After less than a year as Aviva chief executive, Mark Wilson found himself, in late 2013, coming around to the idea that the UK insurance giant's then four-year-old naming rights deal over Dublin's Lansdowne Road stadium was not such a bad idea after all.
“I was coming to see that wonderful rugby game – which Ireland should have won but the All Blacks clinched a few minutes into injury time – and I jumped into a taxi and said: ‘Can you take me to Lansdowne Road?’,” recalls Wilson. “The driver said: ‘You mean the Aviva?’”
It would be another three years before Ireland’s 111-year losing run against New Zealand would be broken. But Wilson – a native of Rotorua in the Pacific nation’s North Island – had concluded “there and then” in November 2013 that he would extend the Dublin sponsorship deal.
It could have been a foolhardy call. At the time, Wilson, an insurance turnaround specialist hired from Hong Kong to fix a then-troubled Aviva, was wondering how he could overhaul its Irish business in a very difficult market.
“When I came in, Ireland was one of the worst businesses we had,” Wilson (51) says, sitting in a corporate box on the third floor of the stadium after Aviva announced this week that it was extending the naming rights deal by five years to 2025. “Expenses were out of control, profit was declining, sales were terrible. It wasn’t a great picture.”
The normally straight-talking New Zealander (he openly referred the Irish business as “a dog” when he took to the helm) said that the original 10-year Aviva stadium deal – known to be worth €47 million – was “a symbol of . . .”, before he checks himself. “Let’s just say, questions were asked at group level.”
While Wilson had a sizeable task dealing with the unwieldy London-headquartered group when he joined in January 2013, some of the hard lifting had already started in Dublin. Local management decided in late 2011 – as Ireland’s economy was struggling in the middle of its international bailout programme – to slash its then 2,000 workforce, close its 26-branch network and cede more than a quarter of its motor portfolio.
The same year, Aviva reversed a decision made in 2009 to locate its European headquarters in Dublin. The speculation in financial circles at the time was that Aviva wanted out of Ireland entirely.
Surgery in Ireland continued under Wilson. The local unit’s gold-plated defined-benefit pension plan, where payments are linked to employees’ final salary, was closed within months of his arrival and the health unit was sold in 2016.
It has paid off. While the wider insurance industry is only now staggering out of a period of large underwriting losses in recent years – amid a surge in claims, court awards and legal costs – Aviva has been profitable since 2013.
Extending the naming rights to the stadium to 2025 caps the recovery.
Aviva, formed out of the 2000 merger of Norwich Union and CGU (which owned Hibernian Insurance in Ireland), can trace its history back to 1696.
“It was an iconic brand that had lost its way,” says Wilson of Aviva before he stepped in. “It had no strategy. And the balance sheet was a bit of a mess. While it was never in danger, we didn’t have the capital we should have had.”
Calling
Wilson, who followed his father and grandfather into the insurance business, was in the middle of two years of gardening leave after leaving Asia’s AIA when Aviva’s then chairman, John McFarlane, came calling. The forceful Scot, who began his career with carmaker Ford before switching to financial services, had temporarily seized executive control of the group in 2012 after presiding over the exit of
Andrew Moss
, following a shareholder revolt.
“I did huge due diligence,” says Wilson. “I read every analyst report that had been written over five years. I got a consulting actuary and an investment bank to do some work on it – both of which I paid for personally – before I joined. I did 42 hours of interviews with the board. It really got my interest, because I thought it could be fixed.”
Aviva's problems paled in comparison to what he had been through in Asia with AIA, which found itself at the epicentre of the financial crisis in September 2008 as its US parent AIG nearly imploded, but for a $182 billion (€149 billion) US taxpayer bailout.
“When the crisis happened, I didn’t go home for about 16 days. I didn’t have a day off for nearly 8½ months,” says Wilson. “It was an extraordinary thing [dealing with] media scrums outside every door and queues of thousands of customers around block after block outside all of your branches in Asia. It was ground zero of the financial crisis.”
Wilson, who had joined AIA from Axa in 2006 as chief operating officer before becoming chief executive in 2009, quickly realised that the business was AIG’s get-out-of-jail card. While actively preparing it for an initial public offering (IPO), the company’s parent received a $35.5 billion bid for AIA from UK insurer Prudential.
‘Unworkable’
Wilson, widely credited with saving AIA, came out against the deal, openly telling friends and associates that he would quit if the “unworkable” merger – as he described it – went through.
Prudential ultimately abandoned the bid in June 2010 and AIA floated later that year at a value of $30.5 billion – almost a third more than AIG reckoned it would achieve. But by then Wilson was gone, his fate sealed by his clash with AIG’s then chief executive Robert Benmosche’s sale plan.
“I came out against the deal because the debt load of doing it, in my view, would have destroyed both companies. Both have done very, very well separately since then.” AIA currently has a market vale of more than $100 billion.
Investors in Aviva weren’t immediately enamoured of Wilson’s corporate pedigree when he arrived at Aviva’s 22-floor headquarters in the City of London financial district five years ago.
Shares in the group sold off in the early months of Wilson’s tenure as he announced a 44 per cent cut to its once-sacred dividend, the elimination of 2,000 jobs, the freezing of bonuses for 400 managers and the acceleration of a restructuring plan initiated by McFarlane. (McFarlane signed off on the £1.1 billion, or €1.25 billion, sale of the group’s unwanted US business just days before his new chief executive took over).
The market value of Aviva has surged by 80 per cent from the low point of Wilson’s early days to stand now at £21 billion, as the group reduced the number of countries in which it operates from 28 to 15, selling businesses from Russia to Spain, and focused on building market share in core markets.
He also tapped AIA alumni, bringing in Tom Stoddard ("a key outside adviser" when Wilson was with the Asian group) as his chief financial officer, and AIA's one-time chief administration officer, Nick Amin.
The group’s £5.6 billion purchase of Friends Life in 2015 created the UK’s largest insurance, savings and asset-management group.
The group is now looking, on a smaller scale, to mirror that success with its recently-announced deal to purchase 6 per cent of the Irish life insurance market – in the form of Friends First – in a €130 million accord with Dutch group Achmea. It boosts its share of the life market to 15 per cent and matches its slice of the general insurance pie in Ireland.
“The deal, like the extension of the stadium [naming rights], should be seen as a sign of our commitment to Ireland, the management team and that we want to invest and grow in Ireland,” says Wilson. “It should also be taken that we want to be a [life and non-life] composite insurer here and we wanted to offer a full suite of products.”
“I believe that the next 20 years in insurance is going to be about composites. I don’t believe that monocline, single-country insurers are the same risk profile and I don’t believe they can survive.”
So, how close was Aviva to pulling the plug on Ireland at the height of the crisis?
“It never got that far. I sat down and looked at all countries within the group [in 2013] and Ireland, at that time, was one of the poorest performing, but I like the Irish market and I thought Ireland as a country could turn itself around. To be honest, I didn’t predict that it would have turned itself around as fast as it has.”
He also said that, as a native of a small nation close to a larger power, he “gets” Ireland.
“On the negative side, Ireland has had a history of irrational behaviour in the insurance business. You’ve had some particularly spectacular failures when you look at Quinn Insurance and Setanta Insurance,” says Wilson. “There was a lack of regulatory oversight and that showed itself in the [banking] crisis as well.”
“While at one stage there were too many brokers, too many competitors and irrational behaviour, I think it’s a better place now.”
He said the Supreme Court’s ruling last year to move the cost of Malta-based Setanta’s 2014 collapse – with €90 million of outstanding claims – from the motor insurance industry to the State’s insurance compensation fund “was an important moment for us”.
On its seventh head in a decade, Aviva Ireland is now in the right hands under John Quinlan, Wilson says. Quinlan – or Quinnie, as the boss calls him – joined the company in 2013 from RSA Insurance Ireland and was promoted to chief executive 14 months ago.
The wider Aviva group – which has more than 50,000 Irish-based shareholders – is now swimming in excess capital and cash and plans to deploy £3 billion over the course of this year and next through dividend increases, refinancing of expensive debt and more bolt-on deals.
“It’s a high-quality problem that Aviva probably hasn’t had for 10 or 15 years,” says Wilson.
Fintech alliances
Aviva is also looking increasingly at fintech alliances, having entered an online insurance joint venture last year with Chinese tech group
Tencent
.
The group also plans to make a bigger play of its massive store of customer and risk-profile information – ie “big data” – to cross-sell products and limit the number of questions the company needs to ask customers to offer new areas of coverage. It may be what it takes for traditional insurers to remain in business and thrive, as the advent of driverless cars and other technology developments threatens to change the way vehicles are covered.
Refreshingly candid for a chief executive of a FTSE 100 company, Wilson still can’t help himself slipping into slogans at times.
“You can’t manage a separate country by remote control,” he says of his preference for having locals in charge of different countries within Aviva. And the group’s stated interest in tackling climate change and sustainable investment? “It’s about being a good ancestor.”
The corporate fixer shifts in his seat, however, when asked if he’s planning on moving on after five years at the helm of Aviva?
“I’m getting asked this question quite a bit at the moment. I do like turnarounds and, yes, we’ve fixed the business,” he says. “But my job will be finished when we’ve reinvented the insurance world in terms of the offerings that we give to customers, when the stock price is a whole lot higher and we have a team in place that could take over. And that date is not remotely close.”
