Sandy Leitch: The man who wants you to trust him

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Roadshows are a fact of life for chief executives of big companies. And when times are hard, the need to get out there and meet the public is even more crucial – no matter how unattractive the prospect.

Last week, however, Sandy Leitch, the UK chief executive of Zurich Financial Services, found himself stopping off in Bournemouth, Cardiff and Newcastle to deliver motivational talks not to customers but to staff. It is a reflection of how difficult the current climate is for the insurance industry, which is tainted by association with high-profile failures such as Equitable Life and Independent Insurance, as well as facing huge bills for payouts in the wake of the terrorist attacks in the United States.

"Business conditions are tough," says Leitch. "My job is to communicate that to my staff – the message is blunt but I have to be realistic and frank. Now more than ever, people need insurance and we have to keep that in perspective."

Leitch is refreshingly open. As chief executive of the UK division of Europe's third-largest insurance company, the miner's son from Dunfermline – who still supports the town's football team because it's "nice to have something that has been constant in your life for 40 years" – is prepared to criticise his own industry.

He acknowledges that the Equitable Life debacle – in which the insurer closed to new business after the House of Lords ruled that it had to honour guarantees made to policyholders – is responsible for much of the public's current mistrust of the industry. But he believes Zurich will weather the storm.

"Of course this affects the reputation of the industry, but Zurich's is a relationship business," he stresses. "When one of our advisers talks to a customer, he establishes a bond, so trust isn't a problem for us.

"Trust is fundamental to the insurance industry," he goes on. "You are trusting your hard-earned savings to an organisation. That trust was dented by pensions mis-selling, dented by Equitable. As an industry, we have to push as hard as we possibly can to restore that trust."

Having spent his entire career in the industry, starting at Allied Dunbar – then called Hambro Life – as a systems designer, Leitch clearly believes in the value of insurance. He feels that the industry can make a real difference to people's lives, and nowhere will this be more apparent than in the handling of claims following the US attacks. But he worries that 40 per cent of families in this country have no life cover, while eight million people rely on the state pension scheme.

"When difficulties occur for all those people, there is personal tragedy and huge hardship," he says. "As an industry we make the difference between dignity and destitution."

When Leitch was chief executive of Allied Dunbar Assurance, he used to go down to the claims department and see the claims coming in. "There's a widow who is devastated by the loss of her husband," he recalls, "but you have to remember that his life insurance makes a difference to her future. Then there is somebody saving 20 years for a pension in order to retire with dignity and do some of the things they always wanted to. Then there is the policy that matures, allowing a husband and wife to give their daughter a good wedding."

Despite the one-third fall in the insurer's first-half profits announced last month, Leitch believes Zurich is well positioned. He puts the fall down to factors beyond its control, including depressed equity markets, declining interest rates, a strong dollar and generally weaker economies. The general insurance side of the business still looks rosy, which is no mean feat in difficult market conditions. Zurich has 7 per cent of the UK market, with gross premiums in the first six months rising 29 per cent.

The insurer is also in the middle of an overhaul that has just seen the rebranding of Allied Dunbar to Zurich. The next stage is to ensure the public are made aware of this: as well as sponsoring the British Lions, it is running a television advertising campaign starring Peter O'Toole.

Four years ago Zurich took over Eagle Star, and Leitch is proud of the way the business has been turned around. In the process 2,000 jobs were shed, but he feels this rationalisation was necessary.

"Eagle Star was a company that had just lost £1.2bn in mortgage indemnity over a five-year period," he says. "Its confidence had gone, the culture was wrong, the strategy was incorrect. It was going for volume not value, there were too many people, the cost base had exploded and it had gone through umpteen chairmen."

Leitch forecasts that the life and pensions market in the UK could grow to between three and five times its present size, as people live longer and cannot rely on the government to provide for them. The possibility of expansion to cope with this anticipated increased demand hasn't been ruled out. Having bought Abbey Life last year, Zurich is continually on the look-out for potential targets.

"It is a competitive market but I am confident that through the quality of leadership we've got, we'll take increased market share," says Leitch. "We don't have to make an acquisition but our management is strong enough to absorb something if it did come along."

And with that he's back on the road for his next presentation. Leitch is personable and immensely knowledgeable about his industry. If anyone is going to be able to convince staff that the company can weather the current crisis, he's the man.

Fact File: Sandy Leitch

1947 Born Dunfermline, Fife.

1965 Forsakes a place at university for a career in computer systems design.

1971 Joins Hambro Life as a systems designer.

1982 Joins main board of the group, now renamed Allied Dunbar.

1983 Becomes managing director of Allied Dunbar.

1993 Becomes chief executive of Allied Dunbar.

1997 Appointed chairman of the Association of British Insurers' Life Insurance Council.

1997­98 Serves as board director of BAT Industries.

1998 Becomes chief executive of Zurich Financial Services in the UK.

2000 Becomes chairman of the Government's New Deal Task Force.

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