QBE a Shocker

The statement:  “I am not a scientist so I really cannot comment on the science of climate change.  …….Maybe there is and maybe there isn’t climate change – let us be honest, there are always going to be changes in climate no matter what happens or what it is caused by.  ……I’ve heard Professor Penny Sackett (Australia’s former chief scientist) and others talk about climate change, [saying] this is all happening, its going to be terrible.  And then you get to hear from people like (James Cook University adjunct professor) Robert Carter, and he says well actually that’s all a load of rubbish…….And so I am just none the wiser.  Who Knows?  I don’t have a crystal ball.”

The speaker:  Chairman, Belinda Hutchinson

The business:  risk taker, global insurer operating in 52 countries

The company:  listed on the Australian stock exchange operating internationally with 80% of its business internationally derived.  90% is commercial insurance

Share price:  Halved in the last 12 months, and only one third of its peak in the last five years

Profits 2011:  Halved

Climate catastrophes 2011: A$380 billion with a cost to the insurance industry of A$105 billion.  More than double of that for most years of this past decade except 2008.  

There is of course a real difference between the science of climate change and resource depletion, about which I have written exhaustively (see headlines below blog).  

If there is one thing a director is paid to do, it is to have a firm view and set strategy accordingly.  And for an insurance company whose business is to price risk based on frequency and severity of risk events, this is critical.   Clearly the QBE chairman does have a view:  because QBE was not re-insured (sufficiently?) against the losses from catastrophes last year.  But this is undisclosed to shareholders.

To say as she does in the quote above “Who knows?” is an absolute shocker.  

Find out or leave.