Having joined QBE’s Board in August 2013, it is now my pleasure to write to you as Chairman of QBE. Over the last year I have taken the opportunity to get to know the organisation, spending time with each of our divisions and disciplines in their locale, as well as meeting with many of our larger shareholder groups and key regulators. There are three standout factors that have impressed me and have given me great confidence in the road ahead for QBE.
Firstly, I have been impressed with the overall quality of our people. Across our 17,000 people, we have a diverse mix of outstanding experience, talent, insight and skills working together to provide the best solutions for our clients. Their determination and commitment to returning QBE to its rightful place as an industry leader is reflected in the work done in remediating and right-sizing our business and in driving operational transformation, whilst at the same time, continuing to deliver on our business plans.
Secondly, I have been very impressed with QBE’s solid underwriting DNA. Despite the reserve strengthening over the last two years, our combined ratio has never exceeded 100% and we have remained competitive with our global peers. The principles of underwriting excellence are now fully embedded throughout our organisation and, having delivered reserve stability in the second half of 2014, provide a strong foundation for earnings stability and profitable growth.
My third observation is that QBE is one of very few truly global insurance franchises and we are using this diversity of operations to drive economies of scale, operating synergies as well as providing leading practice solutions for our clients.
I firmly believe QBE is a significantly stronger company than it was 12 months ago. As evidenced by the results announced today, we have made considerable ground in returning to more reliable and consistent earnings. We are now well positioned for future success.
During 2014, we set out three main objectives and I am pleased to say we have made significant progress against each.
1. Complete the “refresh” of your Group Board
2014 has seen a number of changes to your Board to strengthen geographic and market experience including John Green, a QBE non-executive director since 2010, taking on the important role of Deputy Chairman. We have also welcomed three new non-executive directors who bring extensive domestic and international experience – Sir Brian Pomeroy, who will also chair the Audit Committee and Stephen Fitzgerald who will chair QBE’s Investment Committee and Jann Skinner who will serve on our Audit and Remuneration Committees. Pat Regan, our new Group Chief Financial Officer, has also joined the Board.
As previously scheduled, Isabel Hudson and Duncan Boyle retired from the Board at year end. Isabel, as Chair of the Remuneration Committee, and Duncan, as Chair of the Audit Committee, have both made significant contributions to QBE. Their experience, guidance and wise counsel were greatly appreciated and they leave QBE with our sincere thanks.
2. Normalise QBE’s balance sheet
A strong balance sheet with a lower debt to equity ratio has been one of the focus areas for the Board during 2014 and we have made significant headway in achieving this objective. When combined with around $1.5 billion worth of capital initiatives over the past 12 months, we can now more than satisfy the key metrics that both regulators and ratings agencies require, along with the financial security that our policyholders deserve.
3. A return to stable and predictable earnings
We have been through a period of business remediation, reserve strengthening and right-sizing of our business. We are confident that much of the heavy lifting is now complete, and through the 2014 half year and full year reporting periods, we have maintained performance outcomes in line with guidance. We believe we can now focus our attention more firmly on achieving profitable growth going forward.
Our Board focus for 2015 is to continue to build a company that meets the expectations of all our stakeholders – our customers, our people, our shareholders and the communities in which we operate.
We are confident in our ability to deliver on the following key objectives for the Board and our stakeholders in 2015:
- continue to deliver earnings stability and predictability;
- profitably grow our core businesses;
- continue our operational transformation and operational excellence programs;
- maintain the quality balance sheet we have worked hard to normalise; and
- continue to build our global talent and provide planned succession into key roles.
I look forward to updating shareholders on the progress we are making against these objectives at our Annual General Meeting in April.
I would like to take this opportunity to reaffirm to all our stakeholders the great honour it is to serve as Chairman of QBE.
This is a great company with a wonderful legacy. With a strong Board and leadership team and clear strategy, we are well on our way to returning QBE to a market leadership position.
2014 was a year of resetting our foundations for a stronger business with more consistent performance. I want to thank each of our stakeholder groups.
To our shareholders, I want to thank you for your patience as we have undertaken significant activities that have had a temporary impact on top and bottom line performance. We do not take your patience and understanding for granted and we look forward to returning to more consistent and predictable earnings.
To our customers and partners, thank you for your continued faith in our business. We look forward to continuing to share our expertise with you in a way that helps you build your own businesses and deliver to your own customers.
To the communities in which we operate, thank you for continuing to work with us as we seek to make a meaningful contribution beyond being a good corporate citizen.
Ours is a great industry with incredible capacity to help others in their time of need. So to our people, thank you for your continued efforts as we reset the company for a positive and profitable future. We appreciate all you have done in 2014 and we look forward to a great 2015. We know we could not achieve our goals without your determination and commitment.
W. Marston Becker