It has taken two days, but the board of giant insurer QBE has finally rebutted those stories earlier this week that CEO Frank O’Halloran was to retire and be replaced.
In a statement to the ASX yesterday QBE chairman Belinda Hutchinson said the CEO will remain in the role for the foreseeable future.
QBE shares rose 1.7%, or 28c, to $16.77 in yesterday’s very strong trading which saw the overall market rise 2% on the first day of a new month.
In the statement, Ms Hutchinson gave a strongest indication that any successor to Mr O’Halloran would come from QBE’s own ranks.
Earlier this week reports surfaced in an insurance industry journal that QBE could be planning for Mr O’Halloran’s retirement.
The speculation named long time Australian insurance executive, Peter Harmer (a former Europe head of global insurance brokerage Aon) as the person to take the top job at QBE.
QBE declined to comment on the report or answer specific questions but issued a short statement late on Monday saying "rumours that it has agreed on a CEO replacement are completely unfounded".
Yesterday the company said in a second statement:
"Following various media reports and in response to continued speculation and enquiries by shareholders and other interested persons, QBE’s Chairman, Belinda Hutchinson, has issued the following statement:
"Recent media reports indicating that the QBE Board is searching for an external replacement for the CEO, Frank O’Halloran are completely false. The Board has not appointed an external recruiter to fill the CEO role.
"QBE has a long standing and successful succession planning process due to the depth of its high quality management team. This team is ably led by Frank, who will remain the CEO for the foreseeable future.
"Frank has publicly stated his interest and willingness to continue as CEO. QBE will advise the market before making senior management changes.”
Sixty four year old Mr O’Halloran was widely believed to be planning to retire at the end of 2007, but opted to remain in place as the GFC hit.
He recently said he had intended to steer QBE through the financial crisis "stronger than ever".
Speculation seemed to emerge after the company revealed a surprise profit downgrade in June for the June half year, and then confirmed it last month in the full half year announcement.
Like so many insurers, especially those with big reinsurance businesses, as QBE has, the company’s investment returns on its huge cash and near cash reserves has dropped sharply with the fall in official rates and then the continuing fall in market yields on these high grade securities.
QBE expects this contraction of investment income to continue this half until there’s an upturn in market rates.
But with the US heading for a slowdown and the Federal reserve committed to a very easy monetary policy (and leaving its key rate unchanged at 0-0.25%) no one is expecting a quick rebound in bond yields or interest rates generally.
Australia is another story, but it is now the smallest of QBE’s business groups.
