QBE Re-balancing the portfolio – a podcast conversation with Chris Killourhy

The latest Voice of Insurance podcast delves into evolving appetites and re-vamped strategy at QBE Re, a well-respected mid-sized reinsurer that forms a $2bn part of the Australian-based household-name international carrier.

QBE Re has been viewed as a highly competent and nimble trader in the reinsurance markets in which it operated. Today it is evolving into a player that is looking to become a long-term across-the-board partner for the right kind of cedant.

As QBE Re’s managing director, Chris Killourhy hopes that this strategy will deliver a growing, balanced portfolio and a more predictable and less volatile level of earnings than in the past.

Killourhy joined QBE as an actuary, before rising up the ranks to be a chief financial officer (CFO), first for the insurer’s Australian and Pacific arm, and then in London for its international business, before turning his attention to running QBE Re from September 2022.

“When I look at my career and the roles I’ve done with QBE, whether it’s been on the actuarial side, or the CFO side, I’ve always had a real bias towards capital management, capital allocation, optimisation and portfolio management,” he told the podcast. “And I guess that’s the bit I’m excited about now, to have the opportunity to bring a bit of that to the reinsurance room.”

He was candid that his leadership role is not the same as that of a chief underwriter, “probably because I wouldn’t be much good at it”, he admitted. Though he added that as a former actuary, there was a temptation to think any underwriting question could be solved by a smart application of maths, modelling and exposure management.

“But having moved into this role I’ve got a newfound respect for the underwriting skill-set,” he said. “There’s been a great opportunity for me to realise just how nuanced underwriting can be.”

Some of those underwriting skills involve communication – messaging, tact and managing relationships – as much as the more technical aspects of “managing the ups and downs of the cycle”, he suggested.

“This is not black and white that you’re in or you’re out, and how you think about managing the portfolio. One of the things I’m really loving about this industry is the quality of talent that exists in the reinsurance industry, on the broking side on the underwriting side, and also just how important the individual relationships are,” he added.

The portfolio has certainly grown to a new size, and it intends to stay there. Strategically, QBE Re wants to show constancy, Killourhy emphasised, the day before a loss event, the day after, and 20 years ahead, demonstrating reliability to clients. There is still room for tactical fluctuations in capacity deployed, but these ripples will be relatively small when zoomed out, than was the case in previous market cycles, he suggested, when the overall book was allowed to shrink or mushroom more in absolute terms.

“One of things we talk about a lot within QBE is sustainable growth,” he said. “The size of the QBE Re franchise now is in the region of $2bn. So we’re no longer a rounding error in the context of the broader group; we are a core part of the broader group.”

Seeking consistency also changes the client makeup to some degree, he suggested, with the aim that the book grows sustainably, in line with the growth of its renewing cedants.

“We favour relationships where we can write a broad product suite and where we can write across programmes to ensure we’re getting real balance in the portfolio.

This provides flexibility, while avoiding rollercoaster-like changes to the book.

“We can’t be all things to all people, but maybe we can be all things to some people,” he added.