Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Debt Investor Presentation (November 2011)
25 slides from Insurance Australia's debt investor presentation, Nov 7, 2011
Slide 1: New Zealand Retail Offer of Subordinated Bonds
NEW ZEALAND RETAIL OFFER OF SUBORDINATED BONDS INVESTOR PRESENTATION 7 – 9 November 2011 Joint Lead Managers
Slide 2: Disclaimer, Selling Restrictions & Important Notice
DISCLAIMER, SELLING RESTRICTIONS & IMPORTANT NOTICE Thi d This documentt has h b been prepared dbby IInsurance A Australia t li GGroup Li Limited it d (“IAG” and d “Issuer”) “I ”) for f generall information i f ti purposes. It ddoes nott constitute a recommendation by ANZ National Bank Limited, UBS
Slide 3: Today's Agenda
INTRODUCTION TODAY’S AGENDA 1. Introduction 2. Insurance Australia Group • Group Overview • Corporate Structure • Financials 3. The Bonds • Offer Summary and Timetable • Investment Highlights 4. Contact Directory 2
Slide 4: Key Features of the Bonds
INTRODUCTION KEY FEATURES OF THE BONDS Issuer Insurance Australia Group Limited Bonds Unsecured, subordinated, fixed rate debt obligations Issuer Rating S&P “A+” (stable) reaffirmed 4 August 2011 Issue Rating S&P “A A-” Regulatory treatment Lower Tier 2 capital for the Group under APRA’s current pru
Slide 5: General Insurance Group Operating in Australia, NZ, UK & Asia
GROUP OVERVIEW GENERAL INSURANCE GROUP OPERATING IN AUSTRALIA, NEW ZEALAND, UK & ASIA FY11 GROUP GROSS WRITTEN • An ASX-listed general insurance group offering personal and commercial PREMIUM (GWP) BY PRODUCT insurance products through: – leading and established brands across its home markets of Aus
Slide 6: Geographical Presence
GEOGRAPHICAL PRESENCE 90% OF GWP FROM HOME MARKETS (AUSTRALIA & NEW ZEALAND) FY11 GWP BY BUSINESS MIX 4 1 3 1 5 2 2 Australia Direct Australia Intermediated New Zealand United Kingdom Asia 1 .49% ownership of the general insurance arm of AmBank Group, AmG Insurance Berhad, trading under the AmAssura
Slide 7: Simplified Corporate Structure
SIMPLIFIED CORPORATE STRUCTURE THE ISSUER AND THE GROUP INSURANCE AUSTRALIA ASX-listed holding GROUP LIMITED company and Issuer of the Bonds INSURANCE IAG AUSTRALIA INTERNATIONAL LIMITED PTY LIMITED Australian International Operating Businesses Operating Businesses New Zealand • IAG is the ultimate
Slide 8: The Group's Strategic Priorities – Reset June 2011
THE GROUP’S STRATEGIC PRIORITIES – RESET JUNE 2011 A CLEAR FOCUS ON AUSTRALIA, NEW ZEALAND AND ASIA AMBITION STRATEGY TARGETS PRIORITIES Long term Accelerate growth in Deliver superior financial targets: Australia and New p performance byy actively y Zealand To be the world’s world s most respected
Slide 9: FY11 Group Financial Performance
FY11 GROUP FINANCIAL PERFORMANCE KEY PERFORMANCE METRICS (A$m) 8,050 250 7,842 7,782 660 515 493 181 91 09 10 11 09 10 11 09 10 11 GROSS WRITTEN INSURANCE NET PROFIT PREMIUM PROFIT AFTER TAX PAGE 8 8
Slide 10: Group Financial Performance: Divisional Results
GROUP FINANCIAL PERFORMANCE DIVISIONAL RESULTS FY10 FY11 • Australia Insurance Profit (A$m) and Margin (% ) A$m % A$m % − Strong performance maintained in Direct insurance Australia Direct 569 16.9 702 19.5 − Top line growth restored and underlying Australia Intermediated 139 6.6 140 6.5 turnaround
Slide 11: FY10 and FY11 Overview
GROUP FINANCIAL PERFORMANCE FY10 AND FY11 OVERVIEW • After allowing for the impact of foreign FY10 FY11 exchange movements, underlying GWP A$m A$m growth in FY11 was 4.8% Gross written premium 7,782 8,050 • Year-on-year insurance profit comparison Gross earned premium 7,621 7,858 reflects: Reinsuran
Slide 12: Reinsurance: A Key Part of Capital Management
REINSURANCE A KEY PART OF CAPITAL MANAGEMENT • The Group Reinsurance Management Strategy is reviewed annually by the Board and submitted to APRA • Integrated catastrophe cover programme renewed on calendar year basis • Catastrophe cover at 1 January 2011: – Main cover from A$250m up to A$4.1bn (2 to
Slide 13: Strong, Liquid Balance Sheet
GROUP BALANCE SHEET STRONG, LIQUID BALANCE SHEET FY10 FY11 • Investment assets of nearly A$12bn at A$m A$m Assets FY11, 87% invested in highly rated fixed Cash and cash equivalents 416 509 income securities and cash Investments 11,734 11,893 Investments in joint ventures and associates 283 284 • Tot
Slide 14: Investment Portfolio Conservatively Positioned
INVESTMENT PORTFOLIO CONSERVATIVELY POSITIONED TOTAL INVESTMENT PORTFOLIO TECHNICAL RESERVES SHAREHOLDERS’ FUNDS A$11.9BN1 A$8.3BN1 A$3.6BN1 1.0% 13% 18.1% 5.4% 58.9% 17.6% 87% 99.0% Fixed Interest and Cash Alternatives Fixed interest and cash Growth Australian equities International equities Altern
Slide 15: Regulatory Capital Above Long Term Benchmark
CAPITAL REGULATORY CAPITAL ABOVE LONG TERM BENCHMARK • Regulatory capital was a multiple of 1.58 times APRA’s MCR Multiple Minimum Capital Requirement (MCR) at 30 June 2011 FY10 FY11 – Remains above the long term benchmark of 1.45 – 1.50 Regulatory Capital (A$m) 4,140 3,933 times MCR (A$m) 2 154 2,1
Slide 16: Group Debt & Hybrid Capital
GROUP DEBT & HYBRID CAPITAL QUALIFIES AS REGULATORY CAPITAL FUNDING PROFILE SUMMARY OF DEBT & HYBRID SECURITIES – 30 JUNE 2011 A$ A$m Yield 1200 Principal (net of Call, reset amount swaps) or maturity S&P 1000 A$m % date rating 800 £157m subordinated exchangeable term notes 235 3.62% Dec-12 'A' 600
Slide 17: Regulatory & Ratings Capital Review and Status Update
REGULATORY & RATINGS CAPITAL REVIEW AND STATUS UPDATE • APRA has confirmed that the Bonds will qualify as Lower Tier 2 capital under its current prudential standards • APRA is currently reviewing its capital standards for both life insurers and general insurers – aims of the review include improving
Slide 18: IAG Bond Offer: Maturity and Interest Payments
IAG BOND OFFER MATURITY AND INTEREST PAYMENTS Call Dates 15 December 2016 (“First Call Date”) and each Interest Payment Date thereafter Maturity Date 15 December 2036 Subject to APRA approval, the Issuer may redeem the Bonds on any Call Date Early Redemption • on a Rate Reset Date (each 5 year anniv
Slide 19: IAG Bond Offer: Rate Set Process
IAG BOND OFFER RATESET PROCESS Interest Rate • Until the First Call Date, the Initial Interest Rate • For each subsequent period, the sum of the Benchmark Rate (5 year swap rate) on the Rate Reset Date plus the Margin Initial Interest Rate Determined on the Rate Set Date at the greater of: • The Min
Slide 20: IAG Bond Offer: Offer Timetable
IAG BOND OFFER OFFER TIMETABLE Key dates for the Offer Prospectus registered 4 November 2011 Roadshow 7 – 9 November 2011 Firm application bids due 11 00am 14 November 2011 11.00am, Minimum Interest Rate and Margin determined 14 November 2011 Offer Opens 16 November 2011 Investment Statement hard co
Slide 21: IAG Bond Offer: Bookbuild Process
IAG BOND OFFER BOOKBUILD PROCESS Firm bookbuild Approved intermediaries have been invited to participate in the firm bookbuild process Bids to be submitted on the basis of the Initial Interest Rate to the First Call Date Bidding process The Margin will be derived from the clearing Initial Interest R
Slide 22: Comparable Instruments in New Zealand
IAG BOND OFFER COMPARABLE INSTRUMENTS IN NEW ZEALAND IAG Bonds Genesis Capital Bonds New Zealand Post Notes Ranking Subordinated Subordinated Subordinated S&P Issue Rating A A- BB BB- A Rating agency equity Up to year 5 Up to year 10 Up to year 10 credit Payment of Interest Deferrable in limited Man
Slide 23: IAG Bond Offer: Investment Highlights
IAG BOND OFFER INVESTMENT HIGHLIGHTS • Strong ‘A-’ issue credit rating • Interest Rate of at least 7.50% p.a. for 5 years “The Bonds continue the Group’s p • Opportunity to invest in a leading general insurance group in long, distinguished and proud Australia and New Zealand association with New Zea
Slide 24: Contact Directory
CONTACT DIRECTORY IAG Clayton Whipp, Group General Manager Finance +61-2-9292 1104 Alan Cazalet, Group Treasurer +61-2-9292 8451 M kG Mark Gold, ld DDeputy t GGroup T Treasurer +61-2-9292 61 2 9292 2353 Joint Lead Arrangers Ch i O’Neale Chris O’N l 04 802 2423 04-802 Andy Coupe 04-913 4878 Further I
Slide 25: Our Business Model and Brands
OUR BUSINESS MODEL AND BRANDS 24
Insurance Australia Group — Debt Investor Presentation (November 2011) on 6ix