Fortis Rule Out Management Buyout

Chief executive of Fortis UK Barry Smith has responded to speculation over the future of the insurer and ruled out the chance of a management buy-out (MBO).  Smith announced that he was concentrated on constructing the business and he was not going to sell Insurance Times Fortis UK.

At the mean time,the managing director of Fortis Insurance Mar Cliff outlined plans for developing relationships with more brokers and he is planning to move into the fleet market next month.

Since Cliff joined Fortis from AXA last October, the pair believed market speculation on the insurer’s future was ill-founded in their first interview. They distanced their business from its parent bank Fortis, which is involve in a possible sale to their French rival BNP Paribas.

Smith said: “It is the bank part of Fortis which has been bought by the various [Benelux] governments and it is the bank which is the subject of discussions with BNP Paribas. The insurance business – which includes the UK business – is still owned by the shareholders … there are no discussions on an MBO or anything of that nature.”

There is a rumor in the market that Smith has been consistently linked with an MBO. Market rumours also believed that private investors and insurers such as Zurich, Allianz and AXA, have shown their interest in the business.

Smith admitted that the insurer might have got approaches. “It’s like the transfer market. It’s hardly surprising that a lot of people may be interested in buying Fortis. Why wouldn’t they?”

However he added that: “The reality is, we are not for sale. The reality is, we are not spending one minute of our time focusing on these distractions. We are spending our time on how we can build our business, widen the products, offer high-quality service, service the needs of the broker and build an even bigger, better business.”

Cliff, a famous figure among brokers, has adopt a low profile since he was appointed last year. He remarked that he had been focus on getting to make plans for 2009 and comprehend the business.

“People will see a greater commitment to the broker market,” he said. “We deal now with 2,300 brokers and we’re trying to expand that. We have been adding product continually ... we will extend further into the commercial markets.”

He believed Fortis would start the fleet market business with a pilot scheme early next month and after that other commercial lines would come up.  He refused to disclose internal targets for premium.

Cliff said Fortis would keep on offering high quality service at a low cost – this is the competitive advantage comparing to its rivals.  “The decision lines are very short. There is no big monolithic structure and customers have access to any of us,” he said.  “My role is to lead Fortis UK, which is the manufacturer part of the business.  “We underwrite and we handle claims, through different channels. My role is to produce the right and profitable products into the right segments.”