This month Royal & Sun Alliance's (RSA) new head of external relations Phil Wilson-Brown and new head of internal communications Justine Guest will sit down with director of corporate comms Richard Emmott to dig one of the world's largest insurance companies out of a huge reputational hole.
The firm dropped out of the FTSE-100 last March for the first time since the creation of the index. Last April, it emerged that Bob Mendelsohn, the former chief executive sacked in September 2002 after announcing record losses, collected a £2.44m payoff.
In addition, RSA announced 12,000 job cuts in November 2002, and the firm is still smarting from a £135m fine imposed by the Financial Services Authority in August 2002 for its failure to compensate the 13,000 customers to whom it had mis-sold pensions.
In February 2003, the High Court in London rejected a claim by RSA and a Lloyd's of London syndicate that they were not liable to compensate potentially thousands of victims of asbestos-related illness. The case had been brought by former asbestos producer Turner & Newall which insisted that RSA had insured it against possible claims from its employees.
Through all this turmoil, some analysts claimed the company did little to improve relations with the City and pursued a policy of excluding those analysts who issued negative notes on the company from analyst meetings.
The same people also criticised what they saw as a policy of inviting journalists to the same meetings as sell-side analysts. RSA robustly denies both charges.
Fresh analyst relations offensive
The appointment of Andrew Haste as chief executive in April last year began a shift in the way RSA communicates with its stakeholders. Just two months later, RSA hired Emmott, who was then director of corporate comms at the similarly troubled firm Jarvis (PRWeek, 27 June 2003).
At around the same time Emmott joined RSA, the company regained its FTSE-100 status, and by September Haste felt confident enough to tap hard-pressed shareholders through a controversial £960m rights issue and announce another 1,000 job losses.
In preparation for the rights issue Emmott made his first significant communications move, dropping Edelman, RSA's retained financial adviser of 12 months, for Finsbury.
Haste's clean pair of hands and Emmott's initial changes went down well with the City, and the rights issue was a success. 'The fact that they were able to get the rights issue away implied a new contract between the Haste team and the market,' says Collins Stewart insurance analyst Tim Young.
Prior to Emmott's arrival, RSA's PR department had consisted of five people handling comms with analysts - under director of financial communications Malcolm Gilbert - plus an eight-strong internal comms team.
Guest's appointment bolsters internal comms as RSA braces staff for an investment in new technology and the inevitable fall-out from the redundancies (PRWeek, 12 December 2003).
The prospect of more lay-offs and the uncertainty surrounding the business have led Emmott to charge Guest with a more hands-on approach to internal comms, which will put the emphasis on engagement with the workforce.
'Some people take the view that it is enough to stick something on the intranet. Call me old-fashioned but face-to-face is a much more powerful and honest way of dealing with employees,' says Emmott. RSA's decision to start rebuilding its PR armoury with internal communications is in line with Emmott's strategy of bedding down a new structure before the insurer begins to even think about going on the offensive. 'The first stage is to seize control of our message, and manage our way out of the news, says Emmott. 'After 18 months, we hope to reach the tipping point where we can aggressively market the business again.'
RSA's eventual riposte will be handled in part by its new external relations chief, former College Hill Associates account director Wilson-Brown.
The company is also believed to be considering a public affairs capacity, an area that Emmott says RSA 'has not really played in before'. In addition to regulatory issues such as the European Union's Investment Services Directive, Emmott says the company wants to be ready for the political issues that remain in relations with pensions customers and the company's life business.
Emmott says that while building up its PA capacity, RSA will also look at appointing an external PA advisor.
Repositioned as a 'stable' company
Wary of the reputation for over-promising and under-delivering that has stuck to RSA in its relations with its various stakeholders, Emmott describes its strategy as focusing on reporting what he hopes will be results that improve each quarter.
Once analysts have got used to the idea of RSA as a stable company, Emmott says external comms will focus on the 'underlying quality of the the business', by taking analysts to see little-known success stories like its insurance subsidiaries in Denmark and Sweden.
And on the home front, RSA does have a good story to tell with its More Than insurance brand providing policies for nearly 700,000 cars.
But the turnaround that started with the appointment of Haste still has much to achieve, as RSA will be judged more by what it does than by what it says.
As one city analyst puts it: 'The change of management is refreshing, but in the end the only thing that matters is whether that management can improve profitability.'
RSA - THE KEY DATES
- August 2002 FSA fines RSA £1.35m for not compensating 13,000 who
were mis-sold pensions.
- September 2002 Bob Mendelsohn sacked from chief executive role.
- November 2002 RSA announces 12,500 job cuts.
- March 2003 RSA ejected from the FTSE-100 for first time.
- April 2003 Mendelsohn gets £2.44m pay out. Andrew Haste takes
over as chief executive.
- June 2003 Richard Emmott joins the company as comms director.
- September 2003 Haste ann ounces £960m rights issue and a further
1,000 job cuts.
- June 2003 Emmott makes raft of hires an unveils plan for PA