EMERGING insurance play Steadfast Group said former QBE chief Frank O’Halloran was a ”logical choice” to take charge as chairman as it prepared for a stockmarket listing in May next year.
Mr O’Halloran, who was planning to join the QBE board next year, surprised investors when late on Friday he detailed plans to head up the Steadfast board.
The appointment of Mr O’Halloran comes less than two months after he retired from QBE following a 12-year stint as chief executive.
QBE’s board has offered to waive a non-compete clause in his contract that would have prevented Mr O’Halloran from acting for an insurance company or related business for three years from his retirement.
Steadfast executive chairman Robert Kelly said plans for the initial public offer were well under way and Mr O’Halloran was the logical choice for the insurance broker network.
”We do $760 million worth of business with QBE annually; we’ve had a long-standing relationship with them for many years,” Mr Kelly said yesterday. ”We’ve worked very closely with [Frank] over that time.”
JPMorgan and Macquarie Capital have been selected as joint lead managers to the planned float.
The Steadfast model sees insurance brokers band together to negotiate wholesale insurance rates with the major insurers. This is then onsold to the customers of insurance brokers.
Steadfast is also planning to take ownership stakes in more than 100 insurance brokers, making it a rival to listed insurance broker network Austbrokers Holdings.
Still, the appointment of Mr O’Halloran to a business that seeks to drive down premiums from players such as QBE raised questions among investors.
Mr O’Halloran is well known in the insurance broking community and has intimate knowledge of QBE’s pricing models.
There are more than 400 Steadfast brokers’ offices nationally, with sales of $4.1 billion and annual revenues of about $700 million.
Analysts calculate Steadfast would be valued at around $440 million based on its future earnings growth.
Mr O’Halloran was travelling overseas yesterday and was unavailable for comment. QBE chairwoman Belinda Hutchinson said Mr O’Halloran ”is passionate about the insurance industry, and feels that his expertise would add a great deal at Steadfast Group with its plans to list on the ASX”.
However, given QBE underwrites 17 per cent of Steadfast’s insurance, the QBE board and Mr O’Halloran ”agreed that he will not return to the QBE board in 2013 as originally envisaged”.
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