Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — Investor Day (May 2016)
74 slides from Qbe Insurance's investor day presentation, May 10, 2016
Slide 1: Investor Day Presentation cover letter to ASX
QBE Insurance Group Limited ABN 28 008 485 014 Level 27, 8 Chifley Square, SYDNEY NSW 2000 Australia GPO Box 82, Sydney NSW 2001 telephone + 612 9375 4444 + facsimile + 612 9231 6104 www.qbe.com 10 May 2016 The Manager Markets Announcements Office ASX Limited Level 4 Exchange Centre 20 Bridge Street
Slide 2: Investor Day 10 May 2016
For personal use only INVESTOR DAY 10 MAY 2016
Slide 3: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 4: QBE is a distinctive top global P&C insurer
QBE IS A DISTINCTIVE TOP 20 GLOBAL P&C INSURER For personal use only FOCUS ON GLOBAL UNIQUE GLOBAL COMMERCIAL AND CAPABILITIES FOOTPRINT SPECIALTY LINES DELIVERED LOCALLY Established in major hubs: World-class underwriting Shared services and centres London, New York, expertise with a strong of exce
Slide 5: Focused commercial and specialty insurer with strong positions in key markets
FOCUSED COMMERCIAL AND SPECIALTY INSURER WITH STRONG POSITIONS IN KEY MARKETS For personal use only UNIQUE GLOBAL FOOTPRINT ~80% OF BUSINESS IS COMMERCIAL ACROSS 37 COUNTRIES AND SPECIALTY LINES • Highly regarded franchise in the London Market • Capability to write business in 140 countries • Leadin
Slide 6: We have successfully stabilised and transformed
WE HAVE SUCCESSFULLY STABILISED AND TRANSFORMED For personal use only SIMPLIFIED IMPROVED STRENGTHENED AND REFOCUSED PROFITABILITY BALANCE SHEET Employees Operating expenses Debt to equity 1 GWP COR Surplus above S&P ‘A’ 1 1. Adjusted figure excludes Argentine Workers’ Compensation b usiness and $41
Slide 7: Our plans assume challenging macro environment
OUR PLANS ASSUME CHALLENGING MACRO ENVIRONMENT For personal use only SUBDUED PROLONGED SOFT GROWTH LOW RATES PRICING 1 Global GDP Rates are low, with investment Pricing environment growth is subdued income below pre-GFC levels remains difficult 1. AP excludes Mainland China, India and Japan Source:
Slide 8: Underlying trends are disrupting business as usual
UNDERLYING TRENDS ARE DISRUPTING “BUSINESS AS USUAL” For personal use only ALTERNATIVE SOURCES OF CAPITAL REGULATION New sources of capital inflows from Capital and solvency requirements alternative managers MARKET DYNAMICS BIG DATA Increasing application of big Consolidation across market data and
Slide 9: A focused strategic agenda
A FOCUSED STRATEGIC AGENDA For personal use only UNDERWRITING CUSTOMER AND WORLD CLASS EXCELLENCE PARTNER-LED GROWTH TALENT Driving underwriting Deepening major customer and Attracting and retaining excellence across regions broker relationships top talent OPERATIONAL CLAIMS DATA AND EFFICIENCY EXCE
Slide 10: A focused strategic agenda: underwriting excellence
A FOCUSED STRATEGIC AGENDA For personal use only UNDERWRITING CUSTOMER AND WORLD CLASS EXCELLENCE PARTNER-LED GROWTH TALENT Driving underwriting Deepening major customer and Attracting and retaining excellence across regions broker relationships top talent >100% COR 90-100% COR <90% COR • Divested:
Slide 11: A focused strategic agenda: customer and partner-led growth
A FOCUSED STRATEGIC AGENDA For personal use only UNDERWRITING CUSTOMER AND WORLD CLASS EXCELLENCE PARTNER-LED GROWTH TALENT Driving underwriting Deepening major customer and Attracting and retaining excellence across regions broker relationships top talent CORPORATE & EMERGING RETENTION SPECIALTY MA
Slide 12: A focused strategic agenda: world class talent
A FOCUSED STRATEGIC AGENDA For personal use only UNDERWRITING CUSTOMER AND WORLD CLASS EXCELLENCE PARTNER-LED GROWTH TALENT Driving underwriting Deepening major customer and Attracting and retaining excellence across regions broker relationships top talent LEADERSHIP & PURPOSE & VISION ONE QBE VALUE
Slide 13: Clear financial targets
CLEAR FINANCIAL TARGETS For personal use only FRANCHISE • GWP growth of ~3% per annum across the cycle STRENGTH • Operating expense savings of $300M PERFORMANCE • Improvement in COR to ~93% IMPROVEMENT • Long-term return on tangible equity 13-15%1 GROWING CASH • Cumulative cash remittance >$2.5B ove
Slide 14: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 15: We have a strong core business
WE HAVE A STRONG CORE BUSINESS For personal use only • CORPORATE & SPECIALTY FOCUS BUSINESS • CAPABILITY TO WRITE IN OVER 140 COUNTRIES 2015 GWP OF $4.4B SIZE • GLOBAL REINSURANCE GWP BY TYPE OF BUSINESS GWP BY DOMICILE1 GWP BY CURRENCY Other Other CAD GBP Global Canada Reinsurance BUSINESS LatAm EU
Slide 16: Underwriting management structured into three divisions
UNDERWRITING MANAGEMENT STRUCTURED INTO THREE DIVISIONS For personal use only RETAIL (COMMERCIAL LINES) INTERNATIONAL MARKETS QBE RE1 Property, Liability, Motor, Marine, Oil & Gas, Political Risk & Property, Casualty, US multi-line Financial & Specialty Markets (F&SM) Violence, International Propert
Slide 17: Delivered strong FY15 results despite highly competitive market conditions
DELIVERED STRONG FY15 RESULTS DESPITE HIGHLY COMPETITIVE MARKET CONDITIONS For personal use only TOP-LINE PROFITABILITY PERFORMANCE GROWTH IMPROVEMENT DRIVERS $B, CONSTANT CURRENCY • Improvement in COR driven by: - Improved loss experience by portfolio adjustment - Focus on underwriting excellence -
Slide 18: Key strategic priorities
KEY STRATEGIC PRIORITIES For personal use only STRENGTHEN POSITION AS A LEADING SPECIALTY COMMERCIAL INSURER AND REINSURER WITH GLOBAL EXPOSURE Preserve margins through continued underwriting excellence, claims management and cost control Maintain leadership positions in our core markets, with stron
Slide 19: How we will deliver on our strategic priorities
HOW WE WILL DELIVER ON OUR STRATEGIC PRIORITIES For personal use only UNDERWRITING • Maintain best-in-class underwriting skill and discipline and export London EXCELLENCE underwriting expertise by deploying our specialist products in regional hubs • Strengthen customer and broker relationships to pr
Slide 20: Positioned for selective and disciplined growth
POSITIONED FOR SELECTIVE AND DISCIPLINED GROWTH For personal use only QBE PROVEN EXTENDED MAJOR TRADING COLLABORATION EXPERTISE DISTRIBUTION PARTNERS Example: Examples: Examples: Example: Hubs Oil & Gas, Marine, Canada, Europe Global brokers Real Estate, Financial Lines, Life (QBE Re) Exporting Buil
Slide 21: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 22: We have a strong position in an attractive market
WE HAVE A STRONG POSITION IN AN ATTRACTIVE MARKET For personal use only AUSTRALIA IS AN ATTRACTIVE QBE IS A TOP 3 INSURER WITH A INSURANCE MARKET NUMBER OF UNIQUE ATTRIBUTES 1 Est. General Insurance Market GWP (A$B)2 Strong position in commercial Recognised and respected brand Diversified mix across
Slide 23: QBE is a leading commercial and specialty insurer in Australia and New Zealand
QBE IS A LEADING COMMERCIAL AND SPECIALTY INSURER IN AUSTRALIA AND NEW ZEALAND For personal use only HIGHLY DIVERSIFIED MULTI-CHANNEL BROAD AND DEEP PORTFOLIO DISTRIBUTION CUSTOMER BASE Cluster International groups & brokers Local GWP brokers GWP $3.8B $3.8B Corporate Financial partners & institutio
Slide 24: ANZO has delivered strong results
ANZO HAS DELIVERED STRONG RESULTS For personal use only UNDERLYING GWP GROWTH MAINTAINED STRONG PROFITABILITY $B, CONSTANT CURRENCY COR (% ) GWP NEP Note: 2015 exchange rate of 0.7503 AUD/USD applied to 2012, 2013, 2014 GWP and NEP 23
Slide 25: Addressing CTP profitability
ADDRESSING CTP PROFITABILITY For personal use only OVERVIEW QBE CTP BUSINESS CLAIMS FREQUENCY • Increase in claims frequency dominated by low severity, low value claims • Price increases: - 3.7% in June 2015 - 2.2% in February 2016 - 6.4% in May 2016 • Ongoing monitoring of scheme by NSW Government
Slide 26: LMI NEP relatively stable
LMI NEP RELATIVELY STABLE For personal use only NEP RELATIVELY STABLE ALLOWING FOR MODERATION Outlook Outlook 2 2 2 1 1 Note: Includes Hong Kong operations 1. NPAT and NEP in 2014 and 2015 excludes impact of earnings pattern change 2. Target NEP reflects new reinsurance arrangement 25
Slide 27: How we will deliver on our strategic priorities
HOW WE WILL DELIVER ON OUR STRATEGIC PRIORITIES For personal use only UNDERWRITING • Ensure more disciplined underwriting through continued process EXCELLENCE improvement CUSTOMER AND • Customer experience program to increase retention, growth and advocacy PARTNER-LED GROWTH • Focus on key segments,
Slide 28: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 29: QBE Emerging Markets: unique footprint in attractive markets
QBE EMERGING MARKETS: UNIQUE FOOTPRINT IN ATTRACTIVE MARKETS For personal use only OPERATIONS IN 22 MARKETS IN AP AND LATAM WITH 3,200+ EMPLOYEES Mexico Miami (Hub) Puerto Rico Colombia Hong Kong Vietnam Ecuador India Macau Philippines Brazil Thailand Malaysia Singapore PNG Solomon Islands Indonesia
Slide 30: Delivering on our strategy: improved profitability and continued growth
DELIVERING ON OUR STRATEGY – IMPROVED PROFITABILITY AND CONTINUED GROWTH For personal use only EMERGING MARKETS IS GROWING PROFITABILITY IMPROVING $B, CONSTANT CURRENCY COR (% ) AP LatAm Emerging AP LatAm Emerging Markets Markets 2014 GWP 2015 GWP NEP 2014 2015 Note: LatAm GWP and COR excludes Argen
Slide 31: Addressable market opportunity ~$85B by 2020
ADDRESSABLE MARKET OPPORTUNITY ~$85B BY 2020 For personal use only AP: $41B ADDRESSABLE MARKET BY 2020 2020 BY MARKET 2020 BY PRODUCT 9% CAGR LATAM: $44B ADDRESSABLE MARKET BY 2020 2020 BY MARKET 2020 BY PRODUCT 8% CAGR 30
Slide 32: A clear strategy for profitable growth
A CLEAR STRATEGY FOR PROFITABLE GROWTH For personal use only QBE GROUP’S PURPOSE IS TO GIVE PEOPLE THE CONFIDENCE TO ACHIEVE THEIR AMBITIONS EMERGING DELIVER DOUBLE DIGIT GROWTH MARKETS GOAL ASIA PACIFIC LATIN AMERICA OUR MTP Agents Brokers Bancassurance Partnerships CHANNELS OUR SPECIALTY COMMERCIA
Slide 33: Four strategic pillars underpin our Emerging Markets strategy
FOUR STRATEGIC PILLARS UNDERPIN OUR EMERGING MARKETS STRATEGY For personal use only SPECIALTY COMMERCIAL SMEs MAJOR TRADING PERSONAL PARTNERS Example: Marine Example: HK Example: Qnect Example: HSBC P&I Employees Comp bancassurance Collaboration with EO Established Development of Successful providin
Slide 34: EM is undergoing transformation and alignment
EM IS UNDERGOING TRANSFORMATION AND ALIGNMENT ACROSS THE DIVISION AND GROUP For personal use only 2019 2020 2017 2018 2012-2015 2016 FOUNDATION REFINE EXCELLENCE • Combined AP and LatAm and • Expand core • Be a top 3 multinational company implemented EM governance businesses, in our region channels
Slide 35: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 36: We are on a transformative journey
WE ARE ON A TRANSFORMATIVE JOURNEY For personal use only RADICAL CHANGE REQUIRED POSITIONED FOR PROFITABLE GROWTH • Significant talent transfusion required • A specialist insurance and reinsurance franchise • Created shared services platform • Top industry talent that enables differentiation • Ratio
Slide 37: We have turned a corner in 2015 and are positioned for profitable growth
WE HAVE TURNED A CORNER IN 2015 AND ARE POSITIONED FOR PROFITABLE GROWTH For personal use only SUBSTANTIAL PROGRESS MADE POSITIONED FOR PROFITABLE GROWTH COR (% ) 2015 GWP: $5.0B 2, 99% COR Reinsurance Program3 Crop Footprint1 Locations 140 Headcount 40 Standard Lines Specialty Affiliated Agencies3
Slide 38: How we will deliver on our strategic priorities
HOW WE WILL DELIVER ON OUR STRATEGIC PRIORITIES For personal use only • Disciplined technical underwriting and risk selection IMPROVE UNDERWRITING • Data driven underwriting decisions to manage the portfolio EXECUTION • Continuous improvement in underwriting quality of the portfolio • Institutionali
Slide 39: Unlocking franchise value through our specialist approach
UNLOCKING FRANCHISE VALUE THROUGH OUR SPECIALIST APPROACH For personal use only SPECIALTY CROP1 AFFILIATED AGENCIES2 Policy Count GWP GWP ( ‘000) ($M) ($M) ORGANIC GROWTH CAPABILITY M ARKET LEADER UNIQUE POINT OF SALE CAPABILITY STANDARD REINSURANCE LINES A value proposition centered around the GWP
Slide 40: Building a leading specialty franchise in North America
BUILDING A LEADING SPECIALTY FRANCHISE IN NORTH AMERICA For personal use only Specialty GWP ($M) ~$600M Driving profitable organic growth $423M Established $320M reputation as the “Specialist’s Specialist” $254M Culture of innovation and excellence Market-leading underwriting Targeting a $1B portfol
Slide 41: Delivering a sustainable brand and profit
DELIVERING A SUSTAINABLE BRAND AND PROFIT For personal use only A DIFFERENTIATED SPECIALTY AND DRIVING A SUSTAINABLE STANDARD PRODUCT OFFERING LONG-TERM COR ~95% Portfolio mix Perfecting $5.0B a “Go To Market” capability GWP growth of +3% per annum Improving quality $ and predictability of earnings
Slide 42: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 43: Group operations developed to leverage global scale
GROUP OPERATIONS HAS BEEN DEVELOPED TO ENABLE QBE TO BEST LEVERAGE GLOBAL SCALE For personal use only OPERATIONAL DATA CLAIMS EFFICIENCY & ANALYTICS EXCELLENCE Established GSSC, Building a leading Unifying claims simplified capability to drive operations across organisation, setup measurable regions
Slide 44: Actions taken to reduce costs over the last three years
WE’VE TAKEN A NUMBER OF ACTIONS TO REDUCE COSTS OVER THE LAST THREE YEARS For personal use only 2015 COST BASE KEY ACTIONS AND FTE BASE 2012-15 Other support HR Established GROUP SHARED Finance SERVICES CENTRE (‘GSSC’) in ~$2.1B Underwriting/ the Philippines distribution Technology Delivered GROUP O
Slide 45: Significant opportunities for further cost reduction
LOOKING FORWARD: SIGNIFICANT OPPORTUNITIES FOR FURTHER COST REDUCTION, LEVERAGING GLOBAL SCALE For personal use only SHARED SERVICES FUNCTIONAL PROCUREMENT & AUTOMATION EXCELLENCE • Efficient use of service • Create global org in IT, • Deliver the next wave of centres, especially NA and HR and Finan
Slide 46: We will become a more competitive business
WE WILL BECOME A MORE COMPETITIVE BUSINESS OPERATIONAL EFFICIENCY For personal use only OUR EXPENSES ARE HIGHER THAN MANY ONGOING SAVINGS PROGRAM OF OUR PEERS TARGETING $300M IN SAVINGS 1 $300M cost reduction2 1. Excludes commission expense; Median excludes QBE; General operating expense as a % of N
Slide 47: Data & analytics vision and strategy
DATA & ANALYTICS VISION AND STRATEGY DATA & ANALYTICS For personal use only ENABLE BUSINESS GROWTH AND OPERATIONAL EXCELLENCE THROUGH INSIGHT-BASED DECISIONS BUILD A LEADING DRIVE MEASURABLE CREATE A CULTURE OF VISION & GOALS DATA & ANALYTICS PERFORMANCE IMPACT DATA DRIVEN CAPABILITY GLOBALLY THROUG
Slide 48: Examples: Data & analytics solutions
EXAMPLES: DATA & ANALYTICS SOLUTIONS DATA & ANALYTICS For personal use only DISTRIBUTION EXCELLENCE: UNDERWRITING EXCELLENCE: OPERATIONAL EFFECTIVENESS: OPTIMISING NETWORK IDENTIFYING PREMIUM LEAKAGE INTELLIGENT CLAIMS TRIAGE EM NA NA AIM: AIM: AIM: Identify patterns and characteristics Increase pre
Slide 49: Leveraging global claims capability
LEVERAGING GLOBAL CLAIMS CAPABILITY CLAIMS EXCELLENCE For personal use only LEVERAGING GLOBAL CLAIMS CAPABILITY AND UTILISING THE BEST OF QBE’S EXPERTISE ACROSS LINES OF BUSINESS Enabling business drivers: 1 2 3 4 CLAIMS COST SCALABILITY GOVERNANCE & CUSTOMER REDUCTION CONTROL EXPERIENCE Improved lo
Slide 50: Eight opportunity themes and three enablers
EIGHT OPPORTUNITY THEMES AND THREE ENABLERS ARE BEING ADDRESSED AS PART OF THE PROGRAMME CLAIMS EXCELLENCE For personal use only CLAIMS INDEMNITY CLAIMS OPERATIONS 1 Fraud Improved segmentation 6 and work allocation 2 Recoveries Third party administrator 3 Supply chain optimisation 7 (TPA) managemen
Slide 51: State-of-the-art data analytics to optimise fraudulent claim identification
WE ARE USING STATE-OF-THE-ART DATA ANALYTICS TO OPTIMISE FRAUDULENT CLAIM IDENTIFICATION CLAIMS EXCELLENCE For personal use only PREDICTIVE SCORING ALGORITHM EXAMPLES 2 1 Internal/external data LOW SPEED IMPACTS sources Insignificant impacts unlikely to cause injury. Existing fraud detection system
Slide 52: Implementing across all regions in 2016-2018, delivering >$200M p.a. claims savings
IMPLEMENTING ACROSS ALL REGIONS IN 2016-2018, DELIVERING >$200M P.A. CLAIMS SAVINGS CLAIMS EXCELLENCE For personal use only • Global team: sharing best-practices and improving consistency GLOBAL • Global centres of excellence: leveraging specialist capabilities across regions 2015 2015 claims total
Slide 53: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 54: Our investment portfolio relative to peers
OUR INVESTMENT PORTFOLIO RELATIVE TO PEERS For personal use only QBE MORE WEIGHTED TOWARDS SUPERIOR CREDIT QUALITY EXPOSURE LOWER RISK INVESTMENTS Significantly Significantly lower growth less BBB assets exposure than peers Significantly more Money Market and Cash than peers 1 2 2 1. QBE numb ers as
Slide 55: Investment strategy overview
INVESTMENT STRATEGY OVERVIEW For personal use only DEPLOY MORE CASH AND MONEY INVESTMENT STRATEGY MARKET SECURITIES TO CREDIT • QBE has strategic appetite for up to 15% in Growth Assets - Market environment and volatility suggest merit in 10% allocation in 2016 • Deploy more cash into credit while r
Slide 56: We are targeting a 3% investment return by 2018
WE ARE TARGETING A 3% INVESTMENT RETURN BY 2018 For personal use only Largely driven by portfolio change 55
Slide 57: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 58: Investor thesis
INVESTOR THESIS For personal use only FRANCHISE PERFORMANCE GROWING WELL STRENGTH IMPROVEMENT DIVIDENDS CAPITALISED $ $ • Attractive market positions • Underwriting excellence • Established cash • S&P ‘A+’ rated or better • Deep distribution and • Operational efficiency remittance framework • Resili
Slide 59: Performance improvement opportunity
PERFORMANCE IMPROVEMENT OPPORTUNITY PERFORMANCE For personal use only IMPROVEMENT ILLUSTRATIVE TARGETING >10% PROFIT CAGR NPAT ($M ) Increase ~3% Optimise returns to CAGR reinsurance 3% ~2% GWP Shift mix improvement growth to more in expense profitable ratio Continued lines Cautious >$200M p.a. soft
Slide 60: Reinsurance: targeting $300-400M reduction in cost
REINSURANCE: TARGETING $300-400M REDUCTION IN COST WITH ~$50-$100M IMPROVEMENT IN UNDERWRITING PROFIT PERFORMANCE For personal use only IMPROVEMENT REINSURANCE OPPORTUNITY KEY AREAS FOR SAVINGS ADRESSABLE RATE REDUCTION TREATY OPPORTUNITY Benefit from lower pricing available in market as we complete
Slide 61: Strong capital position
STRONG CAPITAL POSITION For personal use only WELL CAPITALISED KEY INDICATORS S&P CAPITAL – DETAILED VIEW 2013 2014 2015 Surplus above ‘A’ ~$0B ~$1B ~$2B Borrowings 4.6 3.6 3.5 capital ($B) (US$) Goodwill & Intangibles 4.5 3.8 3.6 Capital ($B) (US$B) PCA 1.59x 1.67x 1.72x multiple1 S&P CAPITAL2 A ra
Slide 62: Capital resilience (sensitivities)
CAPITAL RESILIENCE (SENSITIVITIES) For personal use only WELL CAPITALISED ILLUSTRATIVE NPAT CAPITAL SENSITIVITY 1 in 20 SCENARIO IMPACT IMPACT 3 1 A AA • Disaster equivalent to modelled range range Catastrophe Category 5 hurricane in ~$50M No change Florida1 0% 20% 2 • Cumulative impact of: AA - Equ
Slide 63: Our remittance framework targets strong cash flows to the Group
OUR REMITTANCE FRAMEWORK TARGETS STRONG CASH FLOWS TO THE GROUP For personal use only GROWING DIVIDENDS AUSTRALIA AND NPAT X 70-80% less Group Corporate Costs NEW ZEALAND + NORTH AMERICA NPAT X 70-80% + EUROPE NPAT X 70-80% less Europe interest costs + EQUATOR NPAT X 90-100% + EMERGING NPAT X 50% MA
Slide 64: Positive remittance outlook
POSITIVE REMITTANCE OUTLOOK For personal use only GROWING DIVIDENDS Outlook $2.5B+ 63
Slide 65: Dividends: increasing shareholder payout
DIVIDENDS: INCREASING SHAREHOLDER PAYOUT For personal use only GROWING DIVIDENDS STRONG DIVIDEND GROWTH 2013-15, DIVIDEND OUTLOOK WHICH WE AIM TO CONTINUE • Targeting >10% profit KEY CAGR DRIVERS • Strong internal cash flow • Strong capital position • Dividend payout increased to up to 65% OUTLOOK •
Slide 66: Clear financial targets
CLEAR FINANCIAL TARGETS For personal use only FRANCHISE • GWP growth of ~3% per annum across the cycle STRENGTH • Operating expense savings of $300M PERFORMANCE • Improvement in COR to ~93% IMPROVEMENT • Long-term return on tangible equity 13-15%1 GROWING CASH • Cumulative cash remittance >$2.5B ove
Slide 67: Investor thesis
INVESTOR THESIS For personal use only FRANCHISE PERFORMANCE GROWING WELL STRENGTH IMPROVEMENT DIVIDENDS CAPITALISED $ $ • Attractive market positions • Underwriting excellence • Established cash • S&P ‘A+’ rated or better • Deep distribution and • Operational efficiency remittance framework • Resili
Slide 68: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 69: Investor Day: Agenda
INVESTOR DAY: AGENDA For personal use only ARRIVAL AND COFFEE GROUP STRATEGY AND OUTLOOK | John Neal – Group CEO EUROPE | Richard Pryce – EO CEO AUSTRALIA AND NEW ZEALAND | Tim Plant – ANZ CEO EMERGING MARKETS | David Fried – EM CEO NORTH AMERICA | David Duclos – NA CEO MORNING TEA OPERATIONAL EFFEC
Slide 70: Disclaimer
DISCLAIMER For personal use only This presentation should be read in conjunction with all information which QBE has lodged with the Australian Securities Exchange (“ASX”). Copies of those lodgements are available from either the ASX website www.asx.com.au or QBE’s website www.qbe.com. Prior to makin
Slide 71: Appendix
For personal use only 70 Appendix
Slide 72: QBE LMI has an effective LVR of c. 55%
QBE LMI HAS AN EFFECTIVE LVR OF C. 55% For personal use only Risk in force Original LVR (average) Effective LVR1 (average) (% ) 2015 12.9% 84.9% 82.4% 2014 15.1% 85.8% 73.2% 2013 14.0% 84.7% 62.2% 2012 11.9% 79.9% 54.1% 2011 8.6% 79.7% 54.0% 2010 6.5% 79.0% 51.5% Prior 2009 31.0% 70.0-84.3% 11.0-47.
Slide 73: QBE LMI portfolio mix (as at December 2015)
QBE LMI PORTFOLIO MIX (AS AT 31 DECEMBER 2015) For personal use only Original LVR (%) Product (%) Loan amount (%) Bulk 29% Flow 71% Underwriting years (%) RIF by state (%) Property class (%) 1. Excludes A$8b inwards reinsurance post 2010 72
Slide 74: QBE Emerging Markets: business overview
QBE EMERGING MARKETS: BUSINESS OVERVIEW For personal use only GWP BY COUNTRY 2015 GWP BY PRODUCT 2015 $1.7B $1.7B GWP GWP 73