Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — Citi Conference 2011
17 slides from Qbe Insurance's conference presentation, Oct 25, 2011
Slide 1: ASX cover letter: Citi conference presentation
QBE Insurance Group Limited ABN 28 008 485 014 Head Office 82 Pitt Street SYDNEY NSW 2000 For personal use only Australia Postal Address Box 82 GPO SYDNEY 2001 25 October 2011 Telephone: +61 (2) 9375 4444 Facsimile: +61 (2) 9231 6104 DX 10171, Sydney Stock Exchange The Manager Company Announcements
Slide 2: QBE Insurance Group - Citi conference October 2011
For personal use only QBE INSURANCE GROUP Citi conference - 25 October 2011 Presented by: Neil Drabsch, Group CFO
Slide 3: Frequently asked questions
Frequently asked questions For personal use only Insurance/reinsurance pricing and market conditions Acquisitions and growth - QBE business model QBE’s global reinsurance arrangements - cost of reinsurance Quality of QBE’s investment portfolio – Eurozone fears QBE FY 2011 outlook Dividend sustainabi
Slide 4: Pricing outlook: US small accounts lead upturn in premium rates
Overall premium rate increases on renewed business expected to exceed 4% for FY11 For personal use only Pricing outlook: US small accounts lead upturn in premium rates 3rd quarter update: QBE the Americas overall average rate increase of around 3%, with an upward trend European operations up 2% over
Slide 5: Lloyd's major losses - net ultimate claims (1998-2011)
Lloyd’s major losses – Net ultimate claims (1998 – 2011). 2011 is costliest first half on record For personal use only Major claims for 1H 2011 double the level of the prior year and more than 10 times long-term average 4.00 KRW For the period 2004 – Hurricanes 2010, QBE’s large risk 3.50 and catast
Slide 6: QBE's underwriting performance compared with selected London based insurers
QBE’s underwriting performance compared with selected London based insurers’ results For personal use only Combined Operating Ratio FY 2007 FY 2008 FY 2009 FY 2010 1H 2011 Amlin 68.3 86.3 75.4 93.6 124.4 Beazley 86.6 81.6 93.6 83.7 106.5 Brit 94.0 90.7 91.1 98.4 104.8 Catlin 85.3 96.5 93.0 93.3 118.
Slide 7: QBE's diverse businesses assist in outperforming global peers
QBE’s diverse and specialised businesses assist in outperforming global peers in difficult market conditions For personal use only Top 30 of the top 50 major global insurers that have reported to date: COR% COR% 1H2011 FY2010 1H2011 FY2010 Progressive 91.8 92.4 Hartford 103.7 95.1 Eureko 91.9 97.4 I
Slide 8: QBE business model: growth by acquisition
QBE business model: growth by acquisition For personal use only Acquisitions in 2010 and 2011 all met our strict criteria including EPS accretion in year one Additional Cost annualised 2010 acquisitions US$M GWP US$M NAU Country – US multi peril crop insurer 573 900 CNA Argentina – workers’ compensa
Slide 9: Acquisitions have locked in premium growth
QBE business model: growth by acquisition For personal use only Acquisitions to date have locked in premium growth 20.0 of approximately 15% p.a. over 2011 and 2012 GWP NEP 18.0 16.0 Compound annual average premium growth rates since 2001 14.0 Premium - $ bn - gross written premium 17.5% 12.0 - net
Slide 10: 2011 global reinsurance program: lower cost and reduced retention
2011 global reinsurance program: lower reinsurance cost and reduced maximum event retention For personal use only Over the past five years QBE has increased GWP by 123% and significantly increased the diversity of its businesses, both by product and geography, enabling the Group to reduce its overal
Slide 11: Global reinsurance program - 70% of cost locked in for 2012/2013
QBE’s global reinsurance program – 70% of cost locked in to growth for 2012/2013 For personal use only QBE’s reinsurers have earned overall underwriting profits since 2000 QBE’s reinsurers benefit from greater diversity and lower risk profile Supports QBE’s ability to secure more comprehensive cover
Slide 12: Investment strategy: cautious approach, high quality liquid securities
Investment strategy: maintain a cautious approach and invest in high quality liquid securities For personal use only Market value of investment 30 June 2011 31 Dec 2010 No investments in banks that portfolio failed the European stress test US$29.0Bn US$25.3Bn and no holdings of sovereign debt issued
Slide 13: 2011 HY insurance margin analysis: strong underlying margin of 16%
2011 HY insurance margin analysis: strong underlying margin of 16% For personal use only Reported margin adjusted for: 20.0 (1) Operational FX 19.0 gains, assumed non- 18.0 17.0 (0.8) 0.3 recurring 6.9 0.6 16.0 15.0 (2) Abnormal large 14.0 claims events above 13.0 15.0 expected prudent 12.0 (2.2) 11
Slide 14: Outlook for remainder of 2011
Outlook for remainder of 2011 For personal use only Outlook for 2011 FY remains unchanged, noting key variables such as: - large risk losses and catastrophes - risk free rates used to discount outstanding claims - investment yields, particularly credit spreads on corporate bonds The minimum projecte
Slide 15: Outlook for remainder of 2011
Outlook for remainder of 2011 For personal use only The underlying insurance margin of 16% is sustainable assuming normal levels of catastrophes losses, stable risk free rates and credit spreads Dividend sustainability supported by: - confidence in underlying insurance margin and profitability - sub
Slide 16: Important disclaimer
Important disclaimer For personal use only The information in this presentation provides an update on market conditions affecting QBE. This presentation should be read in conjunction with all information which QBE has lodged with the Australian Securities Exchange (“ASX”). Copies of those lodgements
Slide 17: QBE Insurance Group www.qbe.com
For personal use only QBE INSURANCE GROUP www.qbe.com 16