Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Shareholder Meeting (November 2007)
31 slides from Insurance Australia's shareholder meeting presentation, Nov 13, 2007
Slide 1: Cover letter to ASX: Annual General Meeting
For personal use only 13 November 2007 Manager, Company Announcements Office ASX Limited Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, INSURANCE AUSTRALIA GROUP LIMITED (‘IAG’) ANNUAL GENERAL MEETING Attached are copies of an address and presentation by the Chief Executiv
Slide 2: Insurance Australia Group Annual General Meeting 2007
For personal use only INSURANCE AUSTRALIA GROUP ANNUAL GENERAL MEETING 2007 13 November 2007
Slide 3: Michael Hawker, Chief Executive Officer
For personal use only MICHAEL HAWKER CHIEF EXECUTIVE OFFICER
Slide 4: Progress against strategy
For personal use only PROGRESS AGAINST STRATEGY
Slide 5: Strategy – focused on general insurance
STRATEGY – FOCUSED ON GENERAL INSURANCE For personal use only To To be be the the best best general general insurer insurer in in every every market market we we invest invest in in Growing Growing market market Profitable Profitable Enter Enter and and grow grow leadership leadership in in niches n
Slide 6: A more diverse geographic spread
A MORE DIVERSE GEOGRAPHIC SPREAD For personal use only $7.4b $6.7b $6.4b $6.4b Premium generated in $5.2b international markets $3.6b Premium generated in $3.2b Australia outside NSW & ACT Premium generated in NSW & ACT Gross written premium 2001 2002 2003 2004 2005 2006 2007 Year ended 30 June PAGE
Slide 7: A diverse general insurance product portfolio
A DIVERSE GENERAL INSURANCE PRODUCT PORTFOLIO For personal use only $7.4b $6.7b Reinsurance $6.4b $6.4b Workers’ comp $5.2b CTP/Motor Liability Liability $3.6b $3.2b Short tail commercial Other short tail Health Home Gross Motor written premium 2001 2002 2003 2004 2005 2006 2007 Year ended 30 June P
Slide 8: Performance during FY2007
For personal use only PERFORMANCE DURING FY2007
Slide 9: Gross written premium grew 15% to $7.4 billion
GROSS WRITTEN PREMIUM GREW 15% TO $7.4 BILLION For personal use only • Australian direct personal lines back in growth mode, with short tail GWP up 1.9% • Acquisitions in UK added $750m to IAG’s total GWP and make IAG the UK’s: • No. 1 motorcycle insurer • No. 3 personal lines insurance broker • No.
Slide 10: Severe storms in Australia and UK cause >$500m gross loss
SEVERE STORMS IN AUSTRALIA AND UK CAUSE >$500M GROSS LOSS For personal use only Storms which lashed the NSW central Floods in the UK in June were the worst in coast in June were the fourth most costly modern history, surpassing even the Great natural disaster in Australia on record Floods of 1947. A
Slide 11: Financial performance: revenue and insurance profit
FINANCIAL PERFORMANCE For personal use only REVENUE INSURANCE PROFIT 8,000 1000 7,000 900 800 6,000 700 5,000 600 4,000 500 3,000 400 300 2,000 200 1,000 100 0 0 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 Year ended 30 June Year ended 30 June Gross written premium ($m) Insurance pro
Slide 12: Financial performance: NPAT and dividends
FINANCIAL PERFORMANCE For personal use only NET PROFIT AFTER TAX DIVIDENDS 900 45 800 40 700 35 600 30 500 25 400 20 300 15 200 10 100 5 0 0 -100 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 Year ended 30 June Year ended 30 June NPAT ($m) Dividend (cps) PAGE 11 ANNUAL GENERAL MEETING
Slide 13: Financial performance: return on equity
FINANCIAL PERFORMANCE For personal use only RETURN ON EQUITY* (ROE) 30.00% 25.00% 20.00% Normalised average ROE (17.1%) 15.00% Target ROE (15%) Actual average ROE (14.2%) 10.00% 5.00% Actual ROE (%) Normalised ROE (%) 0.00% 2002 2003 2004 2005 2006 2007 -5.00% Year ended 30 June *ROE to holders of o
Slide 14: Operational performance - Australia
OPERATIONAL PERFORMANCE - AUSTRALIA For personal use only • Direct personal lines back in growth mode • Soft cycle in commercial lines continued • GWP increased by 1.8% to $5.5 billion • Insurance margin of 13.1% • Employee engagement improved, up to 61% • Expense ratios improved PAGE 13 ANNUAL GENE
Slide 15: Operational performance - New Zealand
OPERATIONAL PERFORMANCE - NEW ZEALAND For personal use only • Retained market leadership • GWP up 2.1% in local currency terms • Implemented new personal lines system • Regionalised call centres • Launched Easybiz and rolled out Marine and Liability products • Expense ratio up as new technology plat
Slide 16: Operational performance - Asia
OPERATIONAL PERFORMANCE - ASIA For personal use only • Existing businesses performing well in challenging conditions • Disciplined approach to M&A • GWP more than doubled to $168 million • Insurance profit up to $9m • Insurance margin of 6.9% • Plans to increase ownership to 49% of AmAssurance in 20
Slide 17: Operational performance - United Kingdom
OPERATIONAL PERFORMANCE - UNITED KINGDOM For personal use only • Equity continued to perform better than market • Addressing challenges in Hastings/Advantage • Fee-based profit of $18 million • Insurance profit of $30 million below expectations due to soft cycle in private motor • Expected synergy b
Slide 18: United Kingdom - Equity Red Star outperformance
UNITED KINGDOM - EQUITY RED STAR OUTPERFORMANCE For personal use only % outperformance by Equity against motor market (COR) Median = 15% over 26 years 30 25 20 15 10 5 0 1980 1985 1990 1995 2000 2005 2007* * 2007 assumes a market COR of 106% for six months to June 2007 – UK GAAP basis PAGE 17 ANNUAL
Slide 19: Our performance indicators are strong
OUR PERFORMANCE INDICATORS ARE STRONG For personal use only EMPLOYEES RISK • Group-wide engagement increased, for • IAG is one of only 5% of insurers globally the fourth consecutive year whose Enterprise Risk Management • Many business units now score within the System has been assessed as ‘Excellen
Slide 20: A leader in sustainability
A LEADER IN SUSTAINABILITY For personal use only Qualified for inclusion in the One of only three Australian Dow Jones Sustainability Index companies to be listed in the which tracks performance of 2007 Global 100 Most leading sustainability driven Sustainable Corporations in the companies around th
Slide 21: Challenges, priorities and outlook for FY2008
For personal use only CHALLENGES, PRIORITIES AND OUTLOOK FOR FY2008
Slide 22: Challenges and priorities
CHALLENGES AND PRIORITIES For personal use only We are… • Actively managing our businesses through the different market cycles, in particular the soft commercial cycle, and soft private motor market in the UK • Addressing challenges in the UK-based Hastings and Advantage businesses • Maintaining our
Slide 23: Outlook for year ending June 2008
OUTLOOK FOR YEAR ENDING 30 JUNE 2008 For personal use only IAG’s guidance for FY08 (which was revised in October 2007) is to: • Deliver gross written premium growth of 7 – 9% • Achieve an insurance margin of 11 – 13% • Retain our strong capital position and very strong ‘AA’ ratings for key wholly-ow
Slide 24: Address by Mr Michael Hawker, Chief Executive Officer
Address by Mr Michael Hawker, Chief Executive Officer Insurance Australia Group Limited For personal use only 2007 Annual General Meeting 13 November 2007 [Slide: title side] Good morning ladies, gentlemen, and fellow shareholders. This morning I plan to: 1. Reiterate our strategy; 2. Provide an ove
Slide 25: For personal use only
competitive advantage into immature, high growth, markets. Secondly, we have targeted select OECD markets where we gain a capital diversification benefit, and can purchase assets which we believe are competitive and are positioned well to benefit from further development of these markets. As a resul
Slide 26: For personal use only
IAG incurred more than $500 million in gross claims costs from these events. The impact, net of reinsurance, was $200 million. The fact that we have endured such events in consecutive years is causing the industry concern. There is clear evidence that our world is warming and that this increased war
Slide 27: For personal use only
Australian Personal Insurance which includes our well-known brands NRMA Insurance, SGIO and SGIC, returned to growth mode. The business has strong growth momentum, a solid margin, good customer satisfaction, and high staff morale. Our next largest business, Australian commercial insurance which is b
Slide 28: For personal use only
[Slide: Operational Performance – Asia] As I mentioned earlier our strategy has been to expand the company internationally, and during the past four years a large part of our focus has been in Asia. For personal use only Within Asia, our target markets are Thailand, Malaysia, China and India. We are
Slide 29: For personal use only
The general view of the UK insurance industry in 2006 was that the private motor market cycle was about to turn. However, the UK motor market further deteriorated in overall profitability during the year. This has reduced our expected returns for this financial year. According to a number of market
Slide 30: For personal use only
[Slide: A Leader in Sustainability] We have qualified for inclusion into the Dow Jones Sustainability Index and improved our rating this year. In addition we are one of only three Australian companies included in the “2007 Global 100 Most Sustainable Corporations in the World” by Corporate Knights a
Slide 31: For personal use only
insurance margin between 11-13%, that we will retain our strong capital discipline, and maintain our dividend at 29.5c per share fully franked. These comments are unchanged from those we recently gave at our annual investor briefing. Thank you for your continued support during the year. We are confi
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