Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — CLSA Investors' Forum, Hong Kong 2010
17 slides from Qbe Insurance's conference presentation, Sep 13, 2010
Slide 1: ASX cover letter: Presentation to the CLSA Investors' Forum
Q OBE 13 September 2010 The Manager Company Announcements ASX Limited Level 6 Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, Presentation to the CLSA Investors’ Forum in Hong Kong QBE Insurance Group Limited ABN 28 008 485 014 Head Office 82 Pitt Street SYDNEY NSW 2000 Australia Po
Slide 2: QBE Insurance Group, CLSA Investors' Forum, Hong Kong
For personal use only QBE INSURANCE GROUP CLSA Investors’ Forum, Hong Kong Presented by: Neil Drabsch, CFO QBE Insurance Group Ltd 13 September 2010
Slide 3: Introduction to QBE
For personal use only Introduction to QBE Listed on the Australian Securities Exchange (“ASX”) with the Group head office function located in Sydney One of the top 25 global insurers and reinsurers based on net earned premium S&P A+ financial strength rating for the main insurance subsidiaries
Slide 4: Strategy and business model
For personal use only Strategy and business model Modest risk retention per risk or event Spread of risk through diversity by product and geographic location Continuing focus on key profit drivers Organic growth pursued in hard markets / niches Growth mainly acquisition focussed Acquisit
Slide 5: Competitive advantage through product and geographic diversification
Competitive advantage through product and geographic diversification across key insurance markets For personal use only Group head office in Sydney Divisional head offices in London, New York, Singapore and Sydney Operations in 49 countries and around 13,400 staff worldwide Forecast 2010 FY
Slide 6: Top P&C insurers: competitor performance 2005 - 2010
Top 10 P&C insurers: competitor performance 2005 - 2010 For personal use only Average combined operating ratio Average return on equity Combined operating ratio Return on equity Fy Fy Fy Fy Fy Hy Weighted Fy Fy Fy Fy Fy Hy Weighted Company 2005 2006 2007 2008 2009 2010 average Company 2005 2006 2007
Slide 7: Strict profit criteria underpins acquisition strategy
Strict profit criteria underpins acquisition strategy For personal use only Insurance profit EPS on 42 acquisitions between GWP NEP COR ins. profit 2005 and 2009 including: US$M US$M % % US$M US cents - Americas: Colombia, 2005 FY 7,171 5,630 89.1 17.4 982 128 National Farmers’ Union, One-Beacon,
Slide 8: Market conditions: exceptional severity of natural catastrophes in 1H 2010
Market conditions: exceptional severity of natural catastrophes in 1H 2010 For personal use only 2010 2000 – 2009 The first six months: average Number of events 440 380 Overall economic loss US$BN 70 41 Insurance losses US$BN 22 11 The five largest natural CATs in first six Overall Insurance months
Slide 9: Market conditions
For personal use only Market conditions Premium rates up 2% to 3% on QBE renewed business Strong competition on new business Reinsurance rates generally soft with increases only on event driven criteria e.g. marine and energy risks Insurance markets remain competitive but resistant to more f
Slide 10: QBE's relative strengths to manage through soft cycle
QBE's relative strengths to manage through soft cycle For personal use only Prudent approach to managing insurance and investment risk Diversity by geography and product Quality reinsurance protections and continued low maximum event retention despite growth (4.0% of forecast 2010 NEP at 30 Ju
Slide 11: Volatile risk-free interest rates impact COR, insurance margin and PoA
Volatile risk-free interest rates impact COR, insurance margin and PoA For personal use only Risk-free rate variations 16 June 15 Apr 31 Dec Sensitivity (3) 2010 1H 2010 2010 (2) 2009 Weighted average risk-free rates % 3.75 2.75 3.19 3.40 3.20 Impact on key half year ratios (1): - COR % 87.8 89.7 89
Slide 12: Financial model
For personal use only Financial model Actual 31 Dec 31 Dec 31 Dec 30 Jun Sensitivity 2007 2008 2009 2010 % % % % % COR 85.9 88.5 89.6 89.7 88.5 Period premium held (1) 1.4 yrs 1.4 yrs 1.5 yrs 1.4 yrs 1.5 yrs Yield on insurance funds (1) 5.9 5.7 4.3 3.8 4.0 Insurance profit/NEP 22.2 19.7 17.0 15.7 17
Slide 13: Financial strength and flexibility
For personal use only Financial strength and flexibility Operating cash flow continues to be strong at US$647M for the half year (2009: US$564M) Capital adequacy at regulated entity and Group level strong – Group MCR multiple of 1.6x (1) Probability of adequacy of total insurance liabilities 9
Slide 14: Outlook and closing remarks
For personal use only Outlook and closing remarks Initiatives announced to date expected to produce additional US$2.3BN GWP and annual profit after tax of US$400M by 2013 Benefits of global initiatives to improve reinsurance costs, claims and expense ratios – details to be announced by year end
Slide 15: 2010 financial performance targets
For personal use only 2010 financial performance targets 2010 FY Insurance profit margin (1) 16% to 18% Combined operating ratio (1) Less than 89% GWP and NEP increase 19% and 20% Reinsurance expense ratio (2) Less than 14% Combined commission & expense ratio (1) Around 29.0% Tax rate Around 18% Gro
Slide 16: Disclaimer
For personal use only Disclaimer The information in this presentation provides an overview of the strategy and operations of QBE Insurance Group Limited. This presentation should be read in conjunction with all information which QBE has lodged with the Australian Securities Exchange (“ASX”). Copies
Slide 17: QBE Insurance Group www.qbe.com
For personal use only QBE INSURANCE GROUP www.qbe.com 16 CLSA investors’ forum presentation
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