Henry Engelhardt, chief executive of Admiral Group, occupies a particularly lofty place on the Welsh business scene.
His motor insurance company is the biggest plc in Wales by market value – and, perhaps symbolically, his office is on the 22nd floor of the tallest building in Cardiff.
On a bright, breezy spring morning the view from Engelhardt’s room, overlooking Cathays Park and towards Castell Coch, is fantastic but the wind makes a heck of a noise against the windows.
Wind aside, though, the atmosphere is pretty calm at the top of Capital Tower. Engelhardt, dressed casually in an open-necked shirt, has seen his share price hold steady when most Welsh plcs have taken a pounding. The main benefit, he says, is security: “The greatest fear is somebody taking you over. If the share price drifts down, you are vulnerable.”
Not that he would turn down any approach flat. “If somebody did approach us it would depend on what they wanted to do with the company,” he says. “If they wanted to merge all the call centres elsewhere…”, giving a look to suggest that would not go down well.
Admiral has grown turnover and profits consistently since Engelhardt, a native of Chicago, set up in 1993. He puts the insurer’s performance down to a few factors, led by efficiency. “We are not hugely layered – the people making the decisions are close to the decisions they make,” he says.
The company’s target market is city dwellers under the age of 50 who are typically riskier and pay more in premiums. The extra income gives Admiral more to cover its overheads. Engelhardt has played a big part in Admiral’s growth, but he is reluctant to play the swashbuckling pioneer.
“I am a manager. I have never been able to figure out what an entrepreneur is,” he says. “I did not have to risk my home on the business, but I’ve always been an equity holder.”
His own business heroes include South West Airlines, the US low-fares pioneer. A giant poster of Muhammad Ali on the wall – “we share a birthday” – hints at a more combative approach than the easygoing style and casual dress might suggest.
Engelhardt has ambitions, including overseas expansion. So far the company has tended to dip a toe or two into a few markets rather than going in with both feet. Recently Admiral set up an online comparison site, Rastreator, to sit alongside its Spanish operation Balumba. The site will act as the equivalent of Admiral’s pioneering Confused.com arm in the UK.
And now he is looking at his homeland – starting with a direct insurance business in Richmond, Virginia.
The US, he says, “is a funny market, split into 51 pieces (50 states plus DC). I would like to think that within ten years we would be in a bunch of states.”
One of the early ones could be his home patch of Illinois, which he says has a large population and leaves insurers relatively free to set their own prices. “It’s an interesting state,” he says, adding that he has no desire to use Admiral to get back to Chicago.
The US is a promising market because, unlike in the UK, consumers are not yet used to shopping around every year for insurance. That means there is potential for growth, although with just 6.4 per cent of UK cars on its books Admiral has plenty of headroom here, too.
Given that Admiral is Wales’ only FTSE 100 company, you might expect advisors at the Welsh Assembly Government to be beating on Engelhardt’s door, demanding that he share his secrets with the rest of corporate Wales. But, he says with a shrug, he has had no such invitation yet.
Talk inevitably turns to the mess the financial system has got itself in. Now Engelhardt’s mild expression turns to bewilderment. “I am surprised people aren’t questioning more,” he says. “The regulatory system broke dow, and it should be investigated. Whatever the regulators were looking at was clearly not the right thing. Nobody was saying ‘what if….’”
The contrast with Admiral’s cautious approach – sacrificing possible big gains for security – should be clear to anyone. Engelhardt is in it for the long term. His family are here, he loves the culture and talks knowledgeably about the rugby.
So will he stay in Wales? “I don’t think we will be living here for ever – it’s a bit wet,” he grins, “but we are happy here.”
Also in: May/June 2009
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