Mr Frank O'Halloran joined QBE in June 1976 as Group Financial Controller at the age of 30. At that time, QBE wrote US$85 million of premium and had a market capitalisation of US$6 million. He had previously trained as a chartered accountant with Coopers & Lybrand where one of his clients was QBE. QBE had only recently been listed on the Australian Stock Exchange in 1973 (following the merger of three insurers, Queensland Insurance Company Limited, Bankers & Traders Insurance Company Limited and Equitable Life & General Insurance Company, three wholly-owned subsidiaries of the then parent, Burns Philp).
In 1981, Mr John Cloney was appointed by the board as Chief Executive Officer. This was the commencement of Mr Cloney and Mr O'Halloran forming a very strong partnership, combining skills of an insurance technician with that of finance. This partnership saw the net worth of QBE grow from around US$20 million market capitalisation in 1981 to US$2.1 billion by the end of 1998 when Mr O'Halloran assumed the role as CEO following Mr Cloney's retirement. During this period premium income grew from US$145 million to US$1.7 billion.
In 1994, prior to his appointment as Director of Operations, Mr O'Halloran took the opportunity to spend three months at Harvard. On his return, he was directly responsible for implementing a number of major management changes throughout the organisation which were directly related to developing the management skills of many of the key employees around the group and building the very sound and respected QBE culture.
Mr O'Halloran has a well-known optimistic view of commercial life and always looks for the positive solution rather than dwelling on the past. He maintains a clear vision of the future and has the skills and ability to assess opportunities that greatly enhance the value for shareholders and staff.
Mr O'Halloran has been directly responsible for more than 125 acquisitions by the QBE Group over the last 27 years and the Elders insurance business in Australia is the latest acquisition in QBE's growth strategy. QBE is now one of the 25 largest insurers in the world with operations in 45 countries deriving three quarters of its revenue from outside Australia. QBE has been consistently in the top performers in terms of return on equity and combined operating ratio for the past seven years. Since Mr O'Halloran took over the reins as CEO, premium income has grown by 6.5 times to US$13.5 billion and, importantly, market capitalisation of QBE Group has grown by over 10 times to over US$22 billion.
His vision and leadership have led to the establishment and introduction of the OPENUP QBE Program, a program that is the cornerstone of ensuring QBE's people throughout the world are focused on key value drivers for the business. Mr O'Halloran was a major driver in introducing the vision, values and essential management behaviours of the Group.
The worth of the QBE culture and behaviours instilled by the OPENUP QBE program cannot be underestimated, particularly assisting with the integration of many diversified businesses over the past years.
Mr O'Halloran is well-known for his capacity to generate new and better ideas to solve business solutions. QBE is one of the very few companies worldwide that has survived the cycles of the insurance industry over the past 25 years and grown its business and share of markets. A great part of this is due to Mr O'Halloran's leadership and his innovation in understanding the appropriate times to take advantage of opportunities in the market. Examples are the significant acquisitions in the UK in 1999-2000 of the Iron Trades Insurance Company Limited and Limit plc., the securing of a 100% interest in our Australian joint venture with ING and the acquisition of Winterthur US, Praetorian and ZC Sterling in the US producing US$3.0 billion of annual premium income. QBE now has significant shares in a number of commercial products in the UK insurance market and is recognised as the largest liability underwriter in that market and also, through the acquisition of Limit plc, is one of the largest managing agencies and providers of capacity to the Lloyd's market.
Insurance and reinsurance is a risk business unlike many throughout the world. The insurance sector has shown that there are few managers worldwide who have the capacity to fully understand the elements of risk in this business. Mr O'Halloran is certainly one of those few and stands out among his peers as one who has survived the most tumultuous period in insurance ever seen. QBE has negotiated the global financial crisis with extraordinary skill through its strategy of diversification by product, geographical exposure and conservative investments, which has been a vital ingredient in the Group's success. The US and Gulf of Mexico hurricanes in 2004 and 2005 were the worst ever for industry catastrophe losses yet QBE produced record underwriting profits. The effect of September 11 as an event was horrific yet, QBE, with its worldwide exposure, including over 7% of the total insurance capacity at Lloyd's, had a small net loss which was one of the lowest amongst competitors. In 1999, which was one of the worst years for insurers, QBE was one of a handful of companies that made an insurance profit that year, primarily through the innovation of Mr O'Halloran to establish a long-term reinsurance arrangement with AAA counterparties. This reinsurance arrangement was a key element in distinguishing QBE from many of its peers and allowed QBE to continue its march to being one of the top insurers and reinsurers in the world.
Mr O'Halloran's background as a chartered accountant with long-standing audit experience has introduced throughout the organisation very carefully managed audit file structures, good corporate governance, audit committees and strong internal controls. QBE has had these practices in place for over 20 years, well before the current market hype and focus on corporate governance. Risk management structures are integrated throughout the business with clear, thorough and robust authority structures in place to ensure that all risk elements are carefully measured and managed.
Over time, Mr O'Halloran has been able to add tremendous value to all stakeholders. An indication can be found simply by looking at an investment in QBE which over the last 5 years has produced over 24% compound average growth . Very few companies in the world can boast this growth and return. Evidence of the support of shareholders is seen in that QBE is one of the few insurance stocks worldwide that trades at more than 2 times book value, a multiple that has been maintained for over 10 years.
Mr O'Halloran has shown he has the vision and the experience and capacity to acquire businesses that have failed or were not properly managed or focused and turn them around into successful businesses. Of the 125 acquisitions QBE has made over the last 27 years, all have met the Group's criteria of EPS positive results in the first year, with only a very few not meeting long term goals. Those few were due to external factors rather than quality of management. As CEO, Mr O'Halloran has built a group of professional managers who ensure that the longstanding culture and reputation of QBE being a company with integrity and focus on customers and shareholder wealth creation continues.
Mr O'Halloran has also been active in the insurance industry, holding many representative positions in the Insurance Council of Australia (ICA), including President and Director of the ICA in 1999-2000.
In what little time Mr O'Halloran has spare from running QBE, he provides a contribution to the community through QBE's well-known long standing association with the Australian Rules football team, QBE Sydney Swans and supports a number of community-related organisations.