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QBE Denies Chief Executive To Step Down
Australian insurance major QBE has moved to end speculation that its chief executive is poised to step down. QBE chief Frank O’Halloran has run the company for the last twelve years, and the insurer says that he would continue in that role “for the foreseeable future”.
Rumours of Mr. O’Halloran’s departure ricocheted around the insurance industry this week, when speculation began to emerge that Mr. O’Halloran would hand over the reigns of the company to Peter Harmer, a senior executive at insurance broker AON.
Mr. Harmer’s apparent ascension was flagged in a British trade publication, Insurance Investor.
The story was quickly rebutted by new QBE Chairman Belinda Hutchinson, who branded the report as “completely false” adding that the board had still not appointed a headhunter or developed a succession plan for the 64 year old Mr. O’Halloran.
“QBE has a longstanding and successful succession planning process due to the depth of its high-quality management team. This team is ably led by Frank, who will remain the CEO for the foreseeable future. Frank has publicly stated his interest and willingness to continue as CEO.” said Ms Hutchinson.
QBE which is facing pressure from investors unimpressed by poor investment returns is thought to have received a commitment from Mr. O’Halloran for a further two years.
The Australian, which quoted an unnamed source suggested that the rumour may have started by a head hunter who was pitching their candidate. The source also added that the insurer preferred internal candidates as opposed to those from outside.
The source also questioned whether a broker was the right person to lead an insurance company, saying it was a bit like “trying to mix oil and water”.
Investors, disappointed with the most recent set of earnings, which saw poor investment returns producing a 39 per cent fall in first half profit, have also been voicing concerns over the insurers extraordinary appetite for inorganic growth through acquisition, despite the fact that QBE says that 90 per cent of its growth during the last half decade was inorganic.
Mr O’Halloran and his predecessor John Cloney have snared up to 130 acquisitions over a 25-year period, with 42 coming in the period 2005-09.
One analyst said poor investment returns were only partially to blame, and they did not tell the whole story.
“What you saw was a window into QBE when the acquisition music stops — not much top-line growth due to expansion into countries that are either deflating or not inflating, and that’s a critical issue for insurers,” he said.
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