Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Shareholder Meeting (November 2006)
43 slides from Insurance Australia's shareholder meeting presentation, Nov 15, 2006
Slide 1: Insurance Australia Group Limited AGM cover letter
Insurance Australia Group Limited ABN 60 096 739 923 388 George Street Sydney NSW 2000 ‘elephone 02 $292 9222 iag.com.au 15 November 2006 Manager, Company Announcements Office y Australian Stock Exchange Limited Level 4, Exchange Centre 20 Bridge Street i AG SYDNEY NSW 2000 Insurance Australia Group
Slide 2: Address by Mr James Strong, Chairman
Address by Mr James Strong, Chairman Insurance Australia Group Limited 2006 Annual General Meeting 15 November 2006 Introduction Before we begin the formal part of the meeting today, | would like to provide an overview of Insurance Australia Group’s performance for the 2006 financial year, with a pa
Slide 3: Net profit after tax of $759 million
We recorded a net profit after tax of $759 million and our second-highest annual insurance margin and return on equity since listing. We achieved this by adhering to core strategies, including; 1. maintaining high customer retention in all major portfolios, and 2. adhering to risk and underwriting p
Slide 4: Dividends and delivering on strategy
ordinary dividends for the year to 29.5 cents per share, representing an 11.3% increase on the previous year. The continued strength of IAG’s financial position allowed for an additional special dividend of 12.5 cents per ordinary share which was paid in June 2006, returning $200 million in surplus
Slide 5: Acquisitions and offshore expansion
risks and generate sustained competitive levels of profitability. The first and most sizeable step we took was the acquisition of CGU and NZI four years ago, leading to our current position as the largest underwriter, in terms of local gross premium, in Australia and New Zealand. These acquisitions
Slide 6: UK Hastings acquisition and corporate governance
During the past year we also established a team and infrastructure to continue to grow and manage our Asian interests. Meanwhile we have been investigating opportunities in other regions. Taking into account industry structures, and the attractiveness and availability of particular entities, the UK
Slide 7: Corporate governance and risk culture
core operating purpose — understand and price risk, pay claims, manage costs and reduce risk — and our responsibility to provide fair and stable returns to shareholders. Our approach to governance is based on the view that it must be more than just compliance. While we already have the systems to he
Slide 8: Governance panel and risk framework
A key part of the Panel’s role is to ensure our governance framework is effective in addressing issues that may arise in the course of our international expansion, as well as to deal appropriately with an expanded Group. The Panel provides advice and support to the Group’s executives to assist them,
Slide 9: Board Membership and Resolutions
Board Membership | take this opportunity to indicate that the Board is planning for the future in terms of its own membership and composition. We will be strengthening the level of international insurance experience as we approach a period when a number of existing Board members will reach the end o
Slide 10: Remuneration report
adoption of the remuneration report, which is located within the annual report. As noted in the report, IAG’s executive remuneration policy is designed to ensure we can attract and retain the best people and reward performance in line with returns delivered to shareholders. Building and retaining a
Slide 11: Looking forward
Looking forward We are excited by the opportunities international expansion offers the Group, to take our expertise to other markets and glean insights for our existing markets at home and in Asia. We are continuing to explore opportunities to generate global scale, by building a portfolio of assets
Slide 12: Closing thanks
And | would like to thank my fellow Board members. It has been my pleasure to work with this group of committed and experienced people. The current year promises new challenges and opportunities for us in steering the future course for your company. Finally, | would like to thank you, our shareholde
Slide 13: Michael Hawker: year in review
2006 AGM Presentation Michael Hawker {Slide 1: Title slide] « Good morning Ladies and Gentlemen, and a very warm welcome to you all, to the 7” Annual General Meeting of Insurance Australia Group. {Slide 2: Year in review] « 2006 has been an interesting year for the company, with many highlights and
Slide 14: Asian Expansion
Asian Expansion « [Slide 5: Established a presence in Asia] After over two years of research, identifying opportunities, and building relationships, we were able to make some investments in Asia. We believe these markets will provide significant and profitable growth opportunities for the company. T
Slide 15: Double Digit Dividend Growth
Double Digit Dividend Growth e This enabled us to pay a dividend of 29.5 cents a share fully franked, an increase from last year of 11.3%. Due to our strong capital position and the buoyant equity markets inflating our expected annual return, we were also able to pay a special dividend of 12.5 cents
Slide 16: Insurance Cycles
« In the general insurance business, to remain profitable and successful over a long period of time, you must have: a consistently competitive customer proposition; outstanding personnel; a high performance and community-aware company culture; market leading risk management and pricing skills; and b
Slide 17: Customer Measures Strong and Improving
strongly committed to the company, driving systematic improvements in your customer proposition, managing resources efficiently, maintaining strong risk management and governance standards, and having an understanding of your impact on the community. Customer Measures Strong and Improving e (Slide 1
Slide 18: Carbon Neutrality by 2012
Carbon Neutrality by 2012 e As an insurance company we have been very concemed about the risks and impact of climate change on our community for a number of years. We have been working, on ways to reduce our own CO, emission footprint, alerting the community about the risks of climate change, and re
Slide 19: Outlook and Summary
« For the first six months we expect GWP to grow by 3-5% over the same corresponding period last year. Summary « [Slide 22: Strategy remains on track]. In summary our strategy remains solidly on track. We are building platforms for long-term growth and profitability, both organically and through acq
Slide 20: Annual General Meeting 2006
Annual General Meeting 2006 - Michael Hawker . Chief Executive Officer _ 415 November 2006
Slide 21: Year in Review
© IAG insurance Australia Group Year in Review Insurance Australia Group Limited ABN 60 090 70 623
Slide 22: Momentum in Personal Insurance
Momentum in Personal Insurance y IAG NSW Car Comprehensive ga eo gge £29 2 8 ss 8s <8 gs = £ ic « mI = ct] c ia] x i] 3 Q = a o = ct £ ww 3 a=) < x x 9 28 ae 33 ajey femeuey AyoamM Week due (Week ending) Insurance Australia Group Limited ABN 60 090 70 623
Slide 23: Cyclone Larry & NZ snow storm
Cyclone Larry & NZ snow storm © os ae insurance 7 Y y Ht pw Australia _ 2 Group ip ig Insurance Australia Group Limited ABN 60 090 70 623
Slide 24: Established a presence in Asia
Established a presence in Asia q@ insurance Australia Group @iac ALBA IAG awns 30% ef AmAssurentea, As al 15 November 2006. Insurance Australia Group Limited ABN 60 090 740 623
Slide 25: Award winning performance
Award winning performance © insurance Australia Group Insurance Australia Group Limited ABN 60 090 70 623
Slide 26: 2006 Results
2006 Results q@ IAG insurance * Net profit after tax of $759 million Group * Second highest ROE and insurance margin * Dividend of 29.5 cents per share fully franked — Up 11.3% on FY05 * Special dividend 12.5 cents per share fully franked — Returned $200 million to shareholders For the year ended 36
Slide 27: GWP: four year growth 15.5%pa
GWP: four year growth 15.5%pa © insurance % premium written, Australia outside NSW/ACT Group ef 42% Growth and | diversification achieved O% we FYO2 FYog FYOd FYOS FYO6 FY06 Pro-torma* Moir Home mest Ofer Shore Shorhik Cormarcisl —miLisbilly 12 CTP Meter fay py Werke’ Comp — i AmAsmurance For the ye
Slide 28: Profit: four year normalised growth 15.3%pa
Profit: four year normalised growth 15.3%pa $m 800 5 Normalised profit four year growth rate 15.3%pa 600 | Actual four year growth rate 39.6%pa 400 + 200 4 FY02 -200 ~ For the year ended 30 June. FYO3 Normalised NPAT to ordinary shareholders 781 636 insurance 759 Austratia Group FYo4 FY05 FYO6. @ Ac
Slide 29: ROE: four year average 15.7%
ROE: four year average 15.7% © insurance 5 24.5% Australia aot 1 Group 20% Normalised ROE four year average ms 15.7% 10% 5% 0% FY03 FY04 FY05 FY06 fa ROE (Normalised) attributable to holders of ordinary shares @ ROE (Actual) attributable to holders of ordinary shares For the year ended 30 June. Insu
Slide 30: Dividends: four year growth 29.5%pa
Dividends: four year growth 29.5%pa © Dividends per share insurance 50.0 Pp Austratia Group 42.0 40.0 | Ordinary dividends four year growth rate | 0, 29.5% pa a“ Fa “) Cents per share oe Q ° 10.0 7 Ei “ 0.0 4 FY02 FY03 FYO4 FYOS FYO6 m Dividends per share fd Special dividend Insurance Australia Grou
Slide 31: Australian general insurance cycles
Australian general insurance cycles y Combined Operating Ratio IAG Insurance Underwriting Profit Austratia Group 80% 90% 100% 110% 120% 130% Underwriting Loss 140% Combined Operating Ratio (%) 160% 160% FYg2 FY93 FY94 = FY95 FY96 = FYS7T = FY98 FYO99 = FYO0 FYOt FYO2 FY03 FY04 = FYOS Year Ended June
Slide 32: Our operations today
Our operations today Ps Hastings oirect sgolag . es NEMA SGIO Scie Racy INSURANCE — ae (eeu Gakkke WA ‘This togo is th property of China Pecitic Proparly Insurance {CPI 1AG is seeking fo acquite 24.9% of PPI: tha transaction net yet completa IAG distributes preducts theaugh RAGV, 3. These lagos are
Slide 33: Health of personal lines portfolios
Health of potas ponds personal ines Clem: tian) og) IAG insurance Claims Satisfaction Level Australia (Direct Personal Lines) Group personal li 908 ae peta age a _— NN TN LO as 30+ Base Jan- duly dan- Jul» Jan= Jul= Jan- ul Mar Sep Mar Sap Mar = Sep Mar Sop ao | 03 03 8 $6 08S 06 Hod 2Ho04 4HOS 2HOS
Slide 34: Employee engagement
Employee engagement q) insurance Australia Group _ Stable” Serious 7908 Critical Zone 0% Employee Engagement Score: IAG Australia Year 2003 2004 2005 2006 Score AS% 53% 54% 56% Insurance Australia Group Limited ABN 60 090 70 623
Slide 35: IT costs down, effectiveness up
IT costs down, effectiveness up © insurance Australia Group IT Costs Priority 1 Outages 350 400 330° 323 300 313 200 & 300 280 278 100 6 sya | rrr | ever | eros | vos | eves | rves | swe | rie | rie | eros 250 + Cote | dana | Apri | Julyos. | Oot | Janus | Apzosi- att get | sans. Ape FYo2 FY03 FYe4
Slide 36: Our sustainability report
Our sustainability report y IAG -16% +82% =" roup AGKG/FTE A8KG/FTE NEW ZEALAND AUSTRALIAN OFFICE RECYCLED COMMINGLED GDTONNES | A: PERSON CAN MAKE PAPER USE AWORLD OF DIFFERENCE 504, AUSTRALIAN Lost, TIME ER SRCY NEW. ZEALAND EMPLOYEE Insurance Australia Group Limited ABN 60 090 70 623
Slide 37: Outlook
© IAG insurance Australia Group Outlook | Insurance Australia Group Limited ABN 60 090 70 623
Slide 38: Sales conversions trending up
Sales conversions trending up © Australian Direct Personal Lines Insurance National Sales Conversion Rates gious for Telephone Cail Centres 50% 48% 48% 44% 42% 40% 38% 36% Sales Conversion Rate (%) 34% 32% 30% 2°! 2128 2 2 2 e@zegse¢ 8 8888 8B SSSR RSSSSESS RS SSERS SORES CER ET RES BRET RE AEE LES
Slide 39: First three months of this financial year
First three months of this q) financial year IAG insurance * Performance in line with our guidance Austral * Continuing momentum in personal lines — Renewal rates at highest level in two years — Marketing initiatives well received by customers — Improving conversion rates on new business * Commercia
Slide 40: Outlook: year ending June 2007
Outlook: year ending 30 June 2007 © insurance Outlook firmed from full year announcement Austria Group « Generate GWP growth of 8 — 10% — GWP growth in first six months 3 - 5% on 1HO6 ¢ Further shareholder accretive acquisitions in the pipeline ¢ Deliver normalised ROE above 15% Subject to no large
Slide 41: Strategy remains on track
Strategy remains on track insurance Generation ‘st Austratia Progress Internatio al Group growth and *otitability Delivered ~- 1998 2003 2004 2005 2006 2012 Insurance Australia Group Limited ABN 60 090 730 623
Slide 42: IAG share performance
IAG share performance © IAG share performance - since listing Insurance Australia Group 300.00 S&P/ASX All Ordinaries Accumulation Index = S&P/ASK 100 Accumulation Index 250.00 -— JAG Share Price including Reinvestment of Dividends 7 200.00 -— 4 150.00 +— + 100.00 7— 4 Note: 80.00 7—--—--—-+¢ Dnideh
Slide 43: Annual General Meeting 2006
Annual General Meeting 2006
Insurance Australia Group — Shareholder Meeting (November 2006) on 6ix