QBE Insurance Group, the Australia-headquartered international insurance giant, announced a 27% jump in profits on Friday. More than 95% of the firm’s business comes through insurance brokers. Group CEO Andrew Horton (pictured) explained what QBE has done to improve the way it works with broker stakeholders, a key driver of the strong results.
He suggested that changes around how the firm organises its distribution of insurance products to brokers had played a key role. “Over the past two years, we've really focused on distribution more and having a group head of distribution sitting at our executive table,” said Horton. “They talk to us about how we can improve the lives of our brokers, make ourselves easier to do business with and improve the customer experience.”
The CEO said his firm is now “more broker focused” that it has ever been.
IB asked what’s key to improving that insurer-broker dynamic? Horton said, across his international firm, QBE has changed the way it trades with brokers. “Historically, we tended to look at the three divisions [North America, International and Australia-Pacific] separately and now [they are] much more joined up,” he said. “So, we're more joined up in how we look at the relationship across the three divisions with each of our major broker partners.”
After discussions earlier this year, each of the larger broker partners will have a QBE executive to take care of them. “We're going to allocate a group executive committee member to each of our key broker partners to ensure that that relationship is working as well as it can,” said Horton.
He added that QBE has a host of broker-focused facilities and plans to expand those offerings. “This is where we're generally writing portfolios of business that brokers are creating,” said Horton. “We've been a big supporter of those - we'll probably have a few new ones with brokers in the second half of this year.”
Other business decisions are playing into QBE’s positive balance sheet. IB asked what Horton meant when he referred to achieving a balance across product classes and geographies? He said this is connected to “optimising the portfolio.”
“What we found historically,” said Horton. “Is that if an event happened in the world, we often had maybe too much of it. We've been looking at our property portfolio across the world and ensuring if there is any major event we won't have too much of it and be too concentrated in some areas.”
He said this isn’t about withdrawing from markets, just getting a better balance. “I'm a great believer that insurance companies perform well when they don't have too much of anything, even if it looks really good - because things can change,” said Horton.
He said QBE has portfolios in 26 countries in most lines of business. This broad spread helps the firm achieve this portfolio balance “as well as, if not better than, most of our competitors.”
“One is improving the margin,” he said. “So taking the combined ratio down from 93.8% to 92.8% and that's close to what we've said we would do this year at 92.5%.”
Investment returns have also been positive. According to the market release, total investment income from the half year was US$788 million, a return of 2.4%.
“It’s been a bit of a choppy first half, with certain things going on in the world, so the investment income is good,” said Horton. “We end up in a relatively good capital position, even after having paid a dividend that's up more than 20% up year on year.”
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