Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — Shareholder Meeting (April 2012)
68 slides from Qbe Insurance's shareholder meeting presentation, Apr 4, 2012
Slide 1: 2012 annual general meeting
QBE INSURANCE GROUP 2012 annual general meeting 4 April 2012 All amounts in US dollars unless otherwise stated. 2012 AGM
Slide 2: Belinda Hutchinson – Chairman
Belinda Hutchinson – Chairman 2 2012 AGM
Slide 3: Welcome to the QBE 2012 AGM
Welcome to the QBE 2012 AGM 3 2012 AGM
Slide 4: Chairman's address: topics to be covered
Chairman’s address: topics to be covered Overview of the 2011 results, dividend and financial position Strategy and positive outlook for 2012 Organisational and governance issues QBE‟s remuneration report and executive remuneration CEO retirement and succession plan 4 2012 AGM
Slide 5: Results for the year ended 31 December 2011
Results for the year ended 31 December 2011 QBE and the global insurance industry faced significant challenges: - abnormally large number of natural disasters - extreme investment market conditions Net profit after tax down 45% to US$704M (2010: US$1.28Bn) QBE outperformed the vast majority of
Slide 6: Top 10 P & C Insurers
Competitor Performance Top 10 P & C Insurers 2007 - 2011 Combined Operating Ratio Return on Equity Notes: 1. Tables reflect the top 10 performers of 43 of the world‟s top 50 P & C insurers that have reported to date 2. Information sourced from published accounts and company websites for insurance an
Slide 7: Results for the year ended 31 December 2011
Results for the year ended 31 December 2011 Global economic cost of catastrophes in 2011 is estimated at US$380Bn*, with insured cost of US$105Bn* Catastrophe claims cost QBE US$1,733M in 2011, nearly three times last year (2010: US$580M) US$219M benefit from our comprehensive reinsurance prog
Slide 8: Results for the year ended 31 December 2011
Results for the year ended 31 December 2011 Underwriting profit reduced by US$252M due to lower risk-free rates used to discount claims Continued low investment yields Increased credit spreads reduced profit before tax by US$241M No permanent impairment in the value of fixed income securitie
Slide 9: Dividend and dividend policy
Dividend and dividend policy Final 2011 dividend reduced to 25 Australian cents (2010: 66 Australian cents) 25% franked compared with 10% in 2010 Dividend policy going forward is a payout ratio of up to 70% of reported net profit after tax 9 2012 AGM
Slide 10: Capital adequacy
Capital adequacy Excess regulatory capital Financial strength ratings of A+ or equivalent confirmed Total QBE regulatory capital US$M Minimum capital requirement ("MCR") US$M Excess capital US$M MCR multiple 31 Dec 2011 5,284 (tier 1) 2,218 (tier 2) 4,968 2,534 1.5x 31 Dec 2010 6,281 (tier 1) 72
Slide 11: Borrowings
Borrowings Conservative and carefully structured debt portfolio of US$4.8Bn at 31 December 2011 During 2011 we locked in US$1.0Bn and £325M of subordinated debt securities – treated as allowable capital by regulatory and rating agencies Ratio of borrowings to shareholders‟ funds increased to 4
Slide 12: Strategy
Strategy QBE has a longstanding and successful strategy of growth by acquisition Continue with the strategy to secure bolt-on acquisitions where we can achieve our minimum 15% return on allocated capital, including synergies and economies of scale Recently announced acquisitions are consistent
Slide 13: QBE well positioned for 2012 and beyond
QBE well positioned for 2012 and beyond Internal targets for a COR of 89% and an insurance profit margin of 15% unchanged Our financial targets are for a COR of less than 90% and an insurance profit margin of 13% or better Subject to the usual caveats as noted at the end of this presentation 1
Slide 14: Global management structure
Global management structure Five operating divisions covering Europe, North America, Latin America, Australia and Asia Pacific Consistent with QBE‟s regional boards in the US and Europe, an Australian operations board established: - Mr Nick Greiner AC as Chairman and three other independent dire
Slide 15: Workplace diversity
Workplace diversity Workplace diversity is essential to maintaining a fair and inclusive workplace Range of initiatives to be introduced, including: – new workplace flexibility policy – manager education, leadership and talent programs – development of a “keeping in touch” program designed for e
Slide 16: Remuneration report
Remuneration report Guiding principles – transparent, simple and easy to understand remuneration strategy Remuneration Committee only comprises of non-executive directors Individual performance-based targets linked to achievement of financial targets, objectives and business strategies Align
Slide 17: QBE Foundation objectives
QBE Foundation objectives Foundation established in 2010 with the objective of a platform for QBE and employees to engage with the communities in which we operate Foundation supported by initial commitment of US$5 million Further amounts set aside each year of 0.5% of Group‟s pre- tax profit
Slide 18: Retirement of chief executive officer and succession plan
Retirement of chief executive officer and succession plan Frank O‟Halloran to retire as Group CEO on 17 August 2012 John Neal to be appointed Group CEO 18 2012 AGM
Slide 19: 2012 AGM
19 2012 AGM
Slide 20: Frank O'Halloran – chief executive officer
Frank O’Halloran – chief executive officer 20 2012 AGM
Slide 21: 2011 financial results
2011 financial results 2011 year was a difficult one for the insurance industry Record catastrophe activity and volatile investment markets negatively impacted QBE‟s profit before tax by US$1.6Bn compared with 2010 Technical underwriting results remain strong Outperformed the majority of our
Slide 22: 2011 underwriting results
2011 underwriting results For the year ended 31 December 2011 2010 % change GWP US$M 18,291 13,629 34 NEP US$M 15,359 11,362 35 Claims ratio % 68.2 59.9 Commission and expense ratio % 28.6 29.8 COR % 96.8 89.7 Underwriting profit US$M 494 1,168 (58) Insurance profit US$M 1,085 1,703 (36) Insurance p
Slide 23: Summary of 2011 financial results
Summary of 2011 financial results 45 out of 52 countries in which we operate made underwriting profits in 2011 despite challenging year Majority of countries exceeded our minimum 15% return on allocated capital Unique worldwide reinsurance programs benefited pre-tax profit by US$219M compared
Slide 24: Acquisitions completed in 2011 and 2012 to date
Overall acquisitions completed in 2011 and 2012 to date are exceeding profit expectations 2011 and 2012 to date Additional Effective acquisitions Business annualised GWP US$M date US insurance operations of Mainly crop 618 1 January 2011 Renaissance Re Balboa in the US Lender-placed homeowners 1,852
Slide 25: Positive start to 2012
Positive start to 2012 Premium rate increases exceeding our expectations of overall real average increases of 5% Net large risk and catastrophe claims for the 1st quarter around 1% of 2012 targeted NEP, compared with 5.5% of 2011 NEP this time last year Risk-free rates increased from 2.10% at
Slide 26: QBE's capital position
QBE’s capital position Strong regulatory capital adequacy above our minimum benchmark and maintained our A+ or equivalent ratings Recently completed institutional placement and retail share purchase plan, raising A$600M, targeted to replace June 30 callable US$500M Tier 2 debt Capital adequacy
Slide 27: John Rumpler – President & CEO, QBE North America
John Rumpler – President & CEO, QBE North America 27 2012 AGM
Slide 28: North America
North America 2011 2010 Gross written premium US$M 7,529 4,606 Gross earned premium US$M 7,431 4,563 Net earned premium US$M 4,018 2,555 Claims ratio % 65.2 62.4 Commission ratio % 6.6 9.6 Expense ratio % 18.8 17.1 Combined operating ratio % 90.6 89.1 Insurance profit margin % 11.0 13.9 Return on eq
Slide 29: Steven Burns – CEO, QBE Europe
Steven Burns – CEO, QBE Europe 29 2012 AGM
Slide 30: European operations
European operations 2011 2010 Gross written premium US$M 4,828 4,156 Gross earned premium US$M 4,635 4,008 Net earned premium US$M 3,150 2,593 Claims ratio % 65.3 57.7 Commission ratio % 17.0 16.9 Expense ratio % 13.2 15.9 Combined operating ratio % 95.5 90.5 Insurance profit margin % 9.5 14.5 Retur
Slide 31: Colin Fagen – CEO, QBE Australia
Colin Fagen – CEO, QBE Australia 31 2012 AGM
Slide 32: Australian operations
Australian operations 2011 2010 Gross written premium US$M 4,486 3,707 Gross earned premium US$M 4,355 3,720 Net earned premium US$M 3,767 3,033 Claims ratio % 69.4 60.9 Commission ratio % 13.0 10.4 Expense ratio % 16.9 17.9 Combined operating ratio % 99.3 89.2 Insurance profit margin % 6.5 17.0 Ret
Slide 33: Mike Goodwin – CEO, QBE Asia Pacific
Mike Goodwin – CEO, QBE Asia Pacific 33 2012 AGM
Slide 34: Asia Pacific operations
Asia Pacific operations 2011 2010 Gross written premium US$M 680 601 Gross earned premium US$M 653 587 Net earned premium US$M 442 420 Claims ratio % 46.6 45.7 Commission ratio % 22.9 20.0 Expense ratio % 22.6 21.0 Combined operating ratio % 92.1 86.7 Insurance profit margin % 13.3 18.3 Return on eq
Slide 35: Jose Sojo – CEO, QBE Latin America
Jose Sojo – CEO, QBE Latin America 35 2012 AGM
Slide 36: Latin America
Latin America 2011 2010 Gross written premium US$M 768 559 Gross earned premium US$M 752 554 Net earned premium US$M 620 454 Claims ratio % 56.7 57.3 Commission ratio % 19.0 22.2 Expense ratio % 14.0 13.9 Combined operating ratio % 89.7 93.4 Insurance profit margin % 16.3 12.3 Return on equity (1) %
Slide 37: Des Fogarty – President, Equator Re
Des Fogarty – President, Equator Re 37 2012 AGM
Slide 38: Equator Re – captive reinsurer
Equator Re – captive reinsurer 2011 2010 Gross written premium US$M 3,807 2,479 Gross earned premium US$M 3,697 2,363 Net earned premium US$M 3,362 2,307 Claims ratio % 77.8 61.4 Commission ratio % 23.3 24.9 Expense ratio % 3.4 3.8 Combined operating ratio % 104.5 90.1 Insurance profit margin % (1.7
Slide 39: 2012 premium outlook
2012 premium outlook Revised Revised GWP – local currency GWP BN (1) US$BN Australia A$4.6 4.7 Asia Pacific US$0.8 0.8 Europe £3.2 5.0 North America US$7.0 7.0 Latin America US$1.2 1.2 Equator Re (2) US$4.0 4.0 Equator Re (4.0) Group total 18.7 (1) Based on the following projected exchange rates – A
Slide 40: Gary Brader – Chief investment officer
Gary Brader – Chief investment officer 40 2012 AGM
Slide 41: Investments now US$29Bn held in over 130 portfolios across 52 countries
Investments now US$29Bn held in over 130 portfolios across 52 countries Due to local regulatory requirements and to avoid FX mismatches around 60% of investments held in comparatively low yielding US dollar, sterling and Euro investments Challenging year due to volatile equity and fixed interest
Slide 42: QBE Group head office management
QBE Group head office management Frank Duncan John Neal Neil Drabsch O‟Halloran Ramsay Tony Jackson Blair Nicholls George Jenni Smith Thwaites 42 2012 AGM
Slide 43: Frank O'Halloran – chief executive officer
Frank O’Halloran – chief executive officer 43 2012 AGM
Slide 44: Thank you to QBE Group staff worldwide
Thank you to QBE Group staff worldwide Over 16,000 staff in 52 countries 44 2012 AGM
Slide 45: Farewell and thankyou
Farewell and thankyou 45 2012 AGM
Slide 46: John Neal – CEO, global underwriting operations
John Neal – CEO, global underwriting operations 46 2012 AGM
Slide 47: Outlook for 2012
Outlook for 2012 Actions taken to reinforce confidence in our 2012 targets Portfolio reviews and remediation plans progressing, aimed at reducing exposure in certain catastrophe-prone areas Large risk and catastrophe claims for Q1 2012 estimated to be around US$700M lower than last year Real
Slide 48: Outlook for 2012
Outlook for 2012 Reinsurance expense on renewal is up 7.5% – largely covered by premium rate increases in our inward reinsurance business Identified US$50M expense saving in 2012 – target savings to increase to US$200M in 2014 48 2012 AGM
Slide 49: Outlook for 2012
Outlook for 2012 QBE‟s 2012 targets for large individual risk and catastrophe claims based on: – in 2011 large individual risk and catastrophe claims – 15.3% of NEP – assumed these catastrophe claims continue at 85% of 2011 level – combined with remediation, expect 2012 large individual risk and c
Slide 50: Longer-term aspirations
Longer-term aspirations The vision and values, introduced in 1994, have served QBE well Since then, the market has changed - QBE‟s size, brand and structure have developed as well as the scale, diversity and complexity of the QBE business model Expectations of key stakeholders have changed. QB
Slide 51: How will QBE develop over the next three years?
How will QBE develop over the next three years? Continue to put expectations of our shareholders first in all decision- making Renew our focus on excellent and timely communication Disciplined approach to decisions on businesses and investments which do not meet QBE‟s high hurdle rate and retu
Slide 52: Closing remarks
Closing remarks Performance focus to meet or exceed our 2012 business plan and financial and operational performance targets Change agenda to continue to evolve our business towards our refreshed Vision: “To be the most successful global insurer and reinsurer in the eyes of our customers, our pe
Slide 53: Formal business
Formal business 53 2012 AGM
Slide 54: Item 1:
Item 1: To receive and consider the annual financial report and the reports of the directors and of the auditors of the Company for the year ended 31 December 2011 54 2012 AGM
Slide 55: Item 2:
Item 2: To adopt the remuneration report 55 2012 AGM
Slide 56: Results of proxy voting for item 2
Results of proxy voting for item 2 Resolution For Open Against Abstain 2 669,258,123 4,247,868 9,237,096 1,932,866 56 2012 AGM
Slide 57: Item 3:
Item 3: To renew the Company‟s proportional takeover approval provisions 57 2012 AGM
Slide 58: Results of proxy voting for item 3
Results of proxy voting for item 3 Resolution For Open Against Abstain 3 674,979,584 4,639,445 4,370,299 947,318 58 2012 AGM
Slide 59: Item 4a:
Item 4a: To re-elect Ms B J Hutchinson as a director 59 2012 AGM
Slide 60: Results of proxy voting for item 4a
Results of proxy voting for item 4a Resolution For Open Against Abstain 4a 672,398,447 4,400,604 7,122,925 920,714 60 2012 AGM
Slide 61: Item 4b:
Item 4b: To re-elect Ms I F Hudson as a director 61 2012 AGM
Slide 62: Results of proxy voting for item 4b
Results of proxy voting for item 4b Resolution For Open Against Abstain 4b 676,101,252 4,460,709 3,448,242 927,133 62 2012 AGM
Slide 63: Item 4c:
Item 4c: To re-elect Ms I Y L Lee as a director 63 2012 AGM
Slide 64: Results of proxy voting for items 4c
Results of proxy voting for items 4c Resolution For Open Against Abstain 4c 631,042,928 4,453,522 48,498,408 942,478 64 2012 AGM
Slide 65: QBE INSURANCE GROUP www.qbe.com
QBE INSURANCE GROUP www.qbe.com 2012 AGM
Slide 66: Important disclaimer
Important disclaimer This presentation should be read in conjunction with all information which QBE has lodged with the Australian Securities Exchange (“ASX”); including QBE‟s full year results filed with the ASX on 4 April 2012. Copies of those lodgements are available from either the ASX website w
Slide 67: Important disclaimer (continued)
Important disclaimer (continued) Any forward-looking statements assume that: large individual risk and catastrophe claims do not exceed the significant allowance in our business plans; there is no overall reduction in premium rates; there is no significant fall in equity markets and interest rates;
Slide 68: QBE INSURANCE GROUP www.qbe.com
QBE INSURANCE GROUP www.qbe.com 2012 AGM
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