Consistency, Innovation, and Culture: Insights from QBE's CEO | Andrew Horton, QBE Insurance

by Juan de Castro, COO Cytora

This a shortened version of Making Risk Flow podcast, episode: “Consistency, Innovation, and Culture: Insights from QBE's CEO". It's a new year and a new season of the Making Risk Flow podcast. This time, host Juan de Castro sits down with Andrew Horton, the Group CEO of QBE Insurance. Located in 26 countries, QBE Insurance is one of the world's top 20 insurance and reinsurance companies. During the course of their conversation, Juan and Andrew discuss QBE’s approach to consistency in an ever-evolving market, the important role innovation and culture plays in insurance, and why the game-changer that is AI is on Andrew’s personal agenda.

Listen to the full episode here

Juan de Castro: Hello, my name is Juan de Castro, and you're listening to Making Risk Flow. Every episode, I sit down with my industry-leading guests to demystify digital risk flows, share practical knowledge, and help you use them to unlock scalability in commercial insurance. In this first episode of Season 5 of Making Risk Flow, I had the opportunity to chat with Andrew Horton, Group CEO at QBE. Andrew is one of the most respected global insurance leaders, having led Beazley for more than twelve years and now leading QBE. In this episode, we talk about his transition from a specialist insurer to a global general insurance one, about the pillars of his strategy at QBE, and we deep dive into his views on areas such as innovation or talent. Hope you enjoy it.

Andrew, thank you so much for joining me today for this new episode. I'm really excited to talk to you about all things QBE and your career and how you see the industry. So thank you for joining.

Andrew Horton: It's great to be here.

Juan de Castro: Can you start with a brief introduction of your background and your current role?

Andrew Horton: Yeah, sure. I won't go back until I was five years old. But in effect, very briefly, I trained as an accountant. I then joined banks. So, I was in banking for about 15 years. And then in 2003, I became the CFO of Beazley. Beazley was a relatively small insurance company that just floated on the UK stock exchange. I was a CFO of Beazley for five years. And then in 2008, I was very fortunate to become the CEO of Beazley. And I did that for twelve to thirteen years. And then I joined QBE shortly after that to become the CEO, moving from London to Australia.

Juan de Castro: Well, quite an impressive career. But obviously, specifically in insurance, you've been with Beazley and now with QBE. So Beazley, being probably one of the most respected specialty insurers in London, and now QBE, a global general insurance company. How was the transition from Beazley to QBE?

Andrew Horton: Sure. I guess the hardest transition I've had in my career was actually moving from banking to insurance. Because just moving to insurance, you find some reason we use a language that nobody else in the world uses. So it's a lot of jargon. The transition from one insurance company to another, from that point of view, was relatively straightforward. And there were quite a lot of similarities. QBE is quite a specialist in what it does. It's mainly a commercial insurer. So that had some similarities. QBE has more depth of product and a larger geographic spread. And of course, QBE, there are 13,000 of us and somewhat fewer at Beazley. And I try and meet as many people as possible. So it's more challenging for me over the past few years. I've tried to get it out and about in the QBE world, meeting as many people as possible because I really like the ideas that our people come up with. But the major difference is just the scale of it, as you say, and the size of it, which means we can compete against many other global insurance. We can offer almost every line of insurance or P&C insurance to everyone in the commercial sector. So it's fun and exciting.

Juan de Castro: Yeah. So how does a large insurance like QBE compete? I guess when you joined it was already a very successful insurer. I'm sure you set your own vision and strategy for QBE. What are the two or three things that differentiate that you want QBE to be known for?

Andrew Horton: Yeah, I think it's a good point. So you're right. What we did was when I joined, some CEOs come in and do this 100-day guarantee and come up with a completely different strategy for the company and change a lot of people. The good news is I didn't really need to do that. QBE was performing pretty well in most parts of the world. And we just came up with a new purpose regarding giving resilience, a more resilient future for our stakeholders. Then we came up with a new vision around being the most consistent and innovative risk partner, underpinned it with six key areas, one that we're going to look at people and culture being completely foundational. How do we ensure we recruit and attract the greatest people, have a really good culture, and what people want to stay with us for a long time. Then modernisation, really appropriate to your company. How do we actually modernise the industry and change the way we do things? How do we actually bring the enterprise together, leverage the skills of the overall group? Because we're running three relatively separate geographic divisions, being North America, international, run out of London, and what we call Australia Pacific, run out of Sydney. Also, the optimisation, how do we get the best balance of the book? And then growth, how do we focus on growth? So there's purpose, vision, six key priorities supporting the purpose and vision. And we launched that just under two years ago. The organisation is right around those. It is giving us this consistency of approach across the three geographic divisions. The one about bringing the enterprise together means we're leveraging the skills of the group. What I found at QBE was really enthusiastic people who've got loads of expertise. And our aim is to make the most of that for the benefit of our clients, brokers, and all other stakeholders. It is really important to us to have this consistency across the group.

Juan de Castro: Yeah, so let's actually deep dive into that consistency, that you just described as a part of your vision. I also worked in other industries before joining insurance and there are, I think, mixed views about the concept of consistency. Some would say it's all about consistency, which is, I think, your vision at QBE. Some others will say, well, an insurer is all about adapting to the different cycles and growing and shrinking as the market evolves. I can see merits to both. So what do you mean by consistency, and why do you think it's important?

Andrew Horton: Yeah, sure, we could have a really long debate over who drives the cycle. So why is the buying the insurance product inconsistent in itself? Because you're right, prices for some lines go up a lot, and then they come down a lot. And they're not like any other P&L line. If you're the CFO of a company and you're buying insurance, you don't really know next year whether it's going to go up in line with inflation, double inflation, triple inflation, or go up four. So what we're trying to do around consistency is consistency of appetite. So we're in certain lines of business. Let's work with our clients through the cycle. So do you see the insurance increase sometimes? Pulling back quite a lot and then diving in quite a lot. New entrants come in, then they pull out. We're trying to be consistent. We're in this line of business, in this geography. Let's be consistently in it. Let's see if we can address that consistency of price a bit more. So we're less volatile in terms of price. That's hard to do, really hard to do, because the market in certain lines of prices moves up and down. Let's treat our people consistently. We've got a good culture. We've got a good environment for people. Let's be very consistent. Because sometimes companies can adjust that and people will get happy or unhappy, depending on how companies change. How our shareholders actually see us, ultimately giving a pretty consistent return. So if we get everything right, get the building blocks right, our aim is to give a less volatile return, knowing we're in insurance. There's always going to be some inherent volatility in our returns. And just consistency in how we deal with other stakeholders. So long-term relationships are really important for those people we deal with who support the company. And they can be our broker partners. They can be TPAs on the claims front. They can be people who supply things to the company. Just consistency. It was interesting when we debated it because some people thought the word consistency was too boring, having a vision, that it needed to be something more exciting. But if you look at the insurance industry, generally not a consistent industry. So I think it's quite an exciting thing to aspire to be. And it sort of differentiates us from others. Most others don't say it. They have this presumption that it is assumed that, of course, we're trying to be consistent.

Juan de Castro: And that consistency of appetite and pricing, which is one of the first ones you mentioned. Obviously, I mean, we know that's what brokers often demand - “Just let me know what type of business or what type of risks QBE is in the market for”.  But obviously, then, will you not miss an opportunity sometimes? And then will it force you to stay in some type of risk lines of business in the part of the cycle where it's less profitable? Or are you taking more of the longer term approach or view?

Andrew Horton: You're exactly right. So it's a question of how much you've got to flex depending on whether the market's heavily buoyant or less buoyant. So we've got to flex. But let's look at our core clients, and let's be really consistent to a core set of clients as far as we can. I appreciate it's hard to do because if we're consistent and everybody else is inconsistent, at some point, the price is going to be half what we have, and we'll end up with no business. And at other points, people are going to be charging double what we have, and we'll have every single bit of business in the world. So I appreciate when we've got to work within the market we're operating in. Let's just go out there. This is our aim to be in these lines of business across the cycle. Our aim is to support our key broker partners and clients across the cycle. Our aim is to be consistent in how we pay claims. People are going to pick up exceptions the whole time, and it's hard to achieve. But I think it's a noble aim to have.

Juan de Castro: Yeah, but I was playing a bit of devil's advocate. But you're totally right. And I think if I look at the insurance industry, I think as a whole, it's becoming, or it's trying to become more consistent and reduce that volatility. You see, I mean, you look at it from as you said, from a pricing perspective, the concept of portfolio underwriting is to try to avoid the volatility of single risks and portfolio. And you're saying, okay, it's also about removing that volatility over time, right? Which is being more consistent, and letting the brokers know what your appetite is.

Andrew Horton: It's an odd industry in a way because nobody wants the volatility in price, and yet it's there. So the brokers don't want it, the insurers don't want it, and the clients certainly don't want it, the people who buy it, but it's there. And we may be one of the most volatile in terms of the price of any other thing that anybody ever buys. It's odd that nobody wants it, and yet we have it. It's a very interesting industry from that point of view. Obviously, it's been there for decades, if not centuries. It's not easy to remove. And I'm not sure QBE by itself is going to be able to remove it. But it's something I think we should aim for.

Juan de Castro: Yeah. And it's probably a heritage of the old London market. So, I mean, with very large risks, it might make more sense to be slightly more volatile or less consistent. But in the more general insurance market, it probably makes slightly less sense.

Andrew Horton: It's an interesting point now because I think with the more complex risks, the buyers appreciate the value of insurance more, and therefore, they are willing to pay the right price for it on a more consistent basis. I think as it becomes more generic and more commoditised and people are buying it more as a commodity and will just take whatever the going price is.

Juan de Castro: Definitely. And your second part of the vision was about being the most innovative or driving innovation. How do you look at innovation in QBE?

Andrew Horton: I think it's a really exciting thing to do because often the industry is criticised if we don't step up and take on new risks. I mean, obviously, that's happening and not true because we can talk about the cyber market, we can talk about the DNA market before that. We do take on new risks as an industry. And I was trying to get the innovation being, let's think about new risks. Human beings are very good at creating new risks. And the insurance industry, to be relevant, needs to step up to the challenge of doing that. The beauty of the insurance industry, if someone creates a new risk, we can atomise it. We can share it between ourselves. We can reinsure it out. So we don't need to bet the whole company on this new risk. We can atomise the structure that's already there. So it's that part of it. The other more important part of innovation is just looking for the small innovations the whole time, this continual improvement, empowering our people. If they're seeing a process, they can enhance a product. They can look at a system. And we actually empower our people to just make those changes for the better. So we spend a reasonable amount of time on this small innovation, empowering people. Please, if you see something you can improve, you are empowered to improve it, change it. And then we're also looking at these new product launches. I think too many people think of innovation only in terms of new products. And they're waiting for someone to design the new product that's going to deliver billions of dollars of premium to the insurance market. And I’m trying to get people away from that to some extent because people get frightened and nervous about that and think that's what innovation is all about. But many innovations are much smaller but maybe more impactful than even that.

Juan de Castro: And also that smaller continuous innovation is harder to achieve, right? Because these big new products, you can just have a small team working on that. They know that's their focus. Whereas this small, incremental innovation, you require almost the whole organisation to have that mindset. So what do you think are the enablers for that? So how do you signal at QBE that that is something you expect and that that is fine to fail, etc.?

Andrew Horton: Yeah, so it's a great point. I've become a believer in my role. You just need to talk about it a lot. So people believe you if you talk about it. And I found the Group CEO role is probably one of the most repetitive roles in the company. So I go around talking to various constituents within the organisation, outside the organisation. We explain what it actually is. We get people together and talk about it. And we're fortunate we have a QBE ventures arm. And therefore, they take the lead on talking about innovation and look for things that are innovative for us. And then you've got to have storytelling. You've got to talk about this new idea. And it was this or change this process with that. So people think, wow, he can do that. Why can't I also change my process for the better? So I think it's about all of that. You can't have a formulaic process, look for an hour every Tuesday afternoon, and we're all going to sit there and innovate. It just doesn't work. Because some people think you've got to allocate time to it. I've got the time to innovate. Well, you have because you're thinking about things the whole time. And I often use the story. A number of people probably go home to their families and say, if QBE only did this, and you think, let's do it. And then rather than go and tell your friends or family, we need to improve it. Why don't you come back to the office and do it? Let's change it. And it's all about how you capture those thoughts. Because people are having them all the time. They can be watching sport on a Saturday afternoon. They think, oh, if only we did that. I'm trying to get people to capture that and do it. They're empowered to do it. We'll have a go at it. Of course, if they need help from other parts of the organisation, I'm trying to ensure the organisation steps up and helps them. So it's more in the culture rather than a guideline, on how to innovate. Step one, do this. Step two, do that. I don't think that really works.

Juan de Castro: Yeah, that's quite interesting. That was one of my first aha’s when I took over more senior roles is... Often you think, I'm referring to this consistency of messaging, often you say, well, I've said this once. I'm sure it's clear, right? But in your role, even more so, it is about just repetition. Even when you think you've said it too many times, probably saying it one more time actually helps, you're signalling what's important for you in the end.

Andrew Horton: I agree. You've hit a really important point. And that's why we've got our purpose, vision, and priorities, is we talk about those a lot. So it's only one purpose, one vision, including consistency and innovation, and six priorities. So people talk about them a lot. So, I get it reflected back on me. This is what I've been doing on portfolio optimisation. Or this is what the risk team really thinks about bringing the enterprise together. So, people have taken the group purpose, vision, and priorities and built them out to their own division, team, function, sub-business, and so on. What is relevant to that? And you get this alignment. So people start talking about innovation down the organisation. And then you help them achieve it. So this idea of the people and culture is really important. We are truly empowering you. I think you touched on the word of failure. That's one of the hardest things because people are just nervous about doing something and then it's not working. That's a really tough one to overcome. Again, you need the stories of, I had a go at something and it failed, and the world didn't collapse on top of me. We just accept it. And most people in their careers have done things that they failed at. So we've all got, as you get older, your list of failures is longer and longer and longer. And generally, assuming you're not failing all the time, most companies can put up with that. We're bizarre. We're a risk-taking business in terms of every single risk we take every day. And then we've got this fear of failure. Well, chances are we can write a policy today and have a $10 million, $20 million, $50 million limit loss tomorrow because we're just unlucky. We write the policy and the loss happens tomorrow. And then we're worrying about really small potential costs of someone trying something and not working out. It's really disproportionate in how people think about it.

Juan de Castro: Yeah. And you touched on part of innovation is giving the people the freedom to innovate and try new things. But sometimes, there are also some more mundane enablers for innovation. I'm referring to just having a budget for it, for example. So, being able to spend money on driving some of the innovation. And I know from working in the past, I think some of the things you've done, for example, are having your central budget or a small central budget to give some budget to the trade.

Andrew Horton: Yeah, you're right. The budget process can be a massive constraint. So I am willing to finance my own central budget if that really becomes the issue. I don't know. I sometimes think the budget is used as a bit of an excuse for not doing stuff. Because most things don't cost an absolute fortune. If you're looking for incremental innovation, it's not really a heavy expense item. I don't know what our expense budget at QBE is, but it's billions. It's not a small number, is it? Spending a small amount on innovation is not a major issue. I think the budget is sometimes an excuse. It's not that we spend the money exactly in line with what we thought we were going to do on January 1st at the beginning of the year. There's always room for it. If people come up with the idea, then escalate it, and if it needs more budget, fine. It's a good idea. Why wouldn't you budget it? Why wouldn't you pay for it? The great beauty about the Group CEO role, is you want to say yes to all these ideas. People come up with ideas, and as long as they've got some justification and some value in the future, why on earth wouldn't you finance them? It's normally a capacity issue rather than a budget. Not as though we're short of budget. It's how many things can we do at the same time.

Juan de Castro: Definitely. And you mentioned, obviously, innovation in terms of new products covering new types of risks, which is often what the type of innovation people think most about. But how about innovation in terms of how big companies run the internal processes, the underwriting workflows? Is that an area where you're also focusing on?

Andrew Horton: Oh, no, definitely. I mean, the new product is a headline issue, isn't it? So QBE launches this new product, and everybody thinks, great, that's true innovation. And your bit is what people don't see. So how do we make ourselves more efficient, either dealing with the external world or dealing with ourselves? I mean, that's how I've sort of defined modernisation within QBE. Modernisation really is two things. We're either easy to do business with external to internal, or easy to do business with internal to internal. And that's what I see modernisation. So innovation is definitely a key part of that. And, of course, at this point in time, Juan and I don't want to take us down a track you may not want us to go, but the AI issue of how is that going to make the internal processes better? I think it's a very exciting potential time for the insurance industry, that something's come in that can actually get through a lot of unstructured information relatively quickly, more quickly than human beings can. So that's going to be an exciting time, 2024 and beyond running.

Juan de Castro: So a few months ago, I had Nigel Walsh from Google, and he also spends quite a lot of time with insurers, boards, and the topic of AI, and he had a good perspective. But how much do you talk about AI at the board level at QBE? Is that something which is at the front of the agenda in terms of innovation?

Andrew Horton: It's a great point. I think it's gone from sort of zero to 100 in no time at all. You can talk at the end of 2022 and hardly at all talk about AI by the time we end in 2023, a lot. It's remarkable how it's changed over a short period. Of course, Gen AI coming in because AI has been around for a while, but that's just a major breakthrough. Of course, we've probably got board members using it to some extent themselves. It's become accessible to everybody, and therefore, everybody can see what it can do. From a personal point of view, when I think it was my holiday in the middle of ‘23, I came back and thought, AI needs to be on one of the top three to four things on my personal agenda. This is potentially a major game changer for the industry. So I put it up there on the top four, the things I wanted to do and spend more time on going forward. And it's still there. Now, whether it's one, two, three, four, I'm not really sure. I never know what to do with four equal ones, one rather than... Because people always wonder, is it fourth or second? I don't know. If it's in the top four, it's quite important to me.

Juan de Castro: Yeah. Yeah, but it's true. I think we're seeing a quite interesting, almost maturity curve of AI at the board level, right? Because I think it probably, as you said, two years ago, it was not a topic that was discussed. Probably one year ago, I just created awareness at the board level, but potentially not yet education. So most of the boards were just not familiar enough with what specifically Gen AI was and what it enabled. What we've seen in the last three, four months, it's a very steep learning curve at the board level of, okay, now we understand what AI is, what it can do for us. Again, the next 2024. So it’s been about putting it into action, right?

Andrew Horton: So it's a great point because in Q1 next year, we're doing all our board education. So we're going to spend several hours with non-executive directors educating them on what we think it is, what we can really do with it, what we've already done. We've already got some up and running and working, and therefore what the potential is. So we're going through now into the first part of 2024, educating our non-executive directors and also our management to a great extent. Because not all managements are in the same place. We've got some people who are much further ahead than others. We're also trying to control it. We don't spend too long on this, but we need to control it. We don't want to find we've got 1,000 AI projects running at QBE. We're trying to hone it down and have central control, which I think is working well.

Juan de Castro: Yeah. So, moving on from innovation, you touched on several priorities that underpin your vision. One of them was people and culture, which is a very broad topic. I believe you also mentioned consistency in the way you treat people. Can you tell me more about your thoughts about people and culture?

Andrew Horton: I always think it's the most important thing. Everybody sort of says it, but then you've already got to act it. There's no point just saying people are the most important thing and then you don't really believe it. So we're trying to have a culture which is safe to speak up. People can raise anything. It's open, and it's transparent. We have good benefits for people. So they like what we're actually doing. We treat them well. We look after them when they have personal challenges and so on, which I think is a key part of it. But we do internal succession better than we used to. So we don't keep recruiting externally at most senior roles. And certainly, in my tenure, we've had three executive roles and they've all been internal roles. Including one external, so there have been four, one external and three internal. So showing people that are actually using progression, talking quite a lot about that within the organisation. Trying to meet people's aspirations, I think, is really important. And then having this inclusive approach. We're really focused on inclusion. And inclusion to us is, everybody should be able to work and do well and thrive at QBE. Now, a lot of companies, we do pulse surveys, employee surveys. We do it three times a year at the moment, and we get about 90% of people completing it, which is fantastically good, I think, because you can get survey fatigue, and we don't seem to. And we get good feedback. We stand out well against other financial services, and we really take feedback seriously. If something isn't working well enough, we tend to focus our resources on improving that. One of the most challenging things for me, Juan, is that, not surprisingly, with an organisation like QBE, the top-scoring location is quite a lot higher than the bottom one, or the top-scoring function is higher than the bottom one. And as Group CEO, I'm not trying to make one group happier than another group. So we're able to bring everybody up to where we should be, which is the best. So it's something we talk about a lot. Culture is never-ending, always trying to improve upon it, always trying to get feedback from people, trying to get feedback externally. I really like it when people externally say, this is what your people are saying about the company, what it's like to be at the company. And that's really positive to me. So I do see, as I say, the people and culture are absolutely foundational to us. But if we get that bit right, we will ultimately have happy brokers, clients, other stakeholders. And if we get that bit right, we'll have a good financial return. This is how it should work. And it seems to be a natural path of things.

Juan de Castro: And would you be willing to share, from those surveys, perhaps pick one which is not too confidential, what is one thing that where you rank really high and one thing that it's, identified as an area of development. Whatever level of detail you want to share it.

Andrew Horton: So it's a great point. So the development often is have people got the right tools to do their job. So this is a challenge. This goes back to systems, process. A lot of insurance companies like us, we've acquired a few companies. We've got lots of technology. We've got data technology. We've got old processes that haven't changed for a long period of time. We've got a lot of unstructured data coming in and dealing with that unstructured data is a challenge. I'm like an ad for Cytora at this point. I just feel as I'm advertising your company. And we've got a solution for you, Andrew, at this point. So we have all of that, which you'll see. So often people say we haven't really got the tools for the job. We've got out-of-date tech. We've got funky processes. We've got a lot of data re-keying. So that's one of them. I'm pleased that people have pride at working at QBE. So we score relatively positively on what people think about the priorities we have, the purpose, vision, and actually pride in working for the company. So I think that's one of the areas that's a bit more, generic bit more softer, perhaps, to have the tools to do the job. So those are two examples of probably the contrast of one positive and one less positive. The safety to speak up, we've been tracking more recently, and that one's scoring, going higher and higher and higher. So it's in a good place compared with other companies. The issue with these surveys, one which I often say, and people tell me, that we're not perfect. So we can always improve. But all we can do is compare ourselves with everybody else. And see where we are and see whether that feels about right. And really encourage our people to be open about how we can improve. And I'm keen on that.

Juan de Castro: And it's all, as you said, it's all about the trend. All you can look at is, are the indicators improving over time. Are you working on the right things? Are people seeing an improvement, right?

Andrew Horton: Yeah, and it often comes down to leadership. So, I think leadership is really important. We've had one function within QBE that's moved almost from bottom of the pack to top of the pack. And they've just sorted out the leadership, been much more open about what's going on, tried to involve people in it. And you can see what a difference it makes. When people feel they're really involved in what the company is doing, they feel much better about it. I've got an executive committee of 12 people. I'd love to have an executive committee of 13,000, really. Probably quite hard to all fit in a virtual room at the same time. I'm trying to get everybody to believe they contribute to the company's success at whatever level. Whatever role anybody's doing, they're all contributing to the success of QBE. Now, to do that, they need to understand what are we trying to achieve. So we need good communication of backwards and forwards. It's not me explaining what we're trying to achieve. It's all of us trying to understand what's going on in front of you. I sound a bit evangelical at this point, but it's really an exciting thing to get people involved. People stay with the company if they understand how they contribute and what are we trying to achieve.

Juan de Castro: And it's quite interesting, too, the area of development and strength that you picked when I asked you the question. So you said one of the strengths is the pride of working at QBE. One of the areas of development is getting the right tools. But that strength of pride in working at QBE is almost the enabler to address any area of development. If you've got a team who is committed, proud of working at QBE, then that team were able to overcome any challenge, right?

Andrew Horton: You’re assigning some really good points. I've come across some people within QBE, who told me they really enjoy working at QBE, the way we treat them and the empowerment and the authority they have, but the systems and processes are dreadful. So it will counter it for a while. If we never improve the systems and process, I think people will get a bit fed up with it. So we need to address that. So you're right. In the first element, we should use the first element to address the second element. And we need to ensure, well, when it's a system first working, you need to help us. Someone isn't going to come in and be able to solve it for you. We need your input into it. And I am trying to change the way we go about it. You'll appreciate this. Often systems and process improvements were given to the tech and ops department, and they were supposed to do it for you. But they can't do it without the person who's living with it day in, day out. So I'm trying to get when we're making changes, it's a coordinated approach for the person who actually lives with the problem, plus the people who actually support the change in the problem. And we're making more progress on that.

Juan de Castro: That's great. So perhaps just touching on one or two of the other priorities you mentioned at the very beginning. So one of them, I believe you said, was the optimisation of the book.

Andrew Horton: Yeah. Portfolio optimisation, yeah. How we optimise the portfolio, yeah.

Juan de Castro: Optimise the portfolio, right? As always, there will be some parts of the book which are less performing than the others. So tricky question. Does that go against the consistency principle?

Andrew Horton: To some extent, it might. I mean, if we look at what we've been doing over the past year or two, we've looked at our property catastrophe book. And what we've found is we've got too much in certain areas. And what we're not trying to do is reduce it necessarily. We're trying to get it in better balance. So you're right. In doing that, we're going to have to give up some clients if we've got too much in a certain area and take another area. But in effect, if we don't have the company giving a consistent result, which is good for clients ultimately, we just need to do it. And if you look at the history of QBE's results over the past decade, we've had some pretty volatile results. We need to take that volatility out to give more consistency. So we're going to apply our consistent theory going forward. So it did need some remediation in the balance. Similarly, you're right. If we're not relevant in a line of business or don't add anything, we can't just plough on because that's good for consistency. Because if somebody else does it, if we find somebody else who can do it better than us, we should let them do it. So there is going to be some. You're right. It's not going to be perfectly consistent. We're just going to do everything. Whether we make money or not make money from it. But the portfolio optimisation is ideally doing it relatively quickly, getting the book in a better balance in a memorable way.

Juan de Castro: Yeah and I guess links to your growth. Obviously, one way of optimising the book, as you mentioned, is growing. So you can shrink it. That's one way of optimising. The other one is growing it in other areas to balance.

Andrew Horton: I completely agree. That's been really important in the property book. But there's a property book as shrunk as a proportion of our total, not necessarily to be written as property business, but because we've written everything else. We've let everything else grow more than we've let that grow. So you're right. Some of the property we have dropped during the past year or two, but we've also grown everything else as a proportionate fall. Exactly right. And then we get the book in better balance.

Juan de Castro: Definitely. And then you mentioned being in lines of business or in products or in parts of the book that are suboptimal from a size perspective. And I remember when I was at Hiscox, we did look at... I think it was a similar initiative in terms of, okay, we've got really small books, almost regardless of whether they're performing well or not. In the end, very small books tend to take a disproportionate amount of management attention and destruction. So do you also agree that almost like an insurance company cannot afford to have like 100 small pieces of book because they just don't manage it?

Andrew Horton: I completely agree with you. When you've got something that's not performing well, the amount of management time that goes into it is enormous. If it's not performing well and you're not really that relevant in it, then you've got to start questioning why are you doing it? In my time, we've made a few changes with some of the books of business. We need to continue to apply that. We've done very best to certain lines of business, and that's why we end up running them. Or we can convince ourselves we need to do it because it benefits something else. And that's often just not true. So I think all companies need to continue to look at that and really think through, are they relevant in it, and they make the margin over the cycle or not. But you're right, your point's a good one because they just take up loads of time. You can find yourself spending a lot of time on very small parts of the business that really matter to a group at all.

Juan de Castro: That's very interesting. Let's play a bit of a crystal ball exercise. If we did another part of this podcast in a couple of years' time, So you've been the CEO of QBE for a couple of years now, right?

Andrew Horton: Just over two years, yeah.

Juan de Castro: So I guess imagine by the time you've been CEO for five years, what would give you the biggest pride?

Andrew Horton: So I would like more stability of people. So we have stability of leadership. We'd see more of that internal succession continue. If anybody does leave, we're using internal succession more and more. I would like people to think of QBE as consistent. So in other words, consistent in terms of appetite, ultimately giving consistent returns. So we've had a record of some inconsistent returns over the past decade. So we have that. Consistent in terms of growth. So brokers can grow with us. We can grow with them. So I'd like to do that. And I would like the system and process to be more modern. Whatever modern means, that might be the use of AI. We're just easier to do business with. I mean, we were the easiest insurance company to do business with in the world. We would get a lot more business. We can turn about business more quickly than anybody else. That would be fantastic. So if in three years time, we can achieve all of those. Luckily, the list isn't too long. Then I would be a happy individual. I'm sure everybody else at QBE would be as would all our stakeholders. That would be a really positive place to be.

Juan de Castro: Exactly. And I mean, if you're easy to do business with, as you said, you will grow with your brokers. If it's easy business internally, you'll have stability of people, leadership.

Andrew Horton: Yeah. And more productivity. We'd be very productive.

Juan de Castro: Exactly. It’s very exciting to see the clarity of your vision and the clarity of your priorities. I mean, this is the way we started the podcast, right? Leadership is about the consistency of messaging, consistency of clarity of vision, and just repeating the priorities over and over again. And I think throughout this chat, it's been very, very clear your vision for QBE, where you want to focus on priority. Andrew, thank you so much for joining me today. It's been wonderful. I'm sure everybody will really appreciate listening to it.

Andrew Horton: I hope so. It's good to spend time with you. Thanks a lot. Cheers.

Juan de Castro: Making Risk Flow is brought to you by Cytora. If you enjoy this podcast, consider subscribing to Making Risk Flow in Apple Podcasts, Spotify, or wherever you get your podcasts so you never miss an episode. To find out more about Cytora, visit cytora.com. Thanks for joining me. See you next time.