With
John Neal soon to exit his role as chief executive of the still-faltering
QBE Insurance, Pat Regan is faced with the challenge of living up to his reputation as a “turnaround king” when he assumes the top job in January.
Neal was axed amidst mounting investor frustration, after a five-year tenure fraught with multiple profit downgrades, leadership shuffles, and a personal scandal – an affair with his personal assistant that docked $550,000 from his bonus earlier this year.
Regan, who joined QBE in 2014 as chief financial officer, has a huge task of winning back the favour of unimpressed shareholders – and fast – armed with his reputation and experience as the master of the turnaround,
The Australian Financial Review reported.
Regan, “hailed as the architect” of the UK-based Aviva's transformation out of a financial black hole, was tapped by QBE with a sign-on bonus of $8.5 million, at a time when Neal's leadership was already marked by four profit downgrades.
In 2016, he was made chief executive of QBE's Australian and New Zealand operations, succeeding Tim Plant, whose one-year tenure yielded disappointing results.
David Walker, an analyst with QBE investor clime asset management, said Regan was successful in that role.
"Pat Regan has a fairly good reputation in the market. He was previously the CFO, so presumably he's a good numbers man," he told
AFR. "He is an industry veteran. You need people who have worked in it [the insurance sector] and not people who have come from the outside, because it's such a risky business."
Regan, who was described as “energetic” and a “dogmatic” character with a “stronger pricing discipline,” is yet to divulge his plans for the company, and said one of his first tasks was to find a successor for his Australia and NZ role.
AFR understands that he is unlikely to renegotiate the company's pricey reinsurance programs, despite the fallout from Hurricanes Irma and Harvey.
K2 Asset Management's David Poppenbeek said it is unlikely that Regan would do anything “radically different.”
"[I would expect to see] fine-tuning and minimising those operational mishaps, given a lot of work has already been done. It's just a matter of evolution – this has been a successful company for a very long time," he told
AFR. "The market conditions and the operating environment has changed and they've had to adapt. It's come a long way in the last few years."
Poppenbeek said QBE may run off its lagging businesses.
"If they don't have an edge, running certain businesses off should improve their returns above the cost of capital and make sure that everything has a return on equity approach, because that's the whole nature of this caper,” he told
AFR. “Everything else is coming along nicely, investment performance is going well and expenses seem well contained. I think leading the market in pricing is something they don't need to do. With Pat's background, he's more of a numbers man, being a price follower might be the right strategy for a while."
Related stories:
QBE investors urged to reduce exposure
New QBE CEO could pocket around $9 million a year
QBE announces CEO departure
.jpg)
