ALEX BRUMMER: Hartigan’s lack of shame knows no bounds

Mark Hartigan’s lack of shame knows no bounds. The ousted CEO of mutual insurer LV has waltzed into the sunset with a £485,000 farewell check, bringing his 2022 earnings with the insurer to £767,000.

For companies that are successful in delivering value to shareholders and that represent the interests of colleagues, suppliers and consumers, there can be no arguing with executive compensation.

Hartigan did none of this.

The former army officer, like the Grand Old Duke of York, marched his troops up the hill and attempted to sell the 180-year-old member-owned life business to the private equity firm Bain Capital.

Following a spirited public campaign against the transaction, backed by this paper, Hartigan was forced to march down the hill after wasting £43 million in consultants’ fees.

Had the sale been successful, Hartigan, as an architect, would have been expected to transfer his services to the world of private equity where there are rich, unseen rewards.

Under Hartigan’s leadership, the insurer tried to convince 1.2 million members, many of them elderly, that the deal was necessary to raise capital and expand the business.

This was patently misleading as the life company had replenished its reserves when it sold its motor insurer (which trades under the same esteemed name) to German financial giant Allianz for £1.1bn.

The most disturbing thing about Hartigan’s mission was that it ran counter to members’ interests.

The wasted consultancy fees could have potentially contributed to the next bonus on their insurance policy or pension.

Seeing Hartigan leave the scene with a golden farewell in his hand is the ultimate insult.

In three short years he amassed over £3 million in income and caused members to worry about the future of their savings.

If he had the slightest bit of decency, he would pay back his severance pay so that it could be used to better serve the members.

Falling star

There will be a lot of gnashing of teeth that the City of London’s own ranking system for the world’s most competitive centers elevates New York to the same status as the Square Mile.

Singapore, followed by Frankfurt, rank third and fourth.

What remains indisputable is the importance of finance to the UK. It generated £278 billion for Britain by 2022 – 12 per cent of total output – and employs 2.5 million people.

It will be argued in some circles that the reduced status of the city is due to Brexit.

The reality is that one of the reasons the UK has lost some momentum is outdated listing rules that make London’s markets less attractive to tech start-ups.

Wall Street has scaled up the rankings due to growth in technology investments, deal making and sources of sustainable capital. All this can be solved.

Prime Minister Rishi Sunak this week focused on technology and entertained digital innovators in Downing Street.

A strategy document will be published in the autumn. Britain’s tech innovation capability lags behind only Silicon Valley and China – but the financial transition from start-ups to listed stars is surprisingly poor given Britain’s financial expertise.

Changing market rules can help. But increasing UK R&D spending, rejoining the European Horizon project and equipping UK financial institutions with better venture capital tools, such as guaranteed loans through the British Business Bank, are also essential.

There is no time to lose if the country wants to lift its game.

Spain win

UK inflation’s 10.4 percent rise in February was a shock, fueled by food supply problems.

There is nevertheless confidence in Whitehall that it will drop dramatically – perhaps by as much as 5 percent in the coming months as fuel costs and food price increases fall out of the consumer price index.

This can happen. The most recent data from the eurozone shows that inflation in Spain has remarkably halved from 6 percent in February to 3.1 percent in March. In energy-poor Germany, inflation fell from 9.3 percent to 7.8 percent.

The big problem in the UK is the persistence of core inflation, with the service sector using the cover of the pandemic to boost margins at the expense of consumers.

When Bank of England Governor Andrew Bailey criticizes business for ‘greed’, he is on the right track.