Lens on ASX 200 Listed QBE Share Price: What’s the latest update?

Summary

• Insurance major QBE Insurance Group announced the departure of Group CEO, Mr Pat Regan on 01 September 2020. QBE share price ended 6.315% lower following the release.
• The decision was taken following the outcome of an external inquiry regarding workplace communications that the Board concluded that he did not meet the guidelines set out in the Group Code of Ethics and Conduct.
• The Company announced its 1H FY2020 results on 13 August with a significant loss of A$712 million. However, the loss results were better than the Company’s earlier guidance resulting in the share price moving north.

ASX 200 listed Company QBE Insurance Group Limited (ASX:QBE), on 01 September 2020, reported a drop in its share price by 6.315% and settled at A$9.940 after the Company announced a change in the Group Chief Executive Officer. The stock was trading at A$10.120 on 2 September (at 03:08 PM AEST).

QBE Insurance has a market capitalisation of A$14.6 billion and has around 1.47 billion outstanding shares. QBE shares have provided a return of over 13% in the last three months. However, its shares in the previous one month and last five days have delivered a return of -0.80% and -5.87% respectively.

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In this article, we would look at the announcement on the change of Group CEO and throw light on the other recent significant announcements.

Group Chief Executive Officer Change

On 01 September 2020, QBE Insurance Group announced that its Group Chief Executive Office Pat Regan would be leaving the Company after spending three years in this role. The announcement comes after the outcome of an external inquiry regarding workplace communications that the Board concluded did not meet the guidelines set out in the Group Code of Ethics and Conduct.

QBE Group Chairman, Mike Wilkins stated that the Board had completed an external investigation and took crucial action concerning the results. Mr Wilkins also highlighted that the Company is committed to having a respectful and inclusive environment for everyone associated with QBE. The Board concluded that Pat Regan had exercised improper judgement on this front.

At the same time, the Board also recognised and also thanked Mr Regan for his hard work and his contribution towards strengthening the Company.

Appointment of Two New Non-Executive Directors:

On 13 August 2020, QBE Insurance Group announced the appointment of Ms Tan Le and Mr Eric Smith as Non-Executive Directors of the Group Board. Ms Le is a technology innovator, entrepreneur, and business executive and also the founder and CEO of a neuroinformatics company, EMOTIV.

Mr Smith has over 40 years’ experience in insurance and financial services and was the former President and Chief Executive Officer Swiss Re Americas, and a member of Swiss Re's Group Executive Committee.

As the Company is accelerating its digital transformation and seek to build best in class data, AI and digital capabilities, QBE feels that Ms Tan will bring invaluable insight and perspective to the strategic decisions.

The appointment of Mr Eric Smith will further deepen the insurance skill of the QBE Board, and the Board will gain from the fresh viewpoint which Eric will carry to the emerging trends, challenges, and opportunities in the future.

Earlier in August, QBE announced the departure of Mr Vivek Bhatia, Australia Pacific CEO.

QBE Announces 2020 Interim Result

On 13 August 2020, QBE announced its 1H FY2020 results for the period ended 30 June 2020.

• Statutory net loss after tax for 1H FY2020 was A$712 million.
• Average group-wide renewal premium rate increase of 8.7%.
• Gross written premium improved by 10% as compared to the previous corresponding period.
• Net earned premium increased 4% to A$5,556 million, influenced by additional (de-risking) reinsurance purchases.
• Along with A$115 million of COVID-19 related risk margins, a COVID-19 underwriting impact of A$335 million pre-tax or 6.0% of net earned premium with anticipated final net cost unaffected at A$600 million.
• Combined Operating Ratio was 103.4% in 1H FY2020. It was 95.2% in 1H FY2019.
• Attritional claims ratio improved by a further 2.2% to 45.5%.
• Expense ratio improved to 14.3%.
• Net investment loss for the period was A$90 million.
• Financing and other costs were A$125 million.
• Pro forma debt to equity ratio of 30.2%.
• The interim dividend was of 4 cents.

According to QBE, the 2020 interim result was in line with and marginally better than the estimates earlier communicated to the market. Despite the challenges experienced by the Company, QBE managed to provide a dividend of 4 cents which reflects Board’s confidence in the strength and stability of QBE combined with more promising outlook backed by enhanced industry pricing.

CEO Pat Regan commented on the result and stated that the safety and wellbeing of customers and people is the top priority. Amid the challenging situation due to COVID-19 pandemic, the Company would support customers via numerous initiatives involving premium refunds, premium deferrals, extending credit plus counselling services to weak clients and fast-tracking claims payments.

The improving industry situation, paired with the basic disciplines followed in the business, can propel sustained margin improvement.

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