QBE Insurance chief executive John Neal has pledged to vigorously defend itself against class actions, after Maurice Blackburn called on long-suffering shareholders to register their interest in holding the global insurer to account for its recent savage profit warning.
Speaking after QBE’s annual general meeting where he vowed to deliver more predictable earnings, Mr Neal said he was not worried “at all” about potential class actions and assured the board had met its disclosure obligations.
“We’ll be ready to defend ourselves against any suggestion of an action,” said Mr Neal, after Maurice Blackburn revealed it was looking at launching a class action.
“We are very rigorous in terms of recognising our continuous disclosure obligations and I’m 100 per cent confident we’ve met those in every respect, especially through the December timeframe.”
QBE, which has revised guidance for the past three years, on December 9 warned it would post a $US250 million loss for the year to December 31 -- compared to an expected profit of more than $US1 billion -- after raising provisions and taking writedowns in its US division.
At the time, QBE said its board had met on Friday, December 6 and taken the action after reviewing an operational and strategic review by management of the US operations.
The warning of its first loss since 2001 wiped more than 30 per cent, or about $6bn, from QBE’s share price over two trading days.
After being approached by retail and institutional shareholders, Maurice Blackburn principal Jacob Varghese said the firm was investigating if QBE breached its disclosure obligations by not telling the market of the losses sooner.
He said the “magnitude” of the downgrade had made investors question the conduct, particularly as QBE had signalled to the market during last year that it was monitoring the US operations and was getting on top of the problems.
“Everyone appreciates that when you buy shares you run a risk they’ll go down … (but) it is difficult for investors to see at the moment how the company could have been so blindsided as to only discover such a downgrade against expectations three weeks before the end of the year,” he said.
Maurice Blackburn, together with Singapore-based International Litigation Funding, is calling for shareholders who bought shares between August 20 and December 6 to register their interest by the end of May.
“We’re not criticising them for having bad news; we’re criticising them for holding on to it,” Mr Varghese said.
A spokeswoman for Slater & Gordon, which in January told The Australian it had investigated a potential class action against QBE but backed away, yesterday declined to comment.
Asked how confident he was of launching the action, Mr Varghese said it depended on “a lot of different factors”, including the commercial decision by the litigation funder.
QBE shares ended 6c higher at $12.80 yesterday, compared to $15.45 before the December profit warning.
TS Lim, an analyst at Bell Potter, said the market was more focused on QBE achieving the profits it had promised than a looming class action, given how long they could take.
Mr Neal, who also sits on the general insurer’s board, said the threat of class actions put pressure on directors, but conceded they were “a fact of life” that may increase.
Chairing his first annual meeting after taking over from Belinda Hutchinson, Marty Becker said the top priority was a return to stable earnings and higher dividends. He vowed to meet and maybe beat full-year guidance of an underlying insurance profit margin of about 10 per cent.
Shareholders approved all resolutions, but registered a strong protest vote of 32 per cent against the election of Margaret Leung as a director due to her several board seats in Asia.
Mr Becker backed her contribution to QBE since August.