Stuart Reid is less concerned about gossip over how he beat two rivals to the helm of VPL than he is about making sure it becomes a £1bn GWP company. Ellen Bennett finds that having just bought SBJ UK, he is raring to go.
It began in Amsterdam. The co-chief executives of Venture Preference, a very new type of broker, decided that three’s a crowd. Stuart Reid, Paul Meehan and Chris Blackham took a trip abroad to hammer out the next move.
One year later, though the course of events on those days in Holland is disputed, one thing is clear: Stuart Reid was left in sole charge while Meehan and Blackham resigned.
When Insurance Times visits Reid’s new office in Holborn in central London, there are no signs of blood on the carpet. Indeed, Venture Preference has only been in residence for a couple of days – the receptionist does not even know who Reid is – and its stay is likely to be temporary.
Following the acquisition of SBJ and scores of smaller buys, VPL (Venture Preference Limited) is riding high at number 10 in the top 50 brokers list. Firmly in control, it’s time for Reid to tell the world of his ambitions, his plan to take VPL to £1bn GWP – and to lay some ghosts to rest.
Anyone in the insurance market who has not been sojourning on another planet for the past couple of years will be familiar with the story. But to recap: in January last year, insurer AXA started buying up brokers – as a straightforward investment, to protect its distribution channel, or to one day increase its share of the brokers’ books, depending on who you ask.
The first two it acquired were Reid’s business, Stuart Alexander and Blackham’s Layton Blackham. Meehan’s Smart & Cook followed a few months later. The three men were set up as co-chief executives. As Reid now admits, it was a shrewd move on AXA’s part. “I don’t think any one of us would have sold our business without the ability to be the chief executive.”
But it couldn’t last. Differing accounts of what happened next have done the rounds but this is Reid’s story so we shall stick with his: “We decided ourselves that we needed one [chief executive] and we told AXA it had to choose. The three of us went abroad [to Amsterdam] with the chief financial officer and we sat down and tried to work out who would be right, what would be right. We went over there to decide who it would be and threw it back to AXA and said you choose and it did and I’m happy to say I was the one.”
Was Reid the right man for the job? He says: “If you were a voting man, perhaps Stu wouldn’t have been favourite.” There have also been mutterings since that Meehan, who is the more senior with experience of running a larger company, would have been the natural choice.
Do these naysayers upset Reid? He says no and insists that he focuses solely on doing the job, but it would take a tough cookie not to be hurt by such speculation – particularly given that Meehan is now back on board at AXA (of which more later).
“I donâ€™t think any one of us would have sold our business without the ability to be chief executive.
Stuart Reid, VPL
Reid has had to toughen up in many ways since graduating from the chief executive of a £52m GWP business to being a man in charge of 2,000 people and £700m GWP (and counting). Not only has he had to cope with a changed relationship with the media – “At Stuart Alexander I would push for stories to be written about us, at VPL stories are written about us without my involvement” – but he has had to tour the UK, stamping his authority on a diverse range of businesses, many of which had until last year answered to his former co-chiefs.
Has he made enemies along the way? It is a question that clearly perturbs Reid, a popular character, well known in the market, connected right down to his fingertips and determinedly charming, with a smile and a quip for everyone.
“I hope not,” he says, sounding surprised. “I’ve never meant anyone any harm – it’s only insurance after all.” General soundings in the market seem to back this up: Reid is liked, with a reputation as something of a party animal.
“Stuart is gregarious – he’s a good communicator, a good guy to get on with,” says one senior industry figure who has known him for many years. “He’s a hard worker too – he started the Stuart Alexander business and grew it from nothing to an extremely successful company.”
But Reid has had his share of irritations. The insurer-owned broker model is new to the UK and many observers believe to this day that AXA is set upon turning VPL into a tied agent, or at least taking a majority share of its book.
The rumours to this effect became so virulent at the last Biba conference that Reid was reported to have left in a huff – he simply shakes his head and rolls his eyes when asked about this now but does admit to ‘being peeved’ at the time. He says that VPL currently places around 10% of its business with AXA.
“I believe that account will grow but it will only grow if they deserve the business, they have to win it, they will not be given it,” he says. Talking to Reid, who is affable by nature, energetic, with passionate opinions, some things take on particular emphasis. That he has had to spend so much time denying so many rumours is one.
“I had to keep repeating to people, ‘I’m not a tied agent, I’m not a tied agent’,” he says. “It’s the same as when I have to say, ‘I believe I’m the right CEO, I believe I’m the right CEO’.”
What else gets his goat? At the time of the interview, it has just been announced that Paul Meehan is set to return to AXA, in a broker-facing role. People keep asking Reid if he minds – which, he protests, is the only part of the whole thing that bothers him.
“[The AXA] account will only grow if they deserve the business â€“ they will have to win it.
Stuart Reid, VPL
“Paul is in charge of customer relations and I’m a customer,” says Reid. “Paul and I are actually quite good friends – we get on tremendously well so it should be quite fun. Paul always said that one day we would work for the same company and ultimately it seems that we have.” Besides this, says Reid, Meehan “owes him a beer”.
So that’s the ghosts laid to rest. It might rankle with Reid, but a number of voices are generally more interested in talking about personalities and the history of VPL than in this new breed of business, and his plans for it. Unfortunately for him, that’s just human nature, but you can understand his frustration: all else to one side, Reid does have an interesting tale to tell.
First up is growth. In Reid’s brand new and clinically bare office, alongside a golden Harrods biscuit tin and a pot plant that has yet to flower, is a large map of the UK, still in its bubble wrap, with 64 red and yellow pins stuck in it representing the broker’s offices (red is VPL, yellow is what was SBJ). Reid is tremendously proud of the geographic scale that VPL now boasts.
“I don’t think there’s an insurance broker in the UK that has built quite so fast,” he says – several times, in fact.
Now the challenge is integrating the businesses. Integration is a popular buzz word but what does it actually mean? “Integration for me means making the best of the things you have bought, bringing together the best of breed,” he says.
“One example is to use our schemes and specialisms that we have in our niche areas throughout the group. If you have a specialism in care home insurance and you’re insuring care homes in Scotland through your normal markets you would transfer it into the scheme specialism and treat the customer much more fairly and give him a better policy for his money.”
Perhaps luckily for VPL, integration will also mean a new brand, to be shared by the whole business, which still trades under its different names. The new name – “I’m not telling you what it is!” – should be unveiled by the end of the year, although it is already several months late.
As well as the odd Greenfield office, growth essentially means acquisition, which even in these turbulent economic times Reid is bullish about. Over the next three years, he will be “acquiring, a lot smaller businesses but a lot more in number”.
Could that mean price wars with fellow consolidators? Apparently not. “I don’t see anyone in that space at the moment, I don’t see anyone buying the small business with a turnover of £5m, £10m premium and below.” In fact, he thinks the other consolidators – the Giles, Jelfs and Ovals of this world – will be more concerned with buying each other than with soaking up smaller brokers.
“Integration for me means making the best of the things you have bought, bringing together the best of breed...treating the customer much more fairly.
Stuart Reid, VPL
Reid also plans to expand VPL’s network – currently called Layton Blackham Business Solutions – but rules out acquiring another network. This, along with the acquisitions, will assure him of the fabled £1bn GWP he has pledged to reach by 2010.
The most important step on this path to date has been the acquisition of SBJ and, days before this interview, the announcement that SBJ would be integrated under the VPL label and his own leadership.
Reid insists that its integration into VPL was always the long-term goal and it was simply the sheer size and complexity of the business which led to the initial takeover being handled by AXA.
While there have been high-profile departures from VPL – which Reid insists have come as no surprise and no major blow to the business – there have as yet been none from SBJ and a new integrated management structure has been announced.
Will there be departures to come? “Oh goodness me, I don’t know,” says Reid, insinuating, characteristically, that the question is unreasonable. “There are no guarantees in life but there are no planned redundancies.”
Indeed, Reid is liable to wax lyrical about his colleagues and the management team that has been created at VPL. He freely admits that it will sound like an advert but says: “I really have been pleasantly surprised by the quality of the people we have got, the people are some of the industry best.”
Can life at VPL be as rosy as Reid suggests? When pressed, he admits that working for a large organisation can have its downsides, too. “Things take longer to finish and that can be very frustrating,” he says. “There are things I have to doff my cap to AXA on.”
That may be so, but for a senior executive at a major multi-national corporation, Reid seems to have remarkable freedom to speak his mind.
â€œWeâ€™ve learnt a lot from some other consolidators out there, whereby forcing your brokers to use certain underwriters
or arrogantly changing methods of working in a short space of time has done untold damage â€“ and we have the benefit of
â€œWeâ€™re close to AXA. We know it very well. I would like it to grow its business. I think it has got a lot to offer but it also has a lot to sort out â€“ such as its client services issues, as we all know.â€
â€œIf we make money for insurers I think weâ€™ve got a good argument to maintain the commission levels that weâ€™re on.
Itâ€™s different for parts of the business.â€
The market cycle
â€œThere are quite a few insurers that talk a good game but we are not seeing the action. I see a lot about them writing for profit, not writing for premium income. If they arenâ€™t
making money why donâ€™t they put their prices up?â€
â€œWe are spending a lot of time with Biba trying to come up with a solution. Everyone will read this article and say:
â€Well, thatâ€™s because he doesnâ€™t want his commissions to come down. But it could undermine the industry â€“ be careful what you wish for.â€
- PDF, Size 6.86 mb