Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — Citi Australia and New Zealand 6th Annual Investment Conference, London 2009
22 slides from Qbe Insurance's conference presentation, Mar 9, 2009
Slide 1: ASX cover letter for CEO presentation
QBE INSURANCE GROUP LIMITED ABN 28 008 485 014 82 Pitt Street Sydney NSW 2000 For personal use only Postal Address GPO Box 82 Sydney NSW 2001 9 March 2009 Telephone: (02) 9375 4444 Facsimile: (02) 9231 6104 DX 10171 Sydney Stock Exchange The Manager Company Announcements ASX Limited Level 6 Exchange
Slide 2: Citi Australia and New Zealand 6th Annual Investment Conference, London 2009
For personal use only QBE INSURANCE GROUP Citi Australia and New Zealand 6th Annual Investment Conference, London 2009 Presented by Frank O’Halloran CEO, QBE Insurance Group 9 March 2009 All amounts in Australian dollars unless otherwise stated.
Slide 3: A track record of underwriting profits
A track record of underwriting profits For personal use only *COR COR COR COR COR 2004 2005 2006 2007 2008 % % % % % Australia 89.7 83.6 82.9 82.9 90.6 Asia Pacific 86.4 82.3 82.7 82.7 82.9 Europe 95.6 90.0 88.9 92.1 93.8 Lloyd’s 91.6 94.5 82.1 75.7 74.2 Americas 93.5 92.9 89.7 93.6 93.6 Equator Re
Slide 4: History of premium income - a growth story
History of premium income - a growth story For personal use only $ Bn 14 Compound annual average growth rates over last 10 years: 12 - gross earned premium 19% - net earned premium 19% GEP $12.9 Bn 10 8 NEP $11.1 Bn 6 4 2 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3 QBE INSURANCE GROUP – RE
Slide 5: QBE in great shape
QBE in great shape For personal use only • Businesses and balance sheet in great shape to capitalise on many opportunities available • Substantial majority of our products and businesses in the 45 countries in which we operate producing returns above our 15% minimum ROE requirement • QBE continues t
Slide 6: QBE in great shape
QBE in great shape For personal use only • Our short duration strategy on cash and fixed interest investments has allowed us to benefit from the wider credit spreads on reinvestment and avoid impairment on any one of our $27 billion of cash and fixed interest securities • Total regulatory capital is
Slide 7: QBE defies financial market turmoil and a year of large claims activity
QBE defies financial market turmoil and a year of large claims activity for industry For personal use only • Net profit after tax $1,859 million (2007: $ 1,925 million); a solid financial result considering the adverse impact of the global financial crisis • Insurance profit of $2,183 million (2007:
Slide 8: QBE defies financial market turmoil and a year of large claims activity
QBE defies financial market turmoil and a year of large claims activity for industry For personal use only • Reinsurance expense was 13% of gross written premium improving on our target of 15% primarily due to lower reinsurance costs and synergies from acquisitions • QBE’s estimated net exposure to
Slide 9: Analysis of claims incurred
Analysis of claims incurred For personal use only 2008 2007 2006 % % % Analysis of net claims ratio: – Attritional (2) 47.5 47.7 47.4 – Large and catastrophe (2) (3) 10.2 6.6 8.9 – Risk margin upgrade (0.1) 0.1 1.4 Net claims ratio (1) (4) 57.6 54.4 57.7 1) Represents net claims incurred as a % of n
Slide 10: Highlights
Highlights For personal use only • Undiscounted risk margins are around 9.4% of undiscounted claims provisions; a ratio largely unchanged over the past 4 years • Probability of adequacy of outstanding claims is well in excess of APRA’s 75% minimum benchmark – 86.1% using risk free government bond ra
Slide 11: Dividend performance
Dividend performance For personal use only 126.0 • Full year dividend payout up 11% to $1,187 million 1200 • Dividend per share for 2008 up 3% to 126.0 cents 122.0 1100 • Compound annual average growth in dividend per share over 1000 10 years was 16.9% 900 95.0 800 2008 dividend – cents per share 70
Slide 12: Worldwide operations
Worldwide operations For personal use only GWP Growth COR Net profit after tax 2008 2008 2008 2007 2008 2007 $m % % % $m $m Australia 2,914 12 90.6 82.9 560 445 Asia Pacific 661 13 82.9 82.7 76 89 QBE Insurance Europe 2,525 1 93.8 92.1 201 341 Lloyd’s division 2,486 (6) 74.2 75.7 373 465 the America
Slide 13: Worldwide portfolio mix
Worldwide portfolio mix gross earned premium For personal use only Professional indemnity 6.9% (7.3%) Marine, energy and aviation Workers’ 10.1% (9.9%) compensation 9.2% (9.7%) Financial and credit Property 2.1% (2.0%) 27.4% (27.8%) Liability 16.8% (18.7%) Other Accident and health 4.1% (2.9%) 3.8%
Slide 14: Capital adequacy
Capital adequacy 31 Dec 2008 31 Dec 2007 For personal use only Sensitivity $m $m Tier 1 Share capital and reserves 11,224 11,230 8,472 Perpetual securities 382 382 1,294 Excess risk margins [1], [4] 1,400 1,162 1,577 Less deductions (5,700) (5,657) (3,481) 7,306 7,117 7,862 Tier 2 Subordinated debt
Slide 15: Acquisitions
Acquisitions For personal use only • 11 earnings per share accretive acquisitions during the year: – Deep South, a specialist commercial motor underwriting agency in the US, effective from 1 January – North Pointe Holdings a specialist general insurer in the US, effective from 30 April – Residential
Slide 16: Lenders' Mortgage Insurance
Lenders’ Mortgage Insurance • In 2008 QBE acquired PMI Australia (now QBE LMI) a consistently For personal use only profitable residential LMI insurer for over 40 years, with S&P AA- rating • Gross earned premium $203 million (2007: $194 million) – Target 2009: $207 million • Combined operating rati
Slide 17: 2009 market conditions
2009 market conditions For personal use only • QBE Group overall average premium rate expectations – Australia expecting increases of greater than 5% – Asia Pacific expecting increases of 3% – European operations expecting increases of around 4% – the Americas expecting increases of close to 3%, but
Slide 18: 2009 projected premium income
2009 projected premium income For personal use only Gross written Original premium currency A$bn Australia 3.3 A$3.3bn Asia Pacific 0.8 A$0.8bn QBE Insurance Europe 3.0 £1.35bn QBE Underwriting – Lloyd’s division 2.9 £1.3bn the Americas 6.2 US$4.2bn Equator Re 2.9 A$2.9bn Equator Re elimination (2.9
Slide 19: 2009 outlook
2009 outlook For personal use only Subject to no material movement in budgeted exchange rates; large individual risk and catastrophe claims not exceeding the substantial allowance in our business plans; and no major fall in equity markets or interest rates, we expect: • Gross written premium and net
Slide 20: 2009 outlook
2009 outlook For personal use only • Expected gross investment yield of around 3% - a 1% movement is equivalent to around $300 million before tax • Continue low risk and absolute return investment strategy • Continue our successful strategy of product and geographic diversification and securing dist
Slide 21: Company history
Company history QBE has a history of growth and profitability supported by over 120 acquisitions in the past 25 years For personal use only Gross Insurance written profit Insurance Total Net profit premium COR margin profit investments after tax A$m % % A$m A$m A$m 1999 2,877 103.9 2.5 56 5,232 132
Slide 22: QBE Insurance Group
For personal use only QBE INSURANCE GROUP www.qbe.com 21 QBE INSURANCE GROUP – RESULTS YEAR ENDED 31 DECEMBER 2008