Lightyear’s Sullivan backs ‘prize asset’ Ed as CEO reveals talks with McLaren
Martin Sullivan, the former chief executive of AIG and now a partner in Lightyear Capital, has denied rumours that the private equity firm is looking to sell its stake in broker Ed—of which he is also non-executive chairman.
“We will sell Ed one day—we are a private equity fund. But that will not happen any time soon,” he told Monte Carlo Today. “Ed is a prize asset for us and that does mean we get incoming enquiries. But we have agreed a strategy and we are fully behind them executing that plan. We are completely committed to seeing that through.”
A fundamental restructuring of the broker was kick-started when Steve Hearn, chief executive of Ed, took the reins of the company in November 2015. He had resigned from Willis, where he had been deputy CEO, four months earlier.
At that point, the company was saddled with $400 million of debt and had a complex network of operations. The business cleared the debt by selling Swett & Crawford for $500 million to BB&T. The company also received a $35 million capital injection from Lightyear Capital.
Hearn then set about reorganising and refocusing the company. He exited retail business completely and sold off various smaller operations. This left the company focused on wholesale insurance and reinsurance business. He also, at last year’s Rendez-Vous, rebranded the company from Cooper Gay to Ed.
Since the relaunch in September 2016, the company has been busy delivering the business plan agreed with Lightyear. In the past 12 months, Hearn said, the company has hired 105 new people, many from its rivals, and poached “a fair number” of new clients.
“There were a few titters about the name change; there is less of that now,” he said.
Sullivan said he was pleased with Ed’s progress although, if anything, its development had not been fast enough.
“One of our frustrations has been the concept of ‘gardening leave’ in the London Market. We would rather people could join more quickly. There are a lot of well-trimmed roses and lawns but we want to get on with things.”
Sullivan said Ed is benefiting from a sentiment in the market that a new type of broker is needed.
“The insurance community wants that broad-based, global distribution from a broker that can also be nimble and provider real solutions quickly. And everyone wants more choice—they don’t like having all their eggs in one basket.”
Hearn added that when he is recruiting, it is important to him that the person wants a change. Second, it is important that they are willing to operate in a way that will be new to them and different from what they have done in the past.
Also in terms of recruitment, he admitted that a frustration during the past year has been establishing a presence on Bermuda. Despite going after several teams and individuals and also examining some potential acquisitions on the Island, nothing has come to fruition.
“We are now looking at sending someone on secondment there and building a team organically,” he said. “It is important to us to have a credible presence in that market.”
All connected
Hearn stressed that, although global, Ed is truly interconnected in everything it does, ensuring every member of staff is incentivised to find the right solution for a client regardless of geography or which market the client or broker happens to be in.
“We have a single reporting system, a single incentive scheme and a single P/L that operates on a global basis. We are truly agnostic as to where business is placed,” he said.
“The biggest brokers are too big and complex in their structures to achieve that. The smaller players don’t have our reach. This is completely different from anything most new recruits will have experienced before.”
The broker has launched a new technology platform called TradEd, which also exists as an app, which connects the whole company and allows staff to quote and bind business globally for any class of business. This level of interconnectivity and simplification of systems would be impossible for bigger players to roll out, Hearn suggested.
Kieran Angelini-Hurll, the chief executive of Ed’s reinsurance division who joined from Willis Re in 2016, added that he joined the company because he feels he can get things done at Ed—not always the case in other companies he had worked in.
“We believe clients want a full broking service—we are an independent, global broker that can offer it in a way that is unique. It is a question of matching the risk with the capital, wherever that is.
“The new technology platform we have is also a real innovation that will take cost out of the business. That is a very different conversation to have with clients,” he said
Hearn revealed to Monte Carlo Today that the company has been working with the non-auto technology division of the McLaren Group to explore ways in which the two businesses could work together.
“Their ability to manage and process data is incredible; this industry has a lot of data and is not very good at using it,” Hearn said.
“They like working with companies that are disruptive within their sector, which we feel we are. We believe they could stretch our thinking in terms of what is possible in risk transfer.
“The industry will benefit from an external stimulant such as that, although we still believe that “Insurers and brokers will remain central to the process of innovation within this industry.”
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