QBE CEO search stirs the pot

QBE executive chairman is looking for a new CEO after the hasty exit of Pat Regan. Picture: James Croucher

The abrupt exit of QBE’s chief executive Pat Regan over inappropriate behaviour is causing a stir in the sector, and complicating a succession process at Insurance Australia Group.

Whichever way it all plays out there will be fresh faces and a merry-go-round of insurance executives that follows.

Regan left suddenly on Tuesday after the QBE board trawled through his emails and texts in response to a complaint by a US-based female employee.

A review by MinterEllison found material that fell short of the insurer’s code of conduct and ethics.

The departure has left the often-overlooked insurance industry in a spin, not just because of the scandal, but because QBE was already suffering from the mooted departures of several executives.

Vivek Bhatia — who led QBE’s Australian operations — resigned last month to become Link Group CEO, and the insurer’s group chief risk officer Peter Grewal is leaving at the beginning of 2021 to join London Stock Exchange-listed M&G.

This column understands QBE has Russell Reynolds conducting a search for a new head of risk, while it has this week been accepting pitches by headhunters to run the search for its Australia business chief.

Now QBE executive chairman Mike Wilkins — a former IAG CEO — certainly knows the local talent pool so a lot of the leg work will fall to him on hires required.

But there is a risk is he throws IAG’s own chief executive succession race out of kilter. IAG boss Peter Harmer in April flagged he would retire by the end of 2020, and last month reiterated the process was progressing to plan.

Deputy IAG chief executive Nick Hawkins and Australia boss Mark Millner are the favourites in that tussle, but there is some apprehension among investors given the insurer is yet to announce the winning candidate.

At the same time, Wilkins will be making his own early overtures to Hawkins and Millner.

Internally at QBE, finance boss Inder Singh and retiring international boss Richard Pryce are seen as potential group CEO material. Headhunters on the CEO and Australia chief search may also have IAG board member Andy Cornish and recently departed Suncorp insurance executive Gary Dransfield on their list.

And while a longshot, a return by former QBE executive Colin Fegan cannot be ruled out.

Director views

Former NZ Prime Minister Sir John Key — an ANZ board member — gave some insights at a Hamilton Wealth event this week on the bank’s views on fostering a good culture and the post-COVID landscape.

He referenced the ANZ board’s conduct and culture committee and the “massive wake up call” provided by the Hayne royal commission.

Separately, Key spoke about workplace changes following the pandemic and while he reckons there will be a large rise in working from home, it won’t sound a death knell for central business districts.

“I don’t think you are going to see that take over the normal workplace in totality,” he said.

But interestingly, Key noted that at ANZ’s call centres across the ditch — where he is the bank’s chairman — he expected about 70 per cent of staff would not return to the office.

National Australia Bank board member Simon McKeon also expressed some strong views this week on a Blenheim Partners podcast.

He said it was important those at the helm of banks didn’t “feel suffocated” about the job at hand. That includes managing the COVID-19 crisis, as well as meeting risk management and community expectations following the royal commission.

Given the battering NAB received at the royal commission and the latest controversy at Rio Tinto — where he is also a board member — over the destruction of the Juukan Gorge caves, he also delved into the importance of the court of public opinion.

While steering clear of going into detail on Rio’s decision, McKeon stressed he was a believer in the concept of large companies having a social licence to operate.

He said CEOs had to conduct themselves with a view to encouraging the right behaviour, while also being mindful of community, environmental and shareholder interests.

“Any manager who is just not up to balancing that complicated set of competing interests, you just don’t want them.”

Bid traction

Rationalisation in the investment platform market is occurring at the large and smaller ends of the market.

At the bigger end of town, IOOF is pushing ahead with its $1.4bn takeover of MLC, while at the other end of the spectrum ASX-listed bidder Praemium is set to hit a 50 per cent stake in target Powerwrap, as its cash and scrip offer gathers momentum.

This column understands substantial Powerwrap shareholder Regal Funds Management will accept the now-unconditional Praemium offer.

Individuals at wealth firm Escala that own shares in the target are also selling into the $55.6m takeover.

Escala chief Pep Perry said Powerwrap shareholders at the firm were “very happy” with the bid, which gave them exposure to a bigger industry player with the ability to undertake larger capital expenditure.

He also noted because Powerwrap drew on Praemium’s technology there would be no disruption to Escala’s customers.

But fund manager SG Hiscock — which was earlier said to be holding out for a higher Powerwrap offer — wouldn’t comment on its position on Thursday.

Some investors had been hoping for a bid price closer to the 35c that Powerwrap floated at last year. According to Bloomberg, SG Hiscock’s stake in the target is 6.7 per cent.