Royal & SunAlliance yesterday appointed a new chief executive and chairman to secure the company's future from its knife–edge financial position, but failed to convince shareholders the new team is up to the job.
The board has been scouring the market for a new chief executive following the departure of Bob Mendelsohn in September. The search ended yesterday with Andy Haste, currently chief executive of Axa Sun Life, the life and pensions business of the Axa group, becoming chief executive of RSA. John Napier, chairman of the water group Kelda, is to take over from Sir Patrick Gillam when he retires as chairman in March.
Prior to joining Axa, Mr Haste, 40, headed up the consumer finance division of GE Capital. He starts his new post in April and will be paid a salary of £600,000 with pension, car and bonuses as part of the package. Mr Napier, 60, will join in January as a non-executive director on a salary of £60,000. This will change when he takes over as chairman in March.
Sir Patrick said he was "enormously pleased" with the appointments. He said Mr Napier, who has no experience of insurance, was adept at turning round companies and would do the same job at RSA. Analysts, however, are concerned that the chairman is an unknown to insurance and that Mr Haste's experience lies in life and pensions business, while RSA is steering a course to become a property and casualty insurer.
The group posted record losses this year, and revealed a capital shortfall of £600m. Shareholder pressure caused Mr Mendelsohn to resign, leaving the chief operating officer, Bob Gunn, to stave off a rights issue. He revealed last month a plan to cut 12,000 jobs and shrink the business by £3.5bn of premiums through disposals. Mr Gunn yesterday said he would retire from the company next year.
The share price has failed to recover as concerns over the group's ability to pull off its disposal package hinged on the credibility of its new management.
"At a time when the company is at such a crucial stage, there will be no one on the board that either knows the industry or knows the company," one analyst said.
Shares in RSA closed down more than 5 per cent at 118p on yesterday's news.
Sir Patrick, who is also retiring from his chairmanship of Standard Chartered next year, said he had left the business with a very good management succession. He expressed regret that he and Mr Mendelsohn had been unable to find a buyer for the group's life businesses before 11 September.
Mr Haste shied away from media attention during his time at Axa Sun Life but will have to face up to shareholder scrutiny at the helm of what is still one of the world's largest insurance groups.
A list of more high-profile candidates in the insurance sector had been punted round the City as possibles for the top job at RSA, including Mark Wood at Prudential, Patrick Snowball at Aviva and Patrick O'Sullivan at Zurich. "Andy Haste will have to be judged on his results," said Roger Hill at UBS Warburg. "Shareholders are not immediately behind him because he doesn't have a profile. The company is in desperate need of proper shareholder support and that would have been helpful to have at the start of a new appointment."
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