Australia-headquartered QBE Insurance Group has announced that its CEO, Pat Regan, is to leave the company following a complaint from a female employee and the outcome of a subsequent external investigation into workplace communications, several news organizations reported Aug. 31 and Sept. 1.
The investigation led the QBE board of directors to conclude that Regan had not met the standards of QBE’s code of ethics and conduct.
Reports indicate that a woman in QBE’s North American division made the complaint which led to the investigation conducted by a large Australian law firm. Later, QBE confirmed that the complaint about Regan came from a female employee in the United States.
Word is that the female complainant hired an attorney, and that she resigned about the same time as her complaint was lodged.
In a way, Regan was gored by his own ox. In 2019, he oversaw an update of QBE’s code of ethics and conduct, which among other things, promoted a speak-up culture. His noncompliance led to his ouster.
Details of Regan’s transgression and the consequent legal findings remain under wraps; however, The Sydney Morning Herald reported that the financial penalty to Regan was hefty.
While he received over $300,000 in severance, he leaves a position that last year earned him $4.4 million. Also lost to Regan were share rights estimated to be worth up to $10 million.
Going forward, Mike Wilkins will assume the role of executive chairman, taking day-to-day oversight of QBE during the search for a new CEO.
Previously with British insurer Aviva, Regan joined QBE in 2014 as group CFO and was appointed to the role of CEO, Australian and New Zealand operations in 2016. Regan was appointed CEO in January 2018, replacing John Neal, who had his pay docked by $550,000 in 2016 for failing to tell the board he was in a relationship with his secretary. Neal has since become CEO of Lloyd’s.
When Regan took over, QBE had operations all over the world, in both advancing and emerging markets. Regan set about trimming down the company. He pulled QBE out of Asian and Latin American markets where damage from increasingly frequent extreme weather events posed too great a risk.
His strategy won him praise, and he was viewed as steering the company into safer waters, according to news sources.
In commenting on the board’s decision, Wilkins said, “We are committed to having a respectful and inclusive environment for everyone at QBE. The board concluded that (Regan) had exercised poor judgment in this regard.”
Wilkins thanked Regan for his service by saying, “While these are challenging circumstances, the board recognizes and thanks Mr. Regan for his hard work and contribution to strengthening QBE. However, all employees must be held to the same standards.”
Wilkins continued, “While COVID-19 has created significant challenges, QBE is successfully navigating this period of uncertainty, and the group’s demonstrable financial strength positions us well to capitalize on accelerating pricing momentum and emerging organic growth opportunities.”
COVID-19 losses have already neared the attachment point of QBE’s aggregate reinsurance cover, and the company expects that any business interruption claims from the pandemic will be covered by its reinsurance, Reinsurance News reported.
QBE posted a $510 million loss for the first half of 2020, driven by underwriting impacts from COVID-19, large catastrophe losses and a poor investment performance, according to Reinsurance News.
Nonetheless, Wilkins said he remains optimistic about QBE’s financial prospects despite the disruption a change in leadership will bring.
A financial analyst told The Guardian’s Australia edition that a new CEO would probably write down QBE’s assets. “What often happens when a new CEO is appointed, and particularly in the case of an external appointment, a very vigorous approach is taken to provisioning and expected levels of future profits,” the analyst said.
The QBE board will put in place additional initiatives in the coming weeks to further develop an inclusive culture at QBE, beginning with a board-sponsored and externally-supported culture review and the creation of an additional avenue for employees to safely raise concerns and receive support that will supplement existing channels.
“We want our people to have the avenues they need to safely speak up, with the confidence that they will be heard and that all concerns raised will be treated consistently across our workforce,” Wilkins explained.