Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Investor Day (April 2018)
6 slides from Insurance Australia's investor day presentation, Apr 11, 2018
Slide 1: Capital
CAPITAL Nick Hawkins Chief Financial Officer
Slide 2: Simplification and lower volatility
SIMPLIFICATION and lower volatility Operational Capital platform Optimisation program Sustainable funding structure SIMPLIFICATION Portfolios Flexible in nature and lower Commercial remediation Diversify by form and counterparties volatility Focus on core markets Costs vs benefits Balance sheet Addr
Slide 3: Optimising our capital mix
OPTIMISING our capital mix DIVERSITY OF FUNDING Equity Debt / hybrid Reinsurance SOURCES Reduced emphasis Additional Tier 1 Capital Various forms • Modest M&A appetite • Hybrid equities • Catastrophe capital • Capital management options Tier 2 Capital • P&L volatility protection • Subordinated term
Slide 4: Reinsurance capital: increased use of quota shares
REINSURANCE CAPITAL Increased use of quota shares Catastrophe capital P&L volatility protection Quota shares • Driven by concentrated peak exposures • Tactical and strategic covers • Conducted with major global reinsurers • Long standing relationships with • Take-up influenced by • No impact on mana
Slide 5: Whole-of-account quota shares: favourable outcomes for both sides
WHOLE-OF-ACCOUNT QUOTA SHARES Favourable outcomes for both sides Quota share mechanics Exchange commission IAG Fixed commission Proportion of GEP Receipt of 32.5% Payment of 32.5% Reimbursement Exchange Reinsurer To reflect of gross earned of future gross of 32.5% of commission margin insurance risk
Slide 6: Strong regulatory capital position
STRONG REGULATORY CAPITAL POSITION Intent to manage in line with CET1 benchmark range CET1 is key capital measure Balance date CET1 ratio 1.19 1.09 1.14 1.14 Retained earnings – dividend payout policy 1.06 1.09 of 60-80% of cash earnings 1.07 Modest anticipated organic or acquisitive growth strain F
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