As coined by Rudyard Kipling, “Gardens are not made by singing ‘oh, how beautiful’ and sitting in the shade”, and for Tom Downey (pictured), CEO of Pen Underwriting, building out a thriving business is a similar undertaking to tending a mighty tree. Understanding the root-and-branch connections of a business’s culture is essential to keeping it healthy, he said, which is why every M&A deal, new hire or strategic shift is a matter of careful consideration for the Pen team.
“There are some acquisitions we’ve turned down for various different reasons,” he said. “And some strategic hires that have wanted to come to us and we’ve said no, because they’re not right for Pen, for our culture and for what we’re trying to create. My team and I have to look after that culture and we have to care for it. We have to look after the ‘tree’ to make sure that a leaf doesn’t get infected which might cause damage to the whole tree. And we’re very precious about that responsibility.”
The analogy goes further than just the culture at the heart of Pen and effectively summarises the structure of the firm which first laid out its ambition to become a £1 billion GWP underwriting and distribution business in July 2020. The spine of the business is the Pen brand and strategy, he said, and the branches that stem from that are its ever-evolving people, brands, products and ideas. He sees his role as that of the gardener, tending and nurturing the tree so that it can grow of its own accord.
“That’s just what we’re trying to do with our business,” he said. “We’re looking to let people innovate, let them create their own new branch, let them create their own new shoots and let them create their own new sets of leaves that then help the rest of the tree to grow. Because that truly symbiotic relationship creates everything worth having.”
The tried-and-tested pillars of Pen’s growth strategy to date are still in play, Downey said, with organic growth remaining central to its approach. Organic growth starts with delivering great customer service to brokers, coverholders and end clients alike, he said, and by looking after existing customers while organically bringing on new prospects.
“We broadly exceeded our organic growth targets in 2022 and we’re broadly in line right now for our organic growth targets in 2023,” he said. “We’re an underwriting business, so we’ve got to look after customers and look after the loss ratio performance. It’s not about growth for growth’s sake, it’s about building a business that’s sustainable.”
Downey’s grassroots approach to supporting Pen’s £1 billion GWP vision received a recent boost with its acquisition of Tay River Holdings injecting £90 million of GWP into the business, with the business now standing at north of £810 million in annualised premium in 2023.
“Our second pillar is our M&A,” he said. “We recently bought [Tay River Holdings] and we’re now looking at a number of other potential acquisitions, both in the UK and slightly more internationally which has been really positive. But we’ll only do the right M&A. We could have exceeded £1 billion GWP last year by buying every acquisition that ever came to us but we don’t work like that. We value the right people with the right culture, desires and ambitions.”
From an e-trading and digitalisation perspective, Downey noted that Pen is continuing to move in that direction and roughly £150 million of its GWP is now digitally traded through its own Pen portals and through other products. The recently acquired marine team is a great example of this area of emphasis in action, he said, as the holding group digitalised its marine business at a time when others in the market were standing still.
They really thought about what customers in the marine industry needed most, he said, quickly realised that they need and want fast access to their policies, no matter where they are in the world. Marine is an inherently real-time business, and it demands real-time access to documentation, which is exactly what the marine team delivered.
“We at Pen are investing in insurer-hosting pricing in our household business which is a major investment for us,” he said. “Where once upon a time it took us so long to change our rates, we’ll be able to change our rates [in a matter of minutes]. We can now change the rating structure, amend the rates and do real-time trading which is great to see. But it’s not just about digitalisation, it’s also about the data and the insight that you get out of that for the benefit of brokers, capacity providers and Pen itself.”
Having the right people has always been core to Pen’s proposition and his own role as the ‘gardener’ tending the business, he said, as cemented by its recent strategic hires and promotions. Downey highlighted the addition of Erik Alsegard as Pen’s IP head and the appointment of Catriona Thomson as chief financial officer, succeeding Sarah Breslin who is moving to the role of speciality division MD.
“It might seem old-fashioned but when we’re looking at people’s careers, we encourage people to have career conversations,” he said. “Because anybody’s career moves and changes at a different pace and at different points. All our careers have different lifecycles when you have to decide what’s right for you then, but that doesn’t have to be what’s right for you later
“… And we look at leadership through the lens of somebody’s whole career. We [recognise] our future leaders, the people who are going to run this business in 15-20 years’ time. They’re the future so how are we enabling them? How do we invest in them, but also invest in them creating their own community of future leaders so they can learn from each other and make the right connections?”
One thing that is for sure when looking at where Pen goes next, beyond even the milestone of its £1 billion GWP ambition, Downey said, is that the business won’t stand still. It will continue to innovate, it will continue to invest in its people and products, and it will always keep an eye out for what can be done differently.
“And I encourage all of the teams to do that,” he said. “If things aren’t working, change them. I can’t be the arbitrator of change; you have to make it happen when and where you can. And that’s where my passion stems from. I do have a real passion for this business but I get that energy from the people in this business. It’s their drive, it’s their desire, it’s their teamwork that’s constantly pushing us forward. It’s that which gives me energy and my job is to try and give some of that back.”
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