This seems to be the year of changing the guard in the life industry. Roddy Sparks’s resignation as MD of Old Mutual South Africa is the third in the life industry since late last year. As Sparks steps down, Paul Hanratty, head of Old Mutual’s retail business, prepares to take on the role as from July. Having been with Old Mutual since 1984, added to his experience in heading up the retail business, Hanratty makes a sensible choice as successor.
However, he claims he “had no idea” that he would be offered the position. “I am sure they looked at quite a few people. Maybe I was just the most experienced.” And experience is something the new guard is going to have to have in spadefuls. Apart from the obvious challenges that await any leader of a life company right now, Hanratty will be charged with carrying out the strategy envisaged for the group by Bob Head, Old Mutual’s director for Southern Africa and Hanratty’s immediate boss.
Old Mutual owns one of South Africa’s largest banks as well as a large short-term insurer. The problem, according to Hanratty, is that there is no synergy between the businesses, which have entirely separate client bases. “The theory is that there is opportunity for cross-selling between the companies. Old Mutual has a large client base as do both Nedbank and Mutual & Federal, yet there is very little overlap in terms of clients.”
Hanratty says even the distribution network is very different, with Old Mutual having a strong national network, but not being well represented in Gauteng, while Nedbank has a strong client base in Gauteng and the urban areas. “The trick is how we put together sensible offerings that work from a business perspective.”
Hanratty points to Old Mutual’s group schemes business, which is aimed at the middle-income bracket. It currently has more than one million clients and focus on funeral and life cover. Yet there is no cross-selling of banking, short-term insurance or health products.
“We have 18Â 000 advisers out there who are salaried employees. They give good educational advice, including the fact that people need short-term insurance and banking products. As a group, we can fulfil their clients’ needs.”
However, Hanratty says the challenge is to create new products that meet the needs of this segment of the population rather than just selling off-the-shelf products.
While Hanratty has spoken widely about the synergies around Nedbank and Mutual & Federal, he hasn’t referred to Old Mutual Bank. This is a strange creature in the stable and analysts are not sure exactly where it fits into the group. The bank came about as a result of Old Mutual’s unsuccessful attempt at Internet banking in the late Nineties, which it merged with Nedbank’s Permanent Bank.
Hanratty says Old Mutual Bank is a fascinating business that has lessons for the group strategy. With only 46 branches, many of its products are sold through intermediaries. “There is no other bank in South Africa that works this way and it acts as an extra distribution channel, and a very cheap one as it does not require bricks and mortar.”
In many ways Old Mutual Bank has been a mini experiment for what the group now intends on rolling out. Brokers carrying out needs analyses as part of selling life cover, can recommend Old Mutual banking and home loan products. “It has been financially successful, but the question is where to take it in the future.”
Hanratty says the bank has a unique culture that has resulted in it performing exceptionally well in client and staff surveys. “There is an incredible level of client service, where staff know customers by name. At the same time a junior staff member can tell a senior when they think they are out of line. It is a great culture; I just wish we knew how to recreate it for the group.”
There is one question that has a few eyebrows raised and that is around Peter Moyo, ex-deputy MD in charge of corporate business, who left last year to join Alexander Forbes. Considering that Hanratty’s plans have been fermenting for a while, it does raise the question of why Moyo was not talked into staying, especially as transformation is at the head of every corporate agenda. While Hanratty cannot speak for Moyo, he is open about the very real possibility of a non-pale male running Old Mutual in the not too distant future.
He sees the strategy of aligning the businesses as a three-year task and at the end, he will be ready to hand over the reins, hopefully to a black candidate for MD.
“I was upfront with Bob. I am committed to getting the vision delivered, but then I want to explore other avenues in the group.”
Pressed, Hanratty admits that by then he would have been with the group for 25 years and it may be time to pursue personal goals. However, he is clear that, should he leave the group, it would not be to start a new business and, if he decides to stay in the corporate world, he will keep his skills at Old Mutual.
He has a very personal goal of working for the Red Cross. Leaving the group would be for altruistic purposes, to follow this vision.