They offered him 10 per cent of the company and a seat on the board. When they started to retire five years later, he organised a management buyout, promising his mentors a share of at least pounds 4m in profits for a decade. Since then he has made them far richer.His new holding company, Benfield Group, quickly shed its non-core activities. The remaining reinsurance brokerage expanded organically into aviation and general catastrophe business. A sound strategy, but not enough to explain pre-tax profits that jumped from pounds 20m in 1991 to pounds 32.3m this year, while shareholders’ funds grew from pounds 8.2m to pounds 59.5m. “We move more money more efficiently than most other companies,” he claims, with the same pride you hear when he speaks of Chelsea.The key to Benfield’s success is summed up in a phrase from the company’s business philosophy – “innovation and a refusal to accept every market standard or practice as sacrosanct”. In a world where buyers and sellers are out to shaft each other, Harding broke with the past by developing lasting trust.
His clients keep at least 10 per cent of the risk they want to pass on, giving the reinsurers confidence that it is not a ticking time bomb. In return, the primary insurers know that the remaining 90 per cent will be placed.The second main innovation was to insist on realistic fees and prompt payment. Too many insurance companies make their profits on the interest accrued when they delay payments, either of premiums to reinsurers or of claims to the primary insurers. Some reports say that Benfield can get people to pay in 24 hours, although Harding refused to set a time limit.Surprisingly, Harding has had few imitators. And with one of the highest- paid workforces in the City, not many of his employees are eager to set up on their own The lack of copycats may soon end. In March, he established Benfield Re, a joint venture with Rea Brothers Group, the merchant bank, to offer specialist advice to the insurance industry.His latest venture, launched on Thursday, is the Benfield and Rea Investment Trust, a quoted vehicle, advised by Benfield Re, that will invest primarily in corporate Names. An even more dramatic departure from the firm’s past strategy is its first acquisition.
A possible takeover of Ellinger Heath Western, another small brokerage, is currently in the works. Talks are expected to lead to an agreed price of around pounds 20m within the next month.Harding is cagey about wheth- er his next target will be Chelsea Village, the holding company that owns the Blues. He says he has no plans now, but will not rule out the possibility. Despite sitting on its board until his resignation last week, he owns no shares in the club. He refused to convert his loan stock into equity because of the company’s mysterious share structure. While Bates owns 30 per cent, he speaks for most of the rest through offshore nominee companies. “I’d have had a minority stake in a private company whose shareholders I didn’t know,” said Harding.
