The middle-market segment is a valuable component of the business of QBE North America, the chief executive officer said during a recent interview, putting to rest rumors that the segment is up for sale.
Speaking to Carrier Management at the 2014 PCI Annual Conference in Scottsdale in October, David Duclos addressed conflicting media reports that emerged over the past year about the status of QBE North America’s middle-market business.
“Last February, we mentioned that our middle‑market business was under strategic review. We weren’t suggesting we were going to sell the business, but all options were being considered. We wanted to fix and remediate the performance of that business,” said Duclos, who is also a member of the board of governors of PCI.
“Over the course of the summer, we have come to the conclusion [that this is] an asset that we feel is of value to QBE,” he continued.
Providing some background, Duclos, who has been leading QBE in North America for about 18 months, said that before he arrived, the middle-market premium had fallen off roughly 10-12 percent for two straight years. “The business went from $1.5 billion to just under a billion dollars.”
“The first thing we did was stabilize the written premium…Secondly, we’ve started to rebuild the agency relationships, and third, we’re starting to develop specialty products” for the middle-market customers.
“So it’s an active business that we fully support, and now we’re trying to figure out how we can grow it—and grow it profitably, utilizing the existence of both the standard products as well as new specialty products that we’ll be introducing.”
Duclos also spoke about QBE units that are indeed up for sale, referred to on investor conference calls as “agency business.”
“The U.S. agency business for QBE North America is three different MGAs that were purchased over the past 10 years. They specialize in very unique niche product capabilities. One is transportation related, one is property-cat and then the other is one of the largest condominium insurers in North America,” Duclos explained.
“We’re simply selling the distribution or the agency itself because we’re focused solely on becoming very good underwriters,” he said. “Distribution for us is a bit of a distraction, and frankly, we’re not able to leverage and optimize the value. We don’t really understand how to distribute.”
“Our objective will be to sell it to a strategic partner [that] can actually leverage the product capabilities and sales platform in a much more effective way. And we will continue to be the underwriter.”
Duclos explained that both decisions support QBE’s strategy: “to be an underwriting specialist in North America.”
Duclos provided more details of the transformation that is taking shape at QBE North America. The full interview will be published in the next edition of Carrier Management magazine. In addition, video excerpts will be broadcast on the Carrier Management channel of insurancejournal.tv over the next few weeks.