QBE Insurance Group (ASX:QBE) has appointed a new group CFO to succeed long-serving finance chief Neil Drabsch when he retires in February 2014. The announcement came as the firm revealed its full-year results and a shift in corporate strategy onto global integration.
CEO of QBE’s European Operations Steven Burns, who has been in the role for nine years, will relocate to Sydney to take up his new post as group CFO. He joined QBE following its acquisition of Limit in 2000, where he spent 14 years.
Burns replaces Drabsch, who has been QBE’s group CFO for 18 years and with the company for 21. QBE CEO John Neal thanked Drabsch for his commitment and attributed the group’s track record of profitable growth to him and his close-knit partnership with former chief Frank O’Halloran.
“Neil’s contribution to QBE’s growth and development over the past 21 years is nothing short of extraordinary,” he said.
QBE has chosen deputy CEO of QBE European Operations, Richard Pryce, as Burns’ successor. The group also recently announced David Fried as CEO of Asia-Pacific Operations, and David Duclos as the new CEO of North American Operations. Both are external candidates.
The executive changes came on the back of QBE’s 2012 full-year results, which highlighted an eight per cent net profit rise to US$761m year-on-year, on total revenues of US$20.92bn (AUD$20.34bn), but a disappointing underwriting result.
The company attributed this to the impact of significant prior accident year claims development, the severe US drought, Superstorm Sandy and lower risk-free rates. QBE reported a cash profit of US$1.042bn, up 32 per cent and consistent with November guidance figures, with net earned premium income up three per cent to US$15.8bn.
With the exception of US results, local currency premium growth was strong across other territories including Australia and New Zealand, where operations were up 12 per cent to AUD$4.81bn. Neal labelled the results solid, with the exception of the adverse prior accident year claims development, and claimed they put QBE on firmer footing this year.
“It is disappointing that the benefit of significantly reduced catastrophe claims and a lower discount rate impact is not reflected in a materially improved 2012 underwriting result, due largely to adverse prior accident year claims development,” he commented.
QBE has also announced a change in focus from acquisition-led growth to a bid to become a more fully integrated global insurer. To achieve this, the company will set-up new dedicated centres of excellence to manage functions and processes replicated across the group and help improve productivity, Neal said.
“As the world changes, we need to evolve to continue to meet or exceed the expectations of our key stakeholders,” he said. “Our excellence in risk selection, pricing and distribution will remain core. We will supplement that by using our unique global footprint and expertise to rationalise the way we carry our operational processes. We expect this to produce cost savings which, based on 2012 premium levels, will reduce the expense ratio by 1.6 per cent.”
More details on how QBE’s new strategic direction will be released later this year.