In his first interview, the new AXA chief pledges a strong line on broker commissions.
Philippe Maso y Guell Rivet has big boots to fill. Having taken over the reins of AXA Insurance from the charismatic Peter Hubbard two months ago, he has been dashing up and down the country, meeting brokers, making plans and getting his face known.
Maso is no stranger to AXA Insurance, having been finance director of its parent company AXA UK, for the past five years. A career AXA man, he has earned a reputation for straight talking, a formidable intellect and a will of steel.
His charm is also on display as he meets Insurance Times for his first interview since taking the new job, and sets out his uncompromising plans to overhaul the business in the next 12 months, and his challenges for the market as a whole. He is willing to take a strong line on commissions and seems determined to play a lead role in shaping the UK general insurance market.
First up is the current trend for private equity investors to take stakes in insurance brokers. Maso, restrained but emphatic, disapproves.
“At the moment, we are haemorrhaging value out of insurance into the banking sector,” he says. “As an industry we need to think about the long term, and ask, is that what we want to see? The more of that money that is bleeding away, the less we can invest in our business. It is something we need to think about and I am going to try to bring it to the top of the agenda.”
Maso believes that one consequence of the banking sector’s grip on insurance has been the rise in commissions demanded by the large, powerful consolidating brokers. He thinks they are demanding higher rates from insurers in order to finance the debt provided by bankers. Like Norwich Union’s chief executive Igal Mayer, he is prepared to walk away from business rather than pay sky high commissions, he says, and is currently locked in some tough negotiations.
Maso insists that talks with Venture Preference (VP) – AXA’s wholly owned but independent broking arm – are just as tough as those with other consolidators, if not more so. In the face of some market cynicism, he insists that VP will remain fully independent and declares that turning it into a tied agency would destroy its value. “Why would we destroy the value of something we had invested in,” he asks, dismissively.
He adds that there will be no more acquisitions for Venture Preference in the current economic climate of the credit crunch. The focus now is on integrating the existing business, but the long term plan remains further growth. Any further broker acquisitions would come under the Venture Preference banner, he adds.
“At the moment, we are haemorrhaging value out of insurance into the banking sector.Philippe Maso y Guell Rivet.
Philippe Maso y Guell Rivet
Managed general agents (MGAs) are another topic close to Maso’s heart. While he admits that AXA will participate in MGAs when and if the market demands, he suggests that the operating model, now being championed by broker Willis, may soon attract the attention of the regulator. Moreover, he believes that if brokers are allowed to operate as insurers in all but name, insurers should be given the same option.
While he declines to give details of any solid plans, he holds out the intriguing prospect of insurers creating a kind of reverse MGA, and taking on many of the functions of brokers. “If the value is in that part of the chain [distribution], we as AXA are going to move there,” he says.
Maso is not afraid to speak his mind, and has a reputation as a strong negotiator. “He’s quite stern,” said one source close to AXA. “He knows his stuff, and he knows what he wants. Peter Hubbard [Maso’s predecessor] was very much a ‘down with pub with boys’ kind of operator. He’ll be very different to that.”
Maso is quick to point out that the two men worked closely together. Perhaps keen to provide some reassurance to the market, he insists: “I’m very much a continuation of Peter Hubbard.” However he acknowledges: “Peter was in the role for a long time. There’s a moment when an individual has done what he can and an organisation needs to rejuvenate itself. I will bring a very strategic focus, and a strong vision around profitable growth, commercial activity and performance.”
One of the greatest hurdles Maso faces is AXA’s reputation for poor service to brokers. Last year, brokers ranked it the lowest of the 14 major insurers for service, in research carried out by Insurance Times’ parent company, Newsquest Specialist Media. Like Hubbard before him, Maso admits the failings. “We were not good,” he says, but promises within two years AXA will have gold-plated service – “that’s a pledge to the market, and it will hold us to account”.
The work begins now. Maso says he will overhaul the business within the next 12 months in the pursuit of profitable growth, indicating that this could mean pulling out of some areas of the market to focus on others.
Maso has plenty to say, and is not afraid to make his views known. The market has a formidable new force.