Haste, Andy 1962–
Chief executive officer, Royal & SunAlliance
Born: 1962, in United Kingdom.
Career: National Westminster Bank, dates unknown, president of U.S. consumer credit retail banking; GE Capital UK, dates unknown, president and chief executive officer of Global Consumer Finance Europe; AXA Sun Life, 1999–2003, chief executive officer and director of AXA UK; Royal & SunAlliance, 2003–, chief executive officer.
■ A virtual unknown in the general insurance industry, Andy Haste faced serious internal and external doubts over his ability to save the ailing Royal & SunAlliance company. He had no experience in the general insurance business, and Royal was suffering serious losses after a botched merger between the former Royal Insurance and SunAlliance companies. But Haste had come with a reputation for turning things around in other industries and, in less than a year, had the company's bleak horizon facing sunrise. It appeared that the miracle worker had again changed the course of the future.
BACKGROUND IN FINANCE
Haste had a background in corporate finance, and he used that background to manipulate and restructure ailing organizations and bring them around. He was the former president and chief executive officer of Global Consumer Finance at GE Capital for UK–Eastern and Western Europe. (GE Capital is a provider of general financial services.) Haste also had served as president of National Westminster Bank's U.S. consumer credit business (retail banking). His next big position put him squarely within the insurance sector. In 1999 Haste became chief executive officer of AXA Sun Life and director of AXA UK. (AXA is a French provider of life and pension insurance and annuities.)
MAKE HASTE TO THE RESCUE
While Haste was making a name for himself at AXA, Royal was in deep financial straits. It carried a history of miscalculated losses in its U.S. business and had, of necessity, boosted its reserves four times since 2001. In December 2002 Royal announced that Haste would take over as the company's new chief executive officer and chief group director. Haste was to replace the ousted Bob Mendelsohn, who left in September 2002 (with Bob Gunn serving as temporary chief in the interim). Haste was brought in on a lucrative one-year contract to begin in April 2003. Along with Haste, Royal took on John Napier as its new board chairman, also effective in April 2003.
As news of the two newcomers—both of whom lacked core experience in the general insurance industry—hit the press in December 2002, Royal's stock fell 6 percent (closing down 7.75, to 116.75). Royal openly conceded that Haste did not carry the high-power or high-profile name that people were hoping for. But, Royal explained, Haste came with great references. He had been recommended by GE's former chief executive officer, Jack Welch. Welch considered Haste to be a well-seasoned winner in financial services. Although Haste lacked directly related experience in property and casualty insurance, Welch pointed out that Haste also had not had experience in life insurance when he joined AXA and still had done well there. This positive reference carried the day. After Royal's then-chairman Sir Patrick Gillam revealed that Welch had given Haste a "good ticket," Royal recruited him. In a later article for Times Online (December 20, 2002) by A. Cave, Royal referred to its new chief Haste as "a proven implementer with an excellent track record."
THE "POISONED CHALICE"
In April 2003 Haste became chief executive officer when Royal's chips were down. It had suffered a 15 percent share loss in March alone, after it had revealed yet another capital bailout to compensate for losses in its U.S. operations. This resulted in a 38 percent decrease in profits to date for 2003. All in all, the cash deficit followed a £940 million loss in 2002 on the back of a £889 million loss in 2001. Moreover, Royal had operated without a permanent chief executive officer for seven months, utilizing Bob Gunn in the position. Industry speculators developed serious concerns over whether Royal would ever find a capable person to come aboard what ap peared to be a sinking ship that had struggled to stay afloat in the shallows for seven years. Analysts remarked that the size of Haste's remuneration package reflected just how difficult it was to find someone who could help. The media dubbed it "the poisoned chalice." But Haste saw his first big role with Royal as an opportunity and seized the moment.
Known as a hands-on, no-nonsense manager, Haste set about sorting out the longstanding problems he had inherited. In sharp contrast to his flamboyant predecessor, he moved his office quarters from a grand office to a Spartan (albeit larger) plain room and spread out his work. His immediate priority was to raise fresh capital. At AXA he had outsourced about 100 jobs to India in a "pilot" effort to cut jobs. He intended to build on that experience to fashion a strategy appropriate for Royal.
With a capital deficit of £600 million, Haste planned to conduct wide-range restructuring that would necessarily result in the loss of 12,000 jobs. To that end, he first executed the disposal of noncore businesses and the float of Royal's Austra lian-Asian arm, Promina. Next, Haste cut £3.5 billion in general insurance premiums. The strategy was so effective that £540 million of the £600 million deficit was raised by the float of Promina alone. Another £72 million was raised in June 2003 from the sale of RSUI, an American surplus lines operation. Also in June, Royal sold its health-care unit for £147 million.
By the end of his first 90 days, Haste had closed the hole on the deficit, and Royal's stock share price rose by more than 100 percent. Regarded as stellar performances, Haste's moves clearly prompted investors to take faith in the unknown boardroom warrior. With the pressure of operating under heavy debt alleviated, Haste began to focus on raising another targeted £600 billion for surplus capital.
SOME LOSSES IRREVERSIBLE
As Haste took the helm and faced the wind, two inherited weights dragged at the stern. One was the enormous group of asbestos exposure claims (including U.S. claims) for which Royal remained one of the primary liability insurers. The second was the ongoing court battle with World Trade Center developer Larry Silverstein over the terrorist attack of September 11, 2001. Silverstein sought judicial declaration that the terrorist attack constituted two events, not one, for insurance purposes. A federal district judge had ruled in 2002 that liability exposure on one of Royal's policies was limited to "one event" losses, and Royal could only hope for similar rulings on remaining exposures.
Notwithstanding, Haste's performance in his first nine months earned him £1.4 million, announced in April 2004. Despite this slow, but sure forward momentum, very few persons had met the man behind the wheel, and fewer felt they knew him. Haste remained an enigmatic person continuing to be defined by the moves he made with Royal.
See also entries on National Westminster Bank PLC and Royal & Sun Alliance Insurance Group plc in International Directory of Company Histories.
sources for further information
Cave, A., "Investors Spooked by 'Raw' Recruits," Times Online, December 20, 2002, http://www.timesonline.co.uk/money.
"Haste Needs to Move Fast," Guardian, September 5, 2003, http://www.guardian.co.uk/business/story/0,3604,1036079,00.html.
Senior, Antonia, "First Nine Months at R&SA Earns New Boss £1.4m," Times Online, April 29, 2004, http://www.timesonline.co.uk/industry.
——, "Insurer Refuses to Run for Cover," Times Online, July 28, 2003, http://www.timesonline.co.uk/business.
—Lauri R. Harding