Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — Macquarie Australian Investment Conference 2015
22 slides from Qbe Insurance's conference presentation, May 6, 2015
Slide 1: Cover letter to ASX for conference presentation
QBE Insurance Group Limited ABN 28 008 485 014 Level 27, 8 Chifley Square, SYDNEY NSW 2000 Australia GPO Box 82, Sydney NSW 2001 telephone + 612 9375 4444 • facsimile + 612 9231 6104 www.qbe.com For personal use only 6 May 2015 The Manager Market Announcements Office ASX Limited Level 4 Exchange Cen
Slide 2: QBE Insurance Group - Macquarie Australian investment conference
For personal use only QBE Insurance Group Macquarie Australian investment conference Pat Regan Group Chief Financial Officer Wednesday 6 May 2015 All figures in US$ unless otherwise stated 1
Slide 3: Pat Regan, Group Chief Financial Officer
For personal use only Pat Regan Group Chief Financial Officer 2 Macquarie Australia investment forum - 6 May 2015
Slide 4: Agenda
Agenda For personal use only • About QBE • Recap of 2014 financial results and transformation • Focus for the next 12 months • 1Q15 trading update 3 Macquarie Australia investment forum - 6 May 2015
Slide 5: About QBE
About QBE For personal use only • Top 20 global P&C insurer • Large enough to influence but small enough to remain flexible/nimble • No life insurance or external asset management P&C pure play distractions/complexities • Specialty and commercial focus (minimal personal lines) • Intermediary distrib
Slide 6: About QBE (continued)
About QBE (continued) For personal use only 2014 GWP($M) 5,310 32% 4,526 28% 4,392 27% 2,179 13% 5 Macquarie Australia investment forum - 6 May 2015
Slide 7: 2014 financial results summary
2014 financial results summary For personal use only For the year ended 31 December 2013 2014 Change GWP $M 17,975 16,332 9% NEP $M 15,396 14,084 9% Underwriting profit $M 341 547 60% COR % 97.8 96.1 1.7ppt Insurance profit $M 841 1,074 28% Insurance profit to NEP % 5.5 7.6 2.1ppt Cash profit before
Slide 8: 2014 divisional management results
2014 divisional management results For personal use only Australia & North Emerging Group (1) 2014 New Zealand America Europe Markets Equator Re (statutory) GWP ($M) 4,392 5,310 4,526 2,179 642 16,332 Contribution to Group GWP 27% 32% 28% 13% - 100% GEP ($M) 4,386 5,457 4,805 1,942 764 16,521 NEP ($
Slide 9: Transforming QBE
Transforming QBE For personal use only • Remediation largely completed – particularly in North America and Europe • Attritional claims ratio remains a key focus Underwriting • Reinsurance – external program restructured and improved to reduce volatility excellence • Crop – operational and financial
Slide 10: Transforming QBE - underwriting excellence
Transforming QBE – underwriting excellence For personal use only • Australian & New Zealand Operations – price increases and portfolio remediation and revised risk selection • European Operations – significant rationalisation and remediation of underperforming portfolios • North America – reset as a
Slide 11: Transforming QBE - financial strength
Transforming QBE - financial strength For personal use only 2014 components of capital plan executed in full $780M capital raising Repurchase and cancellation of $500M of convertible securities $700M tier 2 capital qualifying subordinated debt issue $393M buyback of non-qualifying senior deb
Slide 12: Transforming QBE - financial strength (continued)
Transforming QBE – financial strength (continued) For personal use only 2012 2013 2014 60.0% Goodwill and intangibles to equity $M $M $M NEP 50.0% 15,798 15,396 14,084 40.0% Goodwill and intangibles 6,068 4,480 3,831 30.0% 53.4% Borrowings 4,932 4,571 3,581 43.3% 20.0% 34.7% Shareholders’ funds 11,3
Slide 13: Transforming QBE - operational discipline
Transforming QBE – operational discipline For personal use only JULY 2013 ANNOUNCEMENT 2014 ACTUALS (FY15 TARGET) ORIGINAL COST AND BENEFIT IMPACT (P&L) COST AND BENEFIT IMPACT (P&L) US$ 300M 250 US$ 300M 299 225 262 200 200 129 85 240 279 100 190 100 195 25 46 0 0 85 85 -14 -105 -11 -140 -150 -156
Slide 14: Improving financial performance - portfolio
Improving financial performance - portfolio For personal use only • Worldwide reinsurance treaties restructured and improved • Aggregate covers consolidated and placed for 2015 and 2016 – single treaty Reinsurance provides $960M of cover in excess of $1,100M for large individual risk and catastrophe
Slide 15: Investments
Investments For personal use only Exposure to growth assets • Increased from ~2% to ~9% during 2014 • Increased exposure contributed 0.2% to gross investment return of 2.8% • Increased to around 14% post year end • Asset allocation remains conservative relative to global peers (1) Pertains to non-gr
Slide 16: 2015 outlook unchanged
2015 outlook unchanged For personal use only Gross written premium $15.5 – 15.9Bn (1) ($16.4 – 16.8Bn in constant currency) Net earned premium $12.6 – 13.0Bn (1) ($13.4 – 13.8Bn in constant currency) Combined operating ratio 94% - 95% (2) (3) Insurance profit margin 8.5% - 10% (2) (3) (1) Premium ta
Slide 17: Our focus over the next months
Our focus over the next 12 months For personal use only • No surprises - achieve FY15 guidance Earnings predictability • Demonstrate ongoing reserve stability and stability • Cost of large individual risk and catastrophe claims more predictable • Optimise asset allocation to enhance investment retur
Slide 18: Our focus over the next months (continued)
Our focus over the next 12 months (continued) For personal use only • Premium income has declined from a peak of ~$1.6Bn to ~$400m • Currently generating a significant run-rate loss Lender-placed • Further substantial right-sizing of cost base to halve loss • Evaluating a range of more permanent str
Slide 19: 1Q15 trading update
1Q15 trading update For personal use only • Pricing conditions remain competitive in all markets • GWP trending broadly in line with expectations • Annual cost of large individual risk and catastrophe claims capped at $1.1Bn ― benign 1Q15 large individual risk claims experience ― YTD catastrophe cla
Slide 20: Questions
For personal use only Questions 19 Macquarie Australia investment forum - 6 May 2015
Slide 21: Important disclaimer
Important disclaimer For personal use only The information in this presentation provides an overview of the results for the year ended 31 December 2014 and up to 31 March 2015, 2015 outlook, focus areas for the next 12 months and first quarter 2015 trading update. This presentation should be read in
Slide 22: Thank you
For personal use only Thank you 21 Macquarie Australia investment forum - 6 May 2015
QBE Insurance Group — Macquarie Australian Investment Conference 2015 on 6ix