Bringing it all together

John Neal, CEO of QBE Group, discusses the transformation and unification of the global insurance giant

Bringing it all together

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When asked to single out what he considers QBE’s greatest achievement since he assumed the top job, John Neal, CEO of the global insurance giant, doesn’t hesitate.

“I would say that QBE in 2016 is a far more focused business than it was four years ago,” he says. “While we boasted significant global reach, we were really a very federated business, each division operating largely geographically and independently of each other. I would say now, whether you talk to our customers, our brokers or our business partners, there’s a very strong understanding of QBE’s purpose, its vision, what it can stand for for its customers and how relevant we are in a global marketplace.

And that’s a lot harder than it sounds – to actually get the business to think and behave and act as one company.” It’s a business Neal described recently to investors as one that’s transformed into a “distinctive top 20” property & casualty insurer – one of only 15 companies, he says, that operates “truly globally.” In total, QBE wrote approximately $11.51 billion in premium worldwide in 2015.

Under Neal’s leadership, QBE has also substantially turned around the fortunes of its North American operations, realizing a profit last year. Its combined operating ratio has improved substantially in recent years as well, from 111.5% in 2013 to 99.2% in 2015.

But getting there wasn’t easy – Neal considers North America his greatest challenge as CEO.

“I think the good news is that we’ve made really significant progress in that division, notably in returning it to underwriting profit, in particular building a meaningful US specialty business and really improving the quality of our leadership there,” he says.

Going forward, QBE will pursue significant opportunities it sees in the North American specialty market.

“The statistic that always amazes me is that one dollar [of every] two dollars of the world’s gross written premium for commercial and specialty insurance is written in North America, Bermuda or London. It’s still that important,” Neal says. “The North American specialty market is worth between [$61 billion and $69 billion]. Even narrowing North America down, it’s still a vast place, and it’s not as complex as people think … but you’ve got to have the underwriting expertise, the claims expertise, the risk management capability to play in that market, all of which we’ve developed and built.”

And where exactly do Neal and QBE see prime opportunities in specialty lines? “We’re looking quite hard at professional liability. We’re looking at healthcare, marine, general aviation and classic specialty product sets,” he says. “And I think we’re adding value.

We’re adding to a marketplace that isn’t congested, where there is opportunity and brokers are looking for choice.

“It’s not been easy to grow the business,” he continues, “but we had a five-year plan, and that five-year plan is in year four and is nicely on track with where we thought it would be. So we’re excited. It’s a good place to be in North America at the moment.”

Emerging opportunities
Twelve percent of QBE’s business is sourced from its emerging markets division, encompassing 22 countries across Latin America and Asia Pacific.

“I think the good news for me, coming in as CEO, was that we’d been in some of the Asian markets for over 100 years,” Neal says. “We’ve not had the complication of needing to acquire or buy into the markets, which is very expensive and very complex.

“What we did do was take a step back and say, ‘What geographies do we want to be in? What products do we think we can sell? How do we distribute?’ And our base analysis that we undertook in 2012 was telling us that we were way under par in terms of who we were, and therefore what our penetration should be, by anywhere between 20% and 25% of who we could be.”

However, there are still some emerging markets in those regions where QBE is working to grow its presence.

“In Asia, for example, our focus has been around Hong Kong, Singapore, Malaysia and Indonesia … particularly around commercial and specialty products, and also with some bank assurance leverage,” Neal says. “Our sense is that we can maintain a healthy degree of performance profi tability in that respect, and our intent is to see across the emerging markets if we can double the size of the business over a fi ve- to seven-year period.

I say that without growth being the overarching objective. Getting the right margin’s the objective. But those markets certainly create greater opportunities for growth than developed markets.”

The right team
Of course, before devising and executing any grand plans, an organization to ensure that it has the right people leading those endeavors. But who are the ideal insurance employees today and in times ahead?

“I think we’re looking at well-qualified people that are coming into our industry – that probably wasn’t the case 10, 15, 20 years ago,” Neal says. “I think individuals … are a lot more data-oriented and data-literate, which I think is important for our business.”

He adds that broadening your horizons is key to remaining relevant and innovative in today’s insurance industry – and that’s something QBE is certainly willing to do when it comes to recruiting employees.

“We’re prepared to be a little bit disruptive to ourselves around the gene pool and say, ‘Let’s look at individuals who might not classically find themselves in the insurance space; let’s look at people who would’ve gone into Fintech to see if they’re a bit smarter in the way in which they develop technology solutions; let’s look at people who would’ve gone into the media route.

“And then when you get to data, we’ve got anything from a data scientist at one end of the spectrum to a statistician at the other. They’re not classic insurance people, so we’re also trying to ensure that you’re getting different perspectives and diversity of thought and ideas coming into the business.”

 

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