Daily briefing: Friday - Bathia consolidates power at QBE

Make no mistake, today is yet another affirmation of QBE’s faith in Ash Bathia to push the UK business forward.

Bathia expanded his power base last year when he was promoted to chief underwriting officer of the property, casualty and motor division.

He won that enhanced responsibility after winning an internal power battle with former UK property head Bernard Mageean.

Today we learn that distribution managing director Terry Whittaker will step down, and Bathia will assume overall control of UK and Ireland distribution.

Asking hard questions

By consolidating Bathia’s power, QBE will be hoping that he can deliver stronger results in the UK regions.

QBE European Operations, which includes its London platform, posted a pretty good combined operating ratio (COR) of 91.6% last year.

But its UK regional-focused subsidiary, QBE Insurance Europe Ltd, last year performed 15 points worse, with a 106% COR. That needs improving.

Bathia will surely be focusing on where the unprofitable broker relationships are in the UK. He’ll be asking: how much commission is the broker taking? Is the product pricing right? Where do the profitable lines of business lie?

Prioritising the bottom line

It won’t be easy improving COR in the tough UK market, which is suffering from soft rates and a stagnant economy.

But Aviva, with its 96% combined operating ratio last year, proved that, by carefully focusing on distribution relationships and placing business with more profitable agencies, performance can be enhanced by taking a long-term view.

And if that means QBE has to sacrifice top line for bottom line, so be it.