Friday 20 July 2018

AA chief Nevin ready to answer call

The experienced CEO is out to transform the business after an €11m investment under new owners

Brendan Nevin of AA Ireland. Photo: David Conachy
Brendan Nevin of AA Ireland. Photo: David Conachy
Samantha McCaughren

Samantha McCaughren

As the last of the snow was melting in Dublin city centre last week, the offices of AA Ireland were still buzzing from high volumes of customer calls linked to Storm Emma.

Chief executive Brendan Nevin was on high alert in the days leading up to the 'unprecedented' weather event, and an action plan sprung into place, which included booking staff into nearby hotels to ensure they were on hand to reassure fretful customers.

"We have to stay open 24/7. We are always open. Among the key things we wanted to keep open and running was our rescue section, which is something we are quite good at keeping open." Around 70 vehicles, equipped for the inclement conditions, were out each day. "Just so we weren't leaving people stranded.

"And we wanted to keep home insurance open, because I think people just worry," says Nevin. "We had a lot of inquiry calls from people concerned as to whether or not they have the right cover. People would expect patrols to be out, so we had to out-perform on things like home and travel."

Staff were also busy providing travel and traffic updates. "We try to make sure we are there in those events. The team was brilliant - there were people working crazy hours in very, very adverse conditions.

"But when people are in trouble, they definitely want to speak to somebody."

Over the past 18 months the company, which employs 550 people and has revenues of around €60m, has been busy working on establishing itself as an independent business after the Irish arm was bought by private equity fund Carlyle Cardinal Ireland (CCI) in 2016, with managers also buying in.

"We've been doing a major IT investment, that's partly related to us setting it up as an independent business in Ireland, so that's a big undertaking."

Some €11m has been poured into upgrading the company's technology. This meant that 2017 wasn't a year of growth, says Nevin. "It was more a focus on getting that done as well as possible."

Nevin has held many senior roles in some of Ireland best-known companies, but this is the first time he has run a standalone company.

He says he never really remembers seeing himself doing anything other than working in business.

He grew up in Dun Laoghaire and had a first-hand view of business in action. His father owned a small chain of shoe shops, named Connollys, and from a young age he helped out in the stores.

"It was a real old-fashioned, traditional retailer. I was working in there even when I was in school, tidying up and so on. I probably got interested in business from that," he says.

He studied management science in DIT, with a leaning towards marketing, and followed it up with an MA in Trinity.

His first job was with NCR, an ATM company that is now part of IBM. It was in the dark years of the mid-1980s and Nevin describes it as "a real sales job, very tough".

"A lot of people shut the door on me, so you learn resilience for sure."

Opportunities in Ireland were thin on the ground and Nevin knew he would need to cast his net wider in order to catch the type of roles he was interested in.

He headed to London with a plan to spend five years there and ended up staying much longer. Roles included positions at Bulmers and biscuit company McVitie's.

By chance he was offered a job working on Baileys in the mid-90s, bringing him back to Dublin, although travelling extensively as he pushed the cream liqueur out into Eastern Europe and beyond.

"As you went down to Russia and Central Asia, it was definitely something a bit different. Eastern Europe was easier because they have a strong liqueurs tradition so they got the idea of a sweet drink. In Russia and Central Asia, they didn't really have a liqueur tradition. Therefore if you didn't want to drink vodka you were sort of stuck, so that was one of the things that helped it take off."

He then went on to join Coca-Cola Hellenic Bottling Company, which involved him settling in Greece and learning the language.

It was again a very different market, with industrial relations among the most striking challenges.

"The factory I had taken over had been particularly scarred by industrial relations over the years. A couple of weeks after arriving, myself and my wife were sitting having coffee and there was the inevitable communist demonstration going down the street and I suddenly noticed that was our shop steward at the front leading it."

It give him a clear indication and what lay ahead but in the end, Nevin got on well with the man and the way the factory operated improved as they found common ground.

His eldest son was born in Greece but Nevin began increasingly thinking about moving home when a chance to join Eircom (now Eir) came his way and so he returned to work at the newly listed company. He went on to join Bank of Ireland and played a key role in its UK operations.

When Acromos, the owner of AA came knocking in 2011, Nevin was intrigued. While he had run large units of big companies, it was an opportunity to take the reins of a standalone business.

"What I liked about it that it was traditionally a very customer-centric organisation that was now needing to transform. That was interesting as a business problem.

"When we started off it was more of a traditional roadside business," he says. "And it would still have carried a lot of values of the mutual - it used be owned by the members. That creates a culture that is very customer-centric.

"But surrounding that, the rest of the business was pretty undeveloped.

"The transformation has aimed to preserve those positive elements and add new technology, new people and new skillsets, particularly in the areas of data, analytics and IT, in order to expand the business into new markets such as travel and home insurance."

When he took over, around 70pc of turnover came from the breakdown business and the rest from the area of insurance. Now it is around 45pc relates to breakdown and other motoring services and the rest is financial services, predominantly insurance of one kind or another.

When Nevin joined, he felt the then owners were 'wobbling' - the business was not in great shape, and neither was the economy. He agreed with management when they decided to sell the Irish division.

"The challenge of being the Irish division of a much larger company is you end up being at the end of the queue for any resources that need to be deployed.

"And you often have to implement strategies at a group level that just might not make sense here. The Irish market for most of what we do is very different from the UK," he says.

In recent years the business performance improved and Nevin believes it is now well-positioned for growth.

"What we have done is to increase our motor insurance business quite a lot," he says. "Which is a core business for us."

"We have expanded in adjacent areas such as life and mortgage protection and that is growing quite quickly now; travel insurance is growing very quickly - and home which is where we are beginning to focus now."

At the moment, the company has 50,000 home customers and it has particular ambitions to grow this. "We've been investing pretty heavily in our home technology," he says.

There has been some speculation that AA Ireland might look to an IPO for its eventual exit plan, given it is owned by private equity. Nevin said that there is a lot yet to do before firm plans for an exit are decided upon.

"When the time comes, obviously we'll think about it," he says.

"That's not something you would undertake lightly. The markets would have to be right. A lot of things would have to be right before you'd do it and I don't know if that will be the situation when the time comes because I don't know when that time is."

As a high-profile player in the Ireland's motor industry, Nevin has some strong views about Ireland's high motor insurance premiums. While it might seem to most people that insurers are to blame, Nevin says there are structural issues.

There is some frustration that progress on recommendations issued during Eoghan Murphy's time as Minister of State for Financial Services, seems to have stalled.

"The implementation of it has run into the sand a bit," he says. "What's really happened is that pretty high premiums have become normalised."

Nevin said that structural issues remain such as legal costs, fraud and a lack of information-sharing among insurers. In the coming days, AA Ireland will once again raise the issues in an effort to get some renewed momentum for action.

Turnover for 2016 was just under €60m and it was around the same in 2017. Nevin hopes to now enter into a growth phase and build 'significantly' on the 350,000 customers it currently has as well as revenues.

At present, the company has under 10pc of all the insurance segments it operates in and Nevin says this means there is ample opportunity for growth. He demurs from revealing financial or customer targets.

However, he is clear on his vision. "Our ultimate aim is to have an independent, Irish headquartered insurance and financial services group, because there aren't that many of them."

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