QBE Insurance Group Limited: Ethics and Governance Report Analysis

This report is a comprehensive analysis of the corporate governance and ethical practices of QBE Insurance Group Limited. It begins with an executive summary and introduction, providing an overview of the company's history, industry position, and ethical framework. The report delves into QBE's corporate governance structure, including board composition, reports from the chairperson and CEO, and the remuneration report. Furthermore, it examines the board's orientation through the lenses of Agency Theory and Resource Dependency Theory, offering insights into the relationships between stakeholders and management. The report concludes by interpreting QBE's communications using Legitimacy Theory, providing a holistic understanding of the company's approach to governance and ethics. The analysis is based on research from various sources and websites, highlighting key developments and changes within the company, particularly after 2019. The project fulfills the requirements of an individual capstone, demonstrating an understanding of corporate governance principles and their application to a real-world company.

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qbe insurance group Limited
Ethics and Governance
Report
Student Details

Executive Summary
This report content is based on the research done from various sources, journals, and
websites. The “QBE Insurance Group Limited” Corporate Governance has been changed
from in 2019. This company had been listed in the “Australian Securities Exchange” since
1973 and had acquired its position in the ASX Index. In the preceding years, the company
had tremendous growth because of the ethics and governance states by the company. This is
because of the different ethical and governance outlook as compared to the other companies.
It had been observed that objective of QBE is following all ethical grounds and the
performance of the employees, as well as the direction of management, is considered
following social norms, religious practices and are influenced by cultural ethics. QBE
corporate governance and ethics encourages better communication, which helps in the
process of decision-making.
As the companies have effective corporate governance, so this company had been
included in one of the leading Insurance companies in Australia. Due to the previous growth
of this company, the Stakeholders attracts towards this company, as the Board Orientations of
this company is also presentable and effective. Hence, corporate governance and ethics are
acceptable by the Stakeholders.
“QBE Insurance Group limited” corporate governance & ethics objectives and aims
are to consistently understand and develop an approach to maintain standards of conduct and
behavior of the Directors, consultants, employees, and officers in carrying out their roles.

Contents
Introduction....................................................................................................................2
“QBE Insurance Group Limited”...................................................................................2
Corporate Governance of “QBE Insurance Group Limited”.........................................4
Board Composition of QBE.......................................................................................4
Report from Chairperson............................................................................................5
Report from CEO.......................................................................................................6
Remuneration Report.................................................................................................6
Board Orientation of QBE.............................................................................................7
Analysis though “Agency Theory”............................................................................7
Analysis through “Resource Dependency Theory”...................................................9
Interpretation of QBE communications using “Legitimacy Theory”..........................10
Conclusion....................................................................................................................11

Introduction
The Purpose of the Report is to interpret the role and importance of Corporate
Governance and Ethics in “QBE Insurance Group Limited”. In this Report, “QBE Insurance
Group Limited” has been chosen to elaborate the four parts of the report, which helps to learn
and understand the corporate governance, and ethics in “QBE Insurance Group Limited”. In
addition, this report is based on the proper research for each part of the assignment with the
help of various sources and websites. The following paragraphs will help you to find out the
essential outcomes of the reports, which has been included in the conclusion part.
“QBE Insurance Group Limited”
QBE Insurance Group Limited is one of the largest Australian global insurer
companies. Its headquarters is situated in Sydney. This company mainly serves in Australia,
Asia-Pacific, America, and Europe. Presently this company is associated with 14,226
employees from 37 countries worldwide (QBE , 2019). In August 2012, this company
secured the ranked among the World’s top General Insurance Company. The market
capitalization of this company is of “A$17.81 billion”. The QBE follows the guidelines
specified by ASX (ASX, 2019).
James Burns and Robert Philips founded the QB in 1886. This company was
established in Townsville, Australia. Initially, this company was introduced with the name of
“North Queensland Insurance Co.”. The company had played an important part in the
commercial history of Australia. It had been observed that this company had tremendous
growth in national and international grounds (QBE , 2019). In Recent preceding years, this
company secured its place among 20 top most insurer companies and reinsurer companies

globally. This Australian Company was listed in the Australian Securities Exchange since
1973 with the code name ‘QBE’ (ASX, 2019).
 Recent History
“QBE Insurance Group Limited” had taken the necessary steps to achieve the strongest
results in the succeeding years by changing the governance guidelines and code of conduct.
Hence, in 2018, a significant improvement is denoted in cash profit after tax. In 2017, the
company was facing huge losses. The CEO of QBE restructured the program after these
losses by changing the corporate governance of the organization as a result Company covered
all the losses (Howard, 2019).
 Overview of Insurance Industry
In recent years, this industry had a huge change in term of dealing with customers as now this
industry has adopted the new technological innovations, which helps the industry to fulfill the
higher expectations of the customer and the newcomers in this industry redefined the
marketplace by innovative methods. The focus of the insurer remains constant on the growing
sales, profitability, and competing in the dynamic environment of the Insurance industry. In
2018, it had been observed that this industry has emerged with various opportunities and
threads (Deloitte Australia, 2019).
In this Report, this concept had been deeply researched, which will cover all the four parts of
the report. The first part of the report will cover the introduction and summarization of the
“QBE Insurance Group Limited”, which include the company’s ‘Code of Conduct & Ethics’,
history, achievements, missions, objectives, and an overview of the Insurance industry. The
second part will cover the corporate governance of QBE, which involves QBE board
composition, Report from Chairperson and CEO, and Remuneration Report. The third part

includes the Board Orientation, explained with the help of “Agency Theory” and “Resources
Dependency theory”. In addition, the last part of the report will cover the Interpretation of the
QBE communications using “Legitimacy Theory”.
Corporate Governance of “QBE Insurance Group Limited”
“QBE Insurance Group Limited” is highly given preference to its corporate
governance. In 2018, this company had introduced the new DNA which Interlinked 7
Cultural elements. These elements are fundamental to this company. In addition, these
elements will also help in the future by specifying the needs to be operated.“QBE Insurance
Group Limited” (QBE) is committed to the highest standards of corporate governance (QBE,
2019).
In 2018, QBE introduced its new DNA, which interlinks seven cultural elements that
are fundamental to QBE and how QBE needs to operate in the future to succeed, recognizing
its customers, people, shareholders, and the community (QBE , 2019). QBE believes that a
culture that rewards transparency, integrity and performance will promote its long-term
sustainability and the ongoing success of its business.
Board Composition of QBE
The Board Composition of the QBE is comprised. The Board of Directors has assessed the
Directors, which have mostly Independent Directors (Toppr , 2019). The appointment of the
Board of Directors is based on the “ASXCGC Recommendations” and had been reviewed on
a regular basis. However, the Current Board Composition of “QBE Insurance Group
Limited” is meet up with the “ASXCGC Recommendations” (ASX, 2018). The Board
composition of QBE is described in the following table with their Independent and
Nondependent Ratio.

Sno. Name of Board of
Directors
Designation of Director Independent
(Yes\No)
1. W. Marston (Marty)
Becker
Chairperson and Nonexecutive director Yes
2. Patrick (Pat) Regan Chief Executive Officer No
3. Fred Eppinger Nonexecutive director Yes
4. Stephen Fitzgerald Nonexecutive director Yes
5. John M. Green Deputy Chairman and Nonexecutive
director
Yes
6. Kathryn (Kathy) Lisson Nonexecutive director No
7. Sir Brian Pomeroy Non-executive director Yes
8. Jann Skinner Nonexecutive director Yes
9. Rolf Tolle Nonexecutive director Yes
10. Michael (Mike) Wilkins Nonexecutive director Yes
Source: The Board of Directors of QBE Insurance Group Limited (QBE , 2019)
Report from Chairperson
The Chairperson of the company had specified the plans to be reshaped and simplify QBE’s
business progressed meaningfully in 2018, with management successfully executing against
our strategic agenda. In this report, he also specified the improved market conditions
combined with a forensic approach to performance management contributed to improved
financial performance and better returns for shareholders. The Chairman had laid strong
foundations to build upon for a sustainable and profitable QBE of the future. Overview of the
“QBE Insurance Group Limited” has shown that in 2018 the combined operating ratio of
represents a significant improvement compared to 2017 performance (QBE, 2018).

Report from CEO
The actions QBE’s CEO had taken various steps this year to simplify this company
and to upgrade the capabilities in pricing, underwriting, and management claims. These steps
implemented for having an improvement in the performance management framework, which
delivered meaningful improvement in the underlying quality of our business and our financial
performance in 2018. The positive momentum QBE had built throughout 2018, combined
with the year, 2019 with the help of strategic agenda for the improvement in the positions and
value for our shareholders in 2019 and beyond.
At the end of the CEO Report, he pleased with the progress. Organisation had made
against our strategic objectives for 2018, which was reflected in improved financial
performance for the year. With the QBE simplified structure, the implementation of Brilliant
Basics and our relentless focus on performance across the business.
Remuneration Report
This Remuneration Report specifies the set of remuneration framework. In addition, it
provides the detail of remuneration results for key management personnel for the year, 2018.
This reports justified the remuneration alignment of QBE’s performance. The Remuneration
states the accounting standards, which helps in defining the key management personnel. The
Executives and Non-executive Directors have the authorities and responsibilities for
planning, directing and controlling the organizational activities of the “QBE Insurance
Limited Group”, either directly or indirectly. In 2018, the remuneration report had been
prepared and audited according to the disclosure requirements of the Corporations Act 2001.
The QBE Board awarded the Group CEO an “Executive Incentive Plan (EIP) award”
of 98.6% of his target opportunity (65.7% of maximum opportunity) for 2018. In 2019, this

Company had changed in the remuneration arrangement, which has been shown in the
following chart:-
Source: QBE Remuneration arrangement for 2019 (QBE, 2018)
Board Orientation of QBE
“QBE Insurance Group Limited” board orientation is the process that helps the new
directors, states the contribution in the tenure and states their role to corporate governance
and ethics in the board (QBE , 2019). The board orientations role is to provide important
information about the organization. In addition, it specifies the rule and responsibility of the
Board of directors of QBE. In addition, it also serves to build an effective relationship among
the QBE Board members, which provides support and promotes the agreement about their
work.
The corporate governance committee is responsible for the Board Orientations. The
Board Orientation program provides detail information about the company. The Board
orientation of the company can be analyzed with the help of “Stewardship and Resource
Dependency Theory”, which is explained in the following paragraphs.

Analysis though “Agency Theory”
The agency theory helps QBE in defining the separation and management of the
ownership. In addition, this theory helps this company in assigning of the management from
the owners to the managers of the firm. This separation helps in understanding the agency
relationship in the organization and driving the agency cost of QBE. The manager of QBE
works for the self-interest and he is the wealth maximizer that is why this theory inapplicable
in QBE. In this organization, the manager undertakes those activities, performed for their
own interest rather than for the shareholder’s interest. The firm requires corporate
governance, as it reduces the agency cost with the help of accountability and controlling the
actions of the manager with transparency. The agency, the board works to identify the
emphasis of the company annual report, based on the remuneration report. This contains the
scheme named as ‘senior executive remuneration schemes’ (Lopes, 2016). The board is fully
aware of the shareholder requirements and their importance. Therefore, QBE follows the
agency theory as in this organization there are a majority of independent directors.
 Board Orientation of QBE
In “QBE Insurance Group Limited”, have the orientation that follows the agency
theory. Currently, the board composition of this company has all the Non-Executive
Directors, which are independent. This company Board follows the principle of good
corporate governance, where the directors do not receive the remuneration related to the
performance. In addition, they do not receive other benefits of retirement or termination,
except superannuation.
 Board Focus of QBE

The QBE Board focus is to provide shareholder the profits, dividend, and growth.
Remuneration provided to the Directors and the Executives, mentioned in the remuneration
report is in detail and this report is the part of the director’s report.
 Key Communication of QBE
The key communications of QBE Company specify the Remuneration Report,
Company Income Statement, and Balance Sheet.
Analysis through “Resource Dependency Theory”
This theory is applicable in “QBE Insurance Group Limited” as this organization has
an appropriate control on its external resources. To maintain and create the links to the
resources, the BOD of QBE plays an important role. The board members of the QBE add the
value to the organization by their skills and maintain their contacts with the groups such as
educators, policymakers and lobby groups. These group links help in reducing the uncertainty
in the future of accessing the resources required in the organization (HRZone , 2019).
 Board Composition of QBE
In this Theory, the ratio of the independent or non-independent director in the board
composition is not so important. The most significant factors in this theory are a mix of
contacts and skills. In QBE Insurance Group Limited, the mix of skills and contacts ensures
the flow of vital resources.
 Board focus of QBE
The focus of the board in this theory is to the provider of the resources. In addition,
the board focus is on the capital and resources flow management, which enhances the
resources of the “QBE Insurance Group Limited”.

 Key Communication of QBE
The key composition is depending on the company, which means they serve to secure
the vital resources of the company. The key communication of the board helps the QB to
create and maintain new contacts so that the company has further increment in the resources.
“QBE Insurance Group Limited” constructed the skilled matrix. This shows that the
board has the skills, experience, and knowledge. This helps in providing the corporation in an
effective direction, which opens the door for the searching resources for the corporation.
Hence, this theory is applicable to this company. The above discussion helps in
understanding the growth of strategies and capital management in the company.
Overall assessment of all the theories agency theory can be appropriately applicable
for companies board orientation as every board member and employee has to show respects
the right of the shareholders. These shareholders are most powerful shareholders of the
company. As agency theory states that majority of board members should be independent.
QBE also has majority stakeholders and while board selection process board members has to
share all the information about any decissoion of selecting the board members.
When it comes to board focus, with the agency board of the QBE has to respect the
inrest of the shareholders. Baord members have toi provide all the information of the
company and ensures that al the shareholders can access the information or not. The company
regularly communicate with the shareholders through the pulication and disclosure. The
board members of the company welcomes and encourage the participation of shareholders in
AGM which held in Sydney every year. The board has to be ensure that all the auditors
should be there and attend the AGM and provide all the information about the financial
performance of the company which includes the growth, dividends and NP of the company.
Boards key communication are similar as agency thepry, the company provides annual report