Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — Shareholder Meeting (April 2012)
66 slides from Qbe Insurance's shareholder meeting presentation, Apr 4, 2012
Slide 1: ASX cover letter: 2012 AGM presentation slides
QBE Insurance Group Limited ABN 28 008 485 014 Head Office 82 Pitt Street SYDNEY NSW 2000 For personal use only Australia Postal Address Box 82 GPO SYDNEY 2001 4 April 2012 Telephone: +61 (2) 9375 4444 Facsimile: +61 (2) 9231 6104 DX 10171, Sydney Stock Exchange The Manager Company Announcements ASX
Slide 2: QBE Insurance Group 2012 annual general meeting
For personal use only QBE INSURANCE GROUP 2012 annual general meeting 4 April 2012 All amounts in US dollars unless otherwise stated. 2012 AGM
Slide 3: Belinda Hutchinson – Chairman
Belinda Hutchinson – Chairman For personal use only 2 2012 AGM
Slide 4: Welcome to the QBE 2012 AGM
Welcome to the QBE 2012 AGM For personal use only 3 2012 AGM
Slide 5: Chairman's address: topics to be covered
Chairman’s address: topics to be covered For personal use only Overview of the 2011 results, dividend and financial position Strategy and positive outlook for 2012 Organisational and governance issues QBE’s remuneration report and executive remuneration CEO retirement and succession plan 4 2012 AGM
Slide 6: Results for the year ended December 2011
Results for the year ended 31 December 2011 For personal use only QBE and the global insurance industry faced significant challenges: - abnormally large number of natural disasters - extreme investment market conditions Net profit after tax down 45% to US$704M (2010: US$1.28Bn) QBE outperformed the
Slide 7: Competitor Performance: Top P&C Insurers 2007-2011
Competitor Performance Top 10 P & C Insurers 2007 - 2011 For personal use only Combined Operating Ratio Return on Equity Notes: 1. Tables reflect the top 10 performers of 43 of the world’s top 50 P & C insurers that have reported to date 2. Information sourced from published accounts and company web
Slide 8: Results for the year ended December 2011: catastrophes
Results for the year ended 31 December 2011 For personal use only Global economic cost of catastrophes in 2011 is estimated at US$380Bn*, with insured cost of US$105Bn* Catastrophe claims cost QBE US$1,733M in 2011, nearly three times last year (2010: US$580M) US$219M benefit from our comprehensive
Slide 9: Results for the year ended December 2011: underwriting and investment
Results for the year ended 31 December 2011 For personal use only Underwriting profit reduced by US$252M due to lower risk-free rates used to discount claims Continued low investment yields Increased credit spreads reduced profit before tax by US$241M No permanent impairment in the value of fixed in
Slide 10: Dividend and dividend policy
Dividend and dividend policy For personal use only Final 2011 dividend reduced to 25 Australian cents (2010: 66 Australian cents) 25% franked compared with 10% in 2010 Dividend policy going forward is a payout ratio of up to 70% of reported net profit after tax 9 2012 AGM
Slide 11: Capital adequacy
Capital adequacy For personal use only Excess regulatory capital Financial strength ratings of A+ or equivalent confirmed MCR multiple 1.5x 6,281 (tier 1) 722 (tier 2) 1.6x 514 (tier 2) 1.6x Bar chart not to scale Based on current APRA criteria 10 2012 AGM
Slide 12: Borrowings
Borrowings For personal use only Conservative and carefully structured debt portfolio of US$4.8Bn at 31 December 2011 During 2011 we locked in US$1.0Bn and £325M of subordinated debt securities – treated as allowable capital by regulatory and rating agencies Ratio of borrowings to shareholders’ fund
Slide 13: Strategy
Strategy For personal use only QBE has a longstanding and successful strategy of growth by acquisition Continue with the strategy to secure bolt-on acquisitions where we can achieve our minimum 15% return on allocated capital, including synergies and economies of scale Recently announced acquisition
Slide 14: QBE well positioned for 2012 and beyond
QBE well positioned for 2012 and beyond For personal use only Internal targets for a COR of 89% and an insurance profit margin of 15% unchanged Our financial targets are for a COR of less than 90% and an insurance profit margin of 13% or better Subject to the usual caveats as noted at the end of thi
Slide 15: Global management structure
Global management structure For personal use only Five operating divisions covering Europe, North America, Latin America, Australia and Asia Pacific Consistent with QBE’s regional boards in the US and Europe, an Australian operations board established: - Mr Nick Greiner AC as Chairman and three othe
Slide 16: Workplace diversity
Workplace diversity For personal use only Workplace diversity is essential to maintaining a fair and inclusive workplace Range of initiatives to be introduced, including: – new workplace flexibility policy – manager education, leadership and talent programs – development of a “keeping in touch” prog
Slide 17: Remuneration report
Remuneration report For personal use only Guiding principles – transparent, simple and easy to understand remuneration strategy Remuneration Committee only comprises of non-executive directors Individual performance-based targets linked to achievement of financial targets, objectives and business st
Slide 18: QBE Foundation objectives
QBE Foundation objectives For personal use only Foundation established in 2010 with the objective of a platform for QBE and employees to engage with the communities in which we operate Foundation supported by initial commitment of US$5 million Further amounts set aside each year of 0.5% of Group’s p
Slide 19: Retirement of chief executive officer and succession plan
Retirement of chief executive officer and succession plan For personal use only Frank O’Halloran to retire as Group CEO on 17 August 2012 John Neal to be appointed Group CEO 18 2012 AGM
Slide 20: 2011 financial results
2011 financial results For personal use only 2011 year was a difficult one for the insurance industry Record catastrophe activity and volatile investment markets negatively impacted QBE’s profit before tax by US$1.6Bn compared with 2010 Technical underwriting results remain strong Outperformed the m
Slide 21: 2011 underwriting results
2011 underwriting results For personal use only For the year ended 31 December 2011 2010 % change GWP US$M 18,291 13,629 34 NEP US$M 15,359 11,362 35 Claims ratio % 68.2 59.9 Commission and expense ratio % 28.6 29.8 COR % 96.8 89.7 Underwriting profit US$M 494 1,168 (58) Insurance profit US$M 1,085
Slide 22: Summary of 2011 financial results
Summary of 2011 financial results For personal use only 45 out of 52 countries in which we operate made underwriting profits in 2011 despite challenging year Majority of countries exceeded our minimum 15% return on allocated capital Unique worldwide reinsurance programs benefited pre-tax profit by U
Slide 23: Acquisitions completed in 2011 and 2012 to date
Overall acquisitions completed in 2011 and 2012 to date are exceeding profit expectations For personal use only 2011 and 2012 to date Additional Effective acquisitions Business annualised GWP US$M date US insurance operations of Mainly crop 618 1 January 2011 Renaissance Re Balboa in the US Lender-p
Slide 24: Positive start to 2012
Positive start to 2012 For personal use only Premium rate increases exceeding our expectations of overall real average increases of 5% Net large risk and catastrophe claims for the 1st quarter around 1% of 2012 targeted NEP, compared with 5.5% of 2011 NEP this time last year Risk-free rates increase
Slide 25: QBE's capital position
QBE’s capital position For personal use only Strong regulatory capital adequacy above our minimum benchmark and maintained our A+ or equivalent ratings Recently completed institutional placement and retail share purchase plan, raising A$600M, targeted to replace June 30 callable US$500M Tier 2 debt
Slide 26: John Rumpler – President & CEO, QBE North America
John Rumpler – President & CEO, QBE North America For personal use only 25 2012 AGM
Slide 27: North America
North America For personal use only 2011 2010 Gross written premium US$M 7,529 4,606 Gross earned premium US$M 7,431 4,563 Net earned premium US$M 4,018 2,555 Claims ratio % 65.2 62.4 Commission ratio % 6.6 9.6 Expense ratio % 18.8 17.1 Combined operating ratio % 90.6 89.1 Insurance profit margin %
Slide 28: Steven Burns – CEO, QBE Europe
Steven Burns – CEO, QBE Europe For personal use only 27 2012 AGM
Slide 29: European operations
European operations For personal use only 2011 2010 Gross written premium US$M 4,828 4,156 Gross earned premium US$M 4,635 4,008 Net earned premium US$M 3,150 2,593 Claims ratio % 65.3 57.7 Commission ratio % 17.0 16.9 Expense ratio % 13.2 15.9 Combined operating ratio % 95.5 90.5 Insurance profit m
Slide 30: Colin Fagen – CEO, QBE Australia
Colin Fagen – CEO, QBE Australia For personal use only 29 2012 AGM
Slide 31: Australian operations
Australian operations For personal use only 2011 2010 Gross written premium US$M 4,486 3,707 Gross earned premium US$M 4,355 3,720 Net earned premium US$M 3,767 3,033 Claims ratio % 69.4 60.9 Commission ratio % 13.0 10.4 Expense ratio % 16.9 17.9 Combined operating ratio % 99.3 89.2 Insurance profit
Slide 32: Mike Goodwin – CEO, QBE Asia Pacific
Mike Goodwin – CEO, QBE Asia Pacific For personal use only 31 2012 AGM
Slide 33: Asia Pacific operations
Asia Pacific operations For personal use only 2011 2010 Gross written premium US$M 680 601 Gross earned premium US$M 653 587 Net earned premium US$M 442 420 Claims ratio % 46.6 45.7 Commission ratio % 22.9 20.0 Expense ratio % 22.6 21.0 Combined operating ratio % 92.1 86.7 Insurance profit margin %
Slide 34: Jose Sojo – CEO, QBE Latin America
Jose Sojo – CEO, QBE Latin America For personal use only 33 2012 AGM
Slide 35: Latin America
Latin America For personal use only 2011 2010 Gross written premium US$M 768 559 Gross earned premium US$M 752 554 Net earned premium US$M 620 454 Claims ratio % 56.7 57.3 Commission ratio % 19.0 22.2 Expense ratio % 14.0 13.9 Combined operating ratio % 89.7 93.4 Insurance profit margin % 16.3 12.3
Slide 36: Des Fogarty – President, Equator Re
Des Fogarty – President, Equator Re For personal use only 35 2012 AGM
Slide 37: Equator Re – captive reinsurer
Equator Re – captive reinsurer For personal use only 2011 2010 Gross written premium US$M 3,807 2,479 Gross earned premium US$M 3,697 2,363 Net earned premium US$M 3,362 2,307 Claims ratio % 77.8 61.4 Commission ratio % 23.3 24.9 Expense ratio % 3.4 3.8 Combined operating ratio % 104.5 90.1 Insuranc
Slide 38: 2012 premium outlook
2012 premium outlook For personal use only Revised Revised GWP – local currency GWP BN (1) US$BN Australia A$4.6 4.7 Asia Pacific US$0.8 0.8 Europe £3.2 5.0 North America US$7.0 7.0 Latin America US$1.2 1.2 Equator Re (2) US$4.0 4.0 Equator Re (4.0) Group total 18.7 (1) Based on the following projec
Slide 39: Gary Brader – Chief investment officer
Gary Brader – Chief investment officer For personal use only 38 2012 AGM
Slide 40: Investments now US$29Bn held in portfolios
Investments now US$29Bn held in over 130 portfolios across 52 countries For personal use only Due to local regulatory requirements and to avoid FX mismatches around 60% of investments held in comparatively low yielding US dollar, sterling and Euro investments Challenging year due to volatile equity
Slide 41: QBE Group head office management
QBE Group head office management For personal use only Frank Duncan John Neal Neil Drabsch O’Halloran Ramsay Tony Jackson Blair Nicholls George Jenni Smith Thwaites 40 2012 AGM
Slide 42: Thank you to QBE Group staff worldwide
Thank you to QBE Group staff worldwide For personal use only Over 16,000 staff in 52 countries 41 2012 AGM
Slide 43: Farewell and thankyou
Farewell and thankyou For personal use only 42 2012 AGM
Slide 44: John Neal – CEO, global underwriting operations
John Neal – CEO, global underwriting operations For personal use only 43 2012 AGM
Slide 45: Outlook for 2012
Outlook for 2012 For personal use only Actions taken to reinforce confidence in our 2012 targets Portfolio reviews and remediation plans progressing, aimed at reducing exposure in certain catastrophe-prone areas Large risk and catastrophe claims for Q1 2012 estimated to be around US$700M lower than
Slide 46: Outlook for 2012
Outlook for 2012 For personal use only Reinsurance expense on renewal is up 7.5% – largely covered by premium rate increases in our inward reinsurance business Identified US$50M expense saving in 2012 – target savings to increase to US$200M in 2014 45 2012 AGM
Slide 47: Outlook for 2012
Outlook for 2012 For personal use only QBE’s 2012 targets for large individual risk and catastrophe claims based on: – in 2011 large individual risk and catastrophe claims – 15.3% of NEP – assumed these catastrophe claims continue at 85% of 2011 level – combined with remediation, expect 2012 large i
Slide 48: Longer-term aspirations
Longer-term aspirations For personal use only The vision and values, introduced in 1994, have served QBE well Since then, the market has changed - QBE’s size, brand and structure have developed as well as the scale, diversity and complexity of the QBE business model Expectations of key stakeholders
Slide 49: How will QBE develop over the next three years?
How will QBE develop over the next three years? For personal use only Continue to put expectations of our shareholders first in all decision- making Renew our focus on excellent and timely communication Disciplined approach to decisions on businesses and investments which do not meet QBE’s high hurd
Slide 50: Closing remarks
Closing remarks For personal use only Performance focus to meet or exceed our 2012 business plan and financial and operational performance targets Change agenda to continue to evolve our business towards our refreshed Vision: “To be the most successful global insurer and reinsurer in the eyes of our
Slide 51: Formal business
Formal business For personal use only 50 2012 AGM
Slide 52: Item 1: Annual financial report
Item 1: For personal use only To receive and consider the annual financial report and the reports of the directors and of the auditors of the Company for the year ended 31 December 2011 51 2012 AGM
Slide 53: Item 2: To adopt the remuneration report
Item 2: For personal use only To adopt the remuneration report 52 2012 AGM
Slide 54: Results of proxy voting for item 2
Results of proxy voting for item 2 For personal use only Resolution For Open Against Abstain 2 669,258,123 4,247,868 9,237,096 1,932,866 53 2012 AGM
Slide 55: Item 3: Proportional takeover approval provisions
Item 3: For personal use only To renew the Company’s proportional takeover approval provisions 54 2012 AGM
Slide 56: Results of proxy voting for item 3
Results of proxy voting for item 3 For personal use only Resolution For Open Against Abstain 3 674,979,584 4,639,445 4,370,299 947,318 55 2012 AGM
Slide 57: Item 4a: Re-elect Ms B J Hutchinson
Item 4a: For personal use only To re-elect Ms B J Hutchinson as a director 56 2012 AGM
Slide 58: Results of proxy voting for item 4a
Results of proxy voting for item 4a For personal use only Resolution For Open Against Abstain 4a 672,398,447 4,400,604 7,122,925 920,714 57 2012 AGM
Slide 59: Item 4b: Re-elect Ms I F Hudson
Item 4b: For personal use only To re-elect Ms I F Hudson as a director 58 2012 AGM
Slide 60: Results of proxy voting for item 4b
Results of proxy voting for item 4b For personal use only Resolution For Open Against Abstain 4b 676,101,252 4,460,709 3,448,242 927,133 59 2012 AGM
Slide 61: Item 4c: Re-elect Ms I Y L Lee
Item 4c: For personal use only To re-elect Ms I Y L Lee as a director 60 2012 AGM
Slide 62: Results of proxy voting for items 4c
Results of proxy voting for items 4c For personal use only Resolution For Open Against Abstain 4c 631,042,928 4,453,522 48,498,408 942,478 61 2012 AGM
Slide 63: QBE Insurance Group www.qbe.com
For personal use only QBE INSURANCE GROUP www.qbe.com 2012 AGM
Slide 64: Important disclaimer
Important disclaimer For personal use only This presentation should be read in conjunction with all information which QBE has lodged with the Australian Securities Exchange (“ASX”); including QBE’s full year results filed with the ASX on 4 April 2012. Copies of those lodgements are available from ei
Slide 65: Important disclaimer (continued)
Important disclaimer (continued) For personal use only Any forward-looking statements assume that: large individual risk and catastrophe claims do not exceed the significant allowance in our business plans; there is no overall reduction in premium rates; there is no significant fall in equity market
Slide 66: QBE Insurance Group www.qbe.com
For personal use only QBE INSURANCE GROUP www.qbe.com 2012 AGM
QBE Insurance Group — Shareholder Meeting (April 2012) on 6ix