Ascot’s No 9
In a rare profile interview, Ascot group CEO Andrew Brooks talks about the value of patience, the need for a cultural and strategic North Star, and lessons from Olympians
Andrew Brooks is a pretty distinctive character in EC3. He has a gentle but focussed style of delivery when he speaks - friendly and with an unmistakeable rasp.
As befits the nature of one of the more reserved underwriters in the market, he is cautious in his answers, only responding when he’s really considered what he wants to say and how to get it across.
It’s not that he avoids answering any of the questions, it’s more that he wants to be absolutely sure that he’s conveying what he wants to get across. Every answer is considered, measured, concise.
Unlike many of his peers, Brooks isn’t one of those executives who craves the limelight. His leadership style is less about being a visible figurehead, and more about driving home his vision for the company’s goals and its culture from the inside.
It’s perhaps no surprise that at school his sporting career tended towards team sports - and his playing positions towards those in the centre.
While joking initially that he played “wherever the last position on the team sheet was” and that he “wasn’t actually very good” at rugby, at school he was a scrum-half, which he self-deprecatingly describes as “between my great big lumps up front who do a lot of damage and whizzy people behind [who are] much quicker than me”.
But as all rugby union fans know, a scrum-half is really the playmaker, the general, making all the key tactical decisions along with the fly-half. They have to be aware, observant, assertive and excellent communicators.
And a scrum-half must be ready to receive the ball however it comes.
This ability to lead from the centre is something that comes across clearly throughout the interview. Brooks talks passionately about wanting to create “one Ascot” so that - regardless of where you work in terms of geography - the direction of travel, the ambition and the culture are all the same.
“We want have the same culture, the same risk management strategies, the same pricing tools, the same ethos that makes us get out of bed in the morning to drive the company forward. And I want to transcend that all way through the company,” he says.
The Covid-19 situation has actually made building and transmitting that culture easier in some ways, Brooks argues, particularly when it comes to the overseas branches.
“It's been far easier to imbed a culture into a developing company from an overseas perspective with lockdown because you have far more reasons to do live video calls than you do telephone calls,” he says.
“Before [remote working], we were all guilty of trying to speak to people overseas by the telephone rather than Zoom and Teams.
“It’s been easier to get our message across about what the management team are trying to do, globally, through lockdown. There’s only so many times you can travel and there are so many people to see.
“I’m not saying travel’s off the agenda, far from it. But this is definitely the way we should be conducting a lot of our interaction internally and externally.”
In 20 years, Ascot has had two major shareholders; AIG and CPPIB. Culturally, the two organisations are markedly different; one a multinational insurance giant headquartered in the US, the other a major institutional investor overseeing the investments of a giant Canadian pension fund.
But Brooks maintains the culture at Ascot has remained the same, regardless of who the major shareholders are.
“I don’t think the culture has changed in any form to be honest,” he says. “It’s the beauty of a Lloyd’s business – if someone is giving you capital to underwrite on their behalf, which was the case with AIG or CPPIB, it's up to you as the management team and the board to say, this is what we're trying to create.”
What Brooks and his team are aiming for is a proactive culture with equal opportunities for everybody – and for everyone to be aware of that.
He openly references three “really, really good CEOs” that he has drawn many of those lessons from; Stephen Catlin, Rupert Atkin, and Martin Reith. “They all had different attributes, but they were all big on culture, and to be big on culture, you've got to really value your staff,” he says.
“If you value your staff - look after them - over time, you'll get better results than running a company by fear or by creating a really toxic environment.”
Brooks is “immensely proud to be CEO of Ascot”, saying he feels “blessed” every day to work with the colleagues and team he has around him.
He also says he is “honoured” to be the chairman of the Lloyd’s Market Association and to serve on the council of the London Market Group.
“I think giving back is really important, not just to the market, but to younger people in the companies – trying to train them and letting them learn from your experiences,” he says.
Ask what he’s most proud of in his career, and Brooks cites seeing Ascot staff achieve and flourish. But it’s not those at the upper echelons he’s thinking about here. The specific example he gave was of two young women in his firm who underwrote their first risks the week before, having initially joined as school leavers.
“Being able to send them an email to say I’m proud of you for seizing that opportunity, that means a lot to me,” he adds.
“It goes back to the culture, of having a vision and buying into it - when everyone gets on that journey the outcome is phenomenal. Little things, which people might think are innocuous, are important. I got a phone call from a broker and client and they said, ‘Wow the receptionists remembered that I like these Breakaway biscuits and they brought them in and said they’re for you’.
“For me, the receptionists are the first people you see in a company and if you turn up and get a bad experience, that’s a bad start. People who value the company and are proud to be here means everything to me.”
Patience is a [challenging] virtue
As with many executives in (re)insurance, it is patience that has proved a tough virtue to exercise.
Brooks says developing patience is the hardest lesson he’s had to learn. He explains that, as with any career, you start off your journey knowing there are prescribed markers you want to hit, which turn your career into a series of stepping stones.
But in insurance, sometimes you have to slow down and take the time to build solid foundations, rather than getting carried away with reaching for the next stepping stone.
“As an individual or a CEO of a business, you've got to take small, bite-sized steps. And that's really important, because unless you have laid really good foundations, you're always going to be going back and saying, ‘Oh, we've made a mistake here’, and ‘we've got this bit wrong’.
“If you rush, you inevitably get it wrong. Being patient is very important. It can be frustrating at times, but I think it's definitely the thing I've learned - when you try and do things too quickly, you inevitably make mistakes, and some of them can be very, very serious.”
His other major learning over the last few decades was not to “chop and change on your strategy, or what you think is the right trajectory for the company”.
As an example, Brooks references a period in 2006 when the firm was writing “well over a $1bn, getting on for about $1.2bn” across 110 staff. As a management team, they recognised that was a huge amount of GDP per capita in the company.
Fast forward five or six years, and across the same product lines, Ascot now wrote just $650mn-$700mn in premium.
“Our conviction was it wasn't right to deploy capital in certain lines of business, the market was definitely finding itself very, very challenged.
“We were looking at new areas to enter - things like casualty - but we generally didn't feel we could make money in them. Even though we recruited teams, we were almost waiting for the day when we could actually deploy those teams in a meaningful manner,” Brooks remembers.
“We put an international casualty team in place. That budget [in] year one was $40mn, and they wrote $10mn. That's always been our strategy - write for an underwriting profit, don't write for top line.
“And I must say during that time, it was challenging as a lot of our peers were growing.”
Despite commentators from various quarters telling Brooks he was being too cautious and that he was missing out on the opportunities evidenced in other carriers’ results, he stayed the course. He hammered home the point that it had been a very benign period for catastrophes – as well as being conscious of the impact of a lower for longer interest rate environment.
“The rating - baseline rates - just did not make sense. So to actually see the market coming out the other side of it, [and to know] we haven't exposed our shareholder capital, indicates the strategy the management team put in place [was the right one]. But it would have been very easy to throw the towel in maybe three or four years ago and go do something else and change the strategy.”
What Brooks is diplomatically referring to is the period around 2014-16 where many syndicates significantly expanded their top line and a whole host of new syndicates were launched in the pursuit of profitable growth.
By 2017 however, combined ratios were soaring and return on equity was falling into mid-single digits at many Lloyd’s carriers.
As a vocal supporter of disciplined underwriting, you’d expect Brooks to be a fan of the remediation exercise being carried out at Lloyd’s, initially under Jon Hancock and latterly with John Neal – and you’d be right.
“I'm a big advocate,” he says, citing the work Tony Chaudhry, head of performance management at Lloyd’s, did alongside Hancock and Neal.
“You have to take a step back and look at the environment we're operating in. One, there's no investment yield. So making a profit in this cash business is extremely hard.”
Today’s market – despite all the noise around there being a hardening environment across most lines of business – isn’t an excuse to forget all the tough lessons learned in the previous decade.
“If you look at all the all the macroeconomics, you would say, well, casualty is still a difficult line of business to make money in,” says Brooks. “[Let’s say it’s] getting a 14% rate rise or a 20% rate rise - okay, well then you have to ask, how much compound rate reduction have you given off since 2012? And also, how much of that rate rise now is a re-benchmarking of the portfolio from a macroeconomic standpoint?
“In other words, if you're really getting 100% rate rise, of the first 50% is that just a re-benchmarking of all the social environmental conditions we're operating in? If so, that loss pick doesn't change for the first 50%. It's not all about the rate rise, it's about re-benchmarking, and then getting that rate on top.”
As ever, Brooks practices what he preaches. A brief look at Ascot's rate renewal rises for 2020 shows the whole portfolio is up around 10%, but if you stripped out the new business - much of it from other businesses in Lloyd’s - the average rate rise across that business is 40%.
“Now, that gives you an idea of a quantum of disconnect between a well-rated business that will make you a small profit, and business that we just do not feel has got any chance, in a normal world, of making any money at all,” Brooks explains.
“Some of this new business we're putting hefty rises on from a technical standpoint is only just technically adequate. It's not giving us a margin that would [make you] say ‘Wow, that's back to 2002, 2003, 2004 rates’ - it’s more like maybe 2012, 2013, 2014.”
The best piece of advice Brooks ever received came from an unusual quarter – a British Olympic champion.
During the course of the 2012 Olympics, Ascot became involved in sponsoring Team GB and it resulted in Brooks meeting a lot of Olympians. The one who “really resonated” with him was rower Matthew Pinsent.
“We were talking about how the Olympic journey is four years, and for a business, you often do a three- or five-year business plan.
“And he explained that when you set yourself a target, it can look quite daunting at first - how am I going to do it? How am I going to get there? What about concerns you have? How can we solve that?”
As Pinsent relayed, following the Sydney Olympics in 2000, no sooner had the team got out of the boat as gold medallists, the coach demanded to know who was in for a rematch in four years’ time.
A slight reconfiguration later, and Pinsent and his team mates were told they had to shave off over four seconds from the time they won the gold with before the next Olympics, a target Pinsent said was petrifying.
The solution was to break it down into bite-sized chunks, and not try to build Rome in a day.
“They didn't just go, ‘Right, we're gonna train hard, we're gonna knock four seconds off all in one go, they just took it bit by bit,” Brooks says. “They practised the start over and over again. And they saved point two of a second there, and cut time off elsewhere - and they did it, they actually won the next Olympics by 0.08 second and were four and a bit seconds quicker.
“I think that’s a really good analogy: if you look at your plans, don't be impatient and think, ‘I've got to do everything today’, just go, ‘Right, my first measure of success is getting this bit done and doing it properly. Then I can repeat the process over and over again, and move on’.”
Brooks is a believer in tackling problems as soon as possible, in recognising that just because someone approaches a task differently to you, that doesn’t make their approach wrong, and also in regularly making lists of all the goals you have achieved, rather than lists of all the tasks you haven’t done.
He also believes that when you're building a business, you're only as good as the as the weakest person in your executive team. “If you've got somebody there who is not good at their job, [who] doesn't buy in to your strategy, or is just not performing, it will drag you down to the lowest common denominator,” says Brooks.
“My father was a surgeon. If you think of an operating theatre, everybody there - the anaesthetist, the surgeon, the nurses giving the equipment - everybody's got to do their job well. And if you don't do it, well, you'll get catastrophic results.
“You've got to have a mix of people, you've got to have different skill sets, and this is why diversity and culture is so important. If there's many pairs of different eyes on the business and the strategy, then you will no doubt make a better-informed decision.
His final piece of advice is that you should want to be questioned and challenged as a CEO and a leader of a business - so don’t surround yourself with sycophants.
“Ultimately, they've got to respect that the final decision rests with you. And you might go ‘Okay, I've taken everything into consideration, but this is what we're gonna do’. They have to respect [that] and buy into the strategy.
“But if you've got weak people around you - your ‘Yes people’ - you'll end up with a bad result.”
We round off our conversation about Brooks’ leadership style. He hopes he’ll be seen as someone who is “fair, consistent, considered - someone who won’t shirk issues, and is approachable”, then as an afterthought, “and that I’m inquisitive…I like to think I’m prepared to, not stretch the boundaries exactly, but to ask how we can make things even better”.
He’s acutely aware that he has to lead by example if he’s going to earn people’s respect.
“If you suddenly just take your foot off the gas, or you don't appear as motivated, that can be very disruptive to those that you're trying to bring on the journey with you,” he says, adding that it is this thought that keeps him motivated on tougher days.
“It's very easy to build something, and then it flatlines. It can be very easy to start doing things for the sake of doing things. [But] you've got to be very structured and say, you were making the right decisions, the board and the shareholders and the team were with you.
“Once you've started creating that vision, or as other people have said, that North Star, that [becomes] your motivation to get out there and say we haven't hit it yet. And then when you have hit it, the question becomes, okay, what are we going to do next?”
“At some point, I dare say, when I hit the North Star, or the next one, my body will probably go, ‘That’s enough now, time to go’. CPPIB and Lloyd’s will probably say, that’s definitely enough. And thirdly, probably my family will say it’s time to stop,” he says.
“But [until then] it’s really important [that] you've got that vision, that strategy. If you can do that with a great bunch of people around you, it makes a huge difference. Because you're all going to have a day where you're feeling a bit off or low, but one of the other people is going to pick you up and say, ‘Right, today, we're going to knock this out of the park’.”
Brooks says that with all of the firm’s recruitment in the US, the company has got “some fantastic people”.
“Sometimes, getting new people in and telling them the vision is invigorating. As long as you still feel that, you’ll be motivated. And the day I'm not motivated? Yeah, I’ll stop.”
If I were a gambler, I’d bet that time is a long way off.