Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Debt Investor Presentation (March 2012)
22 slides from Insurance Australia's debt investor presentation, Mar 19, 2012
Slide 1: Convertible Preference Share Offer incorporating RPS Reinvestment Offer
19 March 2012 CONVERTIBLE PREFERENCE SHARE OFFER INCORPORATING RPS REINVESTMENT OFFER 1300 666 635 www.iag.com.au/cpsoffer
Slide 2: Important Information
IMPORTANT INFORMATION This presentation has been prepared by Insurance Australia Group Limited (“IAG”) in relation to the offer of Convertible Preference Shares (CPS) in Australia (the “Offer”). The Offer is made pursuant to a prospectus under Part 6D.2 of the Corporations Act 2001(Cwth) which was l
Slide 3: Group Overview
GROUP OVERVIEW GENERAL INSURANCE GROUP OPERATING IN AUSTRALIA, NZ, UK & ASIA An ASX-listed general insurance group offering personal and 1H12 GROUP GWP BY PRODUCT commercial insurance products through: – leading and established brands across its home markets of Australia and New Zealand – a growin
Slide 4: CPS Offer Summary
CPS OFFER SUMMARY OFFER Convertible Preference Shares (CPS) at an Issue Price of $100 each to raise $350 million – ability to raise more or less PURPOSE Part of IAG’s ongoing capital management strategy – proceeds to be used for general corporate purposes, including refinancing of Reset Preferen
Slide 5: CPS Key Features: Dividends
CPS KEY FEATURES DIVIDENDS DIVIDENDS Preferred, discretionary, non-cumulative based on a floating rate (180 day BBSW) Dividends are expected to be fully franked Dividends are payable semi-annually in arrears on 1 May and 1 November commencing on 1 November 2012, subject to Dividend Payment Tes
Slide 6: CPS Key Features: Conversion and Redemption
CPS KEY FEATUES CONVERSION AND REDEMPTION SCHEDULED On the Mandatory Conversion Date, CPS Holders will receive ~$101 of Ordinary Shares (unless the CONVERSION Mandatory Conversion Conditions are not satisfied) The Scheduled Mandatory Conversion Date will be 1 May 2019 If any of the Mandatory C
Slide 7: CPS Key Features: Conversion and Redemption
CPS KEY FEATUES CONVERSION AND REDEMPTION MAXIMUM The Maximum Conversion Number is set to reflect a share price of 50% of the Issue Date VWAP CONVERSION It is possible that when APRA implements Basel III from 1 January 2013, the Maximum Conversion NUMBER Number will be set to reflect a share pri
Slide 8: CPS Key Features: Non-Viability
CPS KEY FEATURES NON-VIABILITY WHAT IS A A Non-Viability Trigger Event is an additional APRA requirement for CPS to be Tier 1 Capital under NON-VIABILITY Basel III TRIGGER EVENT? A Non-Viability Trigger Event occurs where APRA determines that CPS must be Converted because without Conversion or a
Slide 9: CPS Risks
CPS RISKS KEY RISKS Market price of CPS ASSOCIATED Liquidity WITH CPS Fluctuation in Ordinary Share price Dividends may not be paid Changes in Dividend Rate It is not certain whether or when CPS may be Converted or Redeemed Conversion on account of a Non-Viability Trigger Event Restr
Slide 10: CPS Comparison to Other Recent Tier 1 Hybrids
CPS COMPARISON TO OTHER RECENT TIER 1 HYBRIDS1 IAG CPS WESTPAC CPS ANZ CPS 3 LEGAL FORM Preference share Preference share Preference share DIVIDENDS Floating rate Dividends, paid semi- Floating rate dividends, paid semi- Floating rate dividends, paid semi- annually (subject to Dividend P
Slide 11: RPS Reinvestment Offer
RPS REINVESTMENT OFFER PROPOSED RPS RPS are exchangeable by IAG on the reset date being 15 June 2012 BUY-BACK IAG intends to buy back RPS on 15 June 2012 RPS Eligible RPS Holders have the opportunity to reinvest their RPS in CPS REINVESTMENT Eligible RPS Holders applying for CPS may have the
Slide 12: 1H12 Financial Summary: Strong Underlying Performance
1H12 FINANCIAL SUMMARY STRONG UNDERLYING PERFORMANCE IMPROVED UNDERLYING GWP growth of 9.7%, to $4,318m, driven by rate increases, volume gains INSURANCE RESULT and bolt-on acquisitions Net Earned Premium (NEP) growth of 3.5%, to $3,839m, impacted by 56% increase in reinsurance costs Reported
Slide 13: 1H12 Regulatory Capital: Robust Position, Above Long Term Benchmark
1H12 REGULATORY CAPITAL ROBUST POSITION, ABOVE LONG TERM BENCHMARK REGULATORY CAPITAL (MCR) – 1H12 VS FY11 MCR of 1.69 times 2 - above long term benchmark of 0.02 1.45–1.50 0.03 0.03 0.12 - pro forma 1.57, allowing for AMI 0.09 2 and Bohai Strengthened position since 30 June 2011 1 - New Zealand
Slide 14: 1H12 Regulatory Capital: Impact of APRA's LAGIC Review
1H12 REGULATORY CAPITAL IMPACT OF APRA’S LAGIC REVIEW REGULATORY CAPITAL – CURRENT VS LAGIC MINIMUM CAPITAL REQUIREMENT $m New methodology of prescribed capital amount 5,000 (PCA): - modest net impact to Group 4,000 - 2012 reinsurance programme aligned to LAGIC proposals 3,000 CAPITAL BASE 2,000 4
Slide 15: Reinsurance: Comprehensive Catastrophe Programme in Place
REINSURANCE COMPREHENSIVE CATASTROPHE PROGRAMME IN PLACE $m 4700 Earthquake 3-year deal for additional (Australia & earthquake cover New Zealand) 4200 Main catastrophe cover for loss up to $4.2bn (2011: $4.1bn) Main Catastrophe Programme Lower layer of $250m excess 500 of $250m, year 1 of 3-year dea
Slide 16: 1H12 Capital Mix in Line with Target Range
1H12 CAPITAL MIX IN LINE WITH TARGET RANGE CAPITAL MIX IN LINE WITH TARGET 1H11 2H11 1H12 CAPITAL MIX $m $m $m Debt to total tangible capitalisation of 38.3%, within 30–40% debt and hybrid target range Shareholder equity 4,658 4,580 4,513 NZ$325m of subordinated bonds (Tier 2 Intangibles and goo
Slide 17: 1H12 Investment Portfolio: Conservative Mix and High Credit Quality
1H12 INVESTMENT PORTFOLIO CONSERVATIVE MIX AND HIGH CREDIT QUALITY TOTAL INVESTMENT TECHNICAL RESERVES SHAREHOLDERS’ FUNDS PORTFOLIO – $12.7BN 17.2% Australian equities 0.8% $3.7bn International equities Alternatives 0.4% Shareholders' funds Fixed interest and 17.2% Alternatives Technical reserves c
Slide 18: CPS Key Offer Dates
CPS KEY OFFER DATES Lodgement of Prospectus with ASIC 19 March 2012 Bookbuild 26 March 2012 Announcement of the Margin and lodgement of the replacement prospectus with ASIC 27 March 2012 Opening Date 27 March 2012 Closing Date for the General Offer, RPS Reinvestment Offer and Broker Firm Offer (appl
Slide 19: Questions
QUESTIONS CPS OFFER AND RPS REINVESTMENT OFFER
Slide 20: CPS Offer and RPS Reinvestment Offer
3 1 4 2 5 100% owned unless indicated. 1 RACV is via a distribution relationship and underwriting joint venture with RACV Limited. 2 RACV has a 30% interest in Buzz Insurance. 3 IAG holds 98.6% voting rights in Safety Insurance, based in Thailand. 4 IAG owns 49% of the general insurance arm of Malay
Slide 21: Contact Directory
CONTACT DIRECTORY INSURANCE AUSTRALIA GROUP Nick Hawkins, Chief Financial Officer 02-9292-3001 Clayton Whipp, Group General Manager Finance 02-9292-1104 Alan Cazalet, Group Treasurer 02-9292-8451 Mark Gold, Deputy Group Treasurer 02-9292-2353 JOINT LEAD MANAGERS AFSL 314416 Jacqui Vanzella AFSL 2433
Slide 22: Syndicate Brokers: Settlement Instructions for Reinvested RPS
SYNDICATE BROKERS SETTLEMENT INSTRUCTIONS - REINVESTED RPS (BROKER FIRM OFFER) ELIGIBLE RPS HOLDERS WISHING TO REINVEST SOME OR ALL RPS IN CPS UNDER BROKER FIRM OFFER APPLICATION PAYMENT SETTLEMENT CLOSING DATE CHESS SPONSORED HOLDER No Application Payment An election of reinvestment will be req
Insurance Australia Group — Debt Investor Presentation (March 2012) on 6ix