Gary Hoffman, chief executive of the insurer Hastings, is so fed up with the disruption caused by strikes and delays on Southern Trains that he has offered a two-week job swap with its boss. “I want him to see what it is doing to my employees. It has been a complete nightmare,” Mr Hoffman, the biggest employer in the area around Bexhill-on-Sea in East Sussex, said.
Charles Horton, the executive in question, has not bitten, referring the offer to his stakeholder manager.
Mr Hoffman, 56, likes to make an impact. Before Hastings, one of Britain’s fastest growing insurers, he ran Northern Rock, the nationalised bank, and then NBNK, the vehicle that tried to buy 630 Lloyds branches, ending in a row with the government and the near blow-up of its rival, the Co-operative Bank, in the process. “I have a different perspective that I can bring into this little local business on the south coast of England. I’ve had lots of offers to do other things but why would I?”
Mr Hoffman was born in Coventry and graduated from Cambridge. He took over at Hastings in 2012, three years after it avoided a near-death experience as an adjunct of Insurance Australia Group by reinventing itself via a management buyout as a business selling car insurance over price comparison websites. When rival insurers were fighting such players as CompareTheMarket.com or moneysupermarket.com, Hastings embraced them and has ridden their wave of popularity to become the place to buy general insurance products. The company has a target of three million customers by 2020 — a 30 per cent increase.
The secret to the internet-only insurer’s success is simplicity and an ability to switch prices quickly, Mr Hoffman said. “Other insurers have channel conflict: they have a broker channel, telephone channel and may be still on the high street. We don’t have any of that. When our underwriter changes prices he doesn’t have to consult with the branch channel and the telephone channel and the price comparison website channel, he just gets on and does it.”
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The other positive is Hastings’ ability constantly to play with pricing. “We are dancing around the edges every day. We changed the price on average 29 times per month last year across the book. The traditional players hold a monthly pricing committee and put that price on the price comparison website. It is very difficult for them to compete,” he said.
Investors are yet to be convinced. Hastings trades at a discount to some of its rivals because of scepticism about its approach and fears that it may be mispricing its risk. Mr Hoffman accepts that people want to wait and see until it has built up more of a track record, but argues that the company is conservative, as demonstrated by its hiring of Ed Biemer, a senior executive from Allstate, one of America’s largest insurers, to manage underwriting.
“One of my ambitions is to create as many jobs in Hastings as I had to get rid of in Northern Rock
Hastings’ record as an independent company is compelling. Customers are up 15 per cent this year, it has more than 6 per cent of the car insurance market and is making inroads in home insurance. It floated just over a year ago at 170p, valuing it at £1.1 billion, and is now trading at 230p, a value of £1.5 billion.
Rand Merchant Investment — an investment group in South Africa — became its biggest shareholder, buying a 29.9 per cent stake from Goldman Sachs and the insurer’s founders, including Neil Utley, the former boss of the insurer Equity Red Star, who was censured by Lloyd’s of London for insufficient controls.
Goldman, Mr Utley and other backers have made hundreds of millions of pounds out of Hastings. Mr Hoffman himself owns 2.7 million shares, worth £6 million, and stands to own 1 per cent of the company in total if he hits performance targets.
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The jobs growth in particular, including 700 roles added in Leicester this year, is karma for the cuts at Northern Rock, Mr Hoffman said. “One of my ambitions is to create as many jobs in Hastings as I had to get rid of in Northern Rock.”
He was recruited to the nationalised lender in 2008 by the government after he had spent more than two decades at Barclays, starting as a trainee and culminating as its vice-chairman. He oversaw a near-halving of Northern Rock staff from 6,500 to 3,500 but brought it back from the brink of collapse.
As with other bankers parachuted in by the Treasury to big jobs during the financial crisis, he found the role not quite what he expected. “They said to me on day one, we are recruiting you because we want you to have commercial freedom, but every day they phoned me to see what was going on.”
Then it was on to NBNK, an investment vehicle set up to bid for the branches being sold by Lloyds to create a new challenger bank. The project ended with NBNK’s chairman, Lord Levene of Portsoken, claiming that Lloyds was swayed towards a rival offer from the Co-operative Bank because of political pressure to favour the mutual. The Lloyds branches were eventually sold to Sabadell, the Spanish bank.
Mr Hoffman claimed relief that the process failed because it led him to Hastings, where he hopes he has helped to foster its family-orientated culture and focus on the local community. “I have no ambition to do anything else,” he said. “I have no ambition to be a chief executive anywhere else. I wouldn’t be.”
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That could leave the door open for a chairmanship, in time. A straight-talker with an acre of experience, he could be a good choice.