Sun sets on Boyle's rule

Duncan Boyle, Royal & Sun-Alliance's retiring UK chief executive, appears in relaxed mood as he hands over the reins to his successor, Bridget McIntyre.

Amid the discussion of contract certainty and underwriting discipline, he shares the odd joke with Insurance Times and talks about his passion for sailing and his football team Arsenal.

Boyle passed the chief executive's baton to McIntyre, formerly marketing and underwriting director at Norwich Union, on Tuesday, but he will stay on as an adviser for some weeks.

He describes his time as chief executive as "challenging" and is proud that the insurer has weathered the financial storms of three years ago, emerging in rude health.

He says: "What pleases me most about my six years back in the UK is that we've got back to the basics of our business around underwriting and claims."

He adds: "It's great to see the company now fully recovered and in good health again and producing some really good numbers."

Despite many brokers fearing for the future of the insurer, Boyle denies there was ever a time when he thought the company would not survive.

"I don't think there was ever a danger that this group was going to do anything other than recover, it just needed a strong hand and a strong grip, which is what [group chief executive] Andy Haste has provided and I think we've provided in the UK.

"We appreciated the support from our broker friends, because I think they genuinely wanted us to prosper. They didn't want to see us going through the difficult times."

Boyle diplomatically says he "wouldn't dare" give any advice to McIntyre on her new role, saying only: "She will help reshape the business going forward in a different way to how I would, and that's good. So we'll see where she takes it, and I'll be watching with keen interest as a shareholder."

He adds that one of the challenges for the company is to begin to grow again while still maintaining profitability.

"We've had to do some difficult things over the past six years. I've been involved in getting out of some bits of the business that weren't making any sense, and that's helped us to get to a lowish 90% combined ratio. We want to grow that top line again, but not at the expense of the bottom line, that would be the real challenge."

He is optimistic that the group will eventually rid itself of its burdensome US liabilities.

"It's analogous to the life company situation where we closed the business. We had to reshape the exposures, and then at an appropriate time reach the point where the value is seen, and someone is prepared to take it off your hands at a reasonable price."

He adds: "One way or another we will either grind out those exposures over the next handful of years, or we will get rid of those businesses."

Turning to industry issues, does he think that insurers will learn the lessons of the past and be disciplined in their underwriting, not succumbing to the temptation to underwrite for short term volume?

"The jury's out. The problem with insurance is that the worst insurer will drag the market down to its level, if we're not very careful. It's up to chief executives to make sure that over the next 10 years we stand up to that test."

But, he does think that the FSA has a part to play in maintaining underwriting discipline in terms of "making sure that companies act responsibly when deploying their capital, and price correctly for the risk they're adopting".

Certainty is everything
This is prevalent in long-tail business, he argues, where it is "far too easy for an insurer to come in and make a lot of money for a short number of years and then rue the consequences as the tail develops".

Boyle's other hobbyhorse is contract certainty. The working groups for the subscription and non-subscription markets - the latter chaired by Boyle himself - have recently published codes of practice in an effort to meet the challenge laid down by the FSA last year.

With just over a year in which to meet the regulator's deadline for contract certainty does he think the market will hit the target?

"All of the big insurers and big brokers have substantial projects on contract certainty, and they're working well together. Probably the bigger challenge is with the smaller brokers, to get them interested."

He says that contract certainty is "not as big an issue" for the non-subscription market, and it should be "relatively achievable without too much strain for us to achieve our objectives by the end of next year". However, he says the challenge for the London market is a much greater one.

"The London market has a real mountain to climb around some of the practices that have sat around for a very long time."

"The mindset that we have to build a policy wording from the ground up every time for a big client has to be challenged. It creates a lot of cost, it slows the process down, and it makes it impossible to follow markets because you're looking at a wording that's been cobbled together by somebody [else]." IT

Road to the top
Boyle has worked for the Royal & SunAlliance Group since 1974, starting as an underwriter.

He has had leadership roles in London, Sydney, Melbourne and Auckland. He was managing director of the Australian operation.

He returned to the UK in 1999 as head of commercial and subsequently became UK chief executive.

He sits on the ABI general insurance committee and chairs the ABI liability committee, as well as chairing the non-subscription market group for contract certainty, set up to address the FSA's concerns in this area.