He has proven his dedication in the world of financial insurance. Now Sandy Leitch tells Financial Editor Ian Fraser how he is spreading the word in the world of art
IT is often said that life imitates art but for Sandy Leitch life has become art. At least it did for a few hours last week when the globe-trotting financial executive — also a trustee of the National Galleries of Scotland, supporter of Dunfermline Athletic and is confidant of Prime Minister Tony Blair — came to inspect the newly-opened Salvador Dali exhibition at Edinburgh’s Dean Gallery.
The Dali show, which is being sponsored by Zurich Financial Services, where Leitch is UK chief executive, attracted a record 10,000 visitors in its first week. “It’s a fantastic coup for the National Galleries of Scotland,” says Leitch, “and the exhibition is not going anywhere else in Europe.”
Sandy Leitch would like to play a part in making such art more widely accessible. In addition to sponsoring the exhibition itself, Zurich is also backing Scottish-based public sector workers to come to Edinburgh and experience the collection of “disturbing visualisations of the unconscious” for themselves.
Like his love of art, there were, and still are, motivatory forces which led Leitch into the world of financial insurance. His father, a coal-miner in Oakley near Dunfermline, died without insurance when Sandy was two. The family of four was left nearly destitute but the children were brought up by their maternal grandfather.
Now that he has made it up the greasy pole, Sandy Leitch believes successful businesses such as Zurich must do their bit to help less fortunate members of society. “The strong and successful have to put something back,” says Leitch. “Wealth is only worthwhile if you share it.”
He also believes that insurance companies can, and ought to, be a force for the good. Their image was seriously tarnished by the pensions mis-selling scandal and, as current chairman of the Association of British Insurers, Leitch is keen to redress the balance. He would like to instil an “obsessive non-complacency” across the UK’s life and pensions industry to ensure consumers don’t get ripped off again.
Zurich Financial Services effectively came into being in September 1998 when tobacco giant BAT Industries demerged its financial services businesses — including Allied Dunbar, Eagle Star, Threadneedle Asset Management and Farmer’s Insurance in the USA — into Zurich Group of Switzerland. Through a dual holding structure, the businesses are 57% owned by Swiss-quoted Zurich Allied and 43% by London-listed Allied Zurich. This has led to shareholder confusion, so the group will next month “unify” its structure to give itself a single listing.
As a result of the merger, Zurich became the third largest insurance company in the world after Allianz and Axa. Headquartered in Switzerland, the firm focuses on life insurance and non-life insurance, reinsurance and asset management. It employs 68,000 people in 60 countries and has assets under management of $423 billion (£280bn).
Sandy Leitch joined Hambro Life as it was launched by the South African born supersalesman of the industry, serial insurance entrepreneur Sir Mark Weinberg, in March 1971. The business, co-founded by Joel Joffe and Sidney Pitman, was unusually entrepreneurial in the sometimes staid insurance sector and gained a reputation for using “hard sell” techniques.
In 1984 it was bought by the London-headquartered tobacco giant BAT, which was eager to build a presence in financial services to reduce its dependence of tobacco, and renamed Allied Dunbar. But by 1997, by which time Leitch was on the parent company’s main board, BAT was viewing financial services in a rather different light.
Sandy Leitch says: “The dark cloud of litigation that was hanging over tobacco had a seriously dilutive effect on the perceived value of the financial services businesses. BAT took the correct decision from the shareholder perspective. The merger with Zurich has been very successful, partly because the two businesses are so complementary.”
Leitch, 52, has been chairman and chief executive of Zurich’s operations in the UK, Ireland and Southern Africa, in addition to sitting on Zurich’s main board, since 1998. He reports to chief executive Rolf Hüppi.
“I’m very optimistic for the Zurich group across the world,” says Leitch. “The UK is our second largest region after the USA. Globally we are expecting steady growth in property and casualty insurance. Life, pensions and investments however have the potential to grow at a much faster pace than GDP.”
He believes that while the financial services business was rather isolated within a tobacco manufacturer, being part of the Zurich group has enabled it to have a “dialogue at a global level about financial services trends across the world”.
Sandy Leitch has regularly been offered jobs outside the group during his career but says he remains stimulated thanks to a variety of job switches. “At Allied Dunbar I’ve done almost every job. Marketing, product development, administration, office services, strategy, running teams of salesmen (including tied agents and IFA distribution).”
Sandy Leitch prides himself on his consultative leadership skills and says he strives to get the balance right between being a caring boss and a demanding one.
“No manager has an automatic right to respect,” he says. “There has to be an unspoken contract between employer and employee, along the lines of ‘you do your best and we’ll look after you’.” There are two contracts — the formal and the informal.”
Leitch implies that insurance company Eagle Star, another part of the BAT group, was in a bit of a mess before he became chairman in 1996.
“It was very institutionalised and very bureaucratic. They even called me Mr Leitch. They had gone through difficult times on mortgage indemnity,” he says. “Its strategy was unclear, and it suffered from a lack of continuity.”
Sandy Leitch says the time-honoured solution in such circumstances would have been to draft in a new chief executive from another UK insurer. Instead, he installed Irishman Patrick O’Sullivan who had previously worked at BZW, GE and Bank of America.
Leitch says O’Sullivan has “refocused the business on particular markets and delivered world class performance on the basis of realistic prices.” He has also applied rating increases which have meant a short-term reduction in volumes, something which other insurers have followed.
The business has been rebranded, with the Eagle Star name now only being used for business that is sold direct — in direct competition with the Royal Bank of Scotland’s Direct Line. Business that is sold through intermediaries has been rebranded as Zurich.
“This was a difficult decision as the business could have flowed away and we did lose 10% of our business last year,” says Leitch. “It’s a question of getting the right balance between policyholder benefit and shareholder benefit.”
Sandy Leitch believes that since property and casualty insurance has become a commodity business, the best way to maintain a competitive edge is to ensure you have the best people running it.
“That’s what we’re building. Only one member of the previous management team is still there.” Senior executives have been hired from AIG, Prudential and Barclays. “If you’re winning, you’ve got to get the substance right,” said Leitch. “But you’ve also got to get the propaganda right as well.”
However, Leitch realises the real growth is going to come from the life pensions and investments side. “Because of demographic change, people living longer, governments not being able to afford to look after people, we see great potential in these markets right across the world.”
Sandy Leitch believes the catalyst will be advice — as people don’t generally wake up in the morning and think they simply must buy themselves a term insurance policy or a freestanding AVC. “We have had our problems with pensions misselling, but on balance the UK is a world-class leader in financial services.
“This country is still under-insured and under-pensioned. In the UK 40% of households have no life cover at all and the average sum assured is £15,000 per head. One-in-four households have no contents insurance, but we still spend £5 a week on the lottery. I want to make society aware of these issues.”
And art too, perhaps.
Alexander (“Sandy”) Leitch mini profile
Name: Sandy Leitch.
Born: 20 October 1947.
Educated: Dunfermline High School.
1965: joined National Mutual Life in London
1971: head of IT at Hambro Life
1993: CEO, Allied Dunbar
1997: director of BAT, which bought Allied Dunbar in 1984
1998: CEO, Zurich Financial Services after demerger.
Leitch is also chairman of the Association of British Insurers and deputy chairman of Business in the Community.
Hope for the future: That Zurich becomes the world’s number one financial services company and that the gulf between the ‘haves’ and ‘have nots’ is narrowed
This article was published in the Sunday Herald on 6 August 2000