Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Merrill Lynch Australasian Investment Conference 2003
21 slides from Insurance Australia's conference presentation, Oct 16, 2003
Slide 1: ASX cover letter: Investor Presentation
16 October 2003 Ms Pam Ross Manager, Company Announcements Office Australian Stock Exchange Limited Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Ms Ross INSURANCE AUSTRALIA GROUP LIMITED INVESTOR PRESENTATION Please find attached copy of presentation by Insurance Australia Group’s
Slide 2: Insurance Australia Group – Merrill Lynch Australasian Investment Conference
© [AG Insurance Australia Group Insurance Australia G ~ Michael Hawker, CEO Presentation to Merrill Ly ch in Investment ~ Conference — 15 Octob 20: Wea Insurance Australia Group Limited ABN 60 090 739 923 isuRANCE
Slide 3: A watershed year
A watershed year q ¢ Undertook the acquisition of CGU and NZI Group — Added nearly 60% to gross written premium * Delivered improved performance from both the existing and acquired businesses — Reduced loss ratios — Reduced operating costs — Improved levels of new business and customer retention ¢ A
Slide 4: Outline
Outline q IAG ¢ The markets in which we operate Group — Market size and consolidation * Our mix of business and diversification ¢ Market cycles and conditions ¢ FYO3 results — Key ratios — Acquired business performance & integration * Capital strength * Outlook niin au soo ggg WA Neveosorsss om IHSU
Slide 5: Australia's consolidated market
Australia’s consolidated market q IAG Insurance Australia Group CGU 15.0% 14.8% 13.1% 11.9% : : 7.9% 7.3% T T T T L T T 1 IAG (pro- Promina Suncorp Allianz QBE Next 15 The rest forma) Source: APRA Statistics June 2002 ~ Inside Australia general insurance premiums (excluding reinsurers) IRR Clearview
Slide 6: New Zealand's consolidated market
New Zealand’s consolidated market © IAG Insurance Austratia afOU 1000 | 40.0% ° 800 4 NZi E N > 600 - 20.6% 22.4% = 400 4 © 8.8% 8.2% “| - a 0) T T 1 IAG NZ Promina Lumley | The rest Source: Insurance Council of New Zealand ~ Calendar 2002 Statistics vB and! sco gag (srare) WA cores 5
Slide 7: Market shares by product
Market shares by product q IAG Insurance Australia Group Australia New Zealand 50% 50% 40% 4 40% A 30% 4 a 30% 5 E 20% | 38% E 20% |e 39% us * 27% # 29% 10% | wwe 25% 0% 0% Motor Home Metor Commercial Employer Motor Home Comm. Comm. Comm. lability liability Motor property liability + Leading market
Slide 8: Premium diversification
Premium diversification y IAG Insurance 56% Australia Group Premium by class and % outside NSW/ACT 3% FYOS Proforma @ Motor fg Home @ Short-tail Commercial GQ Workers’ Comp (g CTP/Motor liability gg Health (J Liabiity gg Other Short-tail The main components of Other short-tail are: 2% other accident
Slide 9: Broadened distribution channel mix
Broadened distribution channel mix q IAG Insurance Australia Group 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% FY02 Proforma Group FY03 w Direct mintermediated gg Third party Ean Lh Insurance Australia Group Limited MERA Clearview WA ABN 60 090 739 923 IHSURAMCE 8
Slide 10: Market conditions and cycles
Market conditions and cycles q [AG Insurance Australia ¢ A tale of three cycles Group ¢ Personal lines — Structural change — considered sustainable * Commercial lines — The larger the business, the more susceptible to ongoing global cyclical influences * Statutory classes (motor & employer liability
Slide 11: FY03 financial results overview
FY03 financial results overview y [AG Insurance Australia Consolidated financial results FY 2001 FY 2002 FY 2003 Bevan Aim Gross written premium Net premium revenue Underwriting profit/(loss) Investment income on technical reserves Insurance profit Investment income/(loss) on shareholders’ funds Amo
Slide 12: Fifth consecutive half-year of underwriting profit
Fifth consecutive half-year of y underwriting profit © Insurance Australia Group Insurance margin (pre-tax) 9.9% (139) 1HOO 2HO00 1HO1 2H01 1HO2 2H02 1HO3 2H03 w@ Underwriting result @ investment return on technical reserve wre Insurance Australia Group Limited ABN 60 090 739 923 rule coon scio gic
Slide 13: Key operating ratios — margins up
Key operating ratios — margins up y 27.5% 25.0% 22.5% 20.0% 175% 15.0% 12.5% 10.0% 75% 5.0% 25% 00% Expense ratio {and commission ratio for FY01 ~ FY03) 90.0% 3s a Sve 3 2 [AG Insurance . Australia Loss ratio Group 85.0% 80.0% 75.0% 70.0% 65.0% 60.0% 145.0% 410.0% 405.0% 100.0% 95.0% 90.0% 85.0% 80.
Slide 14: CGU/NZI performing strongly
CGU/NZI performing strongly q IAG CGU/NZI insurance result Actual Business case Australia, Gross written premium 1201 A$1,125m Net earned premium 23m A$972m Combined ratio 98.3% Contribution to group NPBT ' nla ‘ Stated after allowing for goodwill amortisation, integration expenses and borrowing cos
Slide 15: Synergy realisation progressing well
Synergy realisation progressing well © IAG Insurance Synergy realisation schedule 2H03 2H03 1HO4 2H04 Be Group Personal lines Commercial IT, shared services & overheads Australia sub-total International - New Zealand Total synergies in run-rate Reported income statement Synergy benefits collected Co
Slide 16: Updated operating targets
Updated operating targets q [AG Insurance . : Australia Previous post- Revised [aaa integration FY03 FY04 targets results Status tar COR - Group COR - Short-tail COR - Long-tail COR - International Insurance margin (pre-tax ¢ Achieved post integration targets in FY03 ¢ Upgraded COR targets for the c
Slide 17: Strongly capitalised
Strongly capitalised q IAG Insurance * Approach to capital unchanged Group — Risk of ruin of 1 in 750 years — 'AA\ category rating — currently 'AA' (Outlook stable) — Group MCR multiple in 1.35x — 1.65x range, now at 1.62x ¢ Australian insurance entities at 2.03x MCR ¢ Strengthened risk margins in c
Slide 18: FY04 outlook
FY04 outlook «© IAG Insurance Australia * Consider organic growth of 7 — 9% achievable Group — Continued robust economy/GDP growth — Moderate premium rate increases reflecting claims inflation * Focused on organic growth and improved efficiency ¢ Upgraded COR targets for FY04 to maintain insurance m
Slide 19: Platform for ongoing value delivery
Platform for ongoing value delivery q IAG Insurance Australia « Business now has scale and momentum Group ¢ Supported by robust capital and risk management * Customer focus being enhanced to improve service and loyalty * Technology transformation to deliver step change in value in 2 — 3 years ¢ Our
Slide 20: Our strategic focus over time
Our strategic focus over time y IAG Insurance stratia Progress Progressing this will depend ¢ is on being able to show internationally applicable core competencies ———> We believe that there are substantial opportunities locally June 2003 for a few years Delivered Time : ; w Insurance Australia Grou
Slide 21: Questions
© [AG Insurance Australia Group Questions NEMA .CeaView SGIO- gqig Gu Wea Insurance Australia Group Limited ABN 60 090 739 923 iisuRANCE.*.
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