Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Investor Presentation (May 2003)
27 slides from Insurance Australia's investor presentation, May 1, 2003
Slide 1: Investor Presentation cover letter to ASX
Insurance Australia Group Limited ABN 60 690 739 923 388 George Street Sydney NSW 2000 Telephone 02 9292 9222 Facsimile: 02 9292 8072 jiag.com.au 1 May 2003 Ms Pam Ross Manager, Company Announcements Office y Australian Stock Exchange Limited wg Level 4, Exchange Centre 20 Bridge Street AG SYDNEY NS
Slide 2: Insurance Australia Group - Michael Hawker
© AG Insurance Australia Group Insurance Australia Group | Michael Hawker Chief Executive Officer & Managing Director ~ 30 April 2003 fogurance Australia Group Limited . ABN €¢:090 739.923 . afin. imag Gi aM Co
Slide 3: Outline
Outline q IAG * Australia and New Zealand general insurance Group markets * Recent performance trends of IAG * Strategy update, including CGU/NZI acquisition * Current priorities and outlook * Questions ne awl scia pau eo Be ooo ws. “wa C) wa 2 rage Insurance Australia Group Limited A&N BO 090 734 9
Slide 4: Australian general insurance market
Australian general insurance market q) IAG Insurance Regulator statistics - Financial year ending in year Group to June 2002 Total market premium of A$27.7bn — A$7.2bn underwritten by Governments (state & federal) — A$2.4bn underwritten by reinsurers — A$18.1bn underwritten by general insurers Top f
Slide 5: Australia's consolidated market
Australia’s consolidated market q& lrisurance Australia 6000 7 26.5% oe 25.1% CGU IAG (pro- Promina Suncorp = Allianz QBE Next 15 The rest forma} « IAG (or predecessor) has been lead insurer for c20 years « Demutualisations & consolidation increased stability tintin eZ 4 eeetetesd Insurance Australi
Slide 6: Australian market conditions
% Change Australian market conditions Start of structural changes to the domestic industry as a result of “demutualisation of the industry” . 1999 2001 Sept 11 & the collapse of HIH, builders warranty & medical indemnity crisis have led to an dramatic hardening of rates, supported by a stable compet
Slide 7: Industry forecasts continuing premium growth
Industry forecasts continuing q) premium growth AG = . » . lrisurance Australian Gen. Ins. industry growth by line of business Australia Group 25000 + ager a Other Employers Liability @ Public & Product Liability O Professional Indemnity mg Domestic motor vehicle a Commercial Motor Vehicle f CTP (Mo
Slide 8: New Zealand market - consolidated
New Zealand market - consolidated New Zealand General Insurance GWP (NZ$m) 861 GWP NZ$m 2 S r—9 AT. 186. 185 IAG NZ Promina Lumiey AMI * Top five writing over 75% of market * Stable market, all employer, accident and motor liability underwritten by government rabies awl scia pau eo Be ooo .. wre C)
Slide 9: IAG performance trends and strategy
IAG Irisurance Australia Group insurance Australia’s performance trends and strategy — onal sake. sag ‘eau ace Wen. rare! Q 4 foguranee Australla Group Limited . ABN 60 090 739-923... afin. - Sloat ecw : amgeman ct
Slide 10: IAG growing and diversifying
IAG growing and diversifying ... y IAG Gross Written Premium By Business lrisurance Australia Group $3.8bn $3.6bn $3.1bn 4% $2.6bn $2.2bn $4.8bn 5% 8% 5% 1s yes vet ¥ BMotor Brome | Short-tail Commercial MB Workers Comp SCIP MHealth O Liabiity O Other Short-tait Noe: * “YO7 #1 1HOB IAG GWP ine . AFD
Slide 11: ... and improving insurance margins
... and improving insurance margins © & components AG Expense Ratio Loss Ratio Insurance 22.8% 4 95.0% Australia Group 90.0% coon | 85.0% 80.0% 76.0% 17.5% 4 70.0% 65.0% 15.0% 4 . ‘ 60.0% ‘ : 2100 At anor 4tHO2 2H02 sHO3 2HOD 1HO4 2HO04 1H02 2HO2 4HO3 Combined Ratio Insurance Margin {before tax} 118
Slide 12: Strongly capitalised — actively managed
Strongly capitalised — actively q) managed IAG Insurance * Maintained AA rating (Stable Outlook) from Australia Standard & Poor’s — Risk of ruin requirements reflected in our economic capital modelling and comfortably met * Tactical hedging in place to protect capital from equity market impact on sh
Slide 13: Five year strategy from 2002
Five year strategy from 2002 q@ IAG Insurance Australia Group Goals Top quartile total s holder return Core operations ROE 13-15% Double GWP by Build capability FY 2007 Maintain combined ratio < 100% Maintain AA category rating Emerging opportunities a Weare) Go) 42 Insurance Australia Group Limited
Slide 14: Key elements of progress to date
Key elements of progress to date % we % Reinvigorate customer focus — Getting It Right Extend scale in general insurance — Targeted CGU/NZI as most suitable acquisition — Continued to apply benefits of scale to existing business slo aig oa Bee When eae ‘2 ea Insurance Australia Group Limited ABN BO
Slide 15: CGU/NZI acquisition - summary
CGU/NZI acquisition - summary q IAG Insurance ¢ Purchased Australia & New Zealand general ean insurance business of Aviva pic Announced 18 October 2002 Completed on 2 January 2003 . Acquired for A$1.85bn Gross premium income stream of A$2.3bn Ongoing operations with a combined ratio of <100% Leading
Slide 16: Provides market leading position in core products
Provides market leading position in core products y IAG lnsuragice f Australia Market share — Australia Market share — NZ Group Based on gross premium revenue Based on gross written premium BO% 4 | AT% BAG ccu , 60% HIAGNZ © NZI 8% 4 40% BG 40%, 7 cor 50%, AB 55% | 30% 40%, 4 27% = 40% 5% 4 25% ae%
Slide 17: More balanced geographic spread
More balanced geographic spread © IAG Insurance Australia Group New Zealand also more som] QLD balanced Between WA IAG&CGU 13% North and South Islands GWP $434 eval (Auckland & Wellington) {AG 19% IAG&CGU 15% {AG&CGU 29% GWP $410m AG&CGU 3% aw $2,525m ee SA | NSW/ACT IAG&CGU 29% ’ GWP $1,081m IAG 17
Slide 18: Pro-forma half-year insurance results
Pro-forma half-year insurance results @© - 31 December 2002 IAG * . . I ‘i Consolidated Financial Results Australia Half-year ended 31 December 2002 IAG CGU/NZI Combined Big Gross written premium Net premium revenue Net claims expense : 2) Underwriting expense ¢ ” | Underwriting profit/{loss) ; Inve
Slide 19: Delivery of synergy benefits on track
Delivery of synergy benefits on track q) IAG * . lrisurance ynergy realisation schedule 4HO4 Australia Group Cumulative run-rate per annum Personal lines Commercial : {T, shared services & overheads ; . . Australia sub-total é International - New Zealand Total synergies in run-rate Reported income s
Slide 20: Key elements of progress to date
Key elements of progress to date q») IAG . Group. ¢ Leverage core capabilities — Getting It Right and brands * Risk management — Increased skills & application of asset:liability work — Ongoing improvements in internal processes & culture * Growth in quality earnings — delivered & more to come robin
Slide 21: Looking forward
IAG Irisuragice Australia Group Looking forward MM: (avare) (A
Slide 22: Short term operating outlook
Short term operating outlook q IAG ¢ 2HO3 will bear impact of sural — Net expenditure on integration — estimated to be A$43m — A$70m in claims (net of reinsurance) for Canberra fires — Ongoing weakness in equity markets (Australian GAAP) — Still targeting a combined ratio of <100%, barring any other
Slide 23: Our current priorities
Our current priorities q& IAG Insurance * Withstand short-term investment market pressures Giz," on our capital * Current businesses running well — investing to ensure they are positioned for sustainable delivery * Delivery of target synergies from acquisition * Increase the value our people and sys
Slide 24: Virtuous loop concept
Virtuous loop concept q Insurance Increased scale of Gaus operations Reduced capital required per $ Attracts more premium (lower fixed business costs & concentration of risk) Facilitates more competitive prices & service delivery Increases ROE for shareholders slit Clove Gio aaa Ca Bile a -MT ATE, C
Slide 25: Conclusion
Conclusion q IAG Insurance * Australian and New Zealand insurance markets are = Ga; increasingly stable with positive outlook * Our business has been grown and reshaped to deliver ongoing underwriting profits and improved insurance margins * The acquired CGU/NZI business is performing well and the s
Slide 26: Questions
IAG Irisuragice Australia Group Questions MM: (avare) (A
Slide 27: Important information
Important information y IAG The information in this presentation is an overview and does not contain all information necessary to an investment decision. it [risurance. is intended to constitute a summary of certain information relating Insurance Australia Group Limited (4AG') and does not Australia
Insurance Australia Group — Investor Presentation (May 2003) on 6ix