Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Investor Presentation (November 2006)
95 slides from Insurance Australia's investor presentation, Nov 22, 2006
Slide 1: Cover letter to ASX: Investor Briefing
Insurance Australia Group Limited ABN 60 090 739 923 GPO BOX 383 Sydney NSW 2001 Iag.com.au 22 November 2006 Manager, Company Announcements Office Australian Stock Exchange Limited Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam INSURANCE AUSTRALIA GROUP LIMITED (‘IAG’) - IN
Slide 2: Investor Briefing
Investor Briefing 22 November 2006 Insurance Australia Group Limited ABN 60 090 739 923
Slide 3: Operations CEOs all presenting (excluding Hastings)
Operations CEOs all presenting (excluding Hastings) Aust Personal Business CGU New Zealand Asia Insurance Partnerships David Mario Jacki Nicholas Justin CEO: Issa Pirone Johnson Hawkins Breheny GWP(2): $2,890m $1,836m $672m $971m $65m (2) Brands: (1) (1) (1) Business Partners (1) Shared brands (2) D
Slide 4: Agenda
Agenda y Introduction – Michael Hawker 1.30 – 1.40pm y Personal Lines (direct) – David Issa 1.40 – 2.20pm y Commercial Lines – Mario Pirone 2.20 – 3.00pm y Business Partnerships – Jacki Johnson 3.00 – 3.40pm y Break 3.40 – 4.00pm y IAG New Zealand – Nicholas Hawkins 4.00 – 4.40pm y IAG Asia – Justin
Slide 5: Personal Insurance
Personal Insurance Investor Briefing 22 November 2006 David Issa CEO, Personal Insurance Insurance Australia Group Limited ABN 60 090 739 923
Slide 6: Agenda
Agenda y Overview of short-tail business – Overall approach – Context on price positioning – Marketing execution – Results y Overview of long-tail – Approach – Results and ongoing objectives y Wrap up and next steps 5
Slide 7: Focused strategy to strengthen business fundamentals
Focused strategy to strengthen business fundamentals Maintain Group ROE of 1.5 X WACC (~15%) Revenue growth Improve productivity Increase Manage Focus our traffic flow margins and front line on Increase through our maintain sales retention distribution cost conversion channels focus 6
Slide 8: State based approach recognises need for distinct strategic and tactical responses
State based approach recognises need for distinct strategic and tactical responses QLD Grow Motor & Home WA SA Grow Motor & Home Penetrate customer segments and NSW obtain added value Penetrate customer segments and obtain added value Position – September 2006 Maximise existing base and grow in sele
Slide 9: Leveraging a competitive price position to protect share - NSW at a five year best
Leveraging a competitive price position to protect share - NSW at a five year best y Ongoing strength of our insurance margin allowing us to maintain a competitive price position in the regions of NSW which exhibit the greatest potential. y Has provided the platform for growth in targeted ABS region
Slide 10: Marketing efforts focused on consistent, clear retail messages and greater visibility
Marketing efforts focused on consistent, clear retail messages and greater visibility y Strong retail messages emphasising features and benefits and reinforcing convenience, recognition, value for money and clarity y Use of simple tools to increase unprompted awareness – for example, Emma character,
Slide 11: Our advertising spend is more effective than it was last year
Our advertising spend is more effective than it was last year NSW Ad spend by competitors $14,000 In the last six months, NSW 11,905 $12,000 ad spend was $10.1m – 10,170 9,996 $10,000 9,280 almost 15% less than last year Spend $'000 $8,000 5,358 A significant portion of our $6,000 4,835 spend last y
Slide 12: Marketing efforts, competitive pricing and focused sales management delivering strong conversion
Marketing efforts, competitive pricing and focused front line sales management are delivering strong sales calls and conversion rates Telephone business centres National sales conversion rates for national sales calls call centres 50% Sales Conversion Rate (%) 48% 160,000 46% 150,000 44% 42% 140,000
Slide 13: Solid renewal trends in our core NSW comprehensive car market
Solid renewal trends in our core NSW comprehensive car market NSW Comprehensive car Week ending 96.0% 22/10/2006 94.0% 92.0% Weekly Renewal Rate 90.0% 88.0% 86.0% 84.0% 82.0% 80.0% 23 28 09 14 11 06 20 16 30 08 22 25 01 15 17 13 27 11 25 -05 19 03 05 19 05 -06 02 16 30 -J -M -J -M -A -A -J -J -J -J
Slide 14: New business volumes also up for NSW comprehensive car
New business volumes also up for NSW comprehensive car Comprehensive car new business volume vs SPLY 20% 15% 10% 5% 0% Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 -5% -10% -15% -20% NSW Comprehensive car 13
Slide 15: NSW home insurance also sustaining high renewal rates
NSW home insurance also sustaining high renewal rates NSW Home Week ending 95.0% 22/10/2006 94.0% 93.0% 92.0% Weekly Renewal Rate 91.0% 90.0% 89.0% 88.0% 87.0% 86.0% 85.0% 08 22 11 25 09 23 06 16 30 14 28 20 -06 01 15 13 27 -05 11 -05 25 03 -06 17 05 19 05 -06 19 16 02 30 -J -J -A -J -J -M -M 6 -J -
Slide 16: New business volumes also up for NSW home insurance
New business volumes also up for NSW home insurance Home new business volume vs SPLY Home (Building, Con't & Hpac x 2) 25% 20% 15% 10% 5% 0% Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 -5% -10% -15% -20% NSW Home 15
Slide 17: NRMA status as #1 brand in the NSW market remains unchallenged
NRMA status as #1 brand in the NSW market remains unchallenged NRMA Insurance Brand Health 60 50 40 30 20 The gap between NRMA and 10 2nd placed player is also greater than it has been since Apr-Jun05 (at 11pts) 0 B'mark Sep-Dec Jan-M ar Apr-Jun Jul-Sep Oct-Dec Jan-M ar Apr-Jun Jul-Sep Oct-Dec Jan-M
Slide 18: Record high results for non-customer predisposition towards NRMA in NSW
Record high results for non-customer predisposition towards NRMA in NSW 60 55 53 50 50 50 48 48 48 46 47 46 % 45 45 45 43 42 41 41 40 35 34 30 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 Non Cus tomer Predis pos ition Source: Dangar Research 17
Slide 19: Solid trends also evident in other States
Solid trends also evident in other States Western Australia Queensland • Strong level of new sales as a result of competitive • Strong growth off the price position, introduction back of ongoing of targeted price reductions targeted strategy and success of • New business volume testimonials and fema
Slide 20: PIF growth has been particularly strong in Queensland and Western Australia
6 -0 19 ov N -06 p Se 06 l- Ju -06 ay M -06 ar Policies in force - WA M 06 n- Ja -05 ov N -05 p Se 5 l-0 Ju -05 strong in Queensland and Western ay M -05 ar M 05 PIF growth has been particularly n- Ja -04 ov N -04 p Se 4 l-0 Ju -04 ay M -04 ar M 04 n- Ja -03 ov N -03 p Se 3 l-0 Ju PIF 6 -0 ov N -06
Slide 21: On the cost side we are reinvigorating our supply chain and cost base
On the cost side we are reinvigorating our supply chain and cost base y Implement motor initiatives to improve performance of our preferred smash repairer network – Issues with repairers last year led to increased average claims costs – Average claims size is in the line with the industry (ISA data)
Slide 22: We have also strengthened relationships with our repairer network and the MTA
We have also strengthened relationships with our repairer network and the MTA y Stable network of quality repairers – 908 nationally y Working with repairers and the MTA NSW to find solutions to industry issues such as skills shortage – Jumpstart programme offering apprenticeships – Since 2001, cont
Slide 23: Overview of long-tail
Overview of long-tail Insurance Australia Group Limited ABN 60 090 739 923
Slide 24: Strategy for NSW CTP is to achieve growth while managing margins
Strategy for NSW CTP is to achieve growth while managing margins y Current PIF market share at 36.4%(1), down from 38%(1) six months ago – Seasonality – Aggressive campaigning by competitors y Aim to return to the 38%(1) this financial year through: – More sophisticated portfolio management and alig
Slide 25: We have been improving our profitability by reducing our exposure to under 25's
We have been improving our profitability by reducing our exposure to under 25’s… NRMA NSW CTP % of policies sold to under 25 year olds 12.0% 11.5% 11.0% 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% Apr-03 Apr-04 Apr-05 Apr-01 Apr-02 Aug-03 Aug-04 Aug-05 Apr-06 Aug-06 Aug-01 Aug-02 Dec-02 Dec-03 Dec-04 Dec-05 Dec
Slide 26: Improving mix of vehicle age, now with 50% of our book in post '97 vehicles
…and improving mix of vehicle age, now with 50% of our book in post ’97 vehicles NRMA NSW CTP % of policies sold by age of vehicle 60% 50% 40% 30% 20% 10% 0% May-06 Apr-06 Mar-06 Oct-06 Oct-05 Aug-06 Nov-05 Feb-06 Jul-06 Jun-06 Sep-06 Jan-06 Dec-05 Pre 1981 1981-1997 Post 1997 25
Slide 27: As a result, CTP is developing into a better quality portfolio
As a result, CTP is developing into a better quality portfolio y Combination of reduced exposure to under 25’s and improving mix of vehicle age have translated into lower claims frequencies y Our frequencies have reduced significantly since September 2005 y Data indicates our frequency is well below
Slide 28: Summary
Summary y We are seeing the success of the ‘back to basics’ strategic direction we’ve defined in the last eight months through financial results and lead business indicators y While we have some growth challenges in NSW CTP, we have a better quality book y Results to date give us confidence that our
Slide 29: Questions
Questions Insurance Australia Group Limited ABN 60 090 739 923
Slide 30: CGU Insurance
CGU Insurance Investor Briefing 22 November 2006 Mario Pirone CEO, CGU Insurance Insurance Australia Group Limited ABN 60 090 739 923
Slide 31: Presentation outline
Presentation outline y Overview of the CGU business y Market cycle y Key industry trends y Business strategy 30
Slide 32: Overview of the CGU business
Overview of the CGU business Over $1.8 billion GWP – $1.3 billion commercial – $237 million workers compensation (risk) – $298 million personal lines(1) y Property (Fire & ISR) Main product suite y Motor: fleet, commercial and farm y Public and products liability, professional indemnity, D&O y Worke
Slide 33: Portfolio snapshot
Portfolio snapshot Diversity across insurance classes and states provides earnings stability % Commercial lines % Commercial lines GWP by product (1) GWP by State (1) 100% 100% Portfolio characteristics 80% 80% y Strong SME focus largely through package policies - high 60% 60% retention and low vola
Slide 34: Distribution approach
Distribution approach Mario Pirone CEO Product & Distribution Claims Services Operations, Human Resources, Strategy, Communication Underwriting y Distributes via international and national broker network Corporate y Key competitors: QBE, Vero, ACE, Chubb and AIG Distribution y Distributes via metrop
Slide 35: Managing portfolio health
Managing portfolio health High risk +30% y Review portfolio performance and implement remedial pricing Preferred y Review risk selection criteria High risk Annual Volume Growth position Stressed position y Strategic review of portfolio - understand reasons behind under-performance 0% y Explore remed
Slide 36: Claims
Claims Value proposition Delivery y Dedicated teams servicing each intermediary Understand intermediaries’ y Local claims service needs and help them grow y 24/7 claims support y Access to senior claims decision makers y Procurement models Flexible claims solutions for y Flexible contact (face to fa
Slide 37: Market cycle
Market cycle Conditions will remain challenging for the next 12 months Commercial lines premium movements Changes in premium rates (%) – based on JP Morgan General Insurance surveys Product trends ’94 – ’98: Irrational ’99 – ’02: Increased pricing ’03 – ’05: Technical pricing by Insurers model sophi
Slide 38: Key industry trends
Key industry trends Consolidation Corporate insurers expanding focus to include affinity, middle market and SME business Insurers purchasing Insurer brokers / underwriting consolidation agencies Australian Market Corporate / top end Major companies Increased competition increasingly exploring from o
Slide 39: CGU's 'First Choice' strategy
CGU’s ‘First Choice’ strategy No. 1 in SME / Regional / Brokered Personal Lines These markets have reduced volatility and will produce more Top 3 in all other markets stable earnings over the cycle. Scale needed to generate They also enable CGU to utilise return on investment in its strong distribut
Slide 40: Summary
Summary y The current environment is challenging, placing pressure on margins y As the market remains soft, we’ll maintain our pricing discipline to reduce the likelihood of writing unprofitable risks y We’re adopting a proactive, strategic approach to managing our business in the context of the cur
Slide 41: Questions
Questions Insurance Australia Group Limited ABN 60 090 739 923
Slide 42: Business Partnerships
Business Partnerships Investor Briefing 22 November 2006 Jacki Johnson CEO, Business Partnerships Insurance Australia Group Limited ABN 60 090 739 923
Slide 43: Business Partnerships
Business Partnerships Jacki Johnson CEO Risk management Third party services distribution National employer Financial institutions services & affinity groups NSW workers’ Motor dealers & compensation motor manufacturers Victoria workers’ compensation Safety and risk consultancy 42
Slide 44: Strategic framework 2006 - 2011
Strategic framework 2006 - 2011 Sustainable profit growth Mutually beneficial partnerships focussed on short-tail general insurance and fee-based business Building and strengthening partnerships Opportunity management + Grow tight responding to market changes People and values Intellectual property
Slide 45: Business Partnerships overview
Business Partnerships overview Customers Market share y 145,000 employers (30% through brokers) y 30.5% Vic workers’ compensation y 200 financial institutions y 20% NSW workers’ compensation y 1,300 motor dealers (includes motorcycle) y 40% FI distribution channel Employees 1,759 headcount y 40% of
Slide 46: Business unit size and composition
Business unit size and composition Risk Management Service Income FY06 $124m y NSW and Victorian w/comp contracts renewed in 2005 and 2006, respectively VIC WC, 46% y SA w/comp contract ceased 30 June 2006 SA WC, 8% Other, 3% y Fees consist of base fees, performance fees and longer-term scheme perfo
Slide 47: Business unit size and composition
Business unit size and composition Third Party Distribution GWP Third Party Distribution GWP by Channel FY06 $672m by State FY06 $672m SA QLD TAS NT Dealer 20% 18% 2% 0% 26% Head WA Office 8% 1% NZ FI Direct VIC 1% 62% 12% 26% NSWACT 24% y Primarily distributed by financial institutions and motor de
Slide 48: Environmental analysis
Environmental analysis y Consolidation of FIs and motor dealers Key trends y New entrants (including non insurers) y Change in lending behaviour and consumer spending trends y Consumer borrowing habits changing Customers y Fuel pricing impacting vehicle choices y National employers are seeking consi
Slide 49: CGU - leader in workers' compensation
CGU - leader in workers’ compensation 2005 market share Northern Territory # Underwriter MS NSW 1 Allianz 34 # Operator MS 2 TIO 32 1 CGU 23 3 CGU 17 2 Allianz 23 4 QBE 17 3 QBE 21 Western Australia 4 GIO 19 # Underwriter MS ACT 1 CGU 25 # Underwriter MS 2 QBE 20 1 Allianz 24 3 Allianz 19 2 CGU 19 4
Slide 50: Customer snapshot – Victoria
Customer snapshot – Victoria Improving the customer experience VWA 2005/06 injured worker VWA 2005/06 employer composite index by agent overall satisfaction by agent Mean Satisfaction 9 100% Scheme 84.4% 83.3% 85.5% 76.8% 76.8% 82.7% 78.2% Satisfied 7 7.05 Scheme Percent 7.16 7.3 6.89 6.9 7.12 80% 8
Slide 51: Customer snapshot
Customer snapshot Why do customers purchase through a financial institution? National and Building Society: “…sees itself as a Financial Services regional partner provider and home and contents insurance is a product brand strength that should be made under the offering.” Alignment and Industry Cred
Slide 52: Customer snapshot
Customer snapshot Why do financial institutions sell general insurance? Bank: “… there has been more focus on insurance as Non-interest a way to obtain non-interest income and spread the income sources of income.” Regional bank: “View insurance as an important part Customer retention – of their prod
Slide 53: Key partnership opportunity
Key partnership opportunity Increase penetration into the six banking institutions Home - Policy penetration of major FI’s into Customer Base 7,000,000 6,000,000 167 5,000,000 Banks Credit FI customer 4,000,000 base Unions 3,000,000 94 2,000,000 Insurance Policies ‘000 1,000,000 49 37 37 18 20 26 0
Slide 54: Customer snapshot
Customer snapshot Motor dealer and motorcycle channel Event driven sales model • Change of ownership Motorcycle • Financing • Purchase protection Motor • Change of ownership Swann • Financing vehicle • Purchase protection Selling processes are specialised and are integrated with events Credit • Debt
Slide 55: Business partnerships - longer term
Business partnerships - longer term Key opportunities: y Consolidation of financial institutions y Consolidation of motor dealers y Potential privatisation of NSW workers’ compensation y Building long-term capability in personal injury management y Technology Sustainable y National workers’ compensa
Slide 56: Questions
Questions Insurance Australia Group Limited ABN 60 090 739 923
Slide 57: IAG New Zealand Limited
IAG New Zealand Limited Investor Briefing 22 November 2006 Nicholas Hawkins CEO, IAG New Zealand Limited Insurance Australia Group Limited ABN 60 090 739 923
Slide 58: IAG NZ history
IAG NZ history Establishment of Acquisition of Swann NZ 50.1% of Mike Limited Acquisition of Acquisition of State New Zealand Henry Travel Insurance Insurance (NZI) Insurance 2000 2001 2002 2003 2004 2005 2006 2007 ... Integration of State and NZI into one company Acquisition of Acquisition of - Nat
Slide 59: Our family of brands
Our family of brands Channel Direct Business Partners Broker Personal Commercial 58
Slide 60: Business by distribution and product
Business by distribution and product 4% 12% 17% 5% 12% 37% 15% 18% 46% 6% 28% Home owners State Home content NZI Private motor vehicle Material damage/business interruption Business Partners Commercial motor vehicle Liability Other commercial 59
Slide 61: We are the largest insurer in NZ
We are the largest insurer in NZ 1,800 1,600 1,400 1,200 GWP - $(m) 1,000 800 41.1% 600 30.0% 400 200 - Total Personal Lines Total Commercial Lines IAG NZ Total Market Source: ICNZ – June 2006 60
Slide 62: Financials
Financials Expense ratio Loss ratio 30.0% 80.0% 70.0% 25.0% 60.0% 10.0% 9.1% 11.0% 10.3% 9.5% 20.0% 9.5% 50.0% 66.9% 15.0% 40.0% 64.5% 62.7% 62.3% 60.9% 58.2% 17.2% 30.0% 16.7% 16.2% 15.4% 15.7% 15.2% 10.0% 20.0% 5.0% 10.0% 0.0% 0.0% 1H05 2H05 1H06 2H06 FY05 FY06 1H05 2H05 1H06 2H06 FY05 FY06 Combin
Slide 63: Insurance cycle relationship to the NZ Economy
Insurance cycle relationship to the NZ Economy Historically, GWP growth has been in sync with but more volatile than GDP growth 15% Premium growth CAGR (dashed blue line) (10 years) 5.4% 10 5 Nominal GDP CAGR growth (10 years) (grey line) 5.3% 0 -5 94 95 96 97 98 99 00 01 02 03 04 05 19 19 19 19 19
Slide 64: GWP trends in NZD
GWP trends in NZD 1,200 1,082 1,087 1,000 800 NZ$m 600 537 546 536 551 400 200 0 Half-year Half-year Half-year Half-year Full-year Full-year ended Dec 04 ended Jun 05 ended Dec 05 ended Jun 06 ended Jun 05 ended Jun 06 63
Slide 65: Key areas of focus over next 12 – 24 months
Key areas of focus over next 12 – 24 months 1. Continue to build capability and capacity (eg: liability) NZI 2. Leverage technology innovation to reduce duplication and costs 1. New system implementation to drive out costs and enhance pricing sophistication to improve underwriting result State 2. Gr
Slide 66: Questions
Questions Insurance Australia Group Limited ABN 60 090 739 923
Slide 67: Asia
Asia Investor Briefing 22 November 2006 Justin Breheny CEO, Asia Insurance Australia Group Limited ABN 60 090 739 923
Slide 68: Presentation outline
Presentation outline y Why Asia? y Where are we now? y Our strategy 67
Slide 69: The Asian insurance market represents a major source of growth for IAG
The Asian insurance market characteristics represent a major source of growth for IAG Market size, growth & penetration 2005 Insurance premium per capita 2005 Non-Life Non-Life 25 1,400 “Emerging Mkt 1,203 Insurance Density: Premiums Per Capita ($US) Size Markets” 1,200 20 India 1,000 2005 GWP Growt
Slide 70: Thailand: fragmented market with very strong growth
Thailand: fragmented market with very strong growth Total registered vehicles - Private 4 CAGR 10.3% Vehicles (Million) 3.5 3.2 3.4 Key Key market market characteristics characteristics 2.9 2.7 3 2.3 yy US$2.9bn US$2.9bn non non life life market market 2.5 2 yy Four Four year year non non life life
Slide 71: Malaysia: solid 10% growth and low penetration
Malaysia: solid 10% growth and low penetration Total registered vehicles - private Key Key market market characteristics characteristics 7 CAGR 7.9% 6.2 5.9 5.5 6 5 yy US$2.4bn US$2.4bn non non life life market market Vehicles (Million) 5 4.6 yy Four Four year year non non life life CAGR CAGR == 9.6
Slide 72: China: huge market with strong growth and outlook
China: huge market with strong growth and outlook Total registered vehicles - Private 12 10.7 0.4% Key Key market market characteristics characteristics GR 3 Vehicles (Million) 10 CA 8.5 8 yy US$20.5bn US$20.5bn non non life life market market 6.2 6 yy Four Four year year non non life life CAGR CAGR
Slide 73: India: strong growth & new players growing rapidly
India: strong growth & new players growing rapidly Total registered vehicles – Private & Taxi 12 11.9% CAGR 9.6 Key Key market market characteristics characteristics Vehicles (Million) 10 8.6 7.6 yy US$4.9bn 8 6.1 7.1 US$4.9bn non non life life market market 6 yy Four Four year non life CAGR == 17.2
Slide 74: Presentation outline
Presentation outline y Why Asia? y Where are we now? y Our strategy 73
Slide 75: We are executing our strategy with positions in Thailand, Malaysia and China
We are executing our strategy with positions in Thailand, Malaysia and China Asia Asia 2006… 2006… yy Platform Platform in in place place –– AmAssurance AmAssurance –– Safety Safety Insurance Insurance and and NZI NZI Thailand Thailand –– MOU MOU with CPIC(1) with CPIC (1) –– Alba Alba yy Earnings E
Slide 76: Strong growth with improving profitability and returns
Strong growth with improving profitability and returns Operations Operations overview overview Financials (1) Financials (1) yy Organisation Organisation Safety Insurance (Baht m) Y/E 30/6/2004 Y/E 30/06/2005 Y/E 30/06/2006 –– Primarily Primarily focused focused on on motor motor insurance insurance
Slide 77: Poised for growth from profitable base
Poised for growth from profitable base Operations Operations overview overview Financials (1) Financials (1) yyOrganisation Organisation NZI Thailand (Baht m) Y/E 30/6/2004 Y/E 30/06/2005 Y/E 30/06/2006 GWP 1,019 1,042 1,107 –– Primarily Primarily focused focused on on commercial commercial business
Slide 78: Strong growth & low COR driving profitability & returns
Strong growth & low COR driving profitability & returns Operations Operations overview overview Financials Financials (1) (1) yyOrganisation AmAssurance (MYR m) Y/E 31/3/2004 Y/E 31/3/2005 Y/E 31/3/2006 Organisation GWP 326 390 438 –– Operates Operates both both Non-life Non-life and and Life Life i
Slide 79: Table of contents
Table of contents y Why Asia? y Where are we now? y Our strategy 78
Slide 80: IAG Asia is targeting a three fold increase in GWP over five years
IAG Asia is targeting a three fold increase in GWP over five years IAG Asia five year GWP growth aspiration 400 350 300 Index 250 200 X3 150 100 50 11 22 33 44 0 Existing Leverage & Increase our IAG value Total Deliver Capture Total with business grow existing share in add: "The acquisitions reinsur
Slide 81: Our strategy focuses on four value drivers
Our strategy focuses on four value drivers 11 Our existing businesses form the basis of our growth Capture Capture system system plans in the region - we will position these businesses to growth growth capture the favourable growth profile of the Asian market Summary Summary of of strategy strategy
Slide 82: Our strategy focuses on four value drivers
Our strategy focuses on four value drivers 22 We will work, subject to regulatory limits, to increase our Increase Increase ownership stake in existing businesses thus increasing our our our share share in in share of future value creation existing markets existing markets We will work to add busine
Slide 83: Our strategy focuses on four value drivers
Our strategy focuses on four value drivers 33 IAG value add: IAG value add: We have developed “the IAG way” to driving value via “The “The IAG IAG way” way” capability transfer of skills such as improved underwriting & claims management and new products & distribution Summary Summary of of strategy
Slide 84: Proven capability of IAG to unlock value in Asia from underwriting
Proven capability of IAG to “unlock value” in Asia from underwriting… IAG Thailand: Safety case study CCA ASSE E SS TTU UDD Safety combined operating ratio YY Key Key capability capability transfer transfer initiatives initiatives yy Data: Data: 108% –– Assisting Assisting Safety Safety in in improv
Slide 85: ... and product development perspectives
… and product development perspectives CCA AmAssurance case study ASSE E SS TTU UDD Opportunity Opportunity YY y Identified major opportunity for Swann products based “Potential upside” – Product capability transfer on AmAssurance dealer AmAssurance extended warranty distribution and AmBank 40 + hir
Slide 86: Our strategy focuses on four value drivers
Our strategy focuses on four value drivers 44 Deliver Deliver We will identify opportunities in new markets to expand acquisitions acquisitions our presence and build value for the Group in in new new markets markets Summary Summary of of strategy strategy Rationale Rationale yy Analyse Analyse the
Slide 87: We have a rigorous opportunity assessment template
We have a rigorous opportunity assessment template - gained from our activity both in Australia and overseas Size Size and and yy What What is is the the GWP GWP and Environment Environment attractiveness and how attractiveness how fast fast is is itit growing? growing? Inherent market sources sourc
Slide 88: Guidelines to ensure we choose the right strategic partners
We have developed guidelines to ensure we choose the right strategic partners Partner Partner selection selection Lines Lines of of yy We We will will target target non-life non-life insurance insurance companies companies and and our our preference preference is is for for the the target target ins
Slide 89: Building a mix of developed vs emerging markets in Asia
Recognising different markets in Asia, we will build a mix of developed vs emerging markets Market characteristic EE ATTIIVV Commentary Commentary TRRA UUSST L IILLL yy Drive Drive towards towards aa “balanced” “balanced” portfolio portfolio that captures value from more that captures value from mor
Slide 90: Our strategy is underpinned by key enablers
Our strategy is underpinned by a number of key “enablers”… 11 We believe people are the difference and we need to ensure People that we are attracting and retaining the right people; that we People & & human human resources have training in place to ensure their development; and that resources we ca
Slide 91: Our strategy is underpinned by key enablers
Our strategy is underpinned by a number of key “enablers”… 22 Governance We have developed a framework around risk and corporate Governance & & risk governance that is specific to the Asian market place, but risk management management ensures that these businesses operate within the overall IAG Grou
Slide 92: Our strategy is underpinned by key enablers
Our strategy is underpinned by a number of key “enablers”… 33 Development and refinement of “how” IAG transfers Capability Capability capabilities. Codifying IAG’s distinctive advantages in transfer transfer “The “The IAG IAG underwriting, claims management, distribution, reinsurance Way” blueprint
Slide 93: Our objectives are not without risk, however we have mitigation strategies
Our objectives are not without risk, however we have mitigation strategies in place Risks Risks that that may may impact impact our our ability ability to to achieve achieve targets targets Mitigating Mitigating factors factors 1. 1. Growth Growth in in our our existing existing businesses businesse
Slide 94: In summary, IAG Asia will…
In summary, IAG Asia will… y Capture Asia’s attractive growth profile y Continue to “unlock value” in our assets y Rigorously assess potential acquisitions y Manage our risk diligently 93
Slide 95: Questions
Questions Insurance Australia Group Limited ABN 60 090 739 923
Insurance Australia Group — Investor Presentation (November 2006) on 6ix