QBE Insurance Group Limited · ASX:QBE
QBE Insurance — Investor Presentation (July 2013)
35 slides from QBE Insurance's investor presentation, Jul 2, 2013
Slide 1: QBE Insurance Group Global Operational Transformation Program
QBE Insurance Group Global Operational Transformation Program John Neal – Group Chief Executive Officer Neil Drabsch – Group Chief Financial Officer Colin Fagen – Chief Executive Officer, Australian & NZ Operations Tuesday 2 July 2013 All figures in US$ unless otherwise stated 1
Slide 2: Agenda
Agenda 1. Introduction and overview of value creation model JN 2. Operational excellence – global reach and scale JN 3. Australian Operations case study CF 4. Financial strength and flexibility ND 5. Closing remarks JN 6. Q & A JN/ND/CF 2 QBE Insurance Group - Global Operational Transformation Pro
Slide 3: Introduction and overview of value creation model
Introduction and overview of value creation model John Neal – Group Chief Executive Officer 3 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013
Slide 4: QBE vision to be the most successful global insurer and reinsurer
In February we rolled out our refreshed vision QBE has a vision to be the most successful global insurer and reinsurer in the eyes of our customers, our people, our shareholders and the community 4 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013
Slide 5: Value creation model
Value creation model Confidence in immediate (FY13) business plans Leveraging the value opportunities of our global business Implementing Group wide programs of change to improve performance 5 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013
Slide 6: Operational excellence: global reach and scale
Operational excellence: global reach and scale John Neal – Group Chief Executive Officer 6 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013
Slide 7: Operational excellence: delivering a repeatable, globally scalable engine for growth
Operational excellence: delivering a repeatable, globally scalable engine for growth • A simplified and unified operating 1. SIMPLIFICATION model Simplify how we do • Roles clearly defined and things today, both across accountabilities understood and within divisions • Process improvement, reduction
Slide 8: Key objectives of GSSC establishment
Key objectives of GSSC establishment 1. Optimise resource cost model Cost 2. Standardise - drive economies Effectiveness of scale 3. Reduce rework Business 1. Create scale Growth 2. More easily absorb transaction volume growth 1. Improve performance management 2. Improve process control Service 3. I
Slide 9: Why Manila? Why a captive model?
Why Manila? Why a captive model? Why Manila? An average GSSC recruit • Philippines is now the #1 location for voice services* • 100% tertiary educated • Cost competitiveness • 95% hold an undergraduate degree • Robust and reliable infrastructure • 30% have post graduate qualifications • Government s
Slide 10: Operational transformation initiatives will deliver annual run-rate benefits of at least $250M by end of FY15
Operational transformation initiatives will deliver annual run-rate benefits of at least $250M by the end of FY15 COST AND BENEFIT IMPACT (P&L) US$ 300M 250 • Total project cost revised 225 downwards $20M but increased 200 expense in FY13 • Excludes estimated global claims 240 100 85 190 procurement
Slide 11: Overview of $250M transformation program savings by functional work streams
Overview of $250M transformation program savings by functional work streams • Significant portion of global workload via GSSC • Review of current processes to eliminate waste Finance • Consolidation, standardisation and process improvement • Easier and faster group wide financial reporting • Deliver
Slide 12: Global procurement initiatives: ranked by value and degree of complexity
Global procurement initiatives: ranked by value and degree of complexity 12 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013 * Included within $250m GOTP savings on slide 10
Slide 13: Transformation timeline
Transformation timeline AO EO • On track for majority • Planning in progress completion by 1Q14 • Commence 2Q14 and complete by 2Q15 Other divisions AO NA EO FY13 FY14 FY15 GSSC NA • Established in • Plan completed June Further iterations Manila • Commence 4Q13 • Complete majority of activity by 2Q1
Slide 14: Australia & New Zealand
Australia & New Zealand Colin Fagen – Chief Executive Officer, Australian & NZ operations 14 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013
Slide 15: Key objectives of GSSC establishment for Australia
Key objectives of GSSC establishment for Australia 1. Optimise resource cost model Cost 2. Standardise - drive economies Effectiveness of scale 3. Reduce rework Business 1. Create scale Growth 2. More easily absorb transaction volume growth 1. Improve performance management 2. Improve process contro
Slide 16: Australia will deliver annual run-rate benefits of at least $85M by end of FY15
Australia will deliver annual run-rate benefits of at least $85M by the end of FY15 COST AND BENEFIT IMPACT (P&L) 84 85 40 29 78 84 12 -29 -2 -55 Cost savings (earned in year) Cost savings (run-rate at year end) -60 Implementation and restructuring costs FY13 FY14 FY15 Excludes claims procurement 16
Slide 17: Australia's transformation: all streams on track to deliver
Australia’s transformation: all streams on track to deliver Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 $85M savings by FY15 Finance $6M HR $5M Claims $6M Operations $36M IT $15M Legend Planning Non-claims procurement Transition to GSSC / third party $17M 17
Slide 18: Parallel processes: knowledge transition
Parallel processes: knowledge transition Processes picked up from Australia, structured and transferred to GSSC before rehearsal and gradual go live Operational excellence assessments Pre go-live T+1 T+15 T+30 T+60 T+90 Design Transition Service Delivery GSSC 1 week 4-5 weeks 4-6 weeks 2 weeks 2 wee
Slide 19: Process reengineering: operations
Process reengineering: operations 19 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013
Slide 20: Developing our Employee Brand: GSSC Employee Value Proposition
Developing our Employee Brand: GSSC Employee Value Proposition OUR EVP PROMISE We believe… that our people‟s ultimate ability and potential should be realised through their employment at QBE. We are committed to… supporting and developing everyone to realise their full potential. We will help them “
Slide 21: The GSSC is already delivering improvements in our operational metrics
The GSSC is already delivering improvements in our operational metrics Function Metric Result* Claims – Motor Direct Finalisation rates 36% improvement in finalisation rates Claims – Motor Intermediated Finalisation rates 6% improvement in finalisation rates Claims – Motor Financial Finalisation
Slide 22: We are already realising efficiencies through the GSSC
We are already realising efficiencies through the GSSC Motivated Workforce Consistent Processes Solid Performance • Clear team structures • Daily reporting has driven • Exceeding both our quality • Clearly defined process consistency and performance SLAs responsibilities • Key improvements made to •
Slide 23: Customer feedback on the GSSC has been positive
Customer feedback on the GSSC has been positive We have already begun receiving customer commendations for the high customer service they have experienced in dealing with our GSSC teams: April April "Please give him [the GSSC claims officer] a "She [GSSC claims officer] was pat on the back. I'm in a
Slide 24: Broker networks remain supportive and informed
Broker networks remain supportive and informed April „Ultimately QBE is responsible for making decisions on how to April best manage their business, and we respect this‟ „We have appreciated the opportunity to have discussions and input into the process‟ May22, 2013 April May „We can understand the
Slide 25: A large proportion of impacted staff in Australia have been redeployed to date
A large proportion of impacted staff in Australia have been redeployed to date Overview of FTE redeployment to mid June 2013 550 500 High redeployment driven by AO strategy to reduce redundancy and 450 manage via natural turnover 190 400 350 15 521 300 52 250 Staff that have 39 accepted VAP may 200
Slide 26: Australia's transformation report card
Delivering operational excellence Australia's transformation report card Model established in Australia Consistent processes across Australia Speed of improvement when influx of claims or policy count increases Sales & distribution balance - scalability Australia‟s retained organisation re
Slide 27: Financial strength and flexibility
Financial strength and flexibility Neil Drabsch – Group Chief Financial Officer 27 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013
Slide 28: Financial strength and flexibility
Financial strength and flexibility • Financial strength and flexibility is integral to QBE‟s value creation model • Balancing the capital needs of all stakeholders • Flexibility for future growth • Optimising gearing • Achievable ambition for book equity growth • Capital has been strengthened over t
Slide 29: Financial strength and flexibility
Financial strength and flexibility • Uncertainty surrounding APRA LAGIC framework resolved • PCA multiple expected to be within our targeted range of 1.55-1.80x APRA requirement at 30 June 2013 • APRA conglomerates capital standard not expected to have any impact and QBE currently not being consider
Slide 30: Financial strength and flexibility: liability management
Financial strength and flexibility: liability management • $220M of sub-debt repaid at first call date on 1 July 2013 • $600M 5 year 2.4% pa coupon senior debt issue completed in April • Proceeds largely used to repay/repurchase SCS • Majority of SCS repaid or repurchased • $234M put option exercise
Slide 31: Financial strength and flexibility: non-core asset sales and other initiatives
Financial strength and flexibility: non-core asset sales and other initiatives • Non-core asset sales with cumulative sale proceeds of around $80M expected by year end including • Australian broker/agency – NCIB (subject to Steadfast IPO) and Invivo • Majority stake in QBE Macedonia • Other initiati
Slide 32: Summary and 1H13 update
Summary and 1H13 update John Neal – Group Chief Executive Officer 32 QBE Insurance Group - Global Operational Transformation Program - 2 July 2013
Slide 33: Summary and 1H13 update
Summary and 1H13 update Reflect on work done to date Demonstrated successes Roadblocks identified and remediated Renewed Executive level bench strength Platform for growth and accelerated synergies from future acquisitions Building towards our goal of being a truly global organisation 33
Slide 34: Summary and 1H13 update
Summary and 1H13 update • Premium rate increases in line with expectations at +5% overall • Annualised first half investment yield expected to be in line with FY13 guidance of approximately 2.25% • Sustained A$ weakness is positive for A$ earnings but adversely impacts reported US$ premium and earni
Slide 35: Important disclaimer
Important disclaimer The information in this presentation provides an overview of QBE‟s global operational transformation program. This presentation should be read in conjunction with all information which QBE has lodged with the Australian Securities Exchange (“ASX”). Copies of those lodgements are
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