Tower chief relishes repairman role

Jim Minto is extremely personable but clearly doesn't shy away from tough decisions. Marty Melville / Getty Images

When Jim Minto joined Government Life, as Tower Group was then known, his first job was to sort out part of the business that was in "terrible shape".

Some 17 years later, Minto is now chief executive of the Australasian insurance group, but is still a troubleshooter.

Tower has had its fair share of problems, most notably the near catastrophic writedowns and losses recorded by its Australian businesses from 2002 onward. But having successfully spun off its Australian Wealth Management business last year, the cashed-up Tower Australia this week stumped up A$145 million ($158 million) for South African-owned PrefSure, doubling in size to make it a top-five player in the fast growing Australian life insurance market.

Tower Australia is now on a much firmer footing and much of the credit must go to Minto who, in troubleshooting mode, leapt at the chance to get the company moving again when it came off the rails four years ago.

Minto returned to New Zealand last year having been appointed chief executive of the company he joined almost two decades ago. Back in New Zealand, he faces the challenge of repairing Tower's local operations, which have stumbled at the same time as Australia was recovering.

"I've got a bit of a reputation, I suppose, for doing fix-ups," the affable Minto said this week at Tower's Wellington head office.

Minto is originally from Dunedin, where he grew up in a family of 10 children, including two adopted state wards.

He believes his big-hearted parents, who often had other state wards to stay during the summer holidays, instilled "strong values" in their children.

"There was that strong feeling of trying to act in the wider good of other people."

His siblings, including anti-apartheid and education activist John, have mostly followed careers that involve serving the community, including midwife, human rights lawyer and nursing.

 

Originally planning to train as a lawyer in Wellington, Minto was sidetracked into a job in Napier for the Public Trust.

His varied career with Public Trust in many cases involved "looking after people often in times of stress", and was quite rewarding.

After 19 years with the Public Trust, Minto was looking for a career change and his father persuaded him to finish his accountancy qualification.

"I've always had an enjoyment of business. I had reinvented myself a number of times at different levels. When I got an opening to do something else I charged into that gap and, perhaps, I just naturally grew into the roles. I don't think many people who knew me in my 20s would have said I'd be the chief executive of Tower. I more grew into it."

Minto's first job when he joined Government Life, as Tower was called then, was to head up its newly acquired trustee subsidiary.

The rigorous recruitment process he underwent was probably a sign Government Life was keen to make sure it got the right person for the job as Trustees Executors was, according to Minto, in "terrible shape".

Early on, his first "big moment of truth" was the discovery of large sums of essentially non-existent income in the financial accounts.

The reversal out of those substantial sums caused "a shock that reverberated through Government Life".

Minto was summoned to boss Henry Lange's office and told: "Jim, I know you've just started here but you've got six weeks to come back to me with a plan as to why we should keep this business."

Minto returned with a plan to cut staff and costs and discontinue some lines of business, which Lange accepted. Government Life injected $1 million to shore up the balance sheet, "and we made profits from that day on and paid dividends from that day on and the business was sold for five times what they paid for it".

"That was fantastic, I really loved that I was being able to have an impact on changing the trust industry. It was a good business and a lot of fun."

After his success with Trustees Executors, Minto went on to do several other transformations for Government Life, and then Tower, including overseeing the merger of the managed funds business and the trust business and another turnaround job on the health and life business between 1999 and 2000.

In 2002, Minto was leading Tower's New Zealand operations when Australia "blew up".

The company's shares plunged from a peak of $5.33 early in the year to a low of $1.22 the following year after a profit warning and an annual net loss of $74.9 million, which included a $35.8 million writedown in the value of its Australian Bridges Financial Services unit.

"I said yes, I'd like to go to Australia and try and sort it out. The rest is history. It was good fun, although it didn't seem so at the time. I love a challenge."

Although Minto is an extremely personable man, it's clear he is capable of making hard business decisions.

"I don't see myself as a hatchet person. I'm actually a value builder. Nobody likes getting rid of people. You've got to create a positive future, but sometimes it means people have to go to start the process off."

That was certainly the case in Australia.

"I think we were on 13 floors of a building and we ended up with nine and half floors. It was that sort of relative number of staff ended up going. It was a lot."

 

The turnaround also involved asking some simple questions. "Where are our core competencies? Where can we be really successful? Are there market opportunities there? Can we win in those spaces? What will it take to win? And developing plans to leverage that."

Tower Australia is now focusing on the fast growing Australian life insurance market and progress to date looks good.

Last year, its net profit rose by 51 per cent to $35.1 million thanks to strong growth in life insurance sales. The PrefSure purchase is evidence of the company's fresh optimism and has been tentatively welcomed by most analysts, although some remain concerned by the company's previously poor track record over the Tasman.

While the turnaround was progressing in Australia, the wheels were coming off in Tower's home market.

"I've been disappointed to come back to New Zealand after two and a half years and find that our line managers lost their way a bit. The story always was that New Zealand was good and Australia was in trouble.

"People thought New Zealand would just keep ticking on but businesses don't keep ticking on at all. They require active and positive management. Your competitors aren't sitting there doing nothing. They're all lifting their game and getting better and better and if you don't lift your game and continually renew your business and your competitive strategy, you're going to suffer, and that's what happened."

Minto says businesses often stumble into risks they haven't taken into account.

For Tower NZ that was the decision early last year that consolidated eight different Auckland sites into one central facility near the Viaduct, an idea that seemed sensible at the time.

However, the company had underestimated the upheaval the shift caused to the lives of its Auckland workers many, of whom lived on the North Shore. The commute and difficulties for workers with school-age children took their toll.

"We lost a lot of good people. I'm not saying the decision to go to the city was a bad one but we should have had an active recruitment policy.

"If you're going to force people to move their jobs to the city, you'd better have a strategy to replace them and we had no strategy; people just kept on leaving."

"We just thought it would come right and, by early 2005, when we all moved into that building, it was a disaster. So many people had gone, the phone system wasn't working properly, a lot of the key managers had gone and there had been some bad management practices. So suddenly major service problems just erupted like that.

"So this last year has been about repairing that."

Minto says the company has made good progress but there's still some way to go. Given his experience and passion for turning ailing financial services companies around, Minto is arguably Tower's perfect boss for now.

"A colleague said to me, 'If there's a crisis, it's a fight to beat you to the front of the queue to be in there'.

"I actually quite like those situations. I've always liked a challenge, but so many people just cave in and say this looks too hard, I feel totally inadequate. But if you actually sit there and listen and think about it, you can find your way through it. And if you're a leader, you've got to be good in a crisis because everybody looks to you.

"The most rewarding thing you can do in business is leading people, in my view, building teams of people who can be successful."

PROFILE: JIM MINTO

Age: 55

Married to Averill

They have five children between them from previous marriages.

Qualifications: ACA accounting, NZ Certificate in Commerce.

Work history: Three decades in the trust industry, including a 19-year stint with the Public Trust, 12 of those years as managing director of Trustees Executors.

Short term managing Tower Managed Funds.

Now, chief executive of Tower Group.