Aon Benfield’s Grahame Chilton has been unusually quiet since selling up to Aon a year ago. But the man who loves the deals more than the dosh is still not afraid to say ‘I told you so’
It was the sale of the century. The world’s largest reinsurance broker snapped up the third largest, putting it in an unassailable position of size and strength. The figures were eye-watering: even as the global economy teetered on the brink of deep recession, Aon stumped up a whopping £935m ($1.5bn) for Benfield. Rivals rubbed their hands with glee at the thought of staff and clients on the loose, while the market watched in fascination.
And at the centre of it all, Benfield chief executive Grahame Chilton – universally known as Chilly – stood, larger than life, ever ready with a smile and a quip, and pocketing a cool £18m to add to his already considerable personal fortune.
But he’s been uncharacteristically quiet ever since. Chilton stayed with Aon, with the title of vice-chairman – of the group, that is, not just of Aon Benfield – and a roving remit that takes in mergers and acquisitions and marketing across the business, as well as reinsurance. So has selling his soul to a large organisation shut him up? Or has he just been too busy making deals with Manchester United, enjoying his money and watching those famous racing driver sons of his?
In his element
In his first interview since the transaction was completed a little over a year ago, Chilton is relaxed and smiling. He ushers Global Reinsurance into his spacious office in Benfield’s building at Bishopsgate, complete with leather sofas, an Aon-branded phone, business headlines on the muted television, and corporate literature ready to hand.
Only the magnum of Pol Roget idly sitting on a corner of the desk hints that it may not all be hard work, though perhaps the free-wheeling, heavy-living days of running an independent brokerage are behind him. But he seems cheery enough. “The combination of Aon and Benfield is extraordinarily powerful,” he insists. “People questioned whether we would be able to hold the revenue lines together, but it’s beaten all our expectations.”
Chilton admits he’s been lower profile since the deal, but says he’s still free to speak his mind. “I was more fettered as chief executive of Benfield. It was a listed company. Aon is number one in everything it does, and that puts you in a powerful position.”
“I’ve always believed you just say what you think,” he says, leaning back. “People don’t have to agree with me. If I was right and they were wrong, I’d send them an ‘I told you so’ T-shirt. And by all means, they could do the same to me.”
As the market predicted, there have been a number of high-profile departures following the merger, but Chilton says the business has retained more than 95% of its chosen leaders, and that client retention has been in the high 90s.
Now, with acquisition and integration completed, Aon has launched a new global broking strategy, based around ‘hubs’ that offer clients risk placement across the world, rather than just in local markets. It has also recently launched a global risk insight platform, or GRIP – a sophisticated new technology package for clients. Chilton is enthusiastic about both.
Timing is everything
But let’s go back a bit. A couple of years ago, he was at the helm of the world’s third-largest reinsurance broker, which was rapidly approaching the second spot, he had a hugely successful team, and a well-liked brand. It was all to play for. Why sell up?
“Business is all about timing,” he says. “I ran Benfield for 13 years and I received at least an offer a year. But the time had to be right. I believe that the independent model of reinsurance broking is no longer viable.”
That’s a strong statement, but he explains that with the technology and the actuarial and other support the clients need today, it can’t be all about individuals anymore. “It’s about teams of high-quality people. Most business is institutionalised to the company.”
So, he had decided to sell and he was in the enviable position of having at least two enthusiastic bidders: Aon and Marsh. Whichever won would become an untouchable market leader. Did he have them over a barrel?
He laughs. “I work for Aon now, so that’s a difficult question to answer,” he smiles and pauses. “As chief executive, you have to do what is in the best interests of your shareholders, and yes, having the demand of at least two buyers would allow me to maximise the value.”
He goes on to explain how currency fluctuations between the time when the deal was agreed and the money was paid worked in Aon’s interest, without decreasing value for Benfield shareholders. “Everyone walked away happy,” he says. “That’s the model of a great transaction.”
Well, not quite everyone. Benfield and Aon brokers had been doing battle in the field for some 20 years and it was an arduous task to get these tough guys to drop their rivalries. Other brokers eagerly touted for scalps, and many teams left. Chilton doesn’t seem too bothered. “Some people left for smaller companies and I think they’re finding that it’s not as easy as they thought it would be,” he says, the hint of a smile in his eyes.
Chilton was himself one of the major beneficiaries of the deal, which valued his 10% stake in Benfield at £77m, but he insists money was not his motivation. “I’ve been fortunate over the years,” he says – an understatement for a man who has regularly featured on the Sunday Times Rich List. “I’ve been a successful trader from a young age, so I’ve been financially secure for some time.”
Get up and go
Still, with that kind of money in your pocket, why bother getting up early every morning? Wasn’t he tempted to take the money and run? Or is he tied in?
“To be brutally honest, when the transaction occurred, I had three options,” he says. “One was to retire and go offshore – I didn’t want to do that – and another was to wait for a period of time and compete – and I have always believed we built a fantastic business in Benfield; I wanted to see it succeed and I would never compete. Therefore, I took the third option.”
But how does he remain motivated when money simply isn’t a factor? “I’ve got a fairly active mind and I like to do deals. I built up over 30 years of experience in this industry and I still want to bring that to bear,” he says.
“I have a lot of personal interests outside the business. I have two sons with full-time racing careers; I’m an active part of it, I own race teams. And I’ve got my personal hedge fund, which I run. But that would not be enough to fill my day.”
He doesn’t say it, because he likes to come across as just another guy, a run-of-the-mill trader, but you get the sense he’s one of those types who just has to work.
And what’s he doing, exactly? Well, he’s on the executive group, the body that runs Aon globally, and has a role in M&A and marketing (yes, he was involved in the Man U sponsorship deal). He hasn’t got responsibility for any profit and loss accounts, and Andrew Appel runs Aon Benfield, but Chilton sits on the executive board.
It’s unsaid again, but you can imagine him stepping in to smooth ruffled feathers where needed, to have the odd quiet conversation with staff or clients. He enjoys it, he says, and he’s full of praise for group chief executive Greg Case.
So what’s the next step? “Ambition is not in my vocabulary,” he declares, which stretches the limits of credulity, given a glance at his CV. “Too much ambition is a dangerous thing.”
Chilton keeps a close eye one the market, and reckons excess capital is the biggest challenge this year. He also complains, as any good broker would, that primary insurers don’t buy enough reinsurance. “Reinsurance is some of the cheapest capital in the world today. If I was chief executive of an insurance company, I would be taking as much help and capacity from the reinsurance industry as I could,” he says. “People should start to think like that.”
There are still plenty of opportunities out there, however, with new risks springing up all the time, construction continuing apace in Florida despite the hazards, and insurable development in the emerging and developing markets. Aon, and Aon Benfield, will be there, with Chilton firmly on board. The independent reinsurance broker may be dead, but Chilly is alive and kicking. GR