Alex Forbes’ turnaround plan queried

The shock dismissal of Alexander Forbes’ CEO Andrew Darfoor, has raised questions about the group’s turnaround strategy.

On Monday, the firm announced the board had terminated his services with immediate effect, due to “a loss of confidence and trust”.

The sternly-worded statement – without further commentary – appears to have perplexed analysts, with some preferring not to comment based on conjecture.

“CEOs get fired all the time, but they never get thrown under the bus at the same time,” says Just One Lap’s Simon Brown.

Questions about the future of the group’s turnaround strategy abound. Ambition 2022, defined by the former CEO and implemented in 2017, is a target-driven five-year plan to broaden Alexander Forbes’ corporate-centric business-to-business model to include the public sector, smaller businesses and individuals.

Darfoor told Moneyweb he was mandated to execute the approved transformation and turnaround strategy, ratified by the company “once again” in March 2018.

“At the annual results for the year ended March, the company reported tangible progress against the five-year strategy across a broad number of key metrics, including achievement of expense efficiency targets two years ahead of plan (allowing us to further reduce the cost to income target from 70% to 65%); improvement in revenue growth, profits and margins; the delivery of positive operating leverage and ongoing dividend payout improvement.

“Key growth areas of the strategy also saw strong top-line growth including retirements, health, insurance and investments.”

Rahima Cassim at Ashburton Investments questions the effect a leadership change is likely to have on Ambition 2022.

“What – if anything – Andrew envisioned and was implementing will need to be reassessed and [what] will the cost of these possible changes be on the business?”

She adds that Darfoor took over a broken business and was clear about what needed to be done and how to do it.

He also clearly linked the strategy to the financial targets.

Brown questions whether Darfoor’s dismissal and the group’s search for a new CEO would set its strategy back by up to two years and put it further on the back foot in relation to allied companies like MMI and Liberty, whose new leaders are already effecting change.

Cassim adds that if Alexander Forbes’ board had an issue with Ambition 2022 and Darfoor’s implementation of it, it’s strange that this wasn’t flagged earlier.