L&G鈥檚 chief tells Joey Gardiner why not all of its investments have worked out so far 鈥� and why he remains optimistic that they will
鈥淣o comment,鈥� says Nigel Wilson, with a broad chuckle and a wry grin which indicates that my question has hit a mark. I have just asked the long-time chief executive of insurance giant L&G if he was pleased that he turned down the ministerial job he was, by all accounts, offered by Liz Truss in September.
Despite his silence, one cannot but help feeling that the decision to refuse Truss鈥檚 offer reflects well on his judgment 鈥� and I suspect he knows this.
Either way, if the media-friendly Wilson 鈥� Sir Nigel, to give him his full title 鈥� is uncharacteristically unwilling to discuss his decision, it is certainly little surprise that he is being sought after at the highest levels. Since taking the L&G top job in 2012, Wilson has impressed both the City 鈥� through consistent financial performance 鈥� and policymakers with his vision of 鈥渋nclusive capitalism鈥�, his claim of putting social purpose at the heart of his multi-billion pound business.
His strategy to deliver this vision has been, on one level, simple: to take the billions in pension liabilities that L&G looks after (actually a staggering 拢1.3 trillion at the latest count) and, rather than engage in complex financial engineering, look instead for real physical assets to invest in which both deliver socially and generate long-term stable returns.
In few areas has this strategy and this vision played out more obviously than in L&G鈥檚 headlong plunge into residential development, where it has a plan to build 10,000 homes per year 鈥� which would make it the UK鈥檚 fourth biggest housebuilder. But L&G鈥檚 investment has not been plain sailing.
While its traditional housebuilding activities have progressed well, the more innovative activities have struggled through choppy waters. The modular business it set up six years ago has racked up more than 拢170m in losses and is yet to turn a profit, while its flagship later living business, Inspired Villages, is also loss-making. I meet Wilson at the launch of a major modular scheme 鈥� Bonnington Walk, in Bristol 鈥� to ask him what has made it all so hard, and whether his patience with the sector is limitless.
Unconventional
An unconventional FTSE 100 chief executive, this former council estate boy from County Durham is a capitalist who claims welfare state founder William Beveridge as his hero and has Karl Marx sitting on his bookshelf. And, with the UK gripped by a housing crisis, the residential development sector unsurprisingly meets all of Wilson鈥檚 requirements for 鈥渋nclusive capitalism鈥� 鈥� real physical assets, that can meet an urgent social need, and that can deliver a solid financial return for L&G鈥檚 many pension holders.
鈥淭he world still is full of lots of money,鈥� he says, 鈥渢hough it鈥檚 a bit more expensive than it used to be. But it needs recycling in a way that makes a difference in people鈥檚 lives.鈥�
鈥滻 got to move into a new council house鈥� and that really created a platform for the rest of my life. I would never have been here today if I had continued to live [鈥 in a massively overcrowded house鈥�
Sir Nigel Wilson
It is a message which clearly resonates with L&G鈥檚 public sector customers, such as Bristol鈥檚 Labour mayor Marvin Rees, and maybe makes its 拢2.2bn in annual pre-tax profit easier to justify. Speaking at the same event, Rees said: 鈥淚 really value some o