QBE chief hands over baton

Mr Neal, the former head of QBE's European operations, insisted there would be no fundamental change to the insurer when he took charge in August. His appointment was "more about evolution rather than revolution" for the insurer, which operates in more than 50 countries.

The career insurance executive was yesterday named QBE's third chief executive in as many decades. The appointment capped off nearly nearly two years of painstaking preparations for the retirement of Frank O'Halloran, the long-serving chief executive who has overseen more than 125 acquisitions in expanding QBE offshore.

"Frank has been the architect of modernising QBE through his tenure acquisitions have been part of that process. We don't see any reason why that shouldn't be the case," said Mr Neal, who last year was appointed QBE's chief underwriting officer.

In outlining his plans to retire, Mr O'Halloran said yesterday there would be no changes in his approach to acquisitions over the next few months. Several bolt-on acquisitions remained under consideration, and they could translate to about $750 million in additional premiums for 2012.

"I can say that I've worked my heart and soul out for QBE for 35 years and I know John will do the same," Mr O'Halloran said.

But in a surprise twist, Mr O'Halloran will rejoin the company as non-executive director in early 2013, leaving just a six-month break from his retirement as chief executive.

The insurer's chairman, Belinda Hutchinson, defended the move, saying she believed it was consistent with good corporate governance. "The board made a decision we had someone who had extraordinary knowledge of the industry and we didn't want to lose him to another player in the industry."

Overshadowing Mr O'Halloran's retirement was a 45 per cent fall in QBE's full-year profit to $US704 million. The company was barely profitable in the second half after being hit by a string of natural disasters during 2011 that sent claims soaring.

The insurer also outlined plans to prop up its capital position by raising as much as $600 million from shareholders. Shares in QBE were placed in a trading halt while the raising is finalised. In Mr O'Halloran's time as chief executive, QBE shares have traded as high as $35, but touched a low of about $5 after the company made an emergency capital raising after the September 11 attack on New York's World Trade Centre. QBE's shares last traded at $11.50.

Mr O'Halloran is the key architect of the business model that is starting to show cracks as growth in the US and Europe remain tough to come by, even through acquisitions. QBE invested heavily in the US market just as the insurance cycle there was turning negative. Its chase for high-margin insurance businesses also left it exposed to weather events.

This caught up with it last year, when payouts for flood, storms and fire around the world totalled $2.35 billion, more than twice the amount of the previous year.

"Over the past five years, QBE increased the weighting of its business to the US market at a time when insurance margins had peaked and have not recovered," said BBY analyst Brett Le Mesurier.