Slide 1: Suncorp Group Limited - Reinsurance Program ASX announcement
ASX X ann noun ncem ment For personal use only 9 October 2013 Suncorp Group G Lim mited - Rein nsurance Program P Please find attached a short presentation on the Su uncorp Gro oup’s catasstrophe rein nsurance program fo or the 2014 financial ye ear which w will be presented to insu urance anallysts
Slide 2: Analyst Reinsurance session
For personal use only Suncorp Group Limited Analyst Reinsurance session 9 October 2013
Slide 3: Agenda
Suncorp results presentation Agenda For personal use only Anthony Day Introduction CEO Commercial Insurance Michael Miller Reinsurance Framework CFO Commercial Insurance Reinsurance Markets and Tony Smith Placement EM – Group Reinsurance Andrew Huszczo Modelling Appointed Actuary General Insurance Q
Slide 4: Introduction
Introduction Key considerations For personal use only Capital Underwriting Requirements 3 Reinsurance 9 October 2013
Slide 5: The reinsurance process
The reinsurance process Framework of decisions For personal use only Capital Volatility Cost Regulatory capital P&L volatility and Cost vs Capital natural hazard trade off Economic capital allowance Risk appetite 4 Reinsurance 9 October 2013
Slide 6: Global Reinsurer Capital
Global Reinsurer Capital Snapshot of the industry For personal use only Suncorp FY14 property program Buoyant Reinsurance market Strong counterparty credit Estimate of traditional capacity* 2% 11% 0% 4% 17% -3% -17% 18% $505B $515B $470B $455B $411B $402B 7% $342B 9% 21% 2007 2008 2009 2010 2011 201
Slide 7: FY14 Suncorp Reinsurance program
FY14 Suncorp Reinsurance program 5.8bn For personal use only Key Points • Purchase more side-ways cover 2.5bn • $250 million ICRC • Top end increasing to $5.8 billion 500m Original cover Third cover Original cover Third cover 250m reinstatement reinstatement 200m 150m Drop-down aggregate program NZ
Slide 8: FY14 Reinsurance program: Drop-down aggregate program - Australia
FY14 Reinsurance program Drop-down aggregate program - Australia For personal use only 250m 50m xs 200m xs 50m 100m xs 100m xs 150m xs 200m 150m xs 300m 200m 150m Erosion contributes to 100m xs 100m xs aggregate dropdown 50m xs 200m 50m xs 300m 50m Retention 7 Reinsurance 9 October 2013
Slide 9: Worked example: Four events - $150 million each
FY14 Drop-down aggregate program Worked example: Four events - $150 million each For personal use only Loss 1 (A$m) Loss 2 (A$m) Loss 3 (A$m) Loss 4 (A$m) Gross 150 150 150 150 Net 150 150 50 50 $250 million 50 x 200 x 50 100 x 100 xs $200 million 150 x 200 150 xs 300 $150 million Remaining cover Lo
Slide 10: Worked example: Three events for $250 million
FY14 Drop-down aggregate program Worked example: Three events for $250 million For personal use only Loss 1 (A$m) Loss 2 (A$m) Loss 3 (A$m) Gross 250 250 250 Net 250 200 50 $250 million Loss 2 $200 million Loss 3 100 xs 150 xs 300 $150 million Loss1001x 50 x 200 1 pre-paid Remaining cover Loss 2 Los
Slide 11: Risk modelling
Risk modelling Looking through the cycle For personal use only Inputs Modelling outcomes • 17 years of Suncorp data • ICRC • 45 years of industry data • Multiple catastrophe models, both internal and • Natural hazard allowance external (FY14 $565 million) • Pricing ability Modelling Process • Group
Slide 12: Natural hazard allowance
Natural hazard allowance Three key components For personal use only Attritional $5m - $100m $100m+ • 17 years of Suncorp data • Modelled using • Multiple catastrophe • 17 years of Suncorp frequency and size models, both internal inflated and adjusted approach and external data • Frequency a blend of
Slide 13: Natural hazards since 1967
Natural hazards since 1967 Suncorp long-term catastrophic loss experience (normalised*) Events greater than $100 million, gross of all reinsurance For personal use only 4,500 Christchurch NZ AUS Long run average earthquakes, Brisbane 4,000 floods, Cyclone Yasi, Melbourne hailstorm 3,500 Brisbane flo
Slide 14: Summary
Summary Closing For personal use only • Cost vs Capital vs Earnings Framework volatility Reinsurance • Healthy reinsurance market market Risk Selection • Core discipline of Suncorp Modelling 13
Slide 15: Contact Details
Contact Details For personal use only Sam Miller samantha.miller@suncorp.com.au +61 7 3135 2415 Mark Ley mark.ley@suncorp.com.au +61 7 3135 3991 Nick Perchey nick.perchey@suncorp.com.au +61 2 8121 9206 Nicole McGinn nicole.mcginn@suncorp.com.au +61 7 3135 3993 Andrew Dempster andrew.dempster@suncorp
Slide 16: Important disclaimer
Important disclaimer This report contains general information which is current as at 9 October 2013. It is information given in summary form For personal use only and does not purport to be complete. It is not a recommendation or advice in relation to the Group or any product or service offered by S