Thursday, 19 January 2012
Chartis and Marsh appoint Schimek and South to lead European operations
Robert Schimek has been named the CEO of Chartis EMEA (Europe, Middle East and Africa) as part of group CEO Peter Hancock's ongoing effort to make the global insurer more streamlined, efficient and reactive to customer needs (see Hot Seat interview in November issue of Commercial Risk Europe).
Robert Schimek, CEO of Chartis EMEA
Broker Marsh has in the same week announced the appointment of Martin South as its European CEO following last year's elevation of David Batchelor to run Marsh's international operations.
Chartis group CEO Mr Hancock decided to focus the business more sharply on its respective commercial and consumer businesses last year as part of its wider recovery process after the funding crisis suffered by parent group AIG that led to its nationalisation.
Mr Hancock said of the latest move: "This simplified structure will permit closer coordination of the regions with the commercial and consumer teams, and it will allow us to put greater emphasis on growth economy nations by aligning them under our top regional executives. Profitable growth in developing countries is an essential component of our strategic plans to create greater value for all of Chartis' stakeholders."
The latest change sees the company organised along three geographic regions—EMEA, Americas and Asia—rather than the four previously that also included growth economies as a standalone operation.
Mr Schimek, who spent 16 years with accounting firm Deloitte in the US and has been Chartis' Chief Financial Officer for the past six years, will move to London from the US to take up his new role.
Lex Baugh, former Head of Chartis in Europe, becomes the group's Chief Risk Officer also based in London.
Peter Eastwood, currently President and Chief Executive Officer of the US and Canada, will assume responsibility for the Americas, which includes the US, Canada, Latin America and Bermuda.
Jose Hernandez, President and Chief Executive Officer of the Far East Region, will now have responsibility for Japan and Chartis' Asia Pacific region.
The change is not based upon a new cost-cutting drive that should have Chartis staff worrying about their jobs and customers about service levels, Mr Schmiek told CRE. The group will, however, continue to seek to remove 'redundancies' and drive efficiencies, particularly for the core global programmes business, he added.
"There is nothing major that we have not already been working on in this regard. For us we are always focused on being efficient in our delivery to clients and, from my perspective, this is always part of the equation and will continue to be so. There are no countries to get rid of to create cost efficiencies but we will continue to look at areas to ensure that they do not create redundancies," Mr Schimek told CRE.
Mr Schimek takes over an EMEA business that contributes about $7bn a year in net written premium and is present in 55 countries. In 2010 Chartis gathered just under $30bn in net written premiums and at half year 2011 it had amassed $18.3bn.
Though the reorganisation is designed to deliver a more efficient delivery system for Chartis customers and follows a period of recovery from the problems suffered by AIG in recent times, the focus is now firmly on growth and the future, said Mr Schimek.
He told CRE that as CFO of Chartis one of his key roles was to go out and explain the recovery plan and delivery to partners such as brokers, clients and Chartis staff so that they were 'better advised' about the situation. "The crisis is now over and we are moving on to the next plan and it was thought I could put the skills developed over this period to good use," he said.
Mr Schimek said that this latest move was a 'logical step' in the deployment of the 'global resource' as set out in the plan that Peter Hancock developed after he arrived.
"Initially we had four geographic regions: the Far East, driven mainly by Japan; Europe; North America and then other countries around the world that were included under the title of growth economies. In Peter's view this enabled us to provide a 100% focus for customers in our primary countries and an approach for the emerging countries," explained Mr Schimek.
"The plan has developed now so that we are streamlining it which enables us to simplify how we manage the global franchise. We operate in 90 countries and we need to make sure that we are able to reach our clients in a timely and efficient manner and going from four to three regions helps this. We operate across many different time zones and so need to constantly improve efficiency of our execution and delivery of products particularly with our core global programmes business," he continued.
Looking forward Mr Schimek said that he sees three big opportunities and challenges for the EMEA business.
First there is the eurozone crisis which he said is one of the major opportunities and challenges that presents changing requirements for Chartis clients. "We need to be ahead of such changes whether they be political or regulatory as we operate in 90 countries," he said.
Second there is Solvency II, which he also said delivers potential opportunities for Chartis as well as obvious challenges.
"Solvency II was one of my key responsibilities as CFO for the last one and a half years in particular and I think we are well positioned for Solvency II. We have operations in over 20 countries in Europe that will be subject to Solvency II. I think we have wonderful diversification benefits that will enable us to really take advantage of the opportunities while others may struggle with the implementation of Solvency II," he said.
The third leg is contained within the growth economies. "Currently these economies account for roughly 10% of group net written premium. By 2016 we expect this to have risen to 15%. So we see these growth economies as a real opportunity. In particular Turkey and the Middle East and the UAE have good potential and I certainly see useful opportunity in South Africa and the wider region," said Mr Schimek.
Global Programmes for both property & casualty and employee benefits is identified by all the leading insurers and brokers as a growth area in the coming years, not least as customers seek new markets and sources of production in emerging markets while at the same time attempt to rationalise their insurance spend.
Mr Schimek certainly sees opportunities for Chartis to consolidate its leading position in this market in the future. "We are already known as one of the best for global programmes. But I do believe there are opportunities to be even more efficient with our ability to execute on behalf of clients, and leverage our efficiencies across the time zones. We have the team in place and can leverage resources more effectively across regions," he said.
And finally innovation is more important than ever for customers, particularly as they expand to new markets, adopt new production and distribution methods and enter new lines of business in the search for growth.
Mr Schimek assured CRE readers that innovation is right at the top of the agenda at Chartis.
"This is one of the best things about our company. We are innovative. In my opinion there is no better time to be innovative than at a time of significant change such as we are seeing today. Challenges such as the eurozone, Solvency II, these are challenges as well as opportunities for growth and it is really important to innovate with products and services across all countries."
Mr Schimek will no doubt spend time in the coming months with Marsh's Martin South who was awarded the newly-created position of CEO of Marsh Europe some time after Mr Batchelor was promoted from his former role as CEO of Marsh EMEA.
Mr South will remain responsible for Marsh's operations in Turkey and India and continue as CEO of Marsh UK & Ireland until a successor is appointed.
As part of the reorganisation of Mr Batchelor's former EMEA region, Robert Makhoul, who remains CEO of Marsh Middle East and North Africa, and Jurie Erwee, who was recently appointed CEO of Marsh Africa will, with Mr South, report to Mr Batchelor.
"Marsh's EMEA region has evolved substantially over the past few years," said Mr Batchelor. "In addition to strong organic growth, the 2010 acquisition of HSBC Insurance Brokers significantly enhanced our operations in the Middle East and our middle market and SME business in the UK. Our recent acquisition of Alexander Forbes Risk Services has taken us, in one step, from being a relatively small participant in South Africa to being a leading broker and risk adviser across the African continent.
"We are now well-positioned to enhance our services in a region that has become increasingly marked by diverse market characteristics and differing client needs.
"Under Martin South's leadership over the past five years, Marsh's UK operations have shown substantial progress and growth. I know he will bring the same client focus and dedication to our operations in Europe."
Mr South added: "I am excited by the opportunity to lead Marsh's European operations to the next stage in their development. In the current economic circumstances, companies across the continent face an unprecedented risk landscape. It is our task to work with our clients to develop the solutions that help them face and overcome these challenges."
Mr South rejoined Marsh and McLennan Companies in 2007 when he became CEO of Marsh Ltd, which comprises the UK & Ireland business of Marsh and Guy Carpenter, having initially joined C T Bowring (later to become Marsh) in 1985. He left Marsh in 1996 to join Zurich Re, later becoming CEO of International Businesses at Zurich Financial Services and a member of the Group Management Board.
Following the financial crisis of 2008, AIG received a $182bn loan from the US government and taxpayers to save its business, which had been severely damaged by a foray into the credit default swap business and the global economic meltdown. Four years later, in December 2012, AIG announced that it had repaid its entire debt, plus a positive return of more than $22bn, to the US government.This restructuring and repayment was led by AIG president and chief executive officer, Robert Benmosche.