Insurance Australia Group Ltd · ASX:IAG

Insurance Australia — Conference Presentation (May 2005)

15 slides from Insurance Australia's conference presentation, May 6, 2005

  1. Slide 1: Cover letter: Presentation by Head of Reinsurance to investors

    insurance Australia Group Limited ABN 60 090 739 923 388 George Street Sydney NSW 2000 Telephone 02 9292 9222 iag.com.au 6 May 2005 Manager, Company Announcements Office y Australian Stock Exchange Limited ‘ Level 4, Exchange Centre 20 Bridge Street IAG SYDNEY NSW 2000 insurance Australia Group Dear

  2. Slide 2: Reinsurance @ IAG

    © IAG insurance Australia Group Reinsurance @ IAG _ Jan van der Schalk, Head of Reinsurance “Insurance Australia Group Limited 6.May 2005 NEMA sGio saic ( cou itt. ra NBN 80000 790925 INSURANCE "i

  3. Slide 3: Reinsurance @ IAG

    Reinsurance @ IAG q@ IAG insurance Australia Group e Reinsurance as capital e IAG Re —- why & how ° Modelling catastrophies ¢ Counterparty credit valuation goa . Cc Bl so Insurance Australia Group Limited NEMA SGIO SGiCc eau Rew state Mn &l ABN 60 090 739 523 INSURANCE a "mint 2

  4. Slide 4: Reinsurance within IAG

    Reinsurance within l[AG q IAG insurance * Provision of capital sata ~— Purchase protection against extreme, severe events (> 1:100 probability) ~ Core risk management tool « Earnings volatility mitigation — Smooth unexpected deviations from budgeted loss ratios (max retained loss from single event =

  5. Slide 5: IAG Re: how it works

    IAG Re: how it works q IAG insurance Australia Group IAG commercial Aus commercial LAVIN MOVIE surplus Vari arious covers IMA giving both vertical and PLI -- IAG & CGU sideways protection Marine IAG Re Commercial motor Various Né@ commercial surplus ¢ Individual entities retain risk based on their c

  6. Slide 6: IAG Re governance

    IAG Re governance q@ IAG hasta Group ¢ Domiciled in Ireland, separate Board with 3 external Directors °* APRA regulated e Direct report to Deputy-CEO ¢ Strategy and execution approved by IAG’s ALCo (executives) and RMCC (IAG non-executive directors) NEMA scjo sGic (cou Eee WA ABN 60090 739928 INSURA

  7. Slide 7: IAG Re & Canberra bushfires

    IAG Re & Canberra bushfires How does it operate? With Canberra IAG loss @ $110m Business Unit/Entities cGu Gross: $20m No ri recovery IMA SGIO/SGIC NRMAI | Meese —________» Premiums Ge Claims ypoty . c NEMA SGIO SGIC 5. CGU Sore? Soe INSURANCE Groes: 85m fg After ri: $30m i Gress: $5m |g After ri: $

  8. Slide 8: Reinsurance process

    Reinsurance process q@ IAG insurance Australia Group DFA = dynamic financial analysis of Group activities goa . Cc Bl so Insurance Australia Group Limited NEMA SGIO SGIC °.CcGU & Pein STATE [i & I ABN 60 090 739 523 a ‘ 7 INSURANCE "mint

  9. Slide 9: Catastrophe modelling

    Catastrophe modelling IAG/CGU -- Australia and NZ combined © IAG insurance Excess Expected Loss Costs Australia B.Cost_[OtherAus | Cyclone | AUSeq | OtherNZ | NZeq | Sum |[ReinstAd P 500 7.68%, 040% 7.93% 021% 068% 510% 5.10% AUSTRALIA Layer IAG Re RMS AR IF Egecat HailAUS Other Cyclone EQ Wind EQ w

  10. Slide 10: Catastrophe: Programme diagram

    Catastrophe: Programme diagram q IAG insurance Australia Group istevent_ 2ndevent 3rd event 4th event [s2.500m | . astmess] ° APRA requires catastrophe a) 70% NZ EQ, no cover to be purchased to reinstatement . +. b) All perils, ex NZ EQ, 1 cover single event risk to (free) reinstatement 4 250 year l

  11. Slide 11: Counterparty credit - S&P rating trend

    Counterparty credit - S&P rating trend @ ) 2001 — 2003 & Gross premiums: Top 20 reinsurers worldwide Insurance Australia 45 « Group 404 IAG Re 35 4 catastrophe 30 4 2001: 69% >AA Eos 2002: 68% >AA a 2003: 46% >AA 8 204 2004: 64% >AA 15 2005: 70% >AA 10 4 54 04 AAA AA+ AA AA At A A- BBB+ BBB BBB- NR

  12. Slide 12: Counterparty credit — a method for valuing reinsurance

    Counterparty credit — a method for q valuing reinsurance rid insurance Australia Group Event Adjusted Cover Event probability band probability Severity factor CPR limit Catastrophe >20% 100% 10%-20% 15.0% 5%-10% 7.0% 1%-5% 3.0% <1% 1.0% Risk excess 730% 100% 5%~30% 17.0% <5% 5.0% Surplus largest Aus

  13. Slide 13: Counterparty credit — IAG Re model output

    Counterparty credit —- IAG Re model y output © ans Ree, eee INSURANCE Rating: Weighted default probability CPR status Actual XOL Recoveries — short 1.9 XOL Recoveries ~ long 71.5 Prop / Fac 0.8 Other Recoveries — xol 9.6 UEP XOL 16.2 UEP (Prop and Facultative) 3.7 Contingent short 153.01 Contingent

  14. Slide 14: Conclusion

    Conclusion q IAG insurance Australia Group e Reinsurance is an integral part of IAG’s capital and risk management ¢ Value add potential and sophistication have increased and continue to evolve get . c Bl so Insurance Australia Group Limited NEMA SGIO SGIC °.CcGU & Pein STATE [i & I ABN 60 090 739 52

  15. Slide 15: Questions

    © IAG insurance Australia Group Questions play . co "es ove Insurance Australia Group Limited ARMA SGIO SGIG ‘\.CcGU ee Rrél ABN 60 090 739 923 bevel a INSURANCE "i

Insurance Australia Group — Conference Presentation (May 2005) on 6ix