QBE has announced a 46% drop in net profit after tax and a new interim-CEO for the business in Australian and New Zealand at their half year results.
The Australian and New Zealand business saw a 3% dip in gross written premiums compared with 2015, and current group financial officer Pat Regan will take over the operation from Tim Plant, who has left the business “effective immediately.”
QBE will begin its search for a permanent replacement for Plant and John Neal, group CEO said in his Group CEO report that the change of direction will benefit the business.
“I believe this change of leadership, along with the increased near-term focus on tight management of underwriting performance and cost control, will deliver on the division’s potential in the current environment and will set us up for future success,” Neal said.
In an overview of the Australian and New Zealand business, Neal wrote that “an unacceptable increase” in attritional claims ratio hit the business with the New South Wales CTP scheme, increased claims in trade credit and premium pricing pressures all having an impact.
“The fundamentals of our business remain in good shape as evidenced by the continued strong performance of our long tail classes and continued positive prior accident year claims development,” Neal wrote.
“Following a period of healthy premium increases in 2011 to 2013, premium pricing in Australia has lagged claims inflation across a number of lines of business.
“These trends worsened through the first half and demanded action.”
Neal noted that it is a challenging environment for all insurers and while the first half result is “solid,” the Australian and New Zealand business demanded a decisive response.
“In an environment where both insurance pricing and investment markets are increasingly challenging, QBE’s strong and differentiated global franchise has delivered a solid first half result,” Neal said.
“While the interim result is broadly in line with our expectations, QBE’s business is not immune to macro conditions that are challenging the returns of all insurance companies.
“This is particularly evident in our Australian & New Zealand operations where cumulative pricing declines concurrent with heightened claims inflation have detracted from performance in several of our short tail classes, exacerbated by the well-publicised deterioration in the NSW compulsory third party (CTP) scheme.
“We are responding decisively with price increases, revised terms and conditions and other portfolio adjustments and remain confident that these actions will benefit the claims ration in 2017.”
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