Qbe Insurance Group Limited · ASX:QBE
Qbe Insurance — Citi 7th Annual Australia & NZ Investment Conference, London (March 2010)
25 slides from Qbe Insurance's conference presentation, Mar 8, 2010
Slide 1: ASX cover letter: CEO presentation to Citi conference
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 8 March 2010 Telephone: +61 (2) 9375 4444 Facsimile: +61 (2) 9231 6104 DX 10171, Sydney Stock Exchange The Manager Company Announcements ASX
Slide 2: Citi 7th Annual Australia & NZ Investment Conference, London
For personal use only QBE INSURANCE GROUP Citi 7th Annual Australia & NZ Investment Conference, London Presented by: Frank O’Halloran, CEO, QBE Insurance Group Limited 8 March 2010 All amounts in Australian dollars unless otherwise stated.
Slide 3: Chairman's comment
Chairman’s comment For personal use only “We should not underestimate the significant achievement of the QBE Group in producing such outstanding financial and underwriting results in a period that history will record as being one of the most difficult and disruptive to the world’s economic environme
Slide 4: 2009 result highlights
2009 result highlights For personal use only Net profit after tax up 6% to $1,970 million (2008: $1,859 million); a solid financial result considering the adverse impact of the global financial crisis Insurance profit of $2,064 million (2008: $2,183 million) or 17.0% of net earned premium (2008: 19.
Slide 5: 2009 result highlights
2009 result highlights For personal use only Reinsurance expense was 13.7% (2008: 13.7%) of gross earned premium, higher than our target of 13% primarily due to acquisitions and reinstatement of premiums on catastrophe claims Premium growth of 10% in line with revised forecast although new business
Slide 6: Strong financial result: held back by low interest yields
Strong financial result: held back by low interest yields For personal use only 2009 target (2 Nov 09) 2009 2008 Profit after tax Greater than 2008 +6% to $1.97bn $1.86bn Insurance profit margin 17% to 18% 17.0% 19.7% Combined operating ratio 87% to 89% 89.6% 88.5% GWP and NEP increase 10% and 6% 10
Slide 7: Worldwide operations
Worldwide operations For personal use only GWP Growth COR NPAT 2009 2009 2009 2008 2009 2008 $m % % % $m $m Australia 3,509 20 89.0 90.6 576 560 Asia Pacific 706 7 88.1 82.9 62 76 Europe 5,094 2 91.3 85.6 467 574 the Americas 5,146 15 89.7 93.6 397 281 Equator Re 2,564 15 88.2 83.8 468 368 Eliminati
Slide 8: 2009 accident year central estimate claims ratio
2009 accident year central estimate claims ratio – attritional ratio slightly up due to European 2008 underwriting year losses For personal use only Analysis of net claims ratio (accident year) (1) 2009 2008 Net earned premium $m 12,149 11,087 Attritional (2) % 51.4 50.7 Large and catastrophe % 7.4
Slide 9: 2009 accident year results: central estimates
2009 accident year results: central estimates For personal use only 2009 2008 % % Net claims ratio (pre risk margins) 59.5 59.6 Commissions 16.2 17.2 Expenses 13.1 13.7 Combined operating ratio 88.8 90.5 GFC claims (1.2) (1.8) Combined operating ratio pre GFC claims 87.6 88.7 8 March 2010 - Citi Con
Slide 10: Worldwide portfolio mix
Worldwide portfolio mix For personal use only Workers’ Bloodstock comp. 1.7% (1.7%) Short tail 55.5% (53.9%) Financial & 7.4% (9.2%) Long tail 44.5% (46.1%) credit 3.3% (2.1%) Property Marine, energy & 29.5% (27.4%) aviation 9.8% (10.0%) Other 3.5% (2.5%) Liability 15.2% (16.8%) Professional indemni
Slide 11: QBE in great shape
QBE in great shape For personal use only Quality insurance business and balance sheet in great shape to capitalise on the many opportunities available Substantial majority of our products and businesses in the 47 countries in which we operate are producing returns above our 15% minimum ROE requireme
Slide 12: QBE in great shape
QBE in great shape For personal use only Our short duration strategy and focus on high quality cash and fixed interest investments continues to protect QBE from impairment and interest rate volatility Total regulatory capital is $2.5 billion above our calculation of APRA’s increased stringent risk b
Slide 13: A track record of underwriting profits
A track record of underwriting profits For personal use only *COR COR COR COR COR 2005 2006 2007 2008 2009 % % % % % Australia 83.6 82.9 82.9 90.6 89.0 Asia Pacific 82.3 82.7 82.7 82.9 88.1 European operations 92.1 86.1 84.8 85.6 91.3 Americas 92.9 89.7 93.6 93.6 89.7 Equator Re 89.8 81.4 80.5 83.8
Slide 14: History of premium income: a growth story despite strengthening A$
History of premium income: a growth story despite strengthening A$ For personal use only 16.0 Compound annual average growth rates over last 10 years 14.0 - gross earned premium 18% 12.0 - net earned premium 19% Premium $bn 10.0 8.0 NEP $12.1bn GEP $14.1bn 6.0 4.0 2.0 0.0 2000 2001 2002 2003 2004 20
Slide 15: Dividend performance
Dividend performance For personal use only 31 30 35 42 54 71 95 122 126 128 1400 140 1,306 2009 final dividend 66.0 cents, 20% franked 1,187 1200 – Ex div date 3 March 2010 120 1,068 – Record date 10 March 2010 Dividend per share 1000 – Payment date 30 March 2010 100 678 Payout $m Total 2009 dividen
Slide 16: Acquisitions
Acquisitions For personal use only Four EPS accretive acquisitions during 2009 for an outlay of $317 million, resulting in $198 million goodwill, expected to generate in excess of $500 million new premium income in a full year: - Carlife Group – Czech Republic motor gap insurance agency - SLG Benefi
Slide 17: 2010: market conditions
2010: market conditions For personal use only QBE Group overall average premium rate expectations on renewal business: - Australia around 5% - Asia Pacific around 1% - European operations around 2% - the Americas expecting increases of close to 1%, with tight economic conditions prevailing QBE’s bus
Slide 18: 2010: premium outlook
2010: premium outlook For personal use only GWP NEP GWP GWP NEP GWP NEP bn bn A$bn growth % A$bn US$bn US$bn Australia A$4.2 A$3.3 4.2 19.0 3.3 3.8 3.0 Asia Pacific A$0.8 A$0.5 0.8 10.0 0.5 0.7 0.5 Europe £2.75 £1.75 4.8 (6.0) 3.1 4.3 2.8 The Americas US$4.6 US$2.8 5.1 - 3.1 4.6 2.8 Equator Re - A$2
Slide 19: 2010: financial performance targets
2010: financial performance targets Subject to the usual caveats i.e. no material change in current exchange rates, large For personal use only individual risk and catastrophe claims not exceeding the significant allowance in our business plans, and no major fall in equity markets or interest rates
Slide 20: 2010: operational performance goals
2010: operational performance goals For personal use only 2010 premium growth to benefit from Elders and ZC Sterling acquisitions Target overall average premium rate increase of 2% Increase existing customer retention ratio Further reinsurance cost synergies Continue low risk investment strategy Sec
Slide 21: Summary: key messages
Summary: key messages For personal use only Strong technical results for 2009 expected to continue in all key markets Foreign exchange outlook for A$ uncertain but performance in underlying currencies remains strong Continuing low interest rate environment will impact 2010 investment yield on policy
Slide 22: Outlook: watch for benefit of higher interest rates
Outlook: watch for benefit of higher interest rates For personal use only Annualised AAA 2010 interest rate target yield of 3% + 1% + 2% Combined operating ratio Less than 89% Less than 88% Less than 87% Insurance profit 16% to 18% +2.8% +5.6% Impact on profit after tax - +$316m +$625m POA of outsta
Slide 23: Company history
Company history For personal use only Gross Insurance written profit Insurance Total Net profit premium COR margin profit investments after tax A$m % % A$m A$m A$m 2000 4,406 102.5 5.4 186 7,334 179 2001 6,793 109.6 (2.6) (119) 9,183 (25) 2002 7,723 97.7 7.2 406 11,504 279 2003 8,350 93.8 10.4 627 1
Slide 24: Historical share price performance
Historical share price performance For personal use only QBE Historical Share Price Performance - Last 20 Years $80.00 $75.00 QBE Share Price Performance $70.00 QBE Share Price Performance Including Reinvestment of Dividends ASX All Ordinaries Accumulation Index $65.00 $60.00 $55.00 An investment in
Slide 25: QBE Insurance Group
For personal use only QBE INSURANCE GROUP www.qbe.com 24 March 2010 - Citi Conference, London