Interview: Craig Thornton: Enjoying the challenge

It has been just over a year since Aviva commercial director Craig Thornton was named as general insurance director for Lloyds Banking Group.

The appointment represented Thornton’s first foray into a general insurance-specific position after a career forged in the fires of composite insurers, reinsurers and in actuarial positions. It came just weeks before The Co-operative Group pulled out of a deal to acquire 632 of the bank’s branches, followed by the scale of the crisis at the mutual rapidly emerging.

In spite of such challenges, Thornton meets Post in relaxed form, excited about the opportunities that lie ahead as the decision-maker in one of the UK’s largest personal lines insurers. In fact, Thornton says he exited Aviva – where he spent three years in a variety of roles covering life and GI – in the search of just such an opportunity. He wasn’t specifically that looking for a general insurance role, more that he wanted to move back into business leadership, rather than working in a technical area, he says.

“My last role at Aviva was chief financial officer for the UK life business, which is a large unit, but that’s a technical role within it. I was very keen to move back into a leadership role with responsibility for the whole business, and that was a big driver in choosing to make the move,” Thornton adds.

So, does he have a career strategy in place? “I don’t really have a grand plan, but I enjoy challenges, being stretched intellectually and stretched from a delivery capacity. I really enjoy taking on things that I will enjoy learning from – but, most importantly, things I can make a difference to.”

Thornton’s move marked the end of just over three years at Aviva, where he served as UK life CFO, commercial director and chief risk officer, overseeing both the general insurance and life operations of the Norwich-based firm.

“You could say I had half my time on each, but this is my first only GI job, and I’m thoroughly enjoying it,” he says.

Before joining Aviva at the start of 2010, Thornton spent 11 years at Swiss Re, initially as a financial services actuary. He rose to become chief executive of Swiss Re life and health for the UK and Ireland in 2005.

Thornton describes his time at the reinsurance giant fondly, saying: “Swiss Re was a fantastic experience for me. They gave me huge variety in the opportunities I had while I was there.

“It was a hugely formative time of my career, and I thoroughly enjoyed my time there. It was fascinating to be in the company through some of the things the whole sector encountered through the early parts of the 2000s – and obviously the later parts, in terms of the financial crisis.”

Relocation to the Gherkin
Based in London, Thornton’s time at Swiss Re included a high-profile relocation, as the reinsurance giant moved from the old M&G building in Moorfields to its now iconic home, 30 St Mary Axe – better known as the Gherkin.

“We moved in in 2003, and it was fantastic. It was an iconic building and remains iconic,” he recalls. “Swiss Re was quite brave in going through with a design like that, and the City does look different nowadays as a result."

Thornton says Swiss Re’s relocation had another outcome too. “It was interesting how many times following moving into the Gherkin our clients were happy to come and visit us, rather than the other way round. It certainly had a draw for them as well.”

A Fellow of the Institute of Actuaries, Thornton started his career straight from university, when he entered National Provident Institution.

In fact, he may be one of the few senior staff Post has interviewed who claims to have genuinely entered the insurance industry on purpose. In an early precedent of the Discover Risk campaign championed by the Chartered Insurance Institute, Thornton recalls being impressed by visitors to his school trying to lure impressionable young minds into careers as actuaries – though he admits also considering a career in medicine.

“When I was at school I toyed with the idea of doing a medical degree, but opted for mathematics, [mostly] on the grounds that it was a three-year degree and I wasn’t clear what I wanted to do,” he says.

“When I was in my last year at school, and had chosen my university degree, I had some people from what was then Victory – a reinsurance company that became part of NPI – come to our school to talk about actuarial careers.

“I went off to university and when I got to the end of the first year, I was looking for holiday work. I rang up the people who came to the school, and they took me on for the holiday. So I got some experience in my first two years of university, and was able to apply for work after that,” he explains.

As a result, Thornton’s is a CV that he admits leans towards life insurance – but he says he was not intimidated by his first role on the other side of the fence. “In some ways, what you don’t have in terms of experience in a particular sector gets made up for by what you bring to it that is new and different,” he says.

(Click here to enlarge the CV)

“There are people who run GI businesses elsewhere who have equally different experiences from other sectors. It’s more about getting the right people around you, setting a good vision, inspiring them and taking the business forward.”

Forward, in this case, will see LBG refocus its insurance offerings, with home, motor and SME covers at the heart of plans for change. Firstly, Thornton says Lloyds is planning to shift its model for home insurance away from what he calls its current ‘two-tier’ offering.

“Effectively, we underwrite all our customers through some channels and we operate a panel through other channels. We intend at some point to move to a model where we underwrite all our own home customers, which is an important step in taking our business forward.

“We have good evidence that we are excellent at manufacturing, and like to help our customers in taking the policy out right through to claims – we think that’s a natural extension of our business,” Thornton says.

The process has yet to formally begin, but he adds the firm’s panel insurers, while disappointed by the move, have been supportive. He says: “They can see a lot of logic in it. They’ve been very accommodating in terms of working with us towards what we want to do, and to my knowledge we’ve had no serious adverse reaction to it at all.”

Targeting motor growth
At the same time, Thornton is targeting the bank’s motor insurance business for growth – but stresses the firm has no interest in becoming a traditional motor underwriter. “We have millions of customers and essentially they have motor insurance needs in the same way they have other needs. We’re just keen to offer them something that gives them a good deal,” he explains.

Meanwhile, LBG announced a five-year SME partnership with Gallagher Heath in February this year, with the broking business providing advice to customers and finding capacity from a panel of insurers. “We’re literally now embedding that into all the offers to our customers. Those that have experienced it have given it very good feedback,” Thornton says.

With such a slate of growth planned for 2014, it is perhaps unsurprising that he feels confident in shrugging off the loss of the branches slated for the Co-op, later spun off as the return of TSB.

Thornton believes growth opportunities may lie elsewhere – he echoes recent comments from Metro Bank founder Anthony Thompson, who recently unveiled plans for the UK’s first “all-digital” bank. Building branches, Thompson said, would be equivalent to BT installing more phone boxes, and it’s a sentiment Thornton is inclined to agree with.

“The opportunity for us under the Lloyds, Bank of Scotland and Halifax brands are enormous – not just in terms of customers who choose to do business with us by coming to our branches – but also increasingly in a digital manner, either directly through our website or other forms of distribution,” he says.

“Going forward I see an increasing move towards people who are more comfortable using remote forms of distribution, either through their mobile phone or tablet or desktop, and we need to be able to face our customers and [provide services] however they want [them] to be offered.

“The more we get customer focused and get that right, the more chance we’ve got of being a winning company going forward,” Thornton says.

Taking advantage
At the same time, Thornton says he is keen to take advantage of the broader banking group’s clout to push more services out to customers, noting that Lloyds as a bank has more frequent contact with its customers than many insurers.

“That offers us a great opportunity to face our customers in different ways, and use the skills we have right across the group to build a relationship with our customers as a group. There is no obvious reason to contact your insurer like there is with a bank, to log into your internet [account] weekly or daily. Our opportunities are very different.”

But Thornton concedes it cannot all be growth and positivity. He says the general insurance business has been subject to cuts. Thornton declines to specify exactly how many jobs will be lost, beyond specifying “double figures”, as LBG seeks to maximise its bang-buck ratio, in part through bringing in more technology.

"We’ve been taking cost out and investing in some of the technology that enables us potentially to do the same degree of activity with less. The timing of it is quite nice in that it coincides with wanting to do more of our own stuff, and so I don’t think we’ll need to either radically increase or decrease the size of our organisation to cope,” he says.

“There will be some decreases – and there have been some decreases – but not massively significant in terms of the size of numbers that that we’re talking about.”

Meanwhile, LBG is also gearing up for “a day to make a difference” – its annual effort that sees staff deployed to good causes all over the country. Perhaps appropriately, Thornton says he is planning for general insurance staff to visit areas wracked by floods over the winter to help with recovery exercises.

“Some of our customers will be back to normal already. If you think back to
pre-Christmas, there were some tidal affected areas on the East coast and there was some localised flooding in places such as Tunbridge, near where I live,” he says.

“In those areas the water has come and gone a bit more quickly than it has in some of the more harshly affected areas. Those customers are back in their houses and back to normal, but for others it will take some time.”

Thornton admits the winter’s weather was a real test for both the insurance industry and its customers. He adds it is easy for the sector to focus on the big picture, but describes this as something to be avoided.

“People often talk about how many thousands of people have been affected by an event, but the important thing to remember when you are in the industry is not how many thousands have been affected and how it all adds up. It is for us to step up and do what we promised at the point that customers took their business out with us – that is really the moment of truth.”

This article was published in the 8 May edition of Post magazine.