Philip Scott runs a small apple co-operative in Norfolk producing cider. He is also executive chairman of Norwich Union Life and director of global insurance giant Aviva.
Scott's path to the top has been slightly unusual. He was studying engineering at Kings College when the sudden death of his father meant he had to return home to manage the family holiday business in the Norfolk Broads. His upbringing has left him with a lifelong love of the water and he still spends as much time as he can sailing. Even his home in Canary Wharf means he can take the river bus to work.
When Scott's mother sold the business, he bought himself an old lifeboat to live on and looked around for a temporary job. He had the choice between working for Lotus cars or Norwich Union but the insurance company got the vote as it was closer. He started off giving technical support to actuarial trainees.
“I thought, I can do that, and I decided to become an actuary myself,” recalls Scott. He qualified by correspondence course. That was 29 years ago and he has never worked anywhere else.
Now ensconced in his minimalist and immaculately tidy office on the 22nd floor of Aviva's City headquarters, Scott has a commanding view over London although part of the view has become blocked by architect Norman Foster's dramatic “gherkin” skyscraper which is nearing completion as a home for Swiss Re. Two apples on the table are all that attest to his life outside the office which must have been a respite from being at the helm of a life company during these torrid times, which he readily admits have been far from plain sailing.
“These have been pretty difficult times for life companies. In fact, 2002 is going to go down as the toughest year for insurance companies globally in the history of the industry,” he says.
But his enthusiasm is undimmed and he works a 16-hour day. In addition to being head of Norwich Union Life and on the Aviva board, he is also a director of Aviva France and of Delta Lloyd in Holland. A third of Aviva's business is in the UK, where he feels the industry is suffering on two fronts. Most obviously, there is the reduction in asset values from the bear market and he readily admits this is having “some big effects”, particularly on endowments.
But Scott also believes the industry is paying for the excesses and failures of the 1990s, most notably Equitable Life. He says: “It is a sad fact that a substantial amount of opinion-formers – politicians, journalists – had policies with Equitable Life and so the issue has influenced perceptions perhaps more than it should have done and this is not yet fully behind us.”
Despite regretting the continuing damage that Equitable Life is doing to life companies generally, Scott does not believe compensation is the answer. He points out that compensation has to come either from taxpayers, policyholders or shareholders and he does believe the case has been made.
I the UK, Norwich Union is looking to tighten its belt. Scott does not believe the market will pick up in the short term and Norwich Union has already signalled its intention to focus on writing only business that it believes is economic. As a result, Scott says the life business will be scaled back this year, with parts of the business moved offshore and redundancies likely.
He is reluctant to comment on rival companies but he concedes that Standard Life overtook NU last year in market share. What does he make of the furore surrounding his main competitor? “The market perception of Standard Life may have been that bit rosier than the reality,” he says, quickly adding that all life companies have had to do a lot of learning in the last six months and that he has the highest respect for Standard, anticipating many years of quality competition to come.
“Am I bothered that Standard Life has overtaken us in market share? No, we wish to be a market leader but our objectives are to maximise return on capital and sometimes we will not always see maximum value in a particular marketplace.”
Scott warns that all companies are going to have to keep a tighter eye on their capital bases when it comes to expansion. He says there is going to be more concentration, with fewer providers active in a particular product area.
As far as the future of distribution is concerned, he concedes: “There are some IFAs who believe we are sitting on the fence.” The formal line is that NU is – and always has been – a multi-distribution company. “The share of the market for full financial advice will still be the majority,” he says, but he is unwilling to hazard a guess about how many IFAs there will be in the future. Scott says pension simplification will not obviate the need for advice but advice will have to develop for the market of the future.
From the lofty heights of his career, he says there is one poignant fact that keeps his feet on the ground. His 24-year-old daughter is healthy and currently travelling in Australia but his younger son was born profoundly handicapped. Scott says having him and meeting the people who look after him has been a humbling and rewarding experience.
His son was born while Scott and his wife were in New Zealand for a few years. He recalls relishing going from being a small fish in a big pond in England to being a big fish in a small pond in New Zealand. Now, with even greater relish -a remarkable absence of arrogance – he is happy to call himself a big fish in a big pond.
Born: Yorkshire, January 6, 1954.
Lives: Near Great Yarmouth, Norfolk and Canary Wharf, London.
Education and qualifications: Richard Hale School, Hertford; Great Yarmouth College.
Career to date:1973, actuarial trainee at NU; 1981, actuary NU New Zealand; 1984 to 1992, head of global equities to chief investment officer; 1992, group finance director; 1993-2002, chief executive of NU and director;2002, executive chairman of NU Life and director of Aviva.
Career ambition: “To be a leader in one of the world's leading insurance companies.”
Life ambition: “To sail the world, to retire in eight to 10 years and buy my own boat.”
Likes: Openness, apples, sailing, growing things, cooking.
Dislikes: People who are pretentious, people who believe they are better than others
Peers say: “Other chief executives hold him in high regard. He is articulate and has a tremendous grasp of industry issues, making forthright comments on them.”
Car: BMW X5