Profile - Andrew Haigh: Our mutual friend engaged in building a bigger, better future

The question did spring to mind as I walked through Engage Mutual's sunlit offices to meet Andrew Haigh.

After all, there's been plenty of speculation that Harrogate-based Engage is planning to snap up some of its troubled rivals.

In recent years, it's merged with the UK Civil Service Benefit Society and bought health plan business Premier Health Benefits.

Engage is in rude health, having attracted more than 40,000 customers over the last year, at a time when other friendly societies are struggling to find capital. So can we expect Engage to be on the prowl for prey?

Well, Mr Haigh was quick to stress that he did not "want to be painted as an aggressive player in this space, which we are not".

"This is an incredibly sensitive area and we wouldn't want to be seen to be looking to profit from the difficulties of our peers,'' he said.

He added: "We have said that we are always willing to talk if, for any reason, another organisation is looking for a partner or to explore how we might build a future together.

"It is a serious business and every situation is different, but we would only enter into a merger if it genuinely worked for both organisations and all the members involved.

"The really important thing is that any proposed merger is ultimately good for both sets of members. The two organisations must have shared values, so that a merger is built on a strong foundation that is sensitive to the history and culture of both parties."

He's passionately committed to Harrogate, where Engage employs 150 staff. Intriguingly, Mr Haigh hasn't ruled out the possibility of gaining another base elsewhere.

Mr Haigh said: "It is always possible that through merger or acquisition we may well gain a second geographic centre if that makes sense for the combined business."

If you're not one of Engage's customers, you probably know the mutual from its sponsorship of rugby league's Super League. Over the last decade, Engage, which used to be known as Homeowners Friendly Society, has secured steady organic growth while many of its rivals have floundered.

The most recent figures showed that it did not emerge unscathed from the recession. Capital at the end of June 2009 was 19.52m, down from 20.16m at the same time the year before. Total assets stood at nearly 600m last June, a slight dip on the 612m recorded in June 2008.

But the number of customers has kept on rising.

Mr Haigh said: "We added around 2,500 to 3,000 customers a month in 2008, and we achieved similar organic growth in 2009.

"Obviously, the net growth was significantly influenced in 2008 by the Premier Health Benefits acquisition.

"With no acquisition in 2009, the number will be much smaller, but we still expect to announce positive net growth in customers."

A decade ago, mutuals seemed to be in decline. However, the financial crisis of late 2008 – in which some plcs were brought low by greed and colossal misjudgments – highlighted the virtues of the mutual model.

"All the events of the last couple of years, particularly in financial services with what has happened to banks, has really brought home to people the benefit of the simple transparent organisation that is a mutual, where, effectively the customer is also the shareholder,'' said

Mr Haigh.

Thirty years after it was founded, Engage has developed a raft of products, including tax-exempt savings, life insurance and health cash plans. But can a friendly society compete with products provided by large plcs?

Said Mr Haigh: "We are an efficient organisation and we absolutely compete head to head with some very big names. We have some very competitive products out there."

From relatively modest beginnings, Engage has become a major employer around Harrogate. Could it grow much bigger?

"If you went back 10 years, our customer base was around 180,000 and we are well over 400,000 now. We've grown more than two and a half times,'' said Mr Haigh.

"Staff numbers have only increased by 30 per cent. A lot of that growth has come through the internet. We have huge potential to grow the number of customers and we've got space to grow in terms of staff.

"Going into 2009, our main priority was to keep costs under control. We cut back our expectations in terms of marketing and new business spend."

Engage's full-year results are due out in early April, and Mr Haigh acknowledges that the performance will have been affected by the economic slump.

"We reduced our financial expectations overall, from that you can guess the shape of what might be coming through," he said. "Having said that, we were very pleased with the way the year turned out.

"Most important is a good underlying organic growth, where we are continuing to attract new customers to the organisation. We want to be bigger simply because that enables us to be more efficient. Being more efficient means we can give better value back to the members."

Not all commentators have praised Engage's products. Conal Gregory, the Yorkshire Post's personal finance correspondent, said that "most of Engage's products under-perform and carry high charges".

In a survey Mr Gregory carried out about one of Engage's products – a 10-year tax-exempt savings bond, based on putting in the maximum of 25 a month – Engage Mutual showed growth of only 1.3 per cent per annum, placing it third from the bottom of a league table of comparable products.

Mr Haigh said he "disagreed strongly with Conal's conclusions", adding: "There is a body of evidence that supports our claim to offer simple, good value products that are competitive against a wide range of providers.

"Inevitably, there will always be exceptions or, as we see with ISA season approaching, headline rates or special bonuses to attract headlines – we tend not to get involved in this but look for long-term sustainable performance.

"Equally, as with any risk-based investment, there will be occasions when for any number of reasons, things don't turn

out as might have been hoped for. That is why clear communication about risk is so important."

Perhaps surprisingly, Mr Haigh is an engineering graduate, although his experience of "metal-bashing" was limited to a brief stint in a foundry in his home city of Hull.

After leaving Newcastle University, he decided that his heart lay in marketing. He joined the society in 1998 and was appointed to the board as sales and marketing director in 1999. Three years later, he became chief executive.

He recalled: "I started off with Volvo, British Airways and Barclays Bank. It was direct marketing, which is customer relationship management, which has become increasingly relevant having moved into the mutual sector. I spent five years with National & Provincial Building Society in Bradford.

"The move into the mutual sector was a great fit with my experience in customer relationship management. You are really trying to put the customer at the heart of the business. You are providing the product and answering to the owners, who are the customers, and once you get your head around that, it's a very stimulating environment to

be in.

"Sometimes we might choose to reach out to an audience that might not be the most profitable in the world, but fits with the kind of people we are trying to do business with. There's a challenge in that and also a lot of opportunity."

He believes the family-friendly values of rugby league fit neatly with Engage's image.

"The Super League sponsorship has given us a fantastic platform to promote the Engage Mutual name. We are in (the sponsorship agreement) for 2010 and we announced our commitment to 2011 and beyond that we will have to see.

"It's been a long association – it will be seven years in total that we've been associated with rugby league – so we'll be talking to them about that towards the end of this year or early next year."

Mr Haigh has no illusions about the challenges facing him in 2010. He believes the "recession will have a long tail" which will inevitably influence consumer behaviour. Although he's no predator, Mr Haigh certainly aims to keep a tight rein on strategy and spending.

ANDREW HAIGH

Title: Chief executive Engage Mutual

Date of birth: January 26 1963

Education: Hymers College, Hull, Newcastle University

First job: Working as a trainee engineer in a Hull foundry

Favourite holiday destination: New England

Last book read: The Cruel Sea Nicholas Monsarrat

Car driven: BMW

Favourite film: It's a Wonderful Life

Favourite song: Something by Coldplay or The Killers or Bruce Springsteen

Thing you are most proud of: My two children