Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — IPO Roadshow (October 2001)
27 slides from Qbe Insurance's IPO roadshow presentation, October 2001
Slide 1: Roadshow Presentation
Roadshow Presentation October 2001 To the maximum extent permitted by law, QBE Insurance Group Limited and its officers and employees exclude liability to any attendees or any other persons arising in relation to this presentation or the accuracy or completeness of the information provided as part o
Slide 2: Agenda
AGENDA • Overview • Use of Proceeds • Timetable • Recent Events • Pro Forma Estimate of Shareholder Funds • Pro Forma Regulatory, Credit and Financial Ratios 2
Slide 3: Overview
Overview 3
Slide 4: Overview
Overview • QBE is raising equity of [$500] million from institutions with the ability to take subscriptions from retail shareholders for up to a further [$165] million • This represents approximately 24% of the current market value of the Company • The offer will largely be available on a pro rata b
Slide 5: Overview (cont'd)
Overview (cont’d) • The institutional component will comprise [$500] million of equity – a non-renounceable priority entitlement of [$375] million – a placement of [$125] million with priority to existing shareholders • The retail component will comprise up to [$165] million of equity – a non-renoun
Slide 6: Use of Proceeds
Use of Proceeds 6
Slide 7: Use of Proceeds
Use of Proceeds • The proceeds will be used to: – provide an appropriate level of capital for QBE to participate in growth opportunities from premium rate increases – provide funding to purchase additional capacity of selected syndicates at Lloyd’s – improve QBE’s debt/equity ratio and its current r
Slide 8: Timetable
Timetable 8
Slide 9: Timetable
Timetable • We are launching the offer today, Tuesday 16th October, 2001 • The institutional priority entitlement will close Wednesday night 17th October 2001 and will settle Tuesday 23rd October • Prospectus will be lodged on or about 22 October 2001 and the retail offer will close on [14] November
Slide 10: Timetable
Timetable Thursday, Tuesday, 18 October - 23 October - Institutional Settlement of Allotment Institutional Offer[$500]M (T+3) Tuesday, Wednesday, Thursday, Monday, Wednesday, Wednesday, 16 October - 17 October - 18 October - 22 October - 14 November - 21 November- Launch Trading Record Retail Retail
Slide 11: Recent Events
Recent Events 11
Slide 12: Recent Events: Up to September 2001
Recent Events Up to 10 September 2001 • profit for half year up 56% to $122m • all divisions on track for 2001 except Asia motor • 20 consecutive years of dividend increases in dividend payout • investment in QBE shares grew by 19.0% per annum over 10 years to 31 December 2000 12
Slide 13: Up to September 2001 (cont'd)
Recent Events Up to 10 September 2001 (cont’d) • shareholders’ funds $2.1bn at 30 June • prudential margins strong at >85% probability of adequacy • exposure to equities 12% of total portfolio - majority had collars in place 13
Slide 14: Impact of September tragedy
Recent Events impact of 11 September tragedy • current best estimate in the region of $250m loss after tax • not a “normal” catastrophe - liability component of loss significant • many portfolios affected • all portfolios and contracts with potential exposure reviewed 14
Slide 15: Impact of September tragedy
Recent Events impact of 11 September tragedy • shareholders’ funds after loss over A$1.9bn or around 1.29 times APRA’s proposed new minimum requirement • downgrade by internationally recognised rating agencies along with many other insurers 15
Slide 16: Impact of September tragedy
Recent Events impact of 11 September tragedy • 97% of reinsurance recoveries from A or better rated organisations - balance of 3% with reputable and long standing reinsurers • reinsurance protections with the same rated organisations in place for potential further catastrophes in 2001 • provision fo
Slide 17: Impact of September tragedy
Recent Events impact of 11 September tragedy • total investment portfolio in excess of A$8bn - A$3.5bn is cash and short term deposits with quality rated institutions • equity collars still in place to protect shareholders’ funds • small positive realised and unrealised gain on investment portfolio
Slide 18: Impact of September tragedy
Recent Events impact of 11 September tragedy • Underlying businesses profitable and looking forward to participating in the growth opportunities from premium rate increases 18
Slide 19: Insurance industry impact for 2002
Recent Events - Insurance industry impact for 2002 • capacity will be withdrawn from reinsurance market • reinsurance costs will increase substantially • premium rates will increase substantially • terrorism cover will be largely reduced or withdrawn 19
Slide 20: Diverging growth rates of premiums and GDP in the industrialised countries
Diverging growth rates of premiums and GDP in the industrialised countries In % 12 10 8 6 4 2 0 1980 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 -2 -4 Difference between premium and GDP growth, weighted average of countries Difference between premium and GDP growth, median of countries
Slide 21: QBE syndicate performance
QBE syndicate performance 1,000 30.0% QBE share 940 Capacity Syndicate return Actual/target return on Capacity (before names' expenses) 900 862 25.0% 836 Limit return 817 800 782 782 782 762 750 764 20.0% 700 15.0% 600 Capacity £m 10.0% 500 5.0% 400 0.0% 300 -5.0% 200 100 -10.0% - -15.0% 1994 1995 1
Slide 22: Challenges going forward
Recent Events Challenges going forward • opportunities for growth and increased profitability • funding of massive premium rate increases • continued focus on more profitable classes of business • increased cost and reduced availability of reinsurance capacity • enhanced risk management to plan for
Slide 23: QBE impact for 2002
Recent Events QBE impact for 2002 • much lower combined operating ratio • reduced investment yields • increased cash flow • scope for target shareholder returns greater than 1993 to 1996 period expected 23
Slide 24: Pro Forma Estimate of Shareholder Funds
Pro Forma Estimate of Shareholder Funds 24
Slide 25: Pro Forma Estimate of Shareholder Funds
Pro Forma Estimate of Shareholder Funds Adjustments to 30 Sept including loss from terrorist Net Proceeds of 30 – Jun – 01 attacks capital raising Pro forma net assets $bn $bn $bn $bn Cash and Investments 8.2 0.1 0.5 8.8 Intangibles 0.4 0.0 0.0 0.4 Other assets 4.3 0.0 0.0 4.3 Outstanding claims net
Slide 26: Pro Forma Regulatory, Credit and Financial Ratios
Pro Forma Regulatory, Credit and Financial Ratios 26
Slide 27: Pro Forma Regulatory, Credit and Financial Ratios
Pro Forma Regulatory, Credit and Financial Ratios Pro Forma Post Terrorist Attacks and Equity 30 – Jun – 01 Raising Debt/Equity 37% 32% Solvency 41.0% 53.7% Multiple of Minimum 1.44x 1.58x APRA Capital Requirement 27