Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — Securities Institute of Australia presentation (October 2003)
28 slides from Qbe Insurance's conference presentation, Oct 21, 2003
Slide 1: ASX cover letter: CEO presentation to Securities Institute of Australia
21 OCT 2883 12:58 FROM GROUP EXEC @292316164 TO ASK RELEASES P.@l-28 AUSTRALIAN STOCK EXCHANGE BE @BEQ00382 QBE INSURANCE GROUP LIMITED Insurance ABN 28 0a 485 014 rou ¢ P 82 Pitt Strest Sycney NSW 2000 Postal Address GPO Box &2 21 October 2003 | Sycney NSW 2001 Telephone: (G2) 9375 4444 Facsimile;
Slide 2: Presentation to the Securities Institute of Australia
P,@2/28 TO ASX RELEASES 21 OCT 2683 12:59 FROM GROUP EXEC B2o23161b84 QBE Insurance Group Limited Presentation to the Securities Institute of Australia Frank O’Halloran, CEO 21 October 2003
Slide 3: Overview
P3728 TO ASX RELEASES 21 OCT 2683 12:59 FROM GROUP EXEC B2o23161b84 VVVVVV VvvvV Vv Overview Established 1886 Merger of three companies in 1973 to form QBE Operates in 38 countries Market capitalisation A$6.8 billion — A$3m in 1974 Total assets A$21.5 billion — A$120m in 1974 Gross premium income 20
Slide 4: Overview (cont'd)
P4728 TO ASX RELEASES 21 OCT 2683 12:59 FROM GROUP EXEC B2o23161b84 @® Overview (contd) > S&P At rating for main operating subsidiaries > Over 7,000 staff (who understand QBE’s approach to business} > Prudent approach to risk management, e.g. > Minimal exposure to asbestos > Last six years overall r
Slide 5: Overview (cont'd)
P6528 TO ASX RELEASES 21 OCT 2683 12:59 FROM GROUP EXEC B2o23161b84 @® Overview (cont'd) > Division Mix — gross premium %o Lioyd’s 2 European Company (ECO) 27 Americas 16 Asia-Pacific 8 Australia 21 1 > Record operating profit after tax in 2002 of A$279 million. > Record operating profit after tax f
Slide 6: Overview (cont'd)
P, 6/28 TO ASX RELEASES 21 OCT 2683 12:59 FROM GROUP EXEC B2o23161b84 > > > Overview (cont'd) 35 out of 38 countries made operating profits in 2003 first half — exceptions Bulgaria, Guam, Japan (run-off) All divisions made underwriting profits and improved insurance results for six months to June 30
Slide 7: History of growth
P.ar728 TO ASX RELEASES 21 OCT 2683 13:64 FROM GROUP EXEC B2923161b4 AX. History of growth year ended 31 December 2002 gross and net earned premium Compound average growth rates over last 10 years: - gross earned premium 23.2% - net eamed premium 22.3% ASM 8,000 TARGET 6,000 2003 4,000 GWP A$8.5B 2.
Slide 8: Dividend performance
P8728 TO ASX RELEASES 21 OCT 2683 13:64 FROM GROUP EXEC B2923161b4 Dividend performance year ended 31 December 2002 A$M 240 200 160 120 80 40 Total $213M Final $114M Interim $99M 1993 1996 1999 2002
Slide 9: Vision
P9728 TO ASX RELEASES 21 OCT 2683 13:64 FROM GROUP EXEC B2923161b4 SS Vision To be internationally recognised as: > a highly successful general insurance and reinsurance group; > a builder of shareholders’ wealth; > a developer of “can do” people; and > an organisation that excels in the continuous
Slide 10: Values
P, 1a/28 TO ASX RELEASES 21 OCT 2683 13:64 FROM GROUP EXEC B2923161b4 aS Values > Increasing the long term wealth of sharehoiders; > Customer satisfaction and retention; > Employee motivation; and > Integrity.
Slide 11: Group Management
P.1i1/28 TO ASX RELEASES 21 OCT 2683 13:64 FROM GROUP EXEC B2923161b4 GROUP MANAGEMENT - Neil Drabsch (CFO) - Gayle Tollifson (Finance & Business Risks) - Duncan Ramsay (General Counsel & Secretary) - Alan Williams (Internal Audit) - Grant Conway (Tax & Regulatory Compliance) - Blair Nicholls (Group
Slide 12: Balance Sheet
P1228 TO ASX RELEASES 21 OCT 2683 13:41 FROM GROUP EXEC B2o23161b84 Balance Sheet 30 June 2003 31 Dec 2002 30 June 2002 $M $M $M ASSETS Investments and cash 11,495 11,508 9,493 Receivables 4,157 3,278 3,949 Recoveries on outstanding claims 3,289 3,666 3,885 Deferred insurance costs 7,620 1,131 1,589
Slide 13: Balance Sheet 30 June 2003
P.13/28 TO AS RELEASES 21 OCT 2863 13'@1 FROM GROUP EXEC @2o2316164 » Balance Sheet 30 June 2003 > A$ impact on 30 June 2003 balances compared to 31 December 2002 > Investments - low risk strategy - liquid and highly-rated > Receivables - highly rated counterparties - adequate provisions for doubtfu
Slide 14: Current Market Conditions
P1428 TO ASX RELEASES Current Market Conditions Positives Substantial premium rate increases since 2001 continuing, although at a lower rate Improved terms, conditions, and deductibles are prevailing Lower risk profile - terrorism exclusions or government cover and, for QBE, reduced aggregates and m
Slide 15: How long can this cycle continue?
P1528 TO ASX RELEASES 21 OCT 2683 13:41 FROM GROUP EXEC B2o23161b84 How long can this cycle continue? Fundamental changes have occurred in industry: Significant consolidation already happened (and continues) 12 of the top 20 global reinsurers’ ratings have reduced over the past 2 years Losses from p
Slide 16: QBE Business Strategy
P.16/28 TO AS RELEASES 21 OCT 2863 13'@1 FROM GROUP EXEC @2o2316164 ASS QBE Business Strategy increase profits consistently over time Achieve ROE in excess of 1.5 times weighted average cost of capital — 2003 half year ROE 16.0% Increase profit by more than 75% in 2003 Net premium growth around 10%
Slide 17: QBE Business Strategy (cont'd)
P.1lr72e TO ASX RELEASES 21 OCT 2683 13:82 FROM GROUP EXEC B2923161b84 OS QBE Business Strategy (cont'd) Premiums after 2004 to increase in line with claims inflation (subject to competition) Reduce inwards reinsurance to 20% or less of group premium income Continued focus on expense management (tar
Slide 18: Lloyd's Division
P1828 TO ASX RELEASES 21 OCT 2683 13:82 FROM GROUP EXEC B2923161b84 IN Lloyd’s Division > CEO - Steven Burns > Largest manager of capacity at Lloyd’s for 2003 - £1.04 billion > QBE provides 78% of capacity (No.2 at Lloyd's) > 5 Syndicates 2003 capacity £'m 386 - non-US liability (EL, PL, Pl) 450 566
Slide 19: European Company Operations
P.19/28 TO ASX RELEASES 21 OCT 2683 13:82 FROM GROUP EXEC B2923161b84 ® VvWwVv Wv European Company Operations Managing Director — Paul Glen Operates in London market, Dublin, Paris, Mitan, Hungary, Macedonia, Ukraine, Moldova, Bulgaria and Slovakia Largest London market general insurer (with Lloyd's
Slide 20: European Company Operations
P. 28/28 TO AS RELEASES 21 OCT 2863 13'@2 FROM GROUP EXEC @292316164 @® European Company Operations > Reinsurance products offered in London & Dublin: > Property catastrophe and X/L (non-USA) > Casualty X/L > Motor X/L (non-USA)} > Agriculture {mainly X/L) > Credit & Surety XL > Marine X/L > Faculta
Slide 21: Americas Division
P2128 TO ASX RELEASES 21 OCT 2683 13:83 FROM GROUP EXEC B2o23161b84 > > > Americas Division President and CEO — Tim Kenny Based in New York Operates in general insurance in USA, Argentina (workers only), Brazil (4 products) and reinsurer in Latin America through our offices in USA, Panama, Mexico, V
Slide 22: Americas Division
P. 22/728 TO AS RELEASES 21 OCT 2663 13'@3 FROM GROUP EXEC @232316164 Americas Division > Main USA general insurance products > Condominium insurance > Health — specific and aggregate > Contractors > Small to medium commercial businesses > Standard and non-standard commercial automobiles > Reinsuran
Slide 23: Asia-Pacific Operations
P2328 TO ASX RELEASES 21 OCT 2683 13:83 FROM GROUP EXEC B2o23161b84 © > Managing Director — Vince McLenaghan > Operates in 18 countries with management and shareholder control (except Vietnam 50%) | > Mainly agency business in Asia. However, specialist commercial lines offered in Asia, e.g. Pl, Trad
Slide 24: Asia-Pacific Operations: Countries of Operation
P2428 TO ASX RELEASES 21 OCT 2683 13:83 FROM GROUP EXEC B2o23161b84 Asia Hong Kong Macau Singapore Malaysia Philippines Indonesia Thailand Vietnam Japan (run-off) Asia-Pacific Operations > Countries of Operation: Pacific New Zealand Papua New Guinea Fiji Solomon Islands New Caledonia French Polynesi
Slide 25: Australia
P.25/28 TO AS RELEASES 21 OCT 2663 13'@3 FROM GROUP EXEC @232316164 Australia > Managing Director — Raymond Jones > Operates in all states and territories covering all lines of business (except bloodstock, builders’ warranty and extended warranty) > Joint venture with ING for small to medium busines
Slide 26: Australia
P. 26728 TO AS RELEASES 21 OCT 2663 13'@4 FROM GROUP EXEC @2o2316164 AS Australia > Product driven strategy outside of joint venture. Products are: > Workers’ compensation (No. 3) > Corporate liability (No. 1) > Corporate property (No. 1) > Professional liability (including D&O and selected medical
Slide 27: Historical share price performance
P2728 TO AS RELEASES 21 OCT 2663 13'@4 FROM GROUP EXEC @2o2316164 ® Historical share price performance An investment in QBE has outperformed the Australian All Ordinaries Index and inflation with a compound average annua! growth rate of 12.0% over 5 years, 20.1% over 10 years and 24.9% over 20 years
Slide 28: OCT 2683 13:64 TO ASX RELEASES P2828
21 OCT 2683 13:64 FROM GROUP EXEC B2o23161b84 TO ASX RELEASES P2828 }QUJ9}U| woo sqb°- MMM jek TOTAL PAGE. 25
QBE Insurance Group — Securities Institute of Australia presentation (October 2003) on 6ix