Two of Aegon's big hitters, including the man behind the Lawn Tennis Association sponsorship coup, have been sacrificed in a management shake-up

AS THEY took the short walk along the second floor offices of Aegon UK's headquarters on the outskirts of Edinburgh, Feilim Mackle and Steve Clode had little idea that it would be their last engagement with chief executive Otto Thoresen.

• Feilim Mackle (left) and Steve Clode

They were summoned separately to a 40-minute briefing on a new strategy that would involve changes to the management structure. And there was to be no role in it for either of them.

Mackle, the genial Northern Irish giant who many had pencilled in as a successor to Thoresen, was the biggest casualty in the shake-up.

A new role of chief operating officer of the life and pensions division was being created and it would go to Adrian Grace, a relative newcomer who had won plaudits from Thoresen for his quick-thinking and attention to detail.

Clode, the marketing big shot who joined the company with Mackle in September 2007, was also told his time was up. He spearheaded the firm's biggest sponsorship gamble: a 25 million tie-up with the Lawn Tennis Association that was the first of its kind for British tennis and a huge commitment by Aegon at a time when companies were scrapping or reconsidering their sponsorship packages in the light of recessionary pressures.

Both men's departure was the talk of the Gyle, the business park alongside the by-pass from where Aegon has been establishing its credentials since the Dutch firm acquired Scottish Equitable in 1994.

Thoresen has seen the firm move up the life and pensions league table in recent years, but a tough trading environment prompted him to take action and to seek what was described by one insider as a need to "up the pace" of delivery.

Thoresen has projected himself as a personable boss, keen to mix with the troops and enjoy the fun of hospitality events. But one source said he was not afraid to take the right decisions, including axing his close associates.

Even so, there was a mixed response to last Wednesday's shoot-out. "It is a pretty major embarrassment for Otto that Feilim and Steve are leaving, it is a big U-turn," said one industry insider.

"They are two big hitters that were brought in to revolutionise things and Feilim had been earmarked to be Otto's successor. The numbers look pretty awful."

Certainly the appointments of both Mackle and Clode were heralded as a coup for the financial services group, whose profile had long lagged Scotland's financial services stalwarts – Standard Life, Scottish Widows and Royal Bank of Scotland.

But only 30 months into their roles, Thoresen had decided the firm's golden boys were surplus to requirements.

How different it looked in September 2007 when Mackle was lured to the group from RBS.

A "high achiever" and managing director of RBS's retail banking division, he had also shown his mettle in life and pensions, having risen through the ranks at Standard Life.

Clode was also a big-hitter. A long standing director of marketing at Nationwide Building Society, he pioneered the group's sponsorship of the England football team and was involved in the Proud To Be Different campaign.

His experience with the Football Association would prove instrumental in his move to sign Aegon up to the five-year sponsorship deal with the LTA, which would include involvement in all aspects of British tennis, from providing racquets to schools to holding the naming rights to international events, including the Aegon Championships, formerly the Stella Artois tournament, at the Queen's Club in London. Scottish star Andy Murray lifted the trophy in last summer's inaugural competition to give the new sponsor a perfect start.

But along with most other financial services firms, 2009 proved a dire year for both Aegon UK and its parent firm in the Netherlands. Aegon NV was one of the few European insurance companies to require a state bail-out, accepting ?3 billion from the Dutch government to boost its capitalisation. In the UK, Thoresen's target of growing its life and pensions business to 10 per cent of the UK market was hitting a rough patch. A third-quarter loss in 2009 of 11m underlying earnings was turned around to a 30m gain in its latest update, but it was not enough to satisfy the boss.

With unusual speed, Thoresen decided to split the management of the business into two new teams. One would cover the group's life and pensions business while another would oversee the group's distribution arm, including its national IFA brand, Positive Solutions. In a sign Thoresen is tightening his grip on the business, he will chair both boards.

Under Thoresen's restructuring, there would be two chief operating officer positions and, as head of the group's life and pensions business, Mackle was seen as most likely to lead the newly restructured L&P team. But Grace, a talented refugee from the failed HBOS, was elevated to the bigger job above Mackle.

Grace joined the firm in January last year. Before HBOS he was at Barclays, where he was responsible for its UK insurance operations. He had spent a mere 20 months as a managing director in HBOS's corporate division under Peter Cummings before the ignominious collapse of the bank forced its merger with Lloyds Banking Group.

Grace's appointment was a surprise in that the group had already made a show of the strength of its team following the arrival of Mackle and Clode. Even more surprising was Grace's success in winning the favour of Thoresen.

Appointed to a newly-created executive role of group development director, Grace was made responsible for the development and execution of Aegon's distribution strategy. Ahead of him was the government's Retail Distribution Review (RDR) which was threatening to bring sweeping changes to the way financial products were sold to customers. Although Thoresen dismisses the 19m loss on the distribution side in 2009 as being a side effect of recession, he credits Grace with a restructuring of the businesses.

Thoresen downplays the effects the RDR will have on Aegon's IFA business. In 2012 all IFAs will have to begin charging customers for advice rather than selling products on commission. It is a blow for Aegon, which moved decisively into the IFA market when it acquired Newcastle-based independent financial adviser network Positive Solutions in a 163m deal in 2005.

"There are issues there around removal of commission replaced by customer charging that requires systems changing and how products are designed," said Thoresen. "Those are the sort of challenges this business is used to dealing with, we have a track record of dealing with those.

"We have quite a big programme to run through over the next few years to take forward the opportunities we see being created by RDR."

While Grace was re-organising the distribution side, problems in the life and pensions business under Mackle's tenure emerged last year when computer glitches affected as many as 7,000 customers getting incorrect valuations on its with-profits policies. Mackle spearheaded a 38m review of the group's systems, led by another new recruit Simon Skinner. Skinner, along with L&P marketing director Andy Marchant, was brought into the business by Mackle. But now they, along with Aegon's veteran head of IT Paul Chong, will work with Grace on the new L&P board.

With Grace's move over to Mackle's life and pensions brief, a vacancy has been created in Thoresen's distribution board. It is expected Jim Reeve, the former Zurich Group and Barclays executive who heads up Aegon's Positive Solutions business, will get the job.

But the departure of Clode suggests the shake-up is a sign of deeper ructions at the group than the Mackle versus Grace showdown suggests.

Days before the surprise announcement, Clode was filmed for a marketing industry website describing how the first year of his sport sponsorship deal with British tennis had delivered results "way ahead of my expectations". Tasked with making Aegon a better known name among consumers of life and pension products, Clode was riding a wave of success – until his abrupt departure.

With some at Aegon describing his exodus as a blow for the firm, Thoresen insists it was a strategic decision, with oversight of the sponsorship passed to Maurice Brunet, director of the firm's corporate pensions business.

"Steve came in and did an excellent piece of work for us and identified the lawn tennis and Aegon championships which worked so well for us," said Thoresen.

"Under our new strategy there is no longer a role which can take advantage of Steve's talent."