Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — H1 2003 Earnings Presentation
22 slides from Qbe Insurance's earnings presentation, Aug 19, 2003
Slide 1: Cover letter to ASX: QBE Results for Half Year ended 30 June 2003
19 AUG 2863 16:14 FROM GROUP EXEC @292516164 TO AS RELEASES P.@l/22 ®& AUSTRALIAN STOCK EXCHANGE QBE @BE000378 vance cRov QBE INSURAN IMITED Insurance eee ABN 28 008 485 014 Group &2 Pitt Street Sydhay NSW 2000 Postal Address GPO Box 82 19 August 2003 Sydney NSW 2001 Telephone: (02) 9375 4444 Facsim
Slide 2: Results & Outlook: Highlights half year to 30 June 2003
19 AUG 2663 16:16 FROM GROUP EXEC 292316184 TO ASX RELEASES P.@2-22 ® QBE INSURANCE GROUP LIMITED RESULTS & OUTLOOK for the half year ended 30 June 2003 Highlights 8 half year to 30 June 2003 Net profit after tax up 110% to $241 million (2002: $115 million) Net profit before tax up 152% to $313 mill
Slide 3: Highlights: premium growth and ratios
19 AUG 2663 16:16 FROM GROUP EXEC 292316184 TO ASX RELEASES Pa3/22 Hig ghlights & half year to 30 June 2003 2+ Gross written premium up 11% to $4.8 billion, gross earned premium up 12% to $3.9 billion j* Stronger A$ has reduced reported top line growth by approximately 5% * Growth supported by premi
Slide 4: Highlights; Shareholder returns
19 AUG 2863 16:14 FROM GROUP EXEC @292516164 TO AS RELEASES P. 4-22 Highlights 6 half year to 30 June 2003 Investment income up 95% to $189 million (2002: $97 millian) Investment income includes realised and unrealised gains before tax of $13 million, mainly reflecting the improved equity markets (2
Slide 5: Historical share price performance
19 AUG 2663 16:11 FROM GROUP EXEC B2o23161b4 TO ASX RELEASES ‘a ie &® Historical share price performance An investment in QBE has outperformed the Australian All Ordinaries Index and Inflation with a compound average annual growth rate of 15.1% over 5 years, 18.0% over 10 years and 23.7% over 20 yea
Slide 6: History of growth; History of key ratios
19 AUG 2663 16:11 FROM GROUP EXEC B2o23161b4 TO ASX RELEASES History of growth half yaar to 30 June 2003 gross and net eamed premium Compound average growth rates over last 10 years: -gross eamed pramium 23.3% SM -net eamed premium 22.7% 4,000 3,000 2,000 4,000 0 1994 1997 2000 2003 ® GEP $3,882M NE
Slide 7: Worldwide operations
19 AUG 2663 16:11 FROM GROUP EXEC B2o23161b4 TO ASX RELEASES P.aree2 , ® Worldwide operations HALF YEAR FULL YEAR June June Dec Dee 2003 2002 2002 2004 eae : Gross written premium $M 4,824 4,332 7,723 6,793 iris Gross earned premium §M 3,882 3,470 7197 6,298 Net earned preraium $M 3,083 2.679 6,642
Slide 8: Geographical diversification; Worldwide portfolio mix
19 AUG 2663 16t11 FROM GROUP EXEC B2o2316184 TO ASX RELEASES i) European company operations Geographical diversification ® half yaar to 30 June 2003 gross eamed premium Lloyd's division 27.0% (31.7%) Australla 21.0% (19.3%) Asia-Pacific 7.1% (8.0%) the Americas 18.1% (11.9%) 29.8% (29.1%) i i. onan
Slide 9: Balance sheet; Net invested funds
19 AUG 2663 16:12 FROM GROUP EXEC B2o23161b4 TO ASX REL EASES Balance sheet ® 30 June 2003. «31 Dec 2002-80 June 2002 $M $M 5M Investments and cash 11,495 11,508 9,493 Receivables 4,157 3278 3.949 i Recoveries on outstanding claims 3,289 3,666 3,685 Deferred insurance costs 4,620 1,134 1,588 Intangi
Slide 10: Balance sheet: investment quality and currency mix
19 AUG 2863 i@ite FROM GROUP EXEC @292516164 TO AS RELEASES x = Balance sheet é 30 June 2003 Approximately 89% of fixed interest and cash is AA rated or better Net invested funds largely unchanged at $10.0 billion due to impact of strong A$ offsetting strong cash inflows Using 31 December 2002 rates
Slide 11: Comparison of international bond yields; Balance sheet
19 AUG 2863 i@ite FROM GROUP EXEC @292516164 TO AS RELEASES P.iivee Comparison of international ® bond yields 3 year AS gov't bond | Z yr USS generic gov't bond Yielde: a * 16 June 4.25% s Youuee 123% as 13 Aug 5.03% 2 13 Aug 1.82% a 1h AS ‘a ‘ 14 MW ast ‘oat + Cian Ren PUD ea ZeApr eMay tedun Wu Ag
Slide 12: Balance sheet: borrowings and prudential margins
19 AUG 2663 16:13 FROM GROUP EXEC 292316184 TO ASX RELEASES Balance sheet & 30 June 2003 Borrowings broadly unchanged at $1,452 million due ta the impact of the stronger A$ US$250 million subordinated debt issue in May -- used to repay debt and for general corporate purposes Weighted average cost of
Slide 13: Balance sheet; Australian general insurance
19 AUG 2663 16:13 FROM GROUP EXEC 292316184 TO ASX RELEASES & Balance sheet 30 June 2003 * Subordinated debt and hybrid securities are included as tier 2 capital for determining the Group's capital adequacy multiple * QBE estimates that Group capital adequacy multiple is around 2.0 times the minimum
Slide 14: Australian general insurance; Asia-Pacific general insurance
19 AUG 2663 16:13 FROM GROUP EXEC 292316184 TO ASX RELEASES & Australian general insurance half year to 30 June 2003 Prudential margins further increased CTP, workers’ compensation, trade credit, corporate property/liability, professional liability, aviation all ahead of plan Joint venture underwrit
Slide 15: Asia-Pacific general insurance; the Americas
19 AUG 2663 16:13 FROM GROUP EXEC 292316184 TO ASX RELEASES Asia-Pacific general insurance half year to 30 June 2003 Underlying growth from increased customer retention, higher premium rates and growth in specialist products Most operations recorded underwriting profits New Zealand, Pacific islands,
Slide 16: the Americas; European company operations
19 AUG 2663 16:14 FROM GROUP EXEC B2o23161b4 TO ASX RELEASES the Americas ) half year to 30 June 2003 Net earned premium growth affected by proportional reinsurance on new agency business Improved COR due to higher premium rates and improved insurance terms and conditions Excellent results for 2002
Slide 17: European company operations; Lloyd's division (Limit)
19 AUG 2863 1@:14 FROM GROUP EXEC @292516164 TO AS RELEASES a + Improved claims ratio reflects improved market conditions and a lower claims trequency « Risk profile of portfolios reduced « Significant allowance for large losses and catastrophes in insurance liabilities * Five out of six Central and
Slide 18: Lloyd's division (Limit); Investment income
19 AUG 2663 16:14 FROM GROUP EXEC B2o23161b4 TO ASX RELEASES Lloyd’s division (Limit) half year to 30 June 2003 Second largest provider. of capacity at Lloyd's 2002 underwriting year results are excellent. 2003 underwriting year claims are less than planned Improved COR following rate increases, low
Slide 19: Investment income; 2003 outlook
19 AUG 2663 16:15 FROM GROUP EXEC 292316184 TO ASX RELEASES : ® Investment income half year to 30 June 2003 Investment income before realised and unrealised gains/losses down 9% to $176 million due to lower interest yields Active management rewarded with strong performance from cash and fixed intere
Slide 20: 2003 outlook
19 AUG 2663 16:15 FROM GROUP EXEC 292316184 TO ASX RELEASES 2003 outlook ® * ‘Target insurance margin for 2003 now in excess of 8.5% * Target increase in profit after tax for the year now more than 75% * Target tax expense rate of 22% of net profit before tax * Reinsurance costs to remain around 21%
Slide 21: 2004 outlook
19 AUG 2663 16:15 FROM GROUP EXEC 292316184 TO ASX RELEASES 2004 outlook ® Slightly higher premium rates for most classes: Liability 5% to 15% Workers’ compensation 0% to 10% Professional indemnity 5% to 15% Financial and credit 0% to 10% Motor 5% to 10% Energy -20% to 0% Marine 5% to 15% Property —
Slide 22: 2004 outlook: investments, tax and capital
19 AUG 2663 16:15 FROM GROUP EXEC 292316184 TO ASX RELEASES P, 22722 & * Net invested funds to benefit from strong cash flow and Lloyd’s reinsurance to close » Expectation of slightly higher interest rates and improved equity markets to benefit investment income * Continue low risk strategy for inve