THE CHIEF executive of QBE Insurance, the 12th largest company on the Australian stock exchange, says that the financial crisis has been less severe on Australia as a large corporate failure in 2001 strengthened regulation.
Speaking in Dublin at the firm’s Irish offices, Frank O’Halloran said the multi-billion-euro collapse of HIH Insurance, Australia’s second largest insurer, had ensured that financial regulation was “much more stringent”.
“That forced the Australian government, the regulators and the banking and insurance industries in particular to tighten up on their risk-management practices and tighten up on their minimum capital requirements,” he said.
Mr O’Halloran said that the Australian financial system had “got through the crisis as good as anyone around the world”.
He said that Australia’s debt levels were low and it was recently shown that the economy was still growing, albeit at just 0.4 per cent.
He said the country’s top four banks, which account for 85 per cent of the domestic market, have had bad loans but have not had to turn to the government for capital investments. “There have been some guarantees to the banks to support their borrowings but each of the four banks are making three to four billion in Aussie dollars in profit a year even after the large provisions,” he said.
QBE, which is primarily a commercial insurer, avoided the risky credit market investments linked to mortgage products, he said.
“If you don’t understand the product, how can you delegate authority to someone else to write that product?” he said.
Mr O’Halloran said QBE, one of the top 20 non-life insurers in the world, hoped to grow annual premium income in its Irish business from almost €100 million to €250 million over five years.
“We are looking at continuing to build our teams and to build our commercial lines and insurance business here,” he said.
He said that the pricing on commercial insurance were “thin” and would need to increase before the company assumed significant exposures in the Irish market.
“It is not sustainable at the current prices – prices will have to go up or terms and conditions on policies have to change,” he said.
The firm employs 100 staff at offices on Sir John Rogerson’s Quay in the Dublin docklands.
He said that QBE was looking at acquisitions in Europe and south America to grow the business.
Customers include contractors involved in infrastructure projects, including the redevelopment of the Lansdowne Road stadium, large venue operators, airlines and Irish semi-states.
QBE, which employs 13,500 staff worldwide, has a market value of just over €11 billion and made a profit of €1.15 billion last year on premium income of about €11 billion.
