Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Merger or Acquisition (April 2012)
17 slides from Insurance Australia's merger presentation, Apr 13, 2012
Slide 1: IAG Expands Malaysian Operations
13 April 2012 ABN 60 090 739 923 IAG EXPANDS MALAYSIAN OPERATIONS Mike Wilkins Justin Breheny Managing Director & Chief Executive Officer, Chief Executive Officer Asia
Slide 2: Important Information
IMPORTANT INFORMATION This presentation contains general information which is current as at 13 April 2012. It is information given in summary form and does not purport to be complete. It is not a recommendation or advice in relation to Insurance Australia Group Limited (“IAG”) or any product or serv
Slide 3: Agenda
AGENDA 1. Transaction summary Mike Wilkins 2. Strategic rationale Justin Breheny Malaysia – IAG’s successful track record Malaysia – attractive market dynamics Kurnia – highly complementary business 3. Integrating AmG and Kurnia Justin Breheny Good strategic and cultural fit Provides signi
Slide 4: Acquisition to Secure Market-Leading Position in Malaysia, Earnings Accretive in Year One
ACQUISITION TO SECURE MARKET-LEADING POSITION IN MALAYSIA EARNINGS ACCRETIVE IN YEAR ONE BUSINESS TO BE Acquisition of Kurnia Insurans (Malaysia) by 49%-owned AmG ACQUIRED Fourth largest general insurer in Malaysia (c.RM1.1bn in GWP) Largest motor insurer in Malaysia Well recognised insurance
Slide 5: Transaction Structure: AmG Acquiring Kurnia's Malaysian Insurance Arm
TRANSACTION STRUCTURE AMG ACQUIRING KURNIA’S MALAYSIAN INSURANCE ARM KURNIA ASIA BERHAD (KAB) ACQUIRED BY AmG RETAINED BY KAB Kurnia Insurans (Malaysia) Berhad Thailand (Kurnia Insurance Malaysian insurance operations (Thailand) Co Ltd) and distribution network Indonesia (PT Kurnia Insurance
Slide 6: Profitable Presence in Malaysia Since 2006, Strong Partnership with AmBank Group
PROFITABLE PRESENCE IN MALAYSIA SINCE 2006 STRONG PARTNERSHIP WITH AMBANK GROUP 800 AmG’S GWP AND PROFITABILITY¹ 20% MARCH 2006 19.4% 18% 700 649 647 634 IAG acquired 30% interest in AmAssurance, a composite (life 16% 600 581 and general) insurer owned by AmBank Group 14% 500 13.2% 12% DECEMBER 20
Slide 7: Malaysia – Attractive Market Dynamics
MALAYSIA – ATTRACTIVE MARKET DYNAMICS STRONG ECONOMY, CONTINUED GENERAL INSURANCE GROWTH MALAYSIA GENERAL INSURANCE GWP (RMm) MALAYSIA REAL GDP GROWTH (%) 7.2 14,029 6.5 13,009 5.8 11,983 5.1 11,038 11,488 11,323 4.7 2006 2007 2008 2009 2009 2010 2011 2006 2007 2008 2009 2010 2011 (1.7) Source: IMF
Slide 8: Kurnia – Highly Complementary Business, Largest Motor Insurer in Malaysia
KURNIA – HIGHLY COMPLEMENTARY BUSINESS LARGEST MOTOR INSURER IN MALAYSIA MALAYSIA’S #1 MOTOR INSURER PRODUCT MIX (% GWP) CHANNEL MIX (% GWP) #4 general insurer in Malaysia with 8% market Agency (82.8%) share Motor (80.2%) Fire (4.7%) Alternative agency (8.2%) Largest motor insurer with 14% marke
Slide 9: Improved Performance from Kurnia
IMPROVED PERFORMANCE FROM KURNIA SIGNIFICANT TRANSFORMATION PROGRAMME AND RESTORED GROWTH KURNIA’S GWP AND PROFITABILITY 1978 1,400 105.2% Business incorporated, trading as Industrial and 105% 1,300 97.8% 99.1% 100.5% Commercial Insurance 1,200 100% 1,100 1,000 1,073 95% 1991 1,034 900 1,001 90%
Slide 10: Combined Business Secures Leading Market Positions in Malaysia
COMBINED BUSINESS SECURES LEADING MARKET POSITIONS IN MALAYSIA 13% GENERAL INSURANCE MARKET 22% MOTOR INSURANCE MARKET Kurnia Kurnia 10% 9% 9% 12% 6% 6% 5% 5% 8% 8% 7% 7% 4% 3% 3% 6% 5% 4% 4% 4% Allianz AmG P&O Allianz Lonpac Uni.Asia Berjaya Chartis MSIG Tokio AXA MAA Etiqa AmG P&O MSIG Etiqa Tokio
Slide 11: Integrating AmG & Kurnia – Good Strategic/Cultural Fit
INTEGRATING AMG & KURNIA – GOOD STRATEGIC/CULTURAL FIT CREATING MALAYSIA’S LARGEST GENERAL INSURER MALAYSIA’S #1 GENERAL INSURER COMBINED AMG / KURNIA PRODUCT MIX (% GWP) Approximately 4 million policyholders Two strong brands Motor (80.1%) Leading market shares in motor (22%) and general Fire
Slide 12: Enlarged AmG Well Placed to Meet Industry Challenges
ENLARGED AMG WELL PLACED TO MEET INDUSTRY CHALLENGES PROVIDES SIGNIFICANT COMPETITIVE ADVANTAGE BUILDS SCALE Creates largest business in Malaysia’s general insurance industry PRODUCT Strong focus on motor insurance Capitalise on large agency base to distribute other retail and SME commercial p
Slide 13: Malaysia: Focus for the Future
MALAYSIA: FOCUS FOR THE FUTURE OBTAINING A MARKET LEADERSHIP POSITION NO. 1 IN MOTOR By organic growth (strategic initiatives focused on improved penetration and renewal retention) and through acquisition LEAD IN NICHE Strategic initiatives targeting specific industries with specialist product a
Slide 14: Capital Position Remains Above Benchmark
CAPITAL POSITION REMAINS ABOVE BENCHMARK ACQUISITION FUNDED INTERNALLY PRO FORMA 31 DEC 2011 BOHAI AMI KURNIA 31 DEC 2011 MCR (A$m) 2,481 18 26 41 2,566 Capital base (A$m) 4,191 - (209) - 3,982 Ratio (x) 1.69 (0.01) (0.10) (0.03) 1.55 PRO FORMA CAPITAL POSITION ABOVE BENCHMARK Proposed acquisition
Slide 15: Expanding IAG's Malaysian Interests
EXPANDING IAG’S MALAYSIAN INTERESTS SUPPORTS TARGET OF 10% OF GROUP GWP FROM ASIA BY 2016 THAILAND MALAYSIA Ownership: 49% Voting rights: 98.6% GWP: A$530m¹ GWP: A$188m ¹ Kurnia subject to Kurnia Asia Berhad shareholder approval – completion expected second half calendar 2012. INDIA CHINA Ownership:
Slide 16: Appendix 1: Kurnia Financials FY09-FY11
APPENDIX 1 KURNIA FINANCIALS: FY09-FY11 Year Ended Six Months Ended Year Ended Year Ended 30 June 2009 31 December 2009 31 December 2010 31 December 2011 Audited Audited Audited Audited RMm RMm RMm RMm Gross written premium 1,001 453 1,034 1,073 Net earned premium 967 429 842 764 Net claims expense
Slide 17: Appendix 2: Kurnia Balance Sheet
APPENDIX 2 KURNIA BALANCE SHEET 31 December 2011 Audited RMm A$m Assets Property and equipment 229 72 Investments 1,635 511 Reinsurance assets and insurance receivables 580 181 Cash and bank balances 116 36 Other assets 119 37 Deferred acquisition costs 26 8 Total Assets 2,705 845 Liabilities Premiu
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