Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Citi Australia and New Zealand Investment Conference 2009
20 slides from Insurance Australia's conference presentation, Mar 10, 2009
Slide 1: Cover letter to ASX: Presentation by IAG CEO at Citi conference
For personal use only 10 March 2009 Manager, Company Announcements Office ASX Limited Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, INSURANCE AUSTRALIA GROUP LIMITED (‘IAG’) Presentation by IAG CEO at Citi - Australia and New Zealand Investment Conference Please find atta
Slide 2: Australia and New Zealand Investment Conference
For personal use only Australia and New Zealand Investment Conference Michael Wilkins Managing Director & Chief Executive Officer London, 9 March 2009 ABN 60 090 739 923
Slide 3: Important Information
IMPORTANT INFORMATION For personal use only The information in this presentation is an overview and does not contain all information necessary to an investment decision. The information contained in this presentation and accompanying materials has been prepared in good faith by IAG. No representatio
Slide 4: Refined Corporate Strategy
REFINED CORPORATE STRATEGY For personal use only OUR • Top quartile Total Shareholder Return (TSR) TARGETS • ROE > 1.5x WACC • Deliver superior performance by actively managing OUR our portfolio, exiting businesses that do not fit our STRATEGY intent or return hurdles, and driving operational perfor
Slide 5: Delivering on Our Promises
DELIVERING ON OUR PROMISES For personal use only Priority Status Move to a simpler operating model by end of September 2008 3 Deliver $130m in annual before tax run rate savings in Australia 3 Appoint CEO of Australia Direct 3 Pursue select opportunities in Asia 3 Scale back operations in the UK 3 E
Slide 6: 1H09 Financial Performance
1H09 FINANCIAL PERFORMANCE Sound progress made during a year of rebuilding For personal use only Financial performance 1H08 2H08 1H09 Gross written premium $3,851m $3,942m $3,922m Insurance profit $190m $202m $227m Insurance margin 5.1% 5.6% 6.2% Profit/(loss) attributable to IAG shareholders $110m
Slide 7: 1H09 Insurance Margin
1H09 INSURANCE MARGIN Adjusted for material external impacts For personal use only 1.1% 2.3% 0.7% 10.3% 6.2% 1H09 Reported Natural Perils (net Credit Spreads DAC/LAT 1H09 Adjusted Margin of allowances) Margin PAGE 6 HY09 Financial Results Presentation
Slide 8: Segment Results
SEGMENT RESULTS For personal use only Insurance Profit 1H08 2H08 1H09 A$m A$m A$m Australia Direct 106 210 194 Australia Intermediated (CGU) 133 1 (7) New Zealand (2) 14 (17) United Kingdom retained business 6 47 77 United Kingdom discontinued business (40) (54) (23) Asia (6) (5) 9 External reinsura
Slide 9: Australia Direct
AUSTRALIA DIRECT Strong GWP growth and improved insurance margin For personal use only AUSTRALIA DIRECT FINANCIAL PERFORMANCE 1H08 A$m 2H08 A$m 1H09 A$m Key points Gross written premium 1,516 1,580 1,650 • GWP growth of 8.8% Insurance profit/(loss) 106 210 194 8 – Rate increases across the portfolio
Slide 10: Australia Intermediated
AUSTRALIA INTERMEDIATED Rebuilding process progressing well For personal use only 2 AUSTRALIA INTERMEDIATED 1H08 2H08 1H09 1 Key points FINANCIAL PERFORMANCE A$m A$m A$m Gross written premium 1,167 1,231 1,159 • GWP down 0.7% -% Insurance profit/(loss) 133 1 (7)% – Average rate increases of 6% Profi
Slide 11: New Zealand
NEW ZEALAND Disappointing first half result For personal use only NEW ZEALAND 1H08 2H08 1H09 Key points FINANCIAL PERFORMANCE A$m A$m A$m Gross written premium 483 491 482 • GWP flat Insurance profit/(loss) (2) 14 (17) – Local currency GWP up 4.7% Profit/(loss) from fee based business - - 1 – Rate r
Slide 12: United Kingdom – Retained Business
UNITED KINGDOM – RETAINED BUSINESS Equity Red Star continues to perform well For personal use only UK RETAINED BUSINESS 1H08 2H08 1H09 Key points FINANCIAL PERFORMANCE A$m A$m A$m 8 • GWP down 6.7% Gross written premium 417 389 389 6 Insurance profit/(loss) 6 47 77 – Local currency GWP down 2.2% Pro
Slide 13: United Kingdom – Divested Business
UNITED KINGDOM – DIVESTED BUSINESS Loss-making non-core businesses divested For personal use only 1 UK DISCONTINUED BUSINESS FINANCIAL PERFORMANCE 1H08 A$m 2H08 A$m 1H09 A$m Key points 1 Gross written premium 168 151 143 • GWP down 14.9% % Insurance profit/(loss) (40) (54) (23) 5 – Local currency GW
Slide 14: Asia
ASIA Medium to long term strategy on track For personal use only ASIA 1H08 2H08 1H09 Key points FINANCIAL PERFORMANCE A$m A$m A$m • GWP growth of 3.4% Gross written premium 89 85 92 – Local currency GWP up 2.5% Insurance profit/(loss) (6) (5) 9 Profit/ (loss) from fee based business (2) (2) (1) – Ec
Slide 15: Reinsurance Protections
REINSURANCE PROTECTIONS Reducing earnings volatility For personal use only • The upper limit of the Group’s catastrophe programme remains at $4bn • Maximum event retentions (MER): – For a first event: $126m in Australia; $105m in NZ; $53m in UK Claims cost from Victorian fires expected to reach ME
Slide 16: Investments
INVESTMENTS Mix stable and high credit quality maintained For personal use only Group Investment Asset Exposure - $10.6bn Group Fixed Interest and Cash - $9.8bn Bonds < Bonds 'A' 'A'/ Unrated 2% Cash Growth 1% 8% 8% Banks, Risk Free Financial Assets Institutions 'AAA' & Other 34% Bonds 'AA' Fixed 41
Slide 17: Balance Sheet
BALANCE SHEET Remains strong For personal use only 1H08 2H08 1H09 1H09 As at 31 December 2008 Capital Mix A$m A$m A$m Proforma (1) Shareholder equity 4,920 4,351 4,135 4,735 • Aiming to have debt to total Intangibles and goodwill (2,941) (2,460) (2,353) (2,353) tangible capitalisation in the Tangibl
Slide 18: Regulatory Capital Position
REGULATORY CAPITAL POSITION MCR multiple increased on a proforma basis For personal use only 0.05 0.10 0.23 1.69 1.51 31 December $450m $100m Share Sub-debt Proforma MCR 2008 MCR Institutional Purchase Plan Repurchase post Capital Placement Raising PAGE 17 HY09 Financial Results Presentation
Slide 19: FY09 Outlook
FY09 OUTLOOK For personal use only Group gross written premium growth FY091 Group GWP growth 0-2% - In line with previous guidance Underlying GWP growth 3-5% - In line with previous guidance Group insurance margin FY091 Previous guidance 10%+ Less : Credit spreads (1.2%) DAC impairment (0.6%) Natura
Slide 20: Our Business Model and Brands
OUR BUSINESS MODEL AND BRANDS For personal use only DIRECT INTERMEDIATED DIRECT DIRECT INTERMEDIATED INSURANCE INSURANCE INSURANCE INSURANCE INSURANCE UNITED KINGDOM eVENTURES NEW ZEALAND INTERMEDIATED INTERMEDIATED AUSTRALIA INSURANCE INSURANCE ASIA * ACTIVE PORTFOLIO MANAGEMENT & GOVERNANCE (CORPO
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