QBE Insurance (QBE) 2014 AGM Report

Company/ASX Code : QBE Insurance Group Limited (QBE)
Venue :
10am, Wesley Conference Centre
Pitt Street
Sydney, New South Wales 2000
Monitor : Ms Joyce Yong
AGM Details / NoM : Wednesday 2nd April, 2014
# of Attendees : 283 attendees, with almost 200 holders/proxies
# Holdings represented by ASA : 574 holders
Value of Proxies : $22.8 million
# Shares Represented by ASA : 1.77 million shares
Market Capitalisation : $16 billion

New chair impresses but big 32% protest against overloaded director

by Joyce Yong with assistance from Ian Graves

This AGM was held on the back of another year of disappointing results capped by the December downgrade.

Chairman Marty Becker introduced himself having succeeded Belinda Hutchinson the day before the AGM. Mr Becker provided an overview of the strengths of QBE’s business and the focus for 2014, before asking managing director John Neal to provide the review of the 2013 results and guidance for the year ahead.     

Earnings attributable to equity holders for the year were -$254 million, down from a $761 million profit in 2012. Despite this, there is still cause for optimism. The accuracy of the 2014 forecast, although conservative, was maintained. It showed little or no growth and results in line with existing underlying earnings. There has been no deterioration in the business since the December market up date. The cash profit, although down $500 million on 2012, was still strong.  The write-downs included substantial goodwill and an increase in  Claims Adequacy to 90.7% probability. These actions have resulted in a stronger balance sheet with greater capital adequacy.

Shareholders’ questions indicated concerns about QBE’s ability to manage any negative impacts caused by the rate of change and sought assurances on the basic soundness of the North American business, as well as overall business and strategic positioning. The Chairman responded cogently.

All resolutions were passed on the basis of a poll although there was a significant 32% vote against the election of Ms Margaret Leung. ASA and other shareholders were concerned that she currently holds over 6 non-executive directorships and was appointed managing director of Chong Hing Bank in February 2014. The Chairman defended her appointment and assured shareholders her performance would be monitored along with other Board members.

ASA voted all undirected proxies against the Remuneration Report, the Group CEO’s long-term incentive grant and the election of Ms Leung. Although the Remuneration Policy is now simpler to understand and the at-risk elements better focused on long term performance, we still had a number of concerns as set out in our voting intentions report. For the sake of consistency we also voted against the CEO’s long-term incentive grant. Like a number of other shareholders, we were also concerned that Mr Becker was only recently appointed to the Board before being ‘catapulted’ into the Chair. However, his knowledge of, and, experience in the industry were obvious at the meeting. His unflappability also impressed. We voted all undirected proxies for his election.

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