James Moore: New FD needs to help restore focus at L&G
Wednesday 02 September 2009
Outlook So congratulations on the new job, Dr Nigel Wilson. The finance chief at United Business Media is to take on the same role at a rather bigger beast: Legal & General. How long that beast can thrive in the wild, though, is open to question. It wasn't so long ago that L&G was a tiger – sleek, fit and dynamic. Under Sir David Prosser it made a habit of defying City expectations on the upside. His strategy was simple: focus the company on doing its job better than rivals and ignore the siren calls of investment bankers. It worked, too, and L&G significantly grew its market share at the expense of rivals who either fell by the wayside or concentrated on doing deals rather than serving their customers.
Since Sir David departed, however, the going has proved much tougher, and Legal's shares have been laggards in the life insurance sector. It is beginning to look less like a predator than it does prey. It could even prove to be a sitting duck for Clive Cowdery, who is busily trying to identify new targets having gobbled up Friends Provident. No one would have dared to take a tilt at L&G with Sir David at the helm. The one time a deal was in the offing (a takeover by NatWest), he negotiated such good terms for his shareholders that the whole thing collapsed, and NatWest was swallowed up by the much smaller Royal Bank of Scotland (and what a disaster that has proved to be).
It would be a shame if L&G were to fall like Friends. The company has done the right things as an institutional investor (focusing on corporate governance), and forced rival life insurers to pay attention to their games.
It is to be hoped that Dr Wilson can help the incumbent chief executive, Tim Breedon, to raise his game. Otherwise he might not be in a job for too long.
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