Insurance industry veteran to head British Gas

Energy giant Centrica has tapped insurance industry veteran Mark Hodges to head British Gas, one of the most politically-sensitive business jobs in the UK.

Mr Hodges will replace Ian Peters as the managing director from June 1. Mr Peters, who was the interim managing director, will take up a new role as "director, consumer facing strategy" but will stay on the executive committee till the end of this year.

The change comes at a time when politicians are scrutinising the profit margin of energy providers after global oil prices approximately halved since last June. The UK fuel provider cut prices in January, in line with its competitors.

The new British Gas chief spent over two decades with insurers Norwich Union and Aviva, where he ran the UK business with a focus on customer service. Most recently, he was the chief executive of specialist insurance broker Towergate Partnership.

At British Gas, Mr Hodges will have a base salary of £625,000, with an annual bonus of up to 100 per cent of salary, subject to shareholder approval, and up to a maximum of 200 per cent for performance materially in excess of target.

Mr Hodges said in a statement: "Centrica is at the forefront of meeting the energy and energy services needs of customers in a range of markets and I am looking forward to being a part of the team."

In February, Centrica cut its dividend for the first time since it was created in 1997 as an "urgent" step to protect its credit rating as falling oil and gas prices led to a 35 per cent drop in annual profits.

The main hit to results came from a slump in Centrica's upstream oil and gas and power generating businesses.

However, warmer UK weather caused cuts to domestic energy consumption at a time when the group is embroiled in a growing political storm over the UK's big six providers.

Profits at British Gas's residential supply business - traditionally a key driver of group earnings - fell 23 per cent from £571m to £439m in the year to December.

At the time of the results, Ian Conn, Centrica chief executive, defended the scale of price reductions announced at British Gas, which ended the year with 14.8m customer accounts - down 2 per cent over the year.

He insisted the 5 per cent cut in residential gas prices fairly reflected Centrica's view of overall cost reductions that could be passed on to customers. He defended the treatment of the majority of customers on standard variable tariffs - who the Competition and Markets Authority said were typically charged £200 or more a year in excess of the best deals available.

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