Suncorp Group Limited · ASX:SUN
Suncorp — Merger or Acquisition (October 2006)
33 slides from Suncorp's merger presentation, Oct 23, 2006
Slide 1: Announcement of Suncorp and Promina Merger
Announcement of Suncorp and Promina Merger 23 October 2006
Slide 2: Agenda
Agenda Introduction – John Story & Leo Tutt Strategic context – John Mulcahy The combined entity – John Mulcahy Benefits for Promina – Mike Wilkins Transaction details – Chris Skilton Conclusion - John Mulcahy 1
Slide 3: John Story, Chairman, Suncorp
John Story Chairman, Suncorp 2
Slide 4: Promina and Suncorp
4 romiina Dp SUNCORP
Slide 5: Leo Tutt, Chairman, Promina
Leo Tutt Chairman, Promina 4, 4 promina
Slide 6: Endorsement from Promina's Board & Management
Endorsement from Promina’s Board & Management Promina’s Board unanimously recommends the merger proposal, in the absence of a superior offer Merger creates compelling and sustainable shareholder benefits Commitment to creating a diversified financial services business, with superior product of
Slide 7: John Mulcahy, CEO, Suncorp
John Mulcahy CEO, Suncorp 4, 6 promina
Slide 8: Strategic context
Strategic context 2 1 3 Promina 2 Value 1 3 GIO 1 Integration 2 Organic growth 3 Corporate Development Suncorp 2 1 Metway QIDC 1996 2001 2006 7
Slide 9: Transaction summary
Transaction summary Merger via scheme of arrangement Subject to Promina shareholder and regulatory approvals Key conditions in merger implementation agreement – Co-operation of the parties in completing the transaction; – Conditions precedent, including ACCC and Treasurer/APRA approval; – No p
Slide 10: Guiding principles for business model development
Guiding principles for business model development • Pursue a customer led strategy which: - Serves a diverse set of different, distinct client and customer segments Create - Delivers superior customer experiences and outcomes customer - Empowers end to end alignment to deliver desired stakeholder ou
Slide 11: Structure
Structure Suncorp Promina CEO Promina CEO Suncorp Group (John Mulcahy) (Michael Wilkins) General Intermediate Group Retail Banking General Chief People, Intermediated Promina Direct Business Insurance Group General Finance & & Wealth Insurance Financial Technology & General Financial General Banking
Slide 12: The combined entity
The combined entity Over eight million customers Strong positions in each line of business Leading positions in Australia and New Zealand Pro forma market value of $20bn Top 10 ASX 100 company Top 5 financial services provider in Australia and New Zealand 11
Slide 13: Pro forma profit before tax of the enlarged group
Pro forma profit before tax of the enlarged group Profit before tax, 12 months to June 2006 $2.5bn $225m $2.0bn $290m $1.5bn $81m $1,172m $1.0bn $691m $209m $0.5bn $506m $481m $506m $0m Suncorp Promina Pro Forma Banking General Insurance Wealth Management Synergies 12
Slide 14: A portfolio of market-leading brands
A portfolio of market-leading brands Australia NZ Partners Banking General insurance management Wealth Note: RACQ, RAA, RAC and AA are joint ventures with the respective motor clubs in Australia and New Zealand. NTI is also a joint venture 13
Slide 15: General Insurance – improved business mix
General Insurance – improved business mix GWP by class of business Commercial Domestic Other Motor 26% 34% Commercial Motor Commercial 29% Other Domestic 30% 24% Motor 37% Commercial Commercial Motor Motor 7% 4% CTP 8% Home CTP CTP Other Home 13% 20% 21% Personal 17% Home 7% Other 19% Personal 4% Su
Slide 16: Intermediated Distribution channels
GI - Complementary brands Classes of business - Australia Personal insurance Commercial insurance Managed schemes Mainstream Mainstream Distribution channels Direct Specialist Small business Intermediated Mainstream Mainstream Specialist Partners Motor Specialist clubs 15
Slide 17: Wealth management – experience, scale, distribution
Wealth management – experience, scale, distribution Significantly enhanced scale (Total risk in-force annual premiums) Complementary brands $800m $600m $400m $200m $0m AXA Australia Promina/Asteron Zurich Suncorp NAB/MLC BT/Westpac TOWER Pro Forma AMP AIG ING St George MBF CBA MetLife Aviva Source:
Slide 18: Growing market share in New Zealand
Growing market share in New Zealand New Zealand General Insurance Market Share GWP - CY 2005, % 40 Vero Market Share 35 1999 - 19.6% 30 2002 - 20.5% 2005 – 22.6% 25 20 15 10 5 0 Vero Source: Promina estimates and ICNZ statistics 17
Slide 19: Banking – Improved profitability
Banking – Improved profitability Increased scale and resulting cost reductions Remains an integral part of our business Distribution Relationships Continue to compete effectively 18
Slide 20: Right opportunity - right time
Right opportunity - right time Careful, detailed, planned acquisition Clear alignment with Suncorp strategy Best business combination of all available strategic alternatives Business model preserves the best elements from each organisation Combined entity of $20bn market value Brings tog
Slide 21: Mike Wilkins, CEO, Promina
Mike Wilkins CEO, Promina J 20 promina
Slide 22: Benefits for Suncorp and Promina shareholders
Benefits for Suncorp and Promina shareholders Vigorous and dynamic competitor in the Australian and New Zealand market place Potential for superior growth profile, harnessing: – The benefits of a differentiated customer service proposition in General Insurance – Scale benefits afforded by combin
Slide 23: Premium for Promina shareholders is compelling
Premium for Promina shareholders is compelling 33.6 % 28.7 % 1 Month VWAP for both 1 Month VWAP for Promina and Suncorp Promina as at as at 10 October 2006 10 October 2006 and Suncorp last closing price as at 20 October 2006 22
Slide 24: Benefits for Suncorp and Promina customers
Benefits for Suncorp and Promina customers Both companies share a common commitment to a customer led strategy serving distinct customer segments The combined group will continue to build on market leading brands across Australia and New Zealand All of the brands within the combined group have
Slide 25: Benefits for Suncorp and Promina employees
Benefits for Suncorp and Promina employees New business model will be framed around a core group of values such as honesty, respect, trustworthiness, fairness A rewarding and attractive place to work Target continuing high level of employee engagement and commitment Retention strategy has be
Slide 26: Chris Skilton, CFO, Suncorp
Chris Skilton CFO, Suncorp 25
Slide 27: Funding of cash component
Funding of cash component Cash component of approximately $1.9bn is intended to be funded through use of excess capital together with a non-dilutionary pro-rata equity entitlements issue to Suncorp shareholders Pro rata equity entitlements issue to Suncorp shareholders – Fully underwritten – To
Slide 28: Expected net cost savings of $225m per annum
Expected net cost savings of $225m per annum Savings focused around: Cost savings in line with – head office and back office functions relevant benchmarks – information technology 60% – business efficiency – reinsurance 50% Based on detailed bottom-up analysis 40% Savings as % of Promina Austral
Slide 29: John Mulcahy, CEO, Suncorp
John Mulcahy CEO, Suncorp J 28 promina
Slide 30: Transaction timeline
Transaction timeline Announce transaction Prepare documentation Regulatory Court hearing approvals (ACCC, APRA etc) Scheme booklet sent to shareholders Scheme meeting Funding Second court hearing Completion 29
Slide 31: Our aspiration
OUR ASPIRATION: To be the leading customer focused financial services provider in Australia and New Zealand. 30
Slide 32: Announcement of Suncorp and Promina Merger
Announcement of Suncorp and Promina Merger 23 October 2006
Slide 33: Important notice
Important notice The purpose of this Presentation is to provide general information about the proposed merger of Promina Group Limited (Promina) by Suncorp-Metway Limited (Suncorp). It is not a recommendation that any person makes any investment decision in relation to Suncorp, Promina or the combin