The right call

Managing director of Gissings Advisory Services at the age of 30, Andrew Kilbey\'s rise from an Axa call centre can only be described as meteoric. John Greenwood finds out what makes him tick

Four years after getting the top job at Gissings’ health and risk business Andrew Kilbey has led a management buyout of the firm and masterminded its move to new offices, new systems and a new brand called Enrich.

Next on the agenda for Kilbey and his renamed business is an assault on the provinces, with a new office in the pipeline, possibly in Bristol, and a new flex offering aimed at smaller companies who traditionally cannot afford the up front costs.

Kilbey wants his business to pursue two strands. The first is regional diversification. “We could do acquisition, and that is our investors’ preferred option. But we have decided we want to look equally at setting up ourselves. We’ve got a new IT system which is immediately scalable and we are doing a study to find which is the most advantageous place for us to set up,” he says.

A study of the benefits map of the UK has identified Bristol as a potentially lucrative spot to build a regional presence. “It has got a big employee base and it does not have the EBC presence that London or Manchester has,” says Kilbey.

The second strand of Enrich’s strategy is to move into reward, which it plans to launch towards the end of 2009.

“We call it reward but it is old comp and bens. We don’t think we will ever compete in the very large comp and bens arena because we don’t have a track record. But we think in the medium market there is a lot of money spent. Our question is, if you’re paying for a comp and bens resource and the adviser, why not combine it? We also think that many small firms have a legacy of benefits that felt right 10 years ago but that lack structure today, are too expensive and are poorly designed. We don’t see anyone offering a one-stop shop to the SME market,” says Kilbey.

His achievements so far show that Kilbey is not a man lacking in ambition or confidence, but his goals extend beyond consolidating and expanding Enrich as a major force in the risk, healthcare and flex market.

At a career level, Kilbey fancies a shot at one of the big four consultancies – but only on the basis that he can ruffle a few feathers.

“The next move for me is to move into a larger organisation. Not an insurance company but a larger EBC, a Watsons or a Mercer, to take a senior role there,” says Kilbey.

So what lessons could Kilbey teach these goliaths of the benefits world? “I think they are slow, and their service offering is slow to move on. And there is a lack of flexibility around how they present their services to clients. We are big enough because of our status in the top five to have influence in the same bracket as those firms, but we are much quicker,” says Kilbey.

“If I were to move to one of those organisations it would be on the premise that I was allowed to change that. Plus I think their services are fragmented. Our big competitors have risk, flex and health in different offices, under different management teams and under different incentive structures. If you have got two different bonus schemes in the same organisation, that can create problems.”

To illustrate his point Kilbey shows a slide of four website homepages, and asks what is striking about them. The answer is that they are all the same light blue colour, with similar fonts and layouts. He then points out that they are the homepages of his four big competitors. Enrich’s website is a striking red.

“I show people this and they think it is the same website. This is largely driven by their parents, so is out of their control, but nobody is saying anything different. They are just saying we are a safe pair of hands and you can trust us. We have chosen red on purpose – to create a difference.”

Before the MBO the two businesses, Gissings Advisory Services and the pensions-based Gissings Consultancy Services ran as separate accounting entities under the same owner.

“It soon became clear that the healthcare business and flex needed their own focus so we demerged ran as a separate entity with the same owner, and then completed the management buyout (MBO) last November,” says Kilbey.

Since the £18m MBO, which was backed by Dunedin, the private equity house, business growth has been positive. “We had a record year this year, with revenue up 12 per cent. Profits are up too,” says Kilbey.

The firm still has the eight FTSE100 firms on its books it did a year ago, and has added another FTSE250 company since then, bringing the total up to 18.

“We were surprised because we thought the MBO would make it harder because it took management out of the structure for a year,” he says.

The firm does not offer pensions advice at all, so is this a gap that needs to be filled? If so, that would leave it potentially competing with its former parent. “We could go into pensions but we have no plans to at the moment because we do not know whether there is money in it. This is a private equity-backed business and we would have to make a pretty solid case to go into pensions. If we were to move into pensions we would look at the GPP space, but that is quite competitive, and with no track record and no in-house expertise we would have to buy it in. There are better options for us than pensions.”

Kilbey describes Enrich as “the smallest major EBC in the market place”, and says the firm has built a reputation for driving some of the hardest deals around. “Everyone would say that they get the best deal and it is hard to substantiate who does. So we say to firms ‘you may not get a 97 per cent loss ratio on premiums spent, but our clients do’,” says Kilbey.

Results-driven remuneration is a growing area for Enrich. Already 20 per cent of its clients operate on a performance basis in the group risk and healthcare market.

“We normally set the level above a certain threshold. So we might guarantee we won’t get anything until the client has saved £100,000, and then we get a proportion of what is saved, up to a cap. We tend to earn more money out of it that way than through our fixed fees,” he says.

Kilbey sees the group risk market as characterised by cosy relationships and in need of a shake-up. “When I started I expect the relationships with insurers to be professional. I was surprised to find that everything was transacted in the pub. In fairness, four years ago we had that culture in our company. I brought a guy in with the objective of stopping that happening,” says Kilbey.

“But suppliers are beginning to pull their socks up and it is probably linked to the fact that they are having to reserve more heavily, so they are not getting quite so much return on their money. Now they are showing they can do more with rehab and return to work. This is starting to worry some of the less sophisticated brokerages who have previously relied on the cosy relationships because other people are now talking a better game,” he says. “Going out drinking with people is not a particularly skilled job. But you are starting to see the green shoots of a more consultative approach, which to be fair the EBCs have been doing for a long time.”

Kilbey believes that intermediaries have been pushed around by providers in the past because they have failed to act in unison. “If you look at healthcare, advisers missed a trick when the netting off of commissions took half off revenues. As individual intermediaries we didn’t get a voice. We said we were outraged, but the more intelligent move would have been for Mercer, Aon, Watson Wyatt and us to say we control 25 or 50 per cent of the channel and this cannot happen. I don’t think we are anywhere near as communicative as we should be.”

Kilbey says the industry spends too much time on the insurance and not with the end results. He would like to see an equivalent of GRID that compares the quality of the rehab that takes place in the first 26 weeks. “If the first 26 weeks were dealt with more effectively then premiums would become more affordable and the value of cover would grow,” he says, adding that a job needs doing on the broader appreciation of group risk products.

“I can do without my health insurance because there is the NHS. I can do without a pension today, but if I go off long-term sick tomorrow, £77 a month of state benefit is not going to cut the mustard. If people focused on PHI it would reinvigorate that market place,” he says.

His firm has carried out research that predicts a 16 per cent a year growth in flex over the next three years, but he is yet to see this fully materialise. “Because it involves a payment up front and savings later we have to make sure we have given the HR people enough ammunition to have a convincing conversation with the FD,” says Kilbey.

Doubtless like all other firms, Kilbey reports that Enrich is starting to notice the effects of the economic downturn in terms of commissions. “Commissions are tending to be hit because the population is shrinking. There are less employees. For the past two months we haven’t hit the commission we thought we would because of the falling population. People are not recruiting. It’s not drastic, but it is happening,” he says. The economy may be facing a downturn but Kilbey is looking up.

From call centre to boardroom

Kilbey joined Gissings in 1997, after working in a call centre for Axa.

“This is my second job, at 34 years of age. I joined Gissings as an administrator. In the first week I was going to leave the company because I thought it was far too professional for a wet behind the ears Axa customer services call centre worker. Being a call centre worker was turning me into a bit of a zombie.

“I applied to Gissings just to get interview practice – I didn’t think they would ever employ me. I got promoted in two weeks to an executive, largely because someone left. Four years ago my predecessor left. I was 30 at the time and I didn’t expect to get the job. I had been made a director a month earlier and I would have been happy staying there learning the ropes. In fairness Sean Breslin, the managing director of Gissings who founded the firm 34 years ago, was perhaps not keen but intrigued to see someone do something similar to him, because of the way he did what he did as a young man. I am eternally grateful to him for being prepared to take that risk, on a 30-year-old. Since then I have had double-digit growth in both top and bottom line for the last four years. We didn’t have that before I was in charge.”

He lives with his partner of 17 years and their new baby, Olivia. Kilbey spends any spare time he gets running.

“I’m doing two marathons this year. London in April, and New York in November. My best time is 3.55. I’m not a fast runner. The best marathon is London because it is just funnier. You go to New York and it’s a race, but London is a fun run. This year I ran with my brother who was dressed as Spiderman. I was just wearing normal clothes. I will now have to wear fancy dress in New York.”