Profile: Rob Sewell, CFO of Pension Corporation

It’s a grey Autumn day on Cornhill and the sky is threatening rain.
Well-heeled pedestrians walk at a brisk pace past the Bank of England’s
immutable neo-classical façade, umbrellas unfurled by their side.

But of course it’s been raining for some time in London’s Square Mile. A
global financial crisis has left few industries, untouched. This afternoon’s
headlines scream: “Bailed-out US firms to be ordered to slash bonuses.”

Eight floors above street level Rob Sewell, chief financial officer of
Pension Corporation, surveys the landscape. “Sometimes it’s hard to think back
about what was happening in the last quarter of 2008; Lehmans went down, AIG
went down, the banking system nearly collapsed, some people thought there were
going to be riots in the streets,” he says.

He recalls sitting at his desk in September 2008. The phone rings. A man from
the Financial Services Authority speaks: “I need a response by the end of today,
what’s your exposure to Lehmans?” the man asks.

In under an hour Sewell has an answer. Thankfully, the exposure is small. He
delivers the good news.

At the end of the day the phone rings again. “I know we asked about your
exposure to Lehmans, could you also tell us do you have any exposure to them via
another scheme?”

“Nope,” said Sewell.

The next morning the phone rings again. “I know we asked those two questions
about Lehmans, can we just check do you have any exposure via reinsurance?” the
man asks.

“Nope” replies Sewell.

Remembering these events, Sewell believes the questions provided a window
into an ever widening global crisis. “What you could see through their questions
was that things they where finding, well, they were all interconnected,” he

Sewell is in the business of buying and selling pensions schemes ­
specifically defined benefit schemes. The schemes are set up by companies which
agree to pay out a fixed sum to an employee when they retire. Companies
interested in offloading these schemes, along with the burdensome liabilities
and obligations, hand them over to firms like Pension Corporation, which invest
the money themselves. These firms use complex equations which calculate life
expectancy along with a range of other factors.

Sewell describes a scene which could have come straight from Bletchley Park;
actuaries hunched at their desks compiling mind-boggling formulas, statistics
and predictions using equations based on life expectancy, income levels,
retirement age, medical conditions. Their aim ­ to calculate the risks of life
and death, sickness and health, better than anyone else.

“When ever you get into crystal ball gazing it gets complex,” he says. “What
we do is we have to look into the future in terms of inflation, interest rates,
how long people are going to live, the chances of people living longer in a
generation, the chances of people living longer today… within the context of
where people live, how much they earn, what their lifestyle is, whether they’re
married or not ­ all these things impact on the risks that we take.”

However, the real risks, according to Sewell, lay in the investment choices.
The firm must support pension holders for the term of their retirement and, in
the meantime, invest their money for what may be short-term positions.

When the financial crisis struck, poor investment decisions stung some of
Sewell’s competitors, while Pension Corporation, according to Sewell, was
insulated because of its heavy investment in liquid assets like cash and gilts.

“We took a view throughout 2007 and 2008 that the markets were bubbling… all
this money being put into the economy by the Bank of England had to be going
somewhere and it was inflating asset prices,” he says.

He has walked a winding path to his present position at London’s Cornhill,
his ascension propelled as much by his own intuition and talent as it was by
factors simply beyond his control.

He qualified in 1991 with the ICAEW, after which he soon won a job in an
insurance company with a finance team of seven. By 1998, after working in a few
positions, he was offered a job in Bristol with NatWest. “I promised the wife in
moving us to Bristol things were going to be stable; NatWest was a nice blue
chip company, and there’s less rain there than where we were living,” he says.

But the new job didn’t bring clear skies or the stability he was searching
for. At NatWest, takeover rumours were rife, and his division was under threat.
“The day I joined I was told the business was looking to outsource a fair bit of
its functionality. In the August [1999] NatWest announced that it was going to
merge with Legal & General, so being in the insurance part of NatWest bank
wasn’t a good place to be.”

The bid failed, and a bitter take over battle ended with Royal Bank of
Scotland taking control of the bank. Events moved quickly from this point.

By Christmas 1999, he had been confirmed as finance director. In April 2000,
after the take over, he became a chief executive.

“I joined in 1998 as effectively number two in the finance function, within a
year and a quarter I was the FD. Within a further four months I was the CEO and
the FD,” he says.

The stable lifestyle he sought was evaporating. “A typical week would be to
fly up to Edinburgh on a Monday, fly back on a Monday evening, go to London on a
Tuesday, Bristol on Wednesday, back up to Edinburgh on Thursday, for an
overnight stay, and come back Friday,” he says. “I was spending three days a
week away. Spending a lot of time on planes.”

These were days when email was slow and a Blackberry was something that grew
on a bush. He remembers time spent in the back of taxis, the seat piled high
with paperwork in need of checking, signing, reviewing.

He’d stop at an office. Drop off one bundle, pick up another, and walk out
again. “It was that sort of thing for months and months and months,” he says.
“It’s one of those unique experiences that you treasure. It’s not something that
anyone would willingly volunteer to do, but when you are doing it and when you
have done it, it is great.”

Sewell’s wandering was not over yet. He went on to become finance director
with Legal & General in March 2001, as the insurer was undertaking a
strategy of acquisitions. Sewell was the point man during the deals, with
“pretty much” full autonomy to negotiate.

He remembers one Thursday afternoon, sitting across the table from suited
representatives of a bank which he was bidding for. He was one of two bidders
During the course of negotiations Sewell was asked for a sweetener, a
contribution to fixed costs or “effectively an upfront fee”.

“We were uncomfortable about this,” he says. “They got to the end of our
presentation and said ‘Lovely presentation, very nice, what fee are you going to
give us… If you can’t decide, we ain’t going with you. We got a number on the
table already’.”

Sewell, after some discussion, arrived at a “light” number and slid it across
the table. “I put it on the table and that was it. We got the deal.”

That night he faced the chief executive ­ a “hard” man who liked to look
after the firm’s money. “If he’d said that was a stupid thing to do, I would
have been finished, because my commercial judgment would have all condensed into
that one moment,” he says.

But the decision was vindicated. The deal went through.

In September 2007, he left the relative security of Legal & General for
pension firm Synesis ­ a start up company in an emerging field. “I threw it all
in for a start up enterprise, private equity backed, it didn’t have any capital
put into it…it was a gamble, it was an enormous gamble,” he says.

Two months after starting the job and the numbers turned ugly. New deals were
hard to find. Investors refused to pump more money unless new business was won.
The small Synesis team struggled to attract clients. It was floundering.

The outlook was grim and Sewell expected to lose his job. “You go home
everyday, you walk into your family, you know that your on a week’s notice.
You’re probably going to be losing your job. You’ve got nothing to go to,” he

It was Pension Corporation which came to the rescue, taking over the
business. Its chief financial officer had resigned and Sewell slipped into the

Today, two years on, and following on from a financial crisis, he believes he
is one of the few that can look back at the past year with an untarnished
balance sheet. “We will look at this year as a year as one which could so easily
have been characterised as one to get through and forget,” he said. “I’m hopeful
we will get through this year and say, ‘that was a really good year for us’.”

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