Peter Wood steers Esure towards winning flotation

By Alex Brummer for the Daily Mail
Updated: 06:06 EDT, 7 April 2011

Making insurance exciting is a big ask. Yet Peter Wood, business creator extraordinaire, has done precisely that, founding no less than seven insurers in three countries down the decades.

Driving seat: Esure boss is much happier now he is back in control of the insurer

Now at the age of 64, Wood, who lives part of the year in Palm Beach in Florida, sports a light tan and has a relaxed, almost laconic manner.

But, behind the veneer, fierce entrepreneurship and individuality burns as brightly as ever.

Having seen his greatest creation Direct Line damaged as a result of its ownership by the Royal Bank of Scotland, Wood was determined that his follow-up act for HBOS, the direct seller Esure, would not suffer the same fate.

He opened negotiations to buy it back from what became Lloyds in October 2008, at the height of the financial crisis, eventually gaining full control for £200m early last year.

With the Esure/Sheila's Wheels brand, made famous by the Michael Winner 'Calm down, dear' commercials safely back under his command, Wood feels much happier.

'It's nice to be totally free, without having to fit with bank reporting deadlines and internal audit and all that.'

Having wrestled back control of the business with partners from the Tosca Penta private equity fund, he set about reshaping Esure in his own image.

He at first 'agonised' about leaving his nice life in Palm Beach for the less glamorous surrounds of Reigate in Surrey - where Esure is based.

But having made the decision Wood moved fast to rebuild the ground breaking insurer's base.

'We promoted Sheila's (car insurance for women) more and closed down India. India's fine for back office work, but customer facing doesn't work,' Wood asserts. 'I am not very keen on shipping jobs out of the UK. If you can get jobs done, and done well at the same cost, you do them in Britain,' Wood says.

Despite his transatlantic lifestyle, Wood moves seamlessly between Reigate, Boston (where he worked with Plymouth Rock insurance) and Palm Beach. He remains the ultimate patriot, paying all his taxes to Her Majesty's government. His deep attachment to all things British is symbolised by his dominant 10.6% share stake in the emblematic electric train and toymaker Hornby.

'I have paid all my tax. I've been one of the highest taxpayers for years. I'm not a Philip Green with a wife in Monaco,' Woods says.

Nevertheless, he feels genuine anger over the 50p tax rate introduced by Labour before it left office and still in place under the Coalition.

'It's a total mistake. Margaret Thatcher proved that categorically. You charge more tax, you earn less revenue. It is totally stupid. I think capital gains tax at 28% is far too high too,' he says.

The capital gains tax could become highly relevant again for Wood over the next two to three years.

As Esure consolidates its position as one of Britain's top five insurers and the group's 50%-owned website Go Compare begins to produce big profits - £30m last year alone - he is quietly preparing to take the group public having had enough of working in the shadow of the big banks.

He estimates that by the time he comes to market the business could be worth upward of £2bn - making it one of the bigger financial sector floats of recent times. Wood can be reasonably assured of a good reception. 'I have always been very conservative on reserves.'

In an industry not renowned for innovation he has proved something of a revolutionary. He gained his training in the back office of insurance broker Alexander Howden looking after IT and Human Resources 'all of the agony, none of the glory,' he notes ruefully. But it was his grip on IT, long before it became the standard in the financial sector, which set him apart.

He persuaded the old Royal Bank of Scotland (long before the heady Sir Fred Goodwin days) to back his idea of selling directly to the consumer, utilising the phone system and modern technology. His invention, Direct Line, had the first call centre in the UK. Call centres may be 'horrible' he says but 'it's a heck of a lot better than driving down the High Street, trying to park and seeing a broker'.

He adds: 'It became the most efficient insurance company in Britain with a cost ratio of just 9.9%.'

Wood even took control of the marketing, discovering his own creative couple (who had pioneered Cadbury Smash) and letting them loose on Direct Line, creating the enduring image of the dancing red phone. They are now more than fully engaged in the marketing of Sheila's, Esure and Go Compare. 'We have our own Mad Men inside the building,' he says.

Direct Line's success made Wood the highest paid company director of the day when he served on the RBS board. He recalls that in the 1990s RBS would 'obsess' about its neighbour the Bank of Scotland and Wood told them to look at the world stage.

'Maybe I shouldn't have said that,' he joshes. 'I got Direct Line from zero in 1985 to the world's largest private motor insurer' and it was making £750m profit a year until three years ago. Fred (Goodwin) wasn't stupid. It's just strange. I used to be proud that I was a director of the Royal Bank,' he says. 'I would like to get it off my CV now. Regulators did not do a great job, but it is a shame for the country.'

Running a UK insurer in the present decade is not without its challenges either. In particular Wood is apoplectic about the personal injury scams. He argues that as a result of nowin, no-fee lawyers we seem to have the weakest necks in the world. 'Whiplash doesn't exist in any other country. You can't prove you have got it, and you can't prove you haven't got it,' he says.

This phenomena has crimped Esure's progress but it still managed to make £20m of profits in the second half of 2010 and that is before Esure adds back its 50% economic interest in Go Compare, which is proving highly profitable.

Wood says he would like to buyout the minority from his partner Hayley Parsons before taking the group to the public markets. Is there an ethical problem about running a car (and household insurer) and a price comparison site out of the same company?

Wood says: 'We are not the biggest customer,' adding 'there are Chinese Walls. If you go to Go Compare you will see there are 120 insurers, but a lot of these are brokers so you don't know who it is,' Wood assures me.

As for suggestions that he buy RBS's insurance interests, including Direct Line, Wood is adamant that he is not interested.

'I'd end up having to sack thousands of people and end up with loads of spare properties. It is not the sort of thing I want to do in the last few years of my working life.'

Wood, who has had two marriages and now lives with his current partner in Florida, says he is now 'happier than I have ever been'.

'Business is good and best of all I don't have to say those awful five words when you are married: "What do you think dear?"'

FACTBOX

NAME: Peter John Wood AGE: 64 JOB: Chairman and chief executive of Esure

LIVES: Reigate, Palm Beach and Boston

FAMILY: Two wives, one partner, five daughters

HOBBIES: Big shareholding in Hornby, supporting Chelsea FC

ACTIVITIES: Playing tennis and golf

LEAST LIKELY TO SAY: 'Get me Stephen Hester on the red phone'