QBE’s Group CEO-elect Pat Regan will lead the search for his successor as CEO Australia and New Zealand Operations when he takes over from John Neal on January 1.

The company surprised the market last week when it announced Mr Neal will step down at the end of the year.

Mr Regan says the insurer has “some clear strengths and great franchises”.

“I am delighted to be appointed to lead the group,” he said. “One of my first priorities will be to lead a search for my successor as CEO of our Australian and New Zealand operations.”

As reported by insuranceNEWS.com.au last Tuesday, Mr Neal will step down after five years at the helm. He began with the company’s European operations in 2003 and moved to Sydney in 2011 as CEO global underwriting operations.

Mr Regan was identified in an Insurance News (the magazine) article in April as “the person with the inside running” to replace Mr Neal. He joined QBE in 2014 as CFO from UK insurer Aviva, allegedly for an $8.5 million sign-on fee.

He will receive a salary of $2 million, while the executive incentive plan provides for a maximum award of 350% of base salary.

Chairman Marty Becker says Mr Neal “has led the business through a significant transformation and a challenging period in the insurance industry globally, and has been working closely with the board to ensure a smooth transition for his succession”.

QBE says the board undertook detailed succession planning over the past two years and carried out an internal and external candidate review for the CEO appointment.

“In the past 12 months Pat has led a strong turnaround in the Australian and New Zealand operations, highlighting his operational skills and business acumen, and in his previous role as group CFO [was] pivotal in stabilising the balance sheet and enhancing the group’s capital management,” Mr Becker said.

QBE reported a net profit of $US345 million ($428 million) for the six months to June 30, up 30% on the corresponding period last year.

But the group came under fire before the results announcement, when it warned the combined operating ratio from its emerging markets division would blow out because of higher than expected claims from Asia and Latin America.

The company also surprised the market earlier this year with the sudden departure of COO Colin Fagen, while Mr Neal’s short-term incentive bonus for last year was cut by 20% because “personal decisions” he had taken were “inconsistent with the board’s expectations”.