Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Shareholder Meeting (November 2002)
39 slides from Insurance Australia's shareholder meeting presentation, Nov 13, 2002
Slide 1: Annual General Meeting announcement cover letter
13 November 2002 Ms Pam Ross Manager, Company Announcements Office Australian Stock Exchange Limited Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Ms Ross FOR IMMEDIATE RELEASE TO THE MARKET INSURANCE AUSTRALIA GROUP LIMITED (‘IAG’) Annual General Meeting Attached are copies of: * a
Slide 2: Address by Mr James Strong, Chairman
ASX VERSION Address by Mr James Strong, Chairman Insurance Australia Group Limited Annual General Meeting 9.30am, 13 November 2002 The main purpose of my address to the meeting today is to provide a brief overview of the past financial year and subsequent important events, and to offer some comment
Slide 3: Chairman's address: management, governance and regulation
ASX VERSION Under the leadership of Michael Hawker, the management team is performing well. Since his appointment in December 2001, Michael has worked closely with the management team to review all key areas of our business. The Board considers that the management team is well qualified and committe
Slide 4: Achieving sustainable growth through a stronger underlying business
ASX VERSION Achieving sustainable growth through a stronger underlying business As no doubt you are aware, the 2001/2002 financial year was both eventful and difficult for the insurance industry and the community at large. Michael Hawker will provide more detail of the unusual combination of catastr
Slide 5: Acquisition
ASX VERSION Acquisition The CGU and NZI acquisition, which is still subject to regulatory approval, is a pivotal step for our future. The Board believes we are paying a fair price to gain some valuable, strategic assets in CGU and NZI. Experience to date confirms our expectations of natural synergie
Slide 6: Share Purchase Plan and conclusion
ASX VERSION Share Purchase Plan All ordinary eligible shareholders registered on 24 October 2002 have the opportunity to increase their investment in Insurance Australia through participation in a Share Purchase Plan, which opened last week and is due to close on 21 November. Conclusion This is an e
Slide 7: 2002 Annual General Meeting CEO Presentation
2002 Annual General Meeting CEO Presentation 13 November 2002 insurance Austcaiia Group Limited, aux sous 732825
Slide 8: Year in review
Year in review ceuatneas Insurance Australia Group Limited ano 090 739923
Slide 9: Momentous events in the insurance industry
Momentous events in the insurance industry « Claims: ~— World Trade Center (“S11”) ~ Bushfires ~— Storms ¢ Investment markets: — Negative equity returns (worst in 14 years) ~— Low interest rates « Negative sentiment towards the insurance industry: —HIH demise ~ Medicai indemnity — Public lability In
Slide 10: A decade of underwriting losses in Australia
A decade of underwriting losses in Australia Underwriting result 1992 1993 1904 1995 1996 1997 1998 1999 2000 2004 2002 Source: APRA Statistics: Total private sector undenmiting resus, Insurance Australia Group Limited ast eo om 9s 223 nbn cimaen sector gag aR) C 4 The ten year underwriting history
Slide 11: Insured catastrophes - WTC may be worst ever
gZ insured catastrophes — WTC may be y worst ever Source: Insurance facts and figures 2002, PricewaterhouseCoopers Insurance Australia Group Limited ast eo om 9s 223 nlfigr cweayni sack gaye fends) C *The graphs shows the 24 most costly insurance losses for calendar years 1991 to 2001. *The three ev
Slide 12: Investment markets - worst performance in a decade
Investment markets - worst performance in a decade 41992 1993 1984 1995 1998 1997 1998 1999 2000 2001 2002 Financial Year Source. 1. ASX is tie S&P ASX 200 Accumulation index. Up untif t Apo 2000 the ASX Alf Ordinaries Accumufation Index was used. 2. MSCIis the MSC! ex Australia Net dividends reinve
Slide 13: Insurance Australia's performance
Insurance Australia’s performance ceuatneas Insurance Australia Group Limited .43n.69.090 730 923
Slide 14: Record performance from underlying business
Record performance from underlying business + Net earned premiums increased by 15% to $3,195 million + Underwriting profit of $142 million + Expense ratio improved from 20.3% to 19.7% + Combined ratio improved by over 5% to 95.6% + Insurance margin rose from 7.6% to 8.7% + Insurance profit rose by 3
Slide 15: Diversified Gross Written Premium by product
Diversified Gross Written Premium y by product 81,716 St7?am s2g2sm S2.554m Fyor Pyox Ryan Bot: Mome ose BWorkers Comp wet Bitesieh Note: Includes the GWP of all businesses except inwards Reinsurance, which is in run-off Insurance Australia Group Limited ast co oso vs s2s comme safo gaye (EIGE) (2)
Slide 16: Improved insurance ratios
Improved insurance ratios Breed Expense Ratio Loss Ratio steal onigs yon vee VE Prag w a — Insurance Austratie Group Limited ast cocso vss 2s nikita coment sake gag aR) ensianct The Group ratios continue to show the right trends, with the combined ratio, loss ratio and expense ratio all decreasing.
Slide 17: Achieved underwriting profit
} Achieved underwriting profit © Underwriting Result ($m) FY95 FY96 FYO? FY98 FY99 FYGC FY01 FYo2 Insurance Australia Group Limited ast eo om 9s 223 nlfigr cweayni sack gaye fends) C " We have delivered our first full year underwriting profit and the third consecutive half year with underwriting pro
Slide 18: Improved earnings growth
Improved earnings growth Actual and Normalised Earnings Financial year ended ms ora oa TRané 1 my ah G% on TR and 74 on SHER Insurance Australia Group Limited ast eo om 9s 223 nlfigr cweayni sack gaye fends) C 12 Note: FY98-00 are NRMA Insurance Limited results and FY01 is a full year’s result, not
Slide 19: Remain strongly capitalised
Remain strongly capitalised ¢ Strong MCR multiple in the range of 1.35 to 1.65 * 90% probability of sufficiency reserving policy « Strengthened reinsurance programme - Restructured investment holdings « Reduced cost of capital « Very strong insurer financial strength rating of ‘AA’istable outlook* f
Slide 20: Full year dividend increased
Full year dividend increased © « Reflection of strong performance + Normalised earnings up 51% to $440m using the historic assumptions - Normalised earnings up 9% to $318m using the new Investment assumptions ¢ Final dividend of 6 cents per share, fully franked {paid 24 October 2062) ¢ Total dividen
Slide 21: Performance to September 2002
Performance to 30 September 2002 © Target YTD September Scorecard IAG Insurance margin is above 10% reflecting strong underlying business performance The Group’s results continue to be impacted by poor equity market conditions Ingurance Australia Group Limited ast co os 19 225 nbn cimaen sector gag
Slide 22: Where to from here?
Where to from here? ceuatneas Insurance Australia Group Limited .sh0p 00 738523, 16
Slide 23: Strategic direction - financial aspirations
Strategic direction — 5 year © financial aspirations Top quartile total s ‘holder return ROE 13-18% Double GWP by FY 2007 Maintain combined fatio < 100% Maintain AA category rating Insurance Australia Group Limited ast eo om 9s 223 nla comet safo gag (HK) C 47 Early this year we undertook a review o
Slide 24: CGU/NZI acquisition - consistent with stated strategy
CGUINZI acquisition - consistent with stated strategy Acquisition Strategy Scorecard Extending scale and diversity in General insurance sue A a Insurance Australia Group Limited ast coos rs 923 nen cisannmadl sake gag ensianct The acquisition of CGU/NZI is a very strong fit with this strategy - whic
Slide 25: Delivers new brands
Delivers new brands GWP AS1,S71m Products — Horne, motor, commercial, workers . ee . * Group aers) compansation, public labiity one Geography Australia - Alf states Gwe NZ$3S7im {AGZGOM) tw VA Products — Commierciat products and personal lines. Geography New Zealand Gwe AS116m awe Products Consumer
Slide 26: Delivers product diversification
Delivers product diversification © Gross Written Premium By Business $3.4bn $t.7bn $4.8b8 FYo? FYOB Pyoa PYRO FYOT FYO2 FYO2" IAG # IAG & CGUINZI © Motor GB Home O SME @ WerkersComp © C7? @ Health Liabilly HE Other Note: + FY9T-FY02 is based on year ended 20 June for JAG (excluding inwards reinsuran
Slide 27: Delivers complementary distribution channels
Delivers complementary © distribution channels : IAG is predominantly a direct insurer, CGU/NZI improves the IAG balance between distribution channels Distribution of [AG business by source Distribution of CGU/NZI business by source Institutions Direot 2% Distribution of combined IAG & 1O% Broker Br
Slide 28: Delivers geographic diversification
Delivers geographic diversification Gwe $345) GwPe $434m iAG 3% IAG 49% IAG&CGU 18% acaccu 29% lowe a» satom ag SA iy, lAG&CGU 61% Gwe $2,525m 1AG 24% IAGECGU 29% Gwe $4,081m 1G 17% IAGECGU 34% Gwe seom 1AG 10% 3 cine . iAGECGU 29% Insurance Australia Group Limifed Ass #6 s0i0 igg So 3) 22 Insurance
Slide 29: Delivers geographic diversification
Delivers geographic diversification © Gross written premium outside NSW/ACT % non NSWIACT FY9S, FYO6 FYO?, FYOS FYOS FYOo FYO1 FyY¢2 IAG & CGUINZI iAG Insurance Australia Group Limited ast eo om 9s 223 nbn cimaen sector gag aR) C 23 The extent of our improved geographic diversification can be seen o
Slide 30: Industry premium
Australian General insurance New Zealand General Insurance IAG (A$bn) (NZ$m)} inguance g 1,000 es #50 us E 209 g 5 40 é Z 708 H _ e ce) 5 . a ‘: -*° at : § 308 g q : 2 & we 4 @ 20 fc ; SA) ac 2 a s B 200 AG NZ RSA NZt Lumiey AL ‘Miaee expastac for Hitt wsnfato Not pel eezotted though 8 APRA Insuranc
Slide 31: Synergies - Insurance Australia the natural owner
Synergies — Insurance Australia the natural owner + Overall synergy benefits expected to be $160 millions, " pre-tax per annum - Generate synergies through compiementary operations — Merge IAG's commercial operations into CGUANZI ~ Merge CGU/NZ! personal lines into [AG - No revenue synergies have be
Slide 32: Fair price
Fair price Discount to annual GWP for combined CGU/NZI of $2bn* Within NTA range of 1.1 - 3.4 for transactions in past 3 years ° ° ° Synergy benefits conservative ° Tangible asset backing is a higher percentage of price paid than recent transactions *GGU ant nia danmesroaptemiad Renembes. 201 nbn ci
Slide 33: Acquisition update
Acquisition update ¢ Funding and Share Purchase Plan « Regulatory approvais ¢ Integration timetable Insurance Australia Group Limited ast eo om 9s 223 nlfigr cweayni sack gaye fends) C The Share Purchase Plan is scheduled to close on 21 November 2002. By now, eligible ordinary shareholders registere
Slide 34: Some other initiatives
Some other initiatives Insurance Australia Group Limited .sh0p 00 738523, 28
Slide 35: Initiatives
Initiatives - Customers ~— Getting it Right, “Help” brand campaign « People - Risk management « Advocacy position ~ risk management for the community- share information we have gathered during our 75 year history, creating a safer community environment « Sponsorship program ~ crime prevention, injur
Slide 36: Share price performance
Share price performance Insurance Australia Group Limited .sh0p 00 738523, 30
Slide 37: IAG share price relative to market performance
IAG share price relative to market y performance IAG wy SS&P/ASX200 800 PT —-- mma m aby Wy TTT index 8.7 as 3 a a a a a a a a 88 8 BBSBSSS8S8R88 SESRSRESRERE SS gg Qg NNN vssegsIgn enna asaA gd & gs 2 Seessgseerresesssesagsee 83 8 88Sseeses 888888588 88 canenaneee S&PIASXZO0 Index oom |S Share $ or
Slide 38: IAG share price relative to insurance industry performance
IAG share price relative to y insurance industry performance 130.0 120.0 110.0 109.0 90.0 80.0 70.0 60.0 56.0 ae = = SSaeuees 888 8 8 SS8888 88 8 a 8 & : a x 8 S888 8 88 8 Bee 3 Se S88 88 85 8 8838 8 88 S888 8s 828 cena SRP IAS XDOO veomenee MSC] World: insurance index: insurance index: Insurance Au
Slide 39: Insurance Australia Group brands
insurance Austrailia Group NRMA Clearview SGIO gig vecmene (STA Insurance Proposed} CGU NZI Bom. ACC ARN Insurance Australia Group Limited ast eo om 9s 223 nbn cimaen sector gag aR) C 33
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