QBE chief steps down
QBE Insurance Group said on Tuesday its chief executive officer John Neal (pictured) would step down in January after five years in the role to be replaced by Patrick Regan, who runs the insurer’s Australian and New Zealand business.
Regan joined QBE in 2014 as group chief financial officer and was subsequently appointed to the role of chief executive officer for the insurance giant’s Australia and New Zealand business in August 2016, QBE said in a statement.
Prior to joining QBE, Regan did a four-year stint in London as Aviva chief financial officer.
“The Board has undertaken a detailed succession planning process over the last two years, and has carried out an internal and external candidate review process for this appointment,” QBE Group Chairman, Marty Becker said in the statement.
In a bid to promote Regan’s appointment at a difficult time for the insurance giant, QBE said Regan had been pivotal in stabilising the company’s balance sheet and enhancing capital management. Moreover, he has led a strong turnaround of the company’s Australian and New Zealand unit in the past year.
The news comes after an earlier announcement last month that the chief executive officer of QBE’s troubled emerging markets business, David Fried, had stepped down following a “major disappointment” in that unit’s performance for the 2017 first half.
In June, the insurer's shock earnings downgrade on the back of higher-than-expected claims in its emerging markets division renewed investor fears over management’s inability to forecast accurately.
According to the insurer, at the time of the profit announcement in August, the blowout in claims was due to a combination of increased frequency of medium-sized risk claims in Asia, weather-related claims in Latin America and an adverse experience in legacy portfolios in Latin America.
Credit Suisse analyst Andrew Adams said that while Regan is the obvious successor, the immediate risk is the 2018 financial targets. The current chief executive has a 2018 target for a combined operating ratio of 93 per cent and an insurance margin of 11 per cent.
But, from where Adams sits, this target is becoming increasingly difficult to achieve given the ongoing difficult market conditions and issues with its Emerging Markets division.
“We expect the new CEO to distance himself from these targets, and instead outline a new three-year plan to turnaround the QBE business. This will also include the need to reduce its exposure to Latin America and hence lower Group Gross Written Premium again," he said.
“We expect the market to welcome the news of a change in chief executive; it will likely be interpreted as a fresh beginning, a new start for QBE on the hopeful road to recovery. However, we caution the expectation of any quick turnaround in QBE's earnings.”
Ignoring the Emerging Markets result and highlighting the strides made in QBE's other divisions, Becker said: “John has led the business through a significant transformation and a challenging period in the insurance industry globally and has been working closely with the board to ensure a smooth transition for his succession.
"In the last 12 months, Pat has led a strong turnaround in the Australian and New Zealand operations highlighting his operational skills and business acumen and, in his previous role as Group chief financial officer, had been pivotal in stabilising the balance sheet and enhancing the Group's capital management.”