Liberty's Irish chief given the freedom to rebuild battered insurer

INTERVIEW: A rebranding and a change of focus and corporate culture could pay handsomely at the former Quinn Insurance

IT’S BEEN 100 days since Boston-based Liberty Insurance took control of Quinn Insurance and, to quote an old Fianna Fáil election slogan, it’s a case of a lot done, more to do.

Liberty Insurance chief executive Patrick O’Brien took over a business in flux last November. Heavily loss-making, Quinn Insurance was haemorrhaging customers, many as a result of the uncertainty created by it being placed into administration at the end of March 2010 by the financial regulator here.

About 1,000 staff left the business during the administration process. In the weeks since the takeover, O’Brien has stemmed rather than stopped the bleed. Last year, Quinn Insurance saw revenues decline to €190 million and lost a “lot of money”.

This decline has continued under Liberty’s stewardship, albeit at a slower pace. O’Brien won’t say how much Quinn Insurance lost last year. “For the first 46 weeks [of the year], it was Quinn Insurance and the administrators need to finalise their accounts. They’re working on those at the moment.”

However, the Dubliner does expect Liberty to turn things around in 2012. “We don’t expect to make bucketloads of money but we do expect to return a small profit this year,” he says. Revenues will be in “excess” of €200 million. “We expect to grow the business this year.”

Starting late last week, Liberty began a short, sharp three-week advertising campaign to say “hello” to the Irish public.

The Quinn Insurance and Quinn Direct brands have been dumped with the company now known as Liberty Insurance. The rebrand was brought forward when Liberty’s top brass decided that the negative press surrounding former owner Seán Quinn and his family were proving to be a drag on the business.

“Originally, we were planning to rebrand in April,” O’Brien says. “As we went through it, it became quite clear that while the Quinn brand had some appeal for existing customers, it was alienating wide aspects of the market.

“We needed to come up with a brand that would appeal to our new target segments. So we brought it forward by six weeks in order to drive some growth in the business.”

The campaign to promote the new brand has three strands. Saying “hello” is step one and has involved a media blitz, including sponsoring RTÉ’s weather forecasts. The second step will be to introduce Irish people to Liberty’s ethos. “Fair, decent, transparent and clear” are its marketing slogans. It wants to convey the message that Liberty cares about settling your claims in a timely and fair manner and will help you do this rather than frustrate you at every turn. Step three will involve the launch of new products from April.

O’Brien wouldn’t be specific but he has spoken previously about Liberty’s desire to move away from Quinn’s traditional focus on young male drivers and of winning more commercial and non-motor business.

“We want to change the focus of the business,” he explains. “Motor will remain a major product. But if we look at household, we have only 3 per cent [of the market]. We see significant opportunities to grow that. Also in the commercial area, we only have a 4 per cent share. We can do multiples of that.”

On the commercial side, Liberty will give the business access to international brokers. The company has also won back some of the Quinn Group business that was lost when the administrators were appointed. “Elements of [Quinn Group] property” came back to the insurer on January 1st and he’s hoping to regain more of that business over time.

O’Brien won’t say precisely how much Liberty is spending on the rebrand but it’s a seven-figure sum. “It will be the biggest ad spend by any insurer in Ireland this year,” he adds cryptically.

It’s estimated that Irish insurers spent more than €4 million last year on advertising, so make of that what you will. What we do know is that Liberty paid €102 million last year to recapitalise Quinn Insurance when it took control of the business with Irish Bank Resolution Corporation, formerly Anglo Irish Bank. Liberty has a 51 per cent equity shareholding and control of the board.

Together, Liberty and IBRC put €200 million in fresh capital and also guaranteed Quinn’s €750 million in liabilities.

This was by no means a shot-gun wedding. Liberty spent 18 months looking at Quinn Insurance before signing a cheque. O’Brien gives a little chuckle at the suggestion that it might have bought the insurer on the cheap.

“According to press reports, 40-plus parties were interested in the business,” he says. “We were the ones with the staying power and stuck with the process right the way through. We invested over 18,000 man hours to get the deal to completion. If we had got it on the cheap, there would have been a lot more people knocking on the door at the end.”

Liberty is managing the Quinn Insurance business in the UK for the administrators, with an option to buy this entity by the end of 2012. “The UK market is probably the most competitive insurance market in the world. We need to do a little bit of research before we jump in there.”

He admits to having been “surprised” in the early days at some of the ways that Quinn Insurance conducted its business.

“It wasn’t run as a traditional insurance business,” he says. “The strategy almost was to look at what the insurance industry was saying needed to be done and to take the opposite approach. They wanted to be a little bit maverick and out on the edges.

“I don’t think they made decisions in a very thoughtful way. They went full steam at a concept without looking at the full implications. Liberty’s approach will be different. We want to be part of the insurance mainstream. We will be more strategic.”

One of O’Brien’s first decisions was to hire an actuary, a new function for Quinn Insurance. Isn’t it strange that the company never had such a role before?

“To me it seems a little bit strange,” O’Brien says. “You have to bring a technical approach towards insurance. At Liberty, that’s what we do. I guess the culture within Quinn Insurance pre-administration was different. It was coming out of a manufacturing-type background and maybe they didn’t appreciate the value that an actuary can bring to the process.”

How is its working relationship with IBRC?

“They’re a passive shareholder.”

In time, O’Brien hopes Liberty will buy out the dying bank’s 49 per cent stake, allowing the State to get some money back. O’Brien says there’s a “minimum commitment of three years” to its shareholding with IBRC. When the time comes, the sale price will be determined by the “open market value” as per an independent review.

A soft spoken, measured executive, O’Brien trained as a chartered accountant and has spent nearly 20 years in insurance, with a six-year stint in Bermuda in the 1990s.

He carries himself in a way that suggests he was a model student and was meticulous in his preparations for the Leaving Cert and accountancy exams. It’s hard to imagine him losing his rag or leading the sing-song at the Christmas staff party.

Pencil thin, with a neatly trimmed goatee and dark-rimmed glasses, O’Brien wears a quality pin-striped suit with a perfectly ironed shirt and a dark red, spotted tie. He’s more a steady Eddie than a champagne Charlie, which is probably what the insurer needs right now.

Talk of Dublin beating Kerry to win the Sam Maguire last September does get him ever so slightly animated. He loves Gaelic football and the win was probably sweetened by the fact that his wife is from Kenmare in Co Kerry.

“It was the happiest day of the year,” he grins. “We had the Dublin bunting out and flags in the window. It’s very much a Dublin house; my wife keeps quiet in that regard.”

O’Brien, who grew up in Drumcondra, trained with Grant Thornton before moving to Bermuda in 1993, where he worked, initially, for Deloitte Touche. “It’s pretty, there’s no tax, the sun shines and there’s lots of opportunity” is how he sums up his time there.

He joined Liberty in 1999 as it established a European division. He was the fourth employee of that entity which had revenues of about €4 million. By the time he left to take on the Irish role, it had revenues of more than €600 million and 350 staff in eight countries.

After years of endless commuting from Dublin to London as chief operating officer of Liberty Mutual Insurance Europe, O’Brien is looking forward to being based at home and the challenge of rebuilding the Quinn business here for Liberty. “I think there’s a great opportunity here. We’ve got a lot of expertise and a business model that empowers local management. It’s a great opportunity for me personally to rebuild the business.”

How big can Liberty be in Ireland?

“We’ve set ourselves a target to be a top three player in the next three or four years. There’s no reason why we shouldn’t be the number one player here.

“We think we can shake up the market and be a significant presence. We’re not afraid of competing with RSA or Aviva or Axa.

“We take these companies on in other parts of the world and in many cases we win. We’re number seven at the moment so we’re not going to get to number one overnight. But in time who knows.”

FRIDAY INTERVIEW

Name

: Patrick O’Brien

Job: Chief executive Liberty Insurance

Age: 42

Family: Married with two sons

Lives: Rathmines

Hobbies: I'm very keen on all sport. I run a little bit and I'm interested in Gaelic football in particular.

Something you might expect:The man charged with putting the former Quinn Insurance back on a stable footing trained originally as an accountant.

Something that might surprise: He worked for six years in Bermuda. "I liked the idea of going away. The IFSC was in its infancy at that stage so I figured I'd go to Bermuda for 18 months and see a bit of the world and then come back. I ended up staying for six years."