Insurance Australia Group Paul Driessen Head Actuary, Personal Injury

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Insurance Australia GroupPaul DriessenHead
Actuary, Personal Injury

• Presentation to Australian National University
  School of Finance Applied Statistics
• 14 August 2003

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Important information

• The information in this presentation is an
  overview and does not contain all information
  necessary to an investment decision.
• Any pro forma financial information is intended
  for informational purposes only, and does not
  purport to be indicative of the results that
  actually would have been obtained or the
  financial position that actually would have
  existed during and for the periods presented, and
  is not necessarily indicative of Insurance
  Australia Group Limiteds (IAGs) operating
  results or financial position to be expected in
  future periods.
• The information contained in this presentation
  has been prepared in good faith by IAG. No
  representation or warranty, express or implied,
  is made as to the accuracy, adequacy or
  reliability of any statements, estimates or
  opinions or other information contained in this
  presentation. To the maximum extent permitted by
  law, IAG, its directors, officers, employees and
  agents disclaim all liability and responsibility
  (including without limitation any liability
  arising from fault or negligence on the part of
  IAG, its directors, officers, employees and
  agents) for any direct or indirect loss or damage
  which may be suffered by any recipient through
  use of or reliance on anything contained in or
  omitted from this presentation. In making an
  investment decision, investors must rely on their
  own examination of IAG, including the merits and
  risks involved. Investors should consult with
  their own legal, tax, business and/or financial
  advisors in connection with any acquisition of
  securities.
• This presentation is not a prospectus nor an
  offer of shares for subscription or sale in any
  jurisdiction. This presentation does not
  constitute an offer to sell, or a solicitation of
  an offer to buy, securities in the United States
  or to any U.S. person, as defined in Regulation S
  under the U.S. Securities Act of 1933, as amended
  (the U.S. Securities Act). Securities may not
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• Certain statements contained in this presentation
  may constitute forward-looking statements or
  statements about future matters for the
  purposes of section 728(2) of the Corporations
  Act 2001 (Cth) and/or forward-looking
  statements within the meaning of the U.S.
  Private Securities Litigation Reform Act of 1995.
  These forward-looking statements speak only as
  of the date of this presentation. The
  forward-looking statements involve known and
  unknown risks, uncertainties and other factors
  that may cause IAGs actual results, performance
  or achievements to differ materially from any
  future results, performance or achievements
  expressed or implied by these forward-looking
  statements. Neither IAG, nor any other person,
  gives any representation, assurance or guarantee
  that the occurrence of the events expressed or
  implied in any forward looking statements in this
  presentation will actually occur.
• This presentation is being supplied to you solely
  for your information and may not be reproduced or
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  without the prior written permission of IAG.

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Curriculum vitae

• PAUL DRIESSEN (BSc Hons, FIAA)
• Head Actuary, Personal Injury
• Paul Driessen has 13 years experience in the
  general insurance industry, including over 5
  years as a Fellow of the Institute of Actuaries
  of Australia and 4 years with the Insurance
  Australia Group (IAG).
• In his current role, Paul has actuarial
  responsibility for the personal injury operations
  of the Group, which covers workers compensation
  and compulsory third party insurance. Paul is a
  member of the Accident Compensation Committee, a
  sub-committee of the Institute of Actuaries of
  Australia General Insurance Practice Committee.
• Prior to joining IAG he worked for the actuarial
  consulting firm Tillinghast-Towers Perrin,
  including two years work in the USA.

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Australia New Zealands Leading General Insurer

• No.1 position in 7 general insurance markets
• -Motor, Home, CTP, SME Commercial, Workers Comp,
  Consumer Credit, Extended Warranty
• Over 11,000 employees in Australia
• Almost 12 million active policies

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Financial strength

• Ranked among 25 largest Australian listed
  companies
• Owns many leading direct and intermediated brands
• Total gross written premium (GWP) almost 6.0bn
• Capitalisation of 5.8bn as at 30 June 2003
• Total assets of 16.3bn, net assets of 4.1bn
  (31/12/02)
• Claims reserved at 90 probability of sufficiency

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Our History

• Motor vehicle insurer in NSW/ACT in 1925
• Demutualised in July 2000
• Insurance arm listed on ASX in August 2000 as
  NRMA Insurance Group Limited
• Name change in January 2002 to Insurance
  Australia Group Limited (IAG)
• Acquisition of CGU/NZI
• announced October 2002
• finalised January 2003 (cost 1.85bn)
• Now a highly diversified insurance group
• Every Australian state and territory New
  Zealand
• All major lines of business

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Core lines of business

• Home Insurance
• Motor vehicle insurance
• Health Insurance
• Commercial Insurance
• Compulsory Third Party (CTP) Insurance
• Workers Compensation Insurance
• Consumer Credit Insurance
• Extended Warranty Insurance
• Retirement financial advice

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History of growth and diversification

• Note
• FY97 to 1H03 IAG GWP includes all business except
  Inward Reinsurance, which is in run-off.
• Pro-forma GWP is the aggregate of the Groups
  consolidated GWP for half year ended 31 December
  2002, doubled to give and annualised amount
  (3.8bn) and the aggregated GWP for CGU and NZI
  for the year ended 31 December 2002.

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Balanced geographic spread
Source (1) APRA December 2001. (2) CGU for the
year ended 31 December 2001. Fortis GWP has been
annualised.
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Share Price History
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Share Price History (1 year)
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Delivering on our five year strategy announced in
May 2002strategy
Goals
Reinvigorate customer focus
Core operations
Top quartile total shareholder return ROE 13
15 Double gross written premium by FY 2007 to
6.6bn Maintain combined ratio lt 100 Maintain
'AA' category rating
Extend scale in general insurance
Deliver earnings
Build capability
Leverage core capabilities
Investigate pursue
Risk management
Growth/quality earnings
Emerging opportunities
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Enterprise Risk Group Actuary

• Chief Risk Officer and Group Actuary
• Tony Coleman FIA, FIAA, MBA
• Research Development
• Technical research
• Actuarial function
• DFA and capital allocation
• Group Risk Compliance
• Risk management
• Fraud Security Risk

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Research Development

• Personal Lines
• Motor
• Home
• Industry Research
• Commercial Insurance
• Personal Injury
• Workers Compensation
• Compulsory Third Party
• Group Actuarial
• Technical Research

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Research Development

• Diverse staff base (around 100 staff in total)
• Actuarial
• Statistical
• Information Technology
• Other (meteorologists, mathematicians, etc)
• Staff in Sydney Melbourne
• Clear focus on technical/pure research
• Many stakeholders to manage
• IAG Management staff
• IAG Board Committees
• External auditors and consultants
• Regulators (APRA, ASIC, ACCC, MAA, etc)

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Research Development

• Control Cycle
• Pricing and rating
• Reserving and provisioning
• Monitoring experience
• Financial budgets
• Statistical/actuarial modeling and analysis
• Generalised linear models
• Data mining
• Asset/liability modeling
• Technical Research
• Climate change
• Claims analysis
• Customer profitability
• Consistent reporting process
• Results to market every 6 months
• Quarterly/Annual APRA returns
• Industry representation

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Challenges/Market Risks

• Reinsurance failures
• Terrorism
• Eroding consumer regulator confidence
• HIH collapse
• Corporate governance
• Latent liabilities
• Tort law reform (public liability)
• Natural catastrophes
• Future climate change?
• Industry consolidation
• Poor equity markets
• Pricing cycle
• New regulatory requirements
• APRA
• International Accounting Standards
• Financial Services Reform

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Graduates what do we look for?

• Bright, talented, well-rounded graduates
• Good academic results
• Work experience
• Personal achievements
• Extra curricular activities
• Interpersonal and communication skills
• Innovation strong problem solving skills
• Strong computer literacy
• Customer focus, integrity, honesty and teamwork

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Graduates what do we offer?

• Great career opportunities
• Australias leading general insurer
• Variety of work
• Mentoring, development training
• Succession planning leadership training
• Competitive salary packages
• Generous superannuation
• Performance based incentives
• Other benefits
• Continuous learning
• On-the job development plans
• Generous study leave for external courses
  (including IAA exams)

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Questions