Aviva CEO Adds Another £130 million of Brand Value to UK’s Top Insurer
Brand Finance, the leading brand valuation and strategy consultancy, has released its annual league table of the UK’s most valuable insurance brands in partnership with POST. The 2014 results point to the continuing success of Mark Wilson’s tenure at the helm ofAviva. He appears to be living up to his billing as the ‘new broom’ needed to stabilise the company and encourage cooperation between divisions. Since arriving last year he has made a series of appointments with the intention of breaking up what he describes as ‘fiefdoms’ within the business. Chris Wei, new head of Aviva’s global life business, worked with Wilson at AIA and follows Tom Stoddard, Nick Amin and others from Wilson’s time there. Brand value rose £119m from 2012-13 and is up a further £130m this year, suggesting that Wilson is on the right track. With a total brand value of £1.29 bn, Aviva remains the UK’s only billion pound insurance brand.
Second on Brand Finance’s list is AIG, which has also had a year to celebrate. After its disastrous entanglement in the 2008 financial crisis and $182 million of government bailouts, the AIG brand became so toxic that at one point the name and logo are alleged to have been removed from ID badges for the safety of employees. Products have since been sold under the Chartis brand. However after recent research showed higher response rates to the AIG name, it has been revived. The renewed faith of customers and management has seen its brand value rocket. AIG has jumped from 12th last year to 2nd following an increase in brand value from £267m to £898m. The clear underlying value in the brand despite the reputational damage of the last few years demonstrates the importance of building a strong brand for the bad times as well as the good. AIG’s sensible decision to monitor its brand has allowed it to maximise business performance.
Stephanie Denton, editor at Post, said: “AIG’s success in the insurance brand league table, moving from 12th to second, is mirrored in Post’s Top 100 UK Insurers rankings, where the business climbed five spots to claim the number one position in 2013. While it is sometimes difficult to map the direct correlation between the value consumers – whether brokers, businesses or members of the public – place on brands and their likelihood to buy from them, it would appear obvious that one exists, given AIG’s remarkable turnaround from a name that was persona non grata in the UK, to the country’s largest insurer.”
The broader picture for UK insurance brands is not so positive however. Allianz is the only other major brand to have improved its position this year; it has grown 10% to £438m and has entered the top 5. Other major players such as RSA, AXA and BUPA have all seen brand values decline. In common with many countries, the UK’s risk profile has been affected by growing geopolitical instability, hitting forecast rates of return and consequently brand value. In many cases insurers have been hit more directly; the battle over Tripoli airport in July saw damage to planes valued at between $200m and $400m. The current excess of capital is not helping matters; shrinking margins and adding to an uncertain outlook for the industry. The relief of a Scottish ‘No’ vote is some small consolation however; removing, or at least delaying, the chance of further disruption for the time being.
US Brands appear to be strengthening their positions however. Julian Steedman, Managing Director of Brand Experience (a partner of Brand Finance) comments, “It is interesting to watch the rise of US insurers and particularly those focused primarily on writing commercial business, clearly demonstrating their respective brand strength against those UK retail carriers who enjoy significantly larger marketing spends”.
While some brands have been at the mercy of broader factors, others have sown the seeds of their own problems. Tesco Underwriting and Co-operative Insurance are 19th and 20th respectively in Brand Finance’s list. Both have seen their brand value drop over 30% this year. The Tesco business as a whole has been underperforming ever since the departure of Terry Leahy. Many point to overextension as a primary cause for the company’s malaise and consumers have lost faith in Tesco’s apparent ability to achieve success in any sector. Peripheral services such as insurance are most emblematic of its loss of focus and while the broader problems of the business persist, the value of the brand in insurance may struggle to recover. This week’s announcement of a £250 million overstatement of profits only adds to a sense in consumers’ minds that the company is losing control, particularly when it comes to finance.
Co-op’s reputational issues have been even better publicised, though it is further along the road to recovery. The central concern has been the group’s admission of "fundamental failings in management and governance at the group over many years" leading to £2.5bn of losses. Brand value losses of £41m this year compound the £13m drop between 2012 and 2013. The total now stands at £92m. The separation of the insurance business from the troubled Co-op Bank will go some way to improving its fortunes however, as will its repositioning within the Co-operative Group. In fact in Brand Finance’s view, though the Co-operative brand is damaged, it has significant underlying value. With new chief executive Richard Pennycook in place and an overhaul of group governance agreed, it may be poised to turn a corner.
Whether external factors are conspiring against them or things have done wrong internally, building a strong brand can help companies to weather the bad times. Trust is more important in the insurance business than in almost any other sector. That trust erodes more slowly, with consumers to give companies the benefit of the doubt when you have a strong brand to stand behind.