Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Deutsche Bank Asia Pacific Financial Institutions Conference 2003
24 slides from Insurance Australia's conference presentation, Jul 8, 2003
Slide 1: ASX release cover letter for Deutsche Bank conference presentation
8 July 2003 Ms Pam Ross Manager, Company Announcements Office Australian Stock Exchange Limited Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Ms Ross INSURANCE AUSTRALIA GROUP LIMITED (‘IAG’) Insurance Australia Group Limited ABN 60 690 739 923 388 George Street Sydney NSW 2000 Tele
Slide 2: Insurance Australia Group - Presentation to Deutsche Bank Conference
Insurance Australia Group George Venardos Chief Financial Officer Presentation to Deutsche Bank — Asia Pacific Financial Services Conference London, 7 July 2003 NAA CleatViews Scio ss 4 OG Be rome (STATE ira Insurance Australia Group Limited Peruse “ce — —— ABN 60 090 739 923
Slide 3: Important information
important information The information in this presentation is an overview and does not contain all information necessary to an investment decision. Any pro forma financial information is intended for informational purposes only, and does not purport to be indicative of the Group results that actuall
Slide 4: Leading general insurance group in Australia and New Zealand
Leading general insurance group in Australia and New Zealand ¢ Market leader (by gross written premium) in each of Australia & New Zealand * Owns leading direct and intermediated brands Insurance Australia Group Limitec page ? ~ nme ponent - eeu Rive. SPATE, al ABN 60 090 739 923 ne SLA
Slide 5: History of growth and diversification
History of growth and diversification . Gross Written Premium By Business wf *” 56% * $6.0bn 42% 42% 3% $3.8bn 5% = 9 ) 8% 11% 21% $2.2bn $1.8bn $1.7bn 2% 28% 2% 1% ee 10% fad 50% Fy97 Pyo8 nY99 #00 Fvo Fever Hos Proforma Annuabised mMoter @Home &Shortiail Commercial m Workers Comp & CTP m Health CL
Slide 6: Improving insurance margins & components
improving insurance margins & components Expense Ratio Loss Ratio 22.5% 7 95.0% One-off impacts 20.0% 4 17.5% F 15.0% 4 . 2H00 1HOt 2H01 1H02 2H02 1HO3 2H00 1HOt 2H01 1HOZ 2H02 1H03 Combined Ratio Insurance Margin (before tax) 115.0% 110.0% One-off impacts 105.0% 100.6% 95.0% 90.0% 85.0% 80.0% 2HO00
Slide 7: Delivering on our five year strategy announced in May 2002
Delivering on our five year strategy announced in May 2002 Top quartile total shareholder return ROE 13 — 15% Double gross written premium by FY 2007 to $6.6bn Maintain combined ratio < 100% Maintain ‘AA’ category rating 4 Insurance Australia Group Limitec ABN 60 090 739 923
Slide 8: Our strategic focus over time
Our strategic focus over time Progress Progressing this will depend on being able to show internationally applicable core competencies ————> We believe that there are substantial opportunities locally for a few years June 2003 << Delivered Time poe 4 Insurance Australia Group Limitec ABN 60 090 739
Slide 9: CGU and NZI acquisition
IAG Benue ata Aaashralia Group CGU and NZI acquisition ica soho gy \ceU Rhone, me MA pore eon nn
Slide 10: CGU/NZI acquisition — summary
CGU/NZI acquisition — summary ¢ Purchased Australia & New Zealand general insurance business of Aviva plc — Announced 18 October 2002 — Completed on 2 January 2003 * Acquired for $1.85bn — Gross premium income stream of $2.3bn — Ongoing operations with a combined ratio of <98% — Leading intermediate
Slide 11: Provides market leading position in core products
Provides market leading position in core products Market share ~ Australia Based on gross premium revenue 50% 9 BIAG & CGU 45% 9 40% 20% 35% 7 30% i 30% 4 25% 4 7 18% 20% 4 20% 15% 10% 5 5% 7 0% Motor Home CTP ST Commercial Workers Comp $1,766m $961m $585m $587m $246m Source: 1. Austrafian market sh
Slide 12: New Zealand also more balanced between North and South Islands
New Zealand also more QLD balanced between North and South Islands GwP 345 . GWwP $434m IAG ee " (Auckland & Wellington) IAG 19% IAG&CGU 15% IAG&CGU 29% GwP $410m IAG 21% GwpP $2,525m IAG&CGU 51% IAG 24% NSW/ACT IAG&CGU 29% Gwp $1,081m IAG 17% IAG&CGU 34% Source: (1) APRA December 2001 es Gwe $80m (
Slide 13: Full range of distribution channels
Full range of distribution channels IAG pre CGU & NZI IAG including CGU & NZI Financial insitiutions 2% Affiliated associations 2% Broker 12% \ | Financial institutions . | ) Other 1% Agent 8% ‘\ ae an Broker 24% Direct 58% Direct 86% nee, cou \eracx 4 Insurance Australia Group Limitec Moma Ney, ten
Slide 14: Delivery of synergy benefits on track
Delivery of synergy benefits on track © IAG Synergy realisation schedule 2H03 Cumulative run-rate per annum Personal lines Commercial IT, shared services & overheads Australia sub-total International - New Zealand Total synergies in run-rate Reported income statement Synergy benefits collected Costs
Slide 15: Capital raising for CGU/NZI acquisition successfully completed
Capital raising for CGU/NZI acquisition successfully completed Share USD sub- Domestic purchase debt Dividend Insto sub-debt plan (hedged) Reinvest RPS2 Ord equity $955 Hybrid $200 Sub-debt $710 Total $1,865 Capital mix result: 68% equity + 12% hybrid + 20% debt NGM Clear ‘ RMA Clearview Puma 4 Insu
Slide 16: Costs of acquisition funding lower than business case
Costs of acquisition funding lower than business case Group Business Achieved Annual funding costs case outcome Savings Interest on subordinated debt (53.2) (46.7) 6.5 Tax credit 16.0 14.0 (2.0) Net annual expense (37.2) (32.7) 4.5 Dividend payable RPS2 11.3 9.0 2.3 Effect on profits available for o
Slide 17: Short term operating outlook
Short term operating outlook ¢ 2HO03 will include the impact of — Net expenditure on integration — estimated to be A$43m — A$70m in claims (net of reinsurance) for Canberra fires — Ongoing weakness in equity markets — Still targeting a combined ratio of <98% ¢ FY04 should benefit from — Net income f
Slide 18: Capital management
IAG Benue ata Aaashralia Group . Capital management can S60 ig Lou oon, See MA er en colin
Slide 19: Financial position
Financial position Capitalisation of $5.8bn as at 30 June 2003 — Ranked among 25 largest Australian listed companies Pro forma balance sheet for 31 December 2002 — Total assets of $16.3bn — Net assets of $4.1bn (net tangible assets of $2.3bn) * Group distributable reserves of $550m at 31 December 20
Slide 20: Capital management
Capital management * Capital actively managed on three parameters — Risk of ruin of 1 in 750 years -— AdArating — Agroup risk-weighted minimum capital requirement (‘MCR’) multiple range of 1.35-1.65 times (set applying APRA principles to ALL operations) * Supported by — Conservative claims reserving
Slide 21: Exposure to equities significantly reduced
Exposure to equities significantly reduced ¢ All exposure to equities removed from technical reserves ¢ Shareholders’ funds benchmark still over 90% in equities: — 65-70% Australian equities — 25% International equities — Balance in fixed interest and cash ¢ Equities exposure of shareholders’ funds
Slide 22: Conclusion
Conclusion (STATE | 4 Insurance Australia Group Limited ~— ABN 60 090 739 923 INGIRBAL ClearView SGRO Sagi. CGE a emule onte an
Slide 23: Questions
Questions (STATE | 4 Insurance Australia Group Limited ~— ABN 60 090 739 923 INGIRBAL ClearView SGRO Sagi. CGE a emule onte an
Slide 24: Curriculum vitae - George Venardos
Curriculum vitae GEORGE VENARDOS Chief Financial Officer George Venardos has over 24 years experience in the financial services industry. In his current role with the Insurance Australia Group (‘IAG’) — which he has held since 1998 - George controls all financial aspects of the Groups operations inc
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