Alistair Houghton meets TIM JOHNSON, chief executive of Paymentshield, in Southport

HE’S helped insure Test cricket matches and a Michael Jackson concert – now Tim Johnson is helping hundreds of thousands of people protect their homes.

Johnson leads the 360-strong team at Paymentshield, the insurer that has become Southport’s biggest private sector employer.

Paymentshield was hit hard by the recession, shedding more than 50 jobs. But today it is back in growth, with employment already back above pre-recession levels and gross written premiums last year of £210m.

The company, taken over by the Towergate group in 2006, has two core products – household insurance, generally sold through mortgage brokers, and mortgage payment protection insurance (MPPI).

Johnson, a Lancastrian who has spent his career in insurance, first heard about Paymentshield when he was working at Towergate. And, in classic Victor Kiam style, he liked the business so much he bought it.

“We had got a little base in Sheffield in more or less the same market,” he said.

“Every time we did our annual budgets, we’d ask the MD there ‘why can’t you do better and why isn’t your market share going up?’

“He would say there was this business called Paymentshield that was totally market dominant and beat them to everything.

“We felt, ‘if we can’t beat it, we should buy it’.

“It’s been a fantastic business for us – we’ve done well with it.”

Johnson, originally from Leigh, started his career in insurance as a graduate trainee at Royal Insurance.

“I did a spell in the head office in Liverpool, in the sandcastle,” he said – using the common nickname for the building now called The Capital, in Old Hall Street.

Next, he spent 10 years with global insurance giant Aon, including a stint at Pinewood Studios handling insurance for major events.

“I looked after Test Match cricket, Grand Prix races, a Michael Jackson concert in Mumbai, and a lot of films.

“I met some really interesting people and moved in glamorous circles in those days. It was a good couple of years.”

Eight years ago, he joined Towergate as chief executive.

In 2006, he and Towergate founder Peter Cullum launched “a quasi venture capital business” within the group called Cullum Capital Ventures.

“It was a merger and acquisitions machine for buying insurance brokers,” he said.

“We bought 36 businesses in three years, which is a heck of a run rate.

“In three years, we grew that business from nothing to the third-largest independent broker in the UK. Towergate was number one.”

Two years ago, Johnson was asked to head back to the North West to run Paymentshield.

“I said yes because it gave me the chance to go home,” he said. “I’d been in the South for 12 years.”

Johnson, who lives in Poulton-le- Fylde, says he is “golf-mad” – making Southport, with its wealth of golf courses, an attractive base.

Paymentshield was founded in 1992 by Pat Cottrell and Rick Riding.

“They decided it would be a good idea to try to sell household insurance through mortgage brokers,” said Johnson.

“They started off on Mrs Cottrell’s dining room table, stuffing documents into envelopes. Then they moved into her son’s bedroom – he worked here in IT until recently.

“So this has gone from pretty humble beginnings to what you see today – about 360 employees and a 30,000 sq ft big shiny office block. it’s a heck of a story.”

Johnson had clearly made a point of studying its back story – even down to its financial performance.

“The first year’s profit was £4,794 – and my FD has put in brackets ‘that’s pounds, not millions’.”

In 2004, Stuart Pender led a management buy-in at Paymentshield, backed by Bank of Scotland Corporate. Two years later, it was bought by Towergate in a £180m deal that saw BoS make a “successful exit”.

The recession had a big effect on Paymentshield because sales of its household insurance are so closely linked to the health of the mortgage market.

“We had a peak time in 2007/2008 when the market was overheated, as has since become pretty evident to anybody who reads the papers,” said Johnson.

“The majority of our sales come from mortgage brokers. They sell household insurance when they make a mortgage sale.

“With a stagnant housing market, that trigger to sell the insurance doesn’t happen.”

There may have been fewer people taking out mortgages, but those who had already taken them were keen to find insurance cover – so Paymentshield’s MPPI business kept ticking over.

“Lots of people were desperate to buy any unemployment-related cover they could,” said Johnson. “Without wanting to sound too ‘business school’, it’s a counter-cyclical business.

“We got a letter this morning that said ‘we’ve been claiming under your redundancy cover for the last X months and I’d like to say thank you to you for keeping me and my wife in our house’.

“That’s the positive side of MPPI that the papers tend to ignore. This keeps real people in their houses in their tens of thousands every week.

“Without cover, the vast majority of UK households could last for some five or six weeks on their savings if they lost their jobs. Then they’d be snookered.”

In November, 2009, Paymentshield axed more than 50 jobs.

“At the end of 2009, we basically carried a 2008 cost base in a 2009 economy,” said Johnson. “

“We were lucky the majority of people we had to let go were contractors or voluntary redundancies.

“It was not a very pleasant thing to have to do. But it left the business in much better shape.”

Last year, the company launched a two-pronged expansion plan.

Firstly, it set up a new business offering credit reference services to landlords. And, secondly, it opened a dedicated call centre to help it win back some of its former customers. That call centre alone now employs more than 50 people.

“We’ve got a really excellent service proposition,” said Johnson. “I’m not saying we’re perfect, but people do like us.

“If a customer has left us, they have often left on price. They save a couple of pounds, get poor service, then when we contact them they remember the service they had.

“We find it reasonably easy to win them back.

“If somebody has left because of poor service, it’s very hard to win them back.”

Johnson is proud that the company has battled to win new business and get staffing levels up again.

“We could have just hibernated and waited until the market picked up again,” he said. “It’s not my preferred strategy, but it’s a legitimate one because in two or three years the market will come back.

“But you can also say ‘how can we grow out of it and think of things differently?’ We chose to do that.”

Johnson shies away from making bold predictions about the future of the housing market.

“I haven’t got a better crystal ball than anyone else,” he said. “But hopefully next year we’ll start to see signs of the market coming back a little bit.”

Johnson remains passionate about the power of MPPI, as offered by specialist insurers such as his.

Several banks have been fined millions of pounds for mis-selling PPI products in recent years – and the whole industry has been tarnished as a result. Johnson, however, believes such insurance is a necessary precaution at a time when the economic forecast remains gloomy.

He said: “When the banks sort out their failings, there will be a really strong place for this insurance. It’s a case of getting consumer confidence back up again.

“One thing is for sure – the Government won’t want to fund all those people who could end up losing their homes and looking for state support.

“Providing this sort of insurance cover is one way to look after people.”