John Neal leaves QBE after tough five years

John Neal will leave QBE after a difficult five years, but he remains highly regarded in the insurance industry.

Outgoing QBE boss John Neal. Pic: Britta Campion

This year is shaping up as one of the worst in history for the global insurance industry as hurricanes wreak destruction in the Caribbean, but QBE looks like emerging relatively unscathed.

The reason for this is the conservative reinsurance policies of outgoing boss John Neal, which has cost the company some upsides but protected it from the massive downgrades.

Amid the catastrophic storms in the past few weeks Neal and QBE chair Marty Becker have talked about how to arrest a 34 per cent slide in the company’s stock price over the last four years.

Today, as flagged in this column last month, Becker and Neal agreed the CEO should step down to be replaced by Australian and New Zealand boss and former CFO Pat Regan.

The change won’t happen until January 1, which suggests this was an orderly handover.

Neal has had a rough time at QBE and in the process been at the helm for around eight profit downgrades, which is a couple too many to engender investor confidence in the company.

His five years as boss has come at a time of record low interest rates, which have resulted in subdued investment returns, and five years of premium rate cuts, which have also hit earnings.

The insurer has long been both inwardly focused in terms of management style and built through rapid-fire acquisitions.

In other words it has had its cultural issues.

There have been some personnel issues, like the departure of Colin Fagan earlier this year shortly after he was promoted to head office and groomed for the top job.

Neal himself lost $550,000 in bonuses earlier this year for failing to disclose a relationship with a head office assistant.

The outgoing CEO has moved too slowly in repairing the myriad trouble spots.

Through it all, though, he is highly regarded inside the company and outside in the industry as someone who had a mess to deal with as all the macro factors went against him.

Ironically, Mr Regan, a former Aviva executive, may be taking over at just the right time with global interest rates edging up and the storm damage bound to increase premium rates.

This was Neal’s first shot at running a listed company and whether he has another go remains to be seen, but he has done some good things in a tough time at QBE.

In the end he was beaten by a lack of investor confidence from one too many downgrades.