winger – which he admitted did not reach the standard of his son’s – lasted into his thirties. He has kept in touch with Simon Barnes, chief sportswriter at The Times, who was an old school friend.
It was also in Newport that Pye completed his A-levels and won a place at university - the first person in his family to do so. Sheffield University was the destination, and history was the subject – a subject that, to this day, he speaks of with fondness.
“It shapes my way of thinking. I need to understand what’s happened in the past in order to understand what will happen in the future.
“You can be quite critical of views and fashions if you have a good knowledge of history.
“It gives you a view that nothing is certain and everything changes.”
“I want us to improve our attractiveness in order to make us the preferred employer in the insurance industry
History then turned to philosophy as he offered some advice to all involved in the industry: “The best bet in insurance is to be a mild contrarian.”
He left university and immediately began his career in the insurance industry, winning a place on Provincial’s graduate scheme and initially working in its fire department. “On the very first day, I was wheeled round to another insurance company to sign up for the CII exams,” he recalled.
“I remember the old school branch manager – bowler hat, pinstripe trousers, buttonhole. He was in very early with the chief clerk to sort the post. Then, he’d go off for coffee with the other managers in the town – bank managers, store managers – pretty much all of his friends.
“Then for lunch, at half past twelve, he’d be at the Conservative club or the golf course. He’d be out the door and on his way home by four-thirty. That was one of the reasons I wanted to be a manager.”
It was during his time at Provincial that he first met Peter Cullum, now chairman of Towergate, while undertaking a course equivalent to today’s MBA. Pye was sponsored by Provincial, but Cullum – now “friend and rival” – gave up his job to do the course.
The two began writing their final dissertation together, sharing interviews.
Later, both were approached for the same job, one that Pye turned down but Cullum took.
“I wasn’t sure about the support from the bank backing the company.
“Peter then led a management buy-out, and later sold the business to Robert Hiscox. That’s where he made his first millions. He was always more of an entrepreneur than me, and always very ambitious.”
Pye remained at Provincial and began developing a specialty in employers’ and public liability – something he believes is complementary to Equity’s current business.
Minster followed Provincial, where he took up his first head office post as UK provincial fire and accident manager. From there he moved to Aegon, his first foray into the London market, where he was both UK underwriting director and UK staff director.
In 1990 he jumped to Pearl Assurance, at the time the second largest insurance company in the UK, where he became general manager of general business. Pearl had just been taken over by Australian insurer AMP and he said he was brought in to “bring some of its practices up to date”.
As always, his language is direct. “The general insurance business lost £30m in the year I joined. When I left in 1994, it made £30m. But after I left, it acquired National Provident and changed its investment strategy.”
Pearl was eventually bought by entrepreneur Hugh Osmond, who recently led the company in a £5bn takeover bid for Resolution.
“You can be quite critical of views and fashions if you have a good knowledge of history. It gives you a view that nothing is certain and everything changes
But for Pye it was another move, this time to London and Edinburgh, where he became managing director of commercial business in 1994, until Norwich Union took over in 1998. He stayed on to help Patrick Snowball and Bridget McIntyre with the integration before leaving.
“I didn’t want to move to Norwich so I looked for a job in London.”
This led to his appointment, in 1999, as active underwriter on Syndicates 962 and 2962 for Creechurch Group.
“I came in with a team drawn from people from Norwich Union following the takeover [of London and Edinburgh]. We grew the business tenfold and produced underwriting profits for every year except the first.”
Creechurch was acquired by Canopius in 2006, and new business was taken by Canopius’s Syndicate 4444. The old Creechurch syndicates are soon expected to close, upon which Pye will relinquish his position of non-executive chairman of Creechurch Underwriting.
This brings us to the current day, and the incoming chairman of Equity Red Star is sipping a cup of tea. He speaks with admiration for his new company.
“It’s the most successful Lloyd’s syndicate – 38 years of unbroken profits and managed well through the cycles.”
The syndicate draws 34% of its capital from Names, with the remainder coming from Equity’s own corporate vehicles. Pye made clear his duties to the former.
“It’s important that the outside Names are treated fairly. One of the duties for me as chairman is to ensure that the Names have a voice in a company which is majority owned by the corporate vehicles.”
And what of the future? “There could be a shift away from private car towards more specialist lines. And the household account isn’t as big as IAG [which took over Equity in 2006] would like it to be.”
And the challenges? “Other companies are making the rating climate difficult. It’s difficult to hold the rate when others write unprofitable business.”
Pye also acknowledged a skills gap across the industry, but said Equity is working with the CII to help attract new talent.
“I want us to improve our attractiveness in order to make us the preferred employer in the insurance industry.”
It will be interesting to see whether this straight-talking man from Birmingham can pull it all off. The signs are good.