QBE Insurance Group Limited · ASX:QBE
QBE Insurance — Citigroup 3rd Annual Investment Conference, London 2006
14 slides from QBE Insurance's conference presentation, Mar 9, 2006
Slide 1: ASX cover letter: CEO presentation to Citigroup conference
QBE INSURANCE GROUP LIMITED ABN 28 008 485 014 82 Pitt Street Sydney NSW 2000 Postal Address GPO Box 82 Sydney NSW 2001 8 March 2006 Telephone: (02) 9375 4444 Facsimile: (02) 9231 6104 DX 10171 Sydney Stock Exchange The Manager Company Announcements Australian Stock Exchange Limited Level 6 Exchange
Slide 2: Company overview
QBE INSURANCE GROUP 3rd Annual Investment Conference London – March 2006 Presented by Frank O’Halloran, CEO Company overview • QBE is an Australian-based general insurance and reinsurance group and one of the world’s 25 largest insurers and reinsurers measured by net written premium – Established in
Slide 3: History of growth
History of growth QBE Historical Share Price Performance - Last 20 Years Gross written Insurance Insurance 40.00 premium COR profit profit A$M % % A$M 35.00 1996 1,561 99.3 8.4 101 1997 30.00 2,054 99.5 7.2 116 1998 2,409 100.3 7.7 147 25.00 1999 2,877 103.9 2.5 56 QBE Share Price (A$) 2000 20.00 4,
Slide 4: Worldwide operations
Worldwide operations HALF YEAR FULL YEAR Jun 2005 Dec 2005 Dec 2005 Dec 2004 Gross written premium $M 5,123 4,285 9,408 8,766 Gross earned premium $M 4,331 4,840 9,171 8,571 Net earned premium $M 3,506 3,880 7,386 6,781 Claims ratio % 61.0 58.9 59.9 61.3 Commission ratio % 17.0 16.8 16.9 17.5 Expens
Slide 5: Managing exposure to catastrophes
Managing exposure to catastrophes Market loss* US$ BN 2004 - includes US hurricanes and Asian tsunami 49 2005 - includes US hurricanes, storms and European floods 83 QBE total 2005 2004 catastrophe losses US$ BN US$ BN Gross (pre tax) 1.6 0.6 Net (pre tax) 0.4 0.2 2005 was one of the most expensive
Slide 6: Acquisitions by division 2002-2005 and balance sheet
Acquisitions by division 2002-2005 Potential gross annual APACE Americas European premium - $M operations AAUP aviation portfolio 35 Reliance Brazil 25 • Acquisition strategy CGU trade credit portfolio 17 ING Indonesia 7 - bolt-ons MBF Malaysia JV 40 - renewal books Gerling Ins. Aust renewal rights
Slide 7: Net invested funds and total insurance liabilities
Net invested funds 31 Dec 2005 31 Dec 2004 $M % $M % Cash 1,061 6.0 1,121 7.5 Short term money 8,292 47.1 5,482 36.6 Fixed interest securities and other 7,537 42.9 6,957 46.5 Equities 674 3.8 1,383 9.2 Investment properties 33 0.2 32 0.2 Total investments and cash 17,597 100.0 14,975 100.0 Borrowing
Slide 8: Outstanding claims provision and claims development
Outstanding claims provision QBE’s record of claims development demonstrates our prudent management of claims 2005 2004 2003 2002 2001 Prior year release - net undiscounted $M 618 140 44 12 162 Total net outstanding claims (discounted) $M 10,870 9,462 7,595 7,994 6,789 Risk margin over central estim
Slide 9: Claims development and analysis of claims incurred
Claims development discounted (note 9) 2005 accident Claims 2005 all Claims year ratio years ratio $M % to NEP $M % to NEP Net earned premium 7,386 7,386 Net discounted claims incurred Central estimate 4,204 56.9 4,232 57.4 Increase in risk margin 445 6.0 185 2.5 Net discounted claims incurred (note
Slide 10: Capital adequacy and comparison of cash yield
Capital adequacy 31 Dec 2005 31 Dec 2004 $M $M Tier 1 Share capital* 3,263 2,870 Reserves and retained earnings 1,856 1,204 Excess risk margin 1,411 1,020 Tax on excess risk margin (423) (306) Final dividend (196) (107) Deductions, mainly intangibles (1,382) (1,039) 4,529 3,642 Tier 2 Subordinated d
Slide 11: Financial model and business strategy and 2006 targets
Financial model 2006 2003 2004 (2) 2005 sensitivity Net earned premium $M 6,036 6,781 7,386 8,300 Claims ratio % 63.3 61.3 59.9 61.5 Commission ratio % 18.2 17.5 16.9 17.0 Expense ratio % 12.3 12.4 12.3 12.0 COR % 93.8 91.2 89.1 90.5 Period premiums held (1) yrs 1.3 1.4 1.5 1.6 Yield on insurance fu
Slide 12: 2006 projected gross written premium
2006 projected gross written premium $ BN Australia 2.6 Pacific Asia Central Europe 0.7 (24 countries) QBE Insurance (Europe) – £1.1 billion 2.6 Limit – £1.0 billion 2.3 the Americas – US$1.6 billion 2.1 10.3* * Assumes A$ to US$0.77 and A$ to £0.43 QBE INSURANCE GROUP 21 Business strategy and 2006
Slide 13: Business strategy and 2006 targets
Business strategy and 2006 targets • Continue low risk strategy for investments - target gross investment yield of slightly in excess of 5%, assuming a 5% capital appreciation on equities • Increase net invested funds to around $18 billion by 31 December 2006 from strong cash flow and acquisitions •
Slide 14: Note on currency and IFRS restatement
Note: $ represented as A$ throughout unless otherwise stated Comparative numbers for the year ended 31 December 2004 have been restated under Australian equivalents to IFRS 13
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