It hasn’t been remarked on widely but the globally booming QBE Insurance has recently cracked the top ten Australian companies for the first time – an achievement deserving hearty congratulations.

Unlike our rapacious banking cartel, QBE Insurance has become a $26 billion ASX giant courtesy of successful global expansion over many years. The company was almost crippled by September 11 and even had to employ Macquarie Bank as its defence team when Rene Rivkin lobbed a takeover bid in the 1980s. It’s come a long way since those days.

QBE has only had two CEOs, John Cloney and Frank O’Halloran, over the past 25 years and they lead the company to this day as chairman and CEO respectively.

O’Halloran is an Albury Tech boy made good who became QBE finance director way back in 1978 and then replaced Cloney as CEO in 1998 after he’d done 17 years in the top job.

It’s been a remarkable partnership unsurpassed in Australia. The next best duo performance is Wal King and Dieter Adamsis at Leighton Holdings, who have been CEO and finance director respectively since 1987. However, QBE is now three times as valuable and far more global.

Our very biggest companies, such as the banks, Telstra and BHP-Billiton, don’t tend to have any institutions with substantial shareholdings above the 5% disclosure threshold.

However, QBE has three very happy long term backers in AXA Asia Pacific, which controls 7.53% worth $1.9 billion, giant US fund manager Capital, which holds 5.9%, and Barclays, which has just over 5% or 38.78 million shares.

Given that QBE shares were trading at below $4 after September 11, the recovery in QBE alone would have seen Axa outperform its Australian competitors. I’m not aware of another Australian fund manager with a bigger stake in a single company.

The only criticism that can be made of QBE is that it has been increasingly gouging its Australian customers as the local general insurance market takes on some cartelesque characteristics, which will be exacerbated today when Promina shareholders endorse the Suncorp-Metway takeover.

This will create a $20 billion giant that will give Australia the rather dubious distinction of having eight financial services companies in its top 15. These turkeys are meant to service the rest of the economy, not take over, but the combination of an unchecked banking cartel and compulsory superannuation has left us this way.

QBE and Macquarie Bank are the only two of the eight with redeeming features in the form of hugely profitable offshore operations.

Peter Fray

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