Cooper Gay - Broker rising

Since becoming Cooper Gay's UK chief executive in October 2006, James Summers has set about making the renowned Lloyd's broker profitable again. As a broker with 90% of its revenue coming from outside the UK, spiralling costs were becoming a problem and profitability had hit a low.

Summers believes that too many brokers are obsessed with the idea of income at any price and forced Cooper Gay to follow a series of strict, cost-controlling exercises that are now beginning to bear fruit. He notes: "It involved making a lot of tough decisions and that's the worst part of the job. Now it's starting to pay dividends: we took a lot of remedial action and a few one-off hits. However, we were delighted to record a 26% net profit for 2007, which in today's market is exceptional."

Process efficiency begins at the front office and works all the way through to the back, according to Summers; he embarked on a review of Cooper Gay's efficiency when he arrived and was not impressed by the figures, on which he hints: "Let's just say that, when you don't get things right first time in London, it can be extremely expensive." In January 2008, Summers imposed a goal of 5% improvement in efficiency at the end of year one, leading to a 10% improvement at the end of year two.

Forte

Efficiency exercises aside, Cooper Gay has been performing well in its chosen sectors. Its core of non-marine property continues to produce the goods while the firm's reinsurance portfolio continues from strength to strength despite challenges from now-stable players in emerging countries like Bermuda, the Middle East and China. Summers continues: "The energy business has been strong; that's been driven by international production. In particular, it has performed well in some of the state-owned companies around the world, which is a great testament to the strength of an independent UK broker, by which I mean doing business in Venezuela that doesn't necessarily favour American-owned companies." Aerospace and marine are also progressing well, he adds.

Despite the exotic locations and the enormous size of some of Cooper Gay's clients, Summers believes that there aren't many differences between running a regional and a Lloyd's broker. "We all have to go through the same Financial Services Authority model of regulation and governance and I still face the challenges of any other chief executive: pensions, premises, corporate governance, people, margins and growing the business. The only difference is the businesses we deal with: the volume of transactions will be less than most regional brokers but the value of each transaction may be higher. " Summers also reveals that, because of the international portfolio of Cooper Gay, exchange rates and global economic pressures are at the forefront of his mind most days, though the geographically diverse books means that the broker can ride out a rough UK economic climate and enjoy a more expansive distribution channel than most regional brokers.

Asked about his management style, Summers ponders for a moment, then replies: "I'd say we manage by consensus rather than by dictatorial approach." Four divisions report to Summers: sales and marketing, operations management, finance and the risk committee.

Summers adds that staff are encouraged to take on responsibility: "Staff are empowered to make their own decisions and, if they make a bad one, we work together to fix it." This dictum applies to Summers too. When he first took the job of chief executive officer, he was also the managing director of the reinsurance division and the head of the triple-A sector, which comprises Australasia, Asia and Africa. Unsurprisingly, he realised he had taken on too much and quickly set about looking for replacement managing directors for triple-A and reinsurance, allowing him to concentrate fully on being chief executive.

Cooper Gay believes in trying to balance staff promotions with the skills they excel in, as Summers notes: "Some people are promoted above their skill set and don't enjoy their job anymore. By releasing that burden and allowing them to return to their favoured position, they can then go back to doing what was most productive for them and for the company." One of Summers' best management decisions came from doing just that, releasing a managing director from his management roles so he could return to sales and marketing. According to Summers, it has not only had a "huge impact" on Cooper Gay's figures but also made his life more enjoyable.

Buying time

Acquisitions are undoubtedly on the cards for 2008 and beyond, following the successful transition of London-broker CRS in July 2007 to Cooper Gay; a takeover of Heath Lambert's wholesale division is also proposed. Summers is adamant that Cooper Gay offers something different for London brokers looking to join a consolidator as compared to rivals like Towergate, on which he says: "Towergate sets up brokers and then leaves them to run themselves, whereas we build the brokers into our own business model, which has proven to be successful." Cooper Gay aims to provide stability and a future for brokers that are currently struggling by enveloping them into their business as, for managers, this can provide a rewarding way to sell a brokerage. Summers adds: "We don't see Jelf and Oval as rivals in this respect because they, along with Axa and others, are looking to buy retail brokers. For them, the focus is on income and gross written premium. We're looking to buy wholesale and reinsurance brokers."

Summers concludes that he would like to see Cooper Gay be recognised as the leading wholesale broker of choice in a decade's time. As well as acquiring London brokers, Summers is looking to boost the company's reinsurance books and continue to lead the market in non-marine property. He adds: "We've been commended for our market reform improvements and our electronic claims are now at 100%. Our contract certainty is nearly 100% and we're in the top quarter of brokers for all market reform initiatives. We're very much about beating the benchmark and so far, we have."

COOPER GAY

UK chief executive officer: James Summers

Established: 1965

Locations: London, Rayleigh and 17 other countries

Number of staff: 500 group wide, 228 in the UK

Main lines of business: Non-marine property, marine and aerospace, professional services and reinsurance

Gross written premium: £600m.