Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — JP Morgan Australasia Conference 2009
22 slides from Insurance Australia's conference presentation, Oct 9, 2009
Slide 1: ASX cover letter for CEO presentation
9 October 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 TO JP MORGAN AUSTRALASIA CONFERENCE Please find attached copy of presentation that will be give
Slide 2: JP Morgan Australasia Conference
JP MORGAN AUSTRALASIA CONFERENCE October 2009 ABN 60 090 739 923
Slide 3: Important Information
IMPORTANT INFORMATION 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 representation or warranty, express
Slide 4: IAG at a Glance
IAG AT A GLANCE # IAG has a portfolio of general insurance businesses, with leading brands across its home markets of Australia and New Zealand, a specialist underwriter in the United Kingdom and a growing presence in Asia. ^ * ~ * RACV is via a distribution relationship and underwriting joint ventu
Slide 5: GWP Mix by Geography, Channel and Product
GWP MIX BY GEOGRAPHY, CHANNEL AND PRODUCT FY09 GWP split by region FY09 GWP split by channel FY09 GWP split by product Asia 2% CTP (Motor UK Liability) Liability 12% Other Workers' Short tail Comp. New Broker/ agent Short tail Zealand 41% Commercial 12% Direct 47% Motor Australia 74% Home Affinity 1
Slide 6: The Year in Summary: Improved performance in year of rebuilding
THE YEAR IN SUMMARY Improved performance in year of rebuilding • Delivered on all immediate strategic priorities set in July 2008 – Moved to a devolved operating model – Achieved targeted $130m pre-tax, run-rate cost savings in Australia – Narrowed focus in UK to profitable, specialist underwriter E
Slide 7: The Year in Summary: FY09 financial performance
THE YEAR IN SUMMARY FY09 financial performance Financial performance FY08 FY09 Gross written premium $7,793m $7,842m - GWP grew 0.6% (guidance 0-2%) - Underlying* GWP grew 4% (guidance 3-5%) Insurance profit $392m $515m - Increased 31% Insurance margin 5.4% 7.1% - Ongoing business increased to 7.7%
Slide 8: Insurance Margin
INSURANCE MARGIN Visible improvement in operating performance +3.1% -2.6% +1.5% -0.3% +0.7% -0.7% 7.1% 5.4% FY08 Reserve Natural Perils Credit DAC/LAT Running Yield Operational FY09 Reported Releases Spreads Improvement Reported Margin Margin PAGE 7 FY09 Investor Roadshow Presentation
Slide 9: Key Insurance Ratios
KEY INSURANCE RATIOS Trending in the right direction Expense ratio Loss ratio 40% 35.0% 90% 70.6% 70.9% 35% 29.9% 29.0% 80% 72.0% 71.1% 70.7% 29.6% 30.2% 29.9% 29.4% 30.0% 70.3% 30% 70% 2.7% 3.4% 3.1% 3.0% 3.4% 25.0% 3.8% 60% 25% 20.0% 8.9% 9.1% 9.7% 9.0% 9.6% 50% 83.8% 20% 9.5% 74.2% 71.3% 70.7% 70
Slide 10: Divisional Results
DIVISIONAL RESULTS Insurance profit FY08 FY09 $m $m Australia Direct 316 373 Australia Intermediated (CGU) 134 48 New Zealand 12 0 United Kingdom (retained) 53 113 Asia (11) 9 Total retained 504 543 Discontinued business (112) (28) TOTAL 392 515 PAGE 9 FY09 Investor Roadshow Presentation
Slide 11: Investments
INVESTMENTS Conservative mix and high credit quality Group Investment Asset Allocation - $10.6bn Group Fixed Interest & Cash - $10.0bn Growth < "A" 6% 1% "A" 5% "AAA" "AA" 48% 46% Fixed Interest & Cash 94% • Total portfolio value of $10.6bn • Asset mix remains conservative – low equity exposure in s
Slide 12: Investment Returns
INVESTMENT RETURNS Impacted by sharp market movements Investment income on technical reserves ($m) Investment income on shareholders' funds ($m) 800 100 700 80 600 60 500 40 400 20 300 0 1H08 1H08 2H08 1H09 2H09 200 (20) 2H09 A$m A$m A$m A$m A$m A$m 100 (40) 0 (60) 1H08 2H08 1H09 2H09 A$m A$m A$m A$
Slide 13: Balance Sheet
BALANCE SHEET Strong capital position As at 30 June 2009 1H08 2H08 1H09 2H09 CAPITAL MIX A$m A$m A$m A$m • Increased MCR multiple of 1.79 Shareholder equity 4,920 4,351 4,135 4,836 – $534m capital raising Intangibles and goodwill (2,941) (2,460) (2,353) (2,278) Tangible shareholder equity 1,979 1,89
Slide 14: Reinsurance Protections
REINSURANCE PROTECTIONS Reducing earnings volatility • The upper limit of the Group’s catastrophe programme is $4.1bn • Maximum event retentions (MER): – Victorian fires reached first event MER of $126m in Australia – For six months from 1 July 2009: MER reduces to: $100m in Australia; $80m in NZ;
Slide 15: FY10 Outlook
FY10 OUTLOOK Platform for further improvement • FY10 operating performance expected to improve further, driven by: – Higher premiums, including earned effect of rate rises implemented in FY09 – Ongoing operating efficiencies across the Group – Improved underwriting discipline, in particular in CGU a
Slide 16: IAG's Business Model and Brands
IAG’S BUSINESS MODEL AND BRANDS DIRECT INTERMEDIATED ONLINE DIRECT DIRECT INTERMEDIATED INSURANCE INSURANCE INSURANCE INSURANCE INSURANCE INSURANCE 2 3 UNITED KINGDOM NEW ZEALAND AUSTRALIA INTERMEDIATED INTERMEDIATED ASIA INSURANCE INSURANCE OTHER 1 ACTIVE PORTFOLIO MANAGEMENT & GOVERNANCE (CORPORAT
Slide 17: Appendices
APPENDICES ©IAG e Australia Group ABN 60 090 739 923
Slide 18: Australia Direct
AUSTRALIA DIRECT Positive GWP and margin momentum AUSTRALIA DIRECT FINANCIAL PERFORMANCE 2H08 A$m 2H09 A$m FY08 A$m FY09 A$m Key points Gross written premium 1,580 1,729 3,096 3,379 • GWP growth of 9.1% Insurance profit/(loss) 210 179 316 373 – Across all portfolios and states Insurance Ratios – ‘Un
Slide 19: Australia Intermediated
AUSTRALIA INTERMEDIATED Turnaround progressing, but still a way to go AUSTRALIA INTERMEDIATED 2H08 2H09 FY08 FY09 Key points FINANCIAL PERFORMANCE A$m A$m A$m A$m Gross written premium 1,231 1,198 2,398 2,357 • GWP down 1.7% Insurance profit/(loss) 1 55 134 48 – Price discipline and withdrawal from
Slide 20: New Zealand
NEW ZEALAND Return to profit in 2H09 NEW ZEALAND FINANCIAL PERFORMANCE 2H08 A$m 2H09 A$m FY08 A$m FY09 A$m Key points Gross written premium 491 483 974 965 • GWP up more than 4% in local currency Insurance profit/(loss) 14 17 12 - • Return to profitability in 2H09 aided by: Insurance Ratios – Rate i
Slide 21: United Kingdom – Retained Business
UNITED KINGDOM – RETAINED BUSINESS Equity Red Star continues to perform well UK RETAINED BUSINESS 2H08 2H09 FY08 FY09 Key points FINANCIAL PERFORMANCE A$m A$m A$m A$m Gross written premium 389 398 806 787 • GWP up 1% in FY09 and 4.4% in 2H09 in Insurance profit/(loss) 47 36 53 113 local currency – A
Slide 22: Asia
ASIA Medium to long term strategy on track ASIA 2H08 2H09 FY08 FY09 Key points FINANCIAL PERFORMANCE A$m A$m A$m A$m Gross written premium 85 101 174 193 • GWP up 2% in local currency Insurance profit/(loss) (5) - (11) 9 • Participation in regional GWP pool in excess of $400m Insurance Ratios • Impr
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