Aviva Europe | FEATURE Heading | F

trading from Ireland, using our pan-European setup, in the third quarter of this year.”

APPROVAL REQUIRED

Before that happens, the hurdle of regulatory approval has to be cleared. The company’s application is currently with the Financial Regulator, with Purdy describing approval as realistic and achievable. In fact, he cites the regulatory environment as a significant pull factor. Despite the hammering the regulator took over the banking crisis, Purdy holds their track record regarding insurance in high regard. The number of companies who choose Dublin as a centre of operations is an endorsement of the business environment. “People see them as being reasonable, sufficiently strong to protect investors’ interests, but also workable – the regulator is prepared to work with companies. That would certainly be our perception so the balance is just about right.”

“With the banking crisis there has been a negative spotlight on the regulator, but we want to work with a regulator that absolutely does their job and therefore when we looked at the markets that we could locate in, we certainly felt that the standard and quality of regulation here was high.”

Tax is another good reason to base things here – but not, he emphasises, the main one. “Obviously we would hope that Ireland remains a relatively low corporation tax environment – that certainly is conducive to organisations like ourselves building up-scale operations. Nobody’s going to pretend that it’s not nice to have a supportive tax environment, because it is.”

EUROPEAN AMBITION

However, Purdy is adamant that the main reason for basing Aviva Europe in Dublin is the quality of existing resources and infrastructure, matched with the strong position of the existing Irish business. Once up and running, the plan is to kick off with forays into Hungary, the Czech Republic and Romania before branching out into other European territories in 2011. If that European strategy seems Napoleon-like in its ambition, at least the company is operating close to home.

A European focus contrasts with the path chosen by former Aviva man, Tidjane Thiam, who is steering Prudential towards a risky $35.5bn takeover of AIG’s Asian unit, AIA. “What’s very interesting about Tidjane’s bid for the AIA business is that we present a very

different approach, which is to really build in our European heartland,” says Purdy, who repeats his belief that European growth will match that of Asia. “We start from a much bigger base. We are effectively the biggest life insurance provider in the market with 100m people, €5.7 trillion of life and pension assets, which gives us an immense opportunity for growth in markets that we know and understand well.” The company will attack that European market with an economy of scale much improved by its pan-European structure. “Individual consumers in individual markets are going to hopefully be a bit more protected from the vagaries of the weather in any one particular market, for example. Obviously, we will be able to look at the performance across all the markets and we will try to deal with the reinsurance companies on a more joined-up basis. A large claims bill in a one-country context isn’t so large spread across a 15-country operation.” The company’s bigger size will make for greater savings – in fact, it is hoped that the financial strength of the enlarged company will insulate it from financial turmoil.

FLOODING AND FREEZING

By unlucky coincidence, Aviva chose to base itself in Ireland just as winter ground the country to a halt through record-breaking flooding and freezing. Purdy accepts this as the nature of the business: “Our purpose is to pay out to customers when it happens.” Proud of Aviva’s response to the inundation of claims, he cites the advances paid to policyholders as an example of the company’s ethos. “If your house or business premises is flooded under a deluge of water or frozen pipes, it’s one of the worst things that can happen to you. We hope we made it easier on our customers and served them well.”

Even so, premiums seem set to rise. Purdy assigns this to trends that were already in the pipeline rather than the harsh winter months. “We’ve had about four or five years of very significant downward pressure on premiums. If you’re driving a Ford Focus around Dublin, you’re probably paying about half of what you were five years ago. Before this winter happened there was a need to re- balance the premium rates within the market, and certainly in parts of our books we are seeing our claims incidences rising and the cost of claims obviously go up.” In a sense, the new arrangement draws a further line under the Hibernian rebranding, a stage-by-

Stuart Purdy, Product and Investment Management Director at Aviva Europe.

“Nobody’s goiNg

to preteNd that

it’s Not Nice to

have a supportive

tax eNviroNmeNt,

because it is.”

stage retirement of the old name which was completed in February this year. Purdy believes that the change has been fully accepted, and the process points the way forward. “It was a journey where we tried to make sure that our customers understood that all of the values that were associated with Hibernian, one of the most trusted financial services brands, could still be found under Aviva. We were trying to transit the trust and support that people could expect through Hibernian Aviva and into the new Aviva brand.”

At present, then, the focus is on moving quickly – but not so quickly as to trip – and learning quickly too. The lessons picked up at this stage will be exported to other territories as the European operation expands. In Hatch St, meanwhile, the quantum leap idea has taken on a life of its own and become one of those love-them-or-hate-them motivators. “There’s a very nice motto around the word ‘leap’ that we use internally: leadership, entrepreneurship, accountability and performance,” says Stuart Purdy. With Hibernian safely put to sleep, its successor has big ambitions.

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