Matthews, now 57, was previously planning to retire at 60 but the Resolution deal has presented him with a new challenge which he says he will see through.
“If you had asked me 12 months ago, I would have said, yes, that’s it, I’ll retire at 60 and be back to Australia. My little boys are eight and nine now so it would be time for high school but I am loving what I am doing here so it is hard to predict.”
Resolution has talked about a two to four-year timeframe to realise value by reselling or floating its purchases, so this could scupper Matthews’ planned retirement date. “If I am doing a good job and everyone is happy with me, then I will stay.”
After several unsuccessful bids for Friends, Matthews is pleased that, under the new governance changes of Resolution’s latest offer, he and finance director Evelyn Bourke will have greater influence over future acquisitions.
“There will be a formal opportunity at least on a monthly basis for Evelyn and myself to interact with the key Resolution people to see what their thoughts are and their targets are and they will get input from us on what we think would be a good match. That means we will not be faced with a situation where all of a sudden the Resolution guys come in and say, this is what we have bought, now do something with it.”
Despite this, as yet, Matthews professes to have no knowledge of the nine targets that Clive Cowdery has in his sights. He is resolute that Cowdery has no intention of turning Friends into a closed book operation. “I do not think there is any doubt whatsoever over our future as an open life book.”
He is equally insistent that service levels will not suffer as a result of the deal. “I can guarantee that service will not drop. We are well regarded because of our clever systems and clever people. Resolution know that the franchise value of the business would be at risk if we were to muck that up.”
Speculation that Resolution’s takeover of Friends could prompt it to get rid of IFA network Sesame angers Matthews. “We have got absolutely no intention of selling Sesame. I see people saying Cowdery is going to sell Sesame. They have got no idea what Cowdery’s going to do, how dare they talk for Clive? That is ridiculous. Sesame delivers bottom-line profit, gives us a good eye on the market and there is strategic value there, given the retail distribution review.”
Matthews says he hopes that Sesame’s takeover of Bankhall will complete, as it offers potential to experiment with different distribution options. “I think Sesame and Bankhall could well offer some restricted options if it makes sense. There is definitely potential and that is quite exciting.”
But he admits Pantheon is “not a big deal for us” although he adds after unnerving the business by looking for a sale, Friends is not currently looking to put it back on the market.
In terms of products, Friends has narrowed its focus to corporate pensions and protection of late. This year, it unveiled a distribution deal with Tesco and Matthews says there are initiatives under way to target wealth managers and help them sell protection to their existing client base. He is a big supporter of adviser-charging for investment advisers but he has grave concerns that extending this to the protection market will be damaging to consumers. “It is ridiculous for the FSA to worry about too much protection being sold, because we do not have enough out there. It is criminal. I have never heard any beneficiary complain that their husband had too much life cover.”
The development of a corporate wrap with technology provider FNZ is a significant move for Friends, although Matthews still insists that now is not the time for the insurer to launch into the retail wrap area. “As part of our corporate platform development, we will get access to a very sophisticated electronic individual Sipp and a more sophisticated group Sipp offering.” But Matthews also drops a strong hint to Cowdery about what he hopes might be on the shopping list. “If acquisition two or three had a Sipp capability, that would be quite interesting.”
Annuities are another area where Friends is not currently very aggressive but where there could be potential for growth through Resolution’s next acquisitions. Matthews says impaired annuities are of particular interest to him and lets slip that a deal with a specialist provider is already in the pipeline.
“We need to offer facilities to our maturing and retiring clients and make it easy for them to get access to impaired annuities. We have a deal on the table at the present time and it is pretty obvious that we would be talking to one of those specialised players.”
But he says Just Retirement is probably too small to merit a significant takeover target for the insurer.
Matthews is yet to be sold on the merits of so-called “third-way” or variable annuities. “I am not a great personal fan. I have still got some question marks in my own mind about whether you can construct a product that charges enough from the company’s point of view to provide the guarantees and still deliver good value to the end customer.”
He believes personal accounts will be a good thing for the pension market but argues that the means-testing conflict and issues over levelling down must be urgently addressed.
Matthews would also like to see low-cost life cover integrated into the system. He says the simplest way of dealing with the means-testing problem would be to make contributions compulsory, as in the Australian system, and believes this will happen in the UK over the next five to 10 years. “It is a bit brutal but it works.”
Born: Sydney, 1952
Lives: Chiswick, London with wife Michele (also an actuary), two sons aged eight and nine, two Ragdoll kittens and Golden Retriever
Education: Punchbowl Boys High School, Sydney, Macquarie University, MA, Fellow of Institute of Actuaries Fellow of Institute of Actuaries of Australia
Career: July 2008-present chief executive officer, Friends Provident 2004-08: chief executive, Standard Life Assurance 2001-04: president and chief executive officer, Manulife Japan 1998-2001: executive vice-president of Canadian operations and chairman, Manulife Bank. 1996-98: general manager of personal finance services, National Australia Bank 1989- 96: managing director of Legal & General Assurance Holdings Australia Other industry positions include: president of the Chartered Insurance Institute (2008-09) president of the Institute of Actuaries of Australia (1997, centenary year).
Likes: Positive, enthusiastic people
Dislikes: Lack of action
Drives: BMW 330D 2003
Book: Fermat’s Last Theorem
Film: Gone With the Wind
Album: Beach Boys Greatest Hits
Career ambition: To lead a large FTSE 100 company
Life ambition: To leave the world a better place
If I wasn’t doing this I would be… On Hayman Island, Queensland with Michele