The Friday Interview:Hibernian insurance chief executive Stuart Purdy seems to be alone in appreciating the weather in Ireland, but there's a reason.
"It's nicer to be in a cooler climate. I hadn't anticipated it would be quite so cool as this summer has been but, having had six summers in India where the temperature is 45-46 degrees on a warm day, it's lovely to be back in Ireland."
Purdy, who took over as chief executive of Aviva-owned Hibernian in February, was most recently managing director of Aviva India, which he led as the 12th entrant into the deregulated Indian life market in 2002. Aviva is now the sixth largest private player there.
After working in a market of about a billion people with a variety of cultures and languages, the Irish market must feel a bit like semi-retirement.
"Not in the least," counters the Scotsman. "When you come back to a market that is amazingly competitive in the general insurance business, with a once-in-a-lifetime transformational opportunity to build a bancassurance operation with the biggest bank in the country, that is by no means an easy step, but I was delighted to say yes when I was offered the opportunity."
That opportunity is Hibernian's joint venture with AIB's Ark Life. In late 2005, AIB's Ark Life merged with Hibernian Life & Pensions, with AIB entering into an exclusive distribution agreement for the joint venture's products and services.
It has been a busy six months for Purdy as he oversaw the final elements of the deal. Given the recent lacklustre performance of Ark Life, the link-up could be viewed as a brave move, but Purdy sees it differently.
"We thought it was a pretty good proposition, but the true test is: do we deliver; do we increase the customer penetration into the customer base; do people want to buy the products; is the service equation right; is the advice good? If we can tick all of those boxes in the next two to three years, I think we have significant growth potential.
"If you add the market share that Ark Life and Hibernian Life had five years ago, if we had that today, we would be the biggest company in the market. So there is a message there for us that we have the potential, but clearly we have to have the products and service to justify the clients giving us that trust."
Solid foundations have already been laid with the launch of a number of products and funds and the company is pleased with the performance of a number of its European commercial property funds.
Purdy says it has given it a platform to compete strongly against the top two in the market, Irish Life and Bank of Ireland.
"Our operating platform goes on to one platform in the next three to four weeks and that in itself will give us a competitive kicker and enhance our competitive position."
Much was made of the fact that Hibernian's full-year results last March produced a surprise in that it had to revise key assumptions about future profitability of life and pension products it has sold, resulting in its life and pensions side losing €63.3 million last year, compared with a profit of €13.4 million in the previous year.
At the time, Purdy described it as an industry-wide problem and said Hibernian might be ahead of the market in making the changes. It was blamed on "adverse persistency", essentially that some policies were either being cashed in faster than originally budgeted for or were not giving the levels of profits previously assumed.
"One of the things that a lot of companies, including ourselves, have suffered from is legacy issues," says Purdy. "As well as the fact that consumer buying habits have changed. Consumers, instead of buying a regular premium pension that they would pay into every month for the next 25 years, by and large, are looking for more flexibility, more single-premium products, more recurring single premiums.
"As a result, there are in the Irish market some issues around persistency as that works its way through the system." He says that setting up the joint venture with Ark Life provided the scope to deal with these issues.
Hibernian's interim results show things moving in the right direction. Total life and pensions business sales rose by 62 per cent to €1.3 billion, with an operating profit of nearly €55 million.
"We have entered into a period of growth after realigning and restructuring elements of our business in 2006," says Purdy
On the general insurance side, Hibernian is just shy of holding 20 per cent of the market. A general trend in motor insurance has been a fall in premiums in recent years, but Purdy doesn't see much room for further falls.
"I think there is a period of lag as well in terms of performance, where the business we were in a year or two ago may be providing the profit figures of today. So that means there is not an inexorable drift down that is going to continue ad infinitum.
"We wouldn't have thought there was a great deal more room for premium rates to fall."
Purdy is no stranger to Ireland. Before India, he had established CGU's life business in Ireland and was involved in CGU's acquisition of Hibernian. CGU later merged with Norwich Union to form Aviva, the world's fifth-largest insurance group and the UK's biggest. He says it gives Hibernian an added advantage.
"As we build our relationship with AIB, we have around the world scores of bancassurance relationships and it's fantastic to be able to look at how they're being implemented in Spain or France or the Netherlands and draw from some of the learnings."
On The Record
Name:Stuart Purdy.
Job:Chief executive of Hibernian.
Age:45.
From:Stranraer in Scotland.
Family:He is married to Shona and they have two daughters, Priya and Zara.
Why he is in the news:Hibernian released its six-month figures, the first set of interim results under his tenure as chief executive.
Something surprising:He is a member of the Chaîne des Rôtisseurs, an international gastronomic society founded in Paris in 1950 that is devoted to promoting fine dining.
Something not:He is a fellow of the Chartered Insurance Institute and a chartered insurer.
Other interests:Is a huge fan of Scottish rugby.
