#129 March 2007 Insurance Australia Group Limited ABN 60 090 739 923 388 George Street Sydney NSW 2000 Telephone 02 9292 9222 iag.com.au Manager, Company Announcements Office Australian Stock Exchange Limited Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 IAG Insurance Australia Group Dear Sir/Madam INSURANCE AUSTRALIA GROUP LIMITED ('IAG') INVESTOR PRESENTATION ON UK OPERATIONS We enclose a copy of a presentation which is being made to an investor by members of IAG's UK management team today. Yours sincerely lewell Glenn Revell Group Company Secretary Attachment (161 pages) G:\CSCDept\CSCUser\ASX\2007\IAG\Mar\ASX Cover Letter UK Presentation.doc#2Business and UK Market Overview March 2007 equity INSURANCE GROUP Hastings DIRECT IAG Insurance Australia Group#32 Important notice The information contained in these presentations is intended to provide an overview of certain information relating to the businesses operated by Insurance Australia Group Limited ('IAG') in the United Kingdom and Gibraltar and the markets in which those businesses operate. It does not purport to be a complete description of these businesses. The information 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 (any of which may change without notice). 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. The information does not take into account your investment objectives, financial situation or particular needs. In making an investment decision, investors must rely on their own examination of IAG and its operation, including the merits and risks involved, and take independent professional advice in relation to the Information and any action to be taken on the basis of the Information. This presentation is not an offer for subscription, invitation, recommendation or sale with respect to the purchase or sale of any shares in any jurisdiction. The presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United Sates 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 be offered or sold in the United States unless the securities have been registered under the U.S. Securities Act or an exemption from registration is available. 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 IAG's 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, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this presentation will actually occur. In particular, such forward-looking statements are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of IAG. Nothing in this document forms the basis of any contract or commitment, or constitutes investment, legal, tax or other advice. IAG is not licensed to provide financial product advice in relation to an investment in its shares and there is no cooling-off period in relation to any such investment. IAG Insurance Australia Group#4Introduction & Agenda London AM • Market Overview • Overview of the Businesses . Equity - Hastings - Advantage Underwriting Claims Colchester PM John Castagno Neil Utley Keith Charlton Phil Anderson ⚫ Direct Broking • Branch Broking • Tour of the Colchester operation Peter Connell Nick Potts John Castagno IAG Insurance Australia Group#54 Equity Insurance Group equity INSURANCE GROUP IAG Insurance Australia Group#6Business Overview - EIG Underwriting • • UK's 5th largest motor insurer and the largest motorcycle insurer The largest motor syndicate at Lloyd's; s.218 GWP of more than £550m (1,400mAUD) for 2006 38 year track record of unbroken profitability Upper quartile operating ratio of 92.2%* Agricultural 3% PA 2% Household 8% Roadside Rescue 3% Fleet 22% Private car broker 21% 5 Special Risks 20% * Earned claims and expenses against net earned premium • • • Distribution The UK's 7th largest personal lines intermediary business (including ODIS) The largest broker in Northern Ireland Multi-channel distribution - telesales, Internet and high street branches GWP of more than £200m (509mAUD) IAG Insurance Australia Group Road Rescue 4% Other 1% Classic 5% Commercial 13% Private car direct 9% Travel 6% Motorcycles 12% Motorcycles 3% Household 8% Private Car 60%#76 Business and Revenue Model - EIG Approximately 19% of the premium underwritten by s.218 is derived from the Group's own direct and branch distribution IAG Insurance Australia Group Business Owned Distribution Direct Branch 12.6% of ERS Premiums Owned Capacity 64% 3rd Party Capacity (Names) 36% Syndicate 218 (ERS) Motor Business 6.3% of ERS Premiums External Brokers 81.1% of ERS Premiums Revenue Streams • Broking Profits Underwriting . Underwriting profits • Investment Return Syndicate 1208 I (In run-off since 2002) | • Profit Share • Management Fee#87 Equity Red Star IAG Insurance Australia Group#9Acquisition History Acquisitions 1976 Lion/Charter Motor Synd. 495 Acquisition of "Right to Renew" IAG 1978 Kinloch Motor Syndicate 82 1994 Service Motor Syndicate 979 1982 Trinity Motor Syndicate 999 1995 Dominion Insurance Co. 1987 Red Star Motor Syndicate 675 1995 Lion Insurance Co. 1987 Barbican Motor Syndicate 325 1996 UFGI Insurance Co. 1990 Beacon Motor Syndicate 81 1997 East West Insurance Co. 1991 Mitre Motor Syndicate 195 2002 Crowe Motor Syndicate 963 1992 HGP Motor Syndicate 560 2006 1999 Shead Motor Syndicate 866 Legal & General Ins Co- motor policies 80#10Performance against the Market (1) !AG 2003-2005 combined shows Equity with the market leading Combined Ratio Insurance Australia Group Market average = 99.5% RBS Aviva R&SA Zurich 30 25 25 Market Share % 20 20 15 10 equity REDSTAR 5 Co-op AXA ♦ Allianz Fortis◆ Liv Vic NFU Highway Groupama HBOS MMA HSBC Provident Brit 130 120 110 100 90 2003-2005 Combined Ratio % (FSA / GAAP 9 Note: HBOS includes First Alternative from 2005 basis) 80 0 70 70#11Performance against the Market (2) % 30 25 % outperformance by Equity against market Median = 15% over 25 years IAG Insurance Australia Group 20 15 10 5 0 1980 1985 1990 1995 2000 2005 10 10 *2006 assumes a market combined ratio of 106% Source: B&W Deloitte, Equity 2006*#12Claims Development 120 100 % 80 60 40 40 05 11 13 20 20 Motor - Net Incurred loss Ratio Progression 04 03 02 00 01 99 97 96 98 95 IAG Insurance Australia Group 94 + 93 35 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Quarter Quarter 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005#1312 Distribution IAG Insurance Australia Group#14Business Model Customers Distribution channel Manufacturing 13 Note: Percentages reflect 2006 Telephone and Internet insure OVER 257 first direct Ninsure JARDINE LLOYD THOMPSON Inner Seniors 08:00 169 0177 RENAULT insurance Alexander Forbes Direct Marketing Affinity ERS 86% Panel 14% Transfers ERS 52% IAG Insurance Face-to-face equity Motor & Home Insurance Branches Panel 48%#1514 14 Direct Marketing Sinsure insurance meinvented We gumm to beat your car Insurancenewal quotation" Call FREE on 0800 169 0177 We guarantee to beat your cument car insurance renewal quotation insure We guarantee to beat your car insurance renewal quotation!* Save time, effort and money by simply calling us FREE on 0800 169 0177 Direct mail: Renewal dated Re-solicitation Car Insurance insure welcome to Confused.com Car Insurance+ insure Low Cost Insurance Cor Insurance On your can IAG Trance tralia up low cost bike insurance OVER 257 YOU NEED TO CALL US Weer 70 years of jUMÉ SUDONŲ insure 177 Find out how much you could save by calling us.co For a further 10% discount 0800 169 0177 when you buy online wwww.insure.co.uk Advertising: Yellow Pages Specialist press On-line banners You can save up to £96 by switching your car insurance to us! insure £200 Churchil £ 211 Esure The £220 C240 Norwich Union E296 On-line aggregators#1615 Key Affinity Partners LEA Motor Manufacturers ROMEO CHEVROLET SUBARU INSURED Financial Services Other mutual matters SKIPTON FIAT first direct RYANAIR FLY CHEAPER Member Services The Camping and Caravanning Club The friendly MOTOR? HARLEY-DAVIDSON CYCLES RENAULT Insurance MARKET HARBOROUGH BUILDING SOCIETY Traditional values in a changing world bonmarché insurance services TRIUMPH SUZUKI NISSAN KENT reliance BUILDING SOCIETY Alliance Leicester AGE Concer IAG Insurance Australia Group#17Growth of Branch Network 8 16 Profit (£m) 6 150 • + 3 2 100 90 90 IAG Insurance Australia 80 Group 80 40 40 50 50 70 70 60 60 Number of Branches 30 60 20 20 + 10 0 0 2000 2001 2002 2003 2004 2005 2006 EIB ODIS No of Branches Growth in 2003/2005 led by Bennetts and JMW acquisitions (20 and 8 branches respectively) • ODIS will significantly increase scale in 2007 • Low (and certain) acquisition cost Note: Profit is Earnings Before Interest and Tax#1817 Branch Locations NORTHERN IRELAND (17 BRANCHES) BALLYMENA BELFAST (x3) COLERAINE (x2) DUNGIVEN (x2) GLENGORMLEY LISBURN (1) IAG Insurance Australia Group LONDONDERRY (x2) MAGHERAFELT MOIRA NEWTOWNARDS (x2) LURGAN NORTHERN REGION (29 BRANCHES) ALFRETON BELPER (1) BIRSTALL (1) BISHOPS STORTFORD SOUTHERN REGION (30 BRANCHES) BASINGSTOKE BRENTWOOD BOURNEMOUTH BULWELL BURTON BURTON ON TRENT (1) COVENTRY (2) DONCASTER (1) GRANTHAM BRIGHTON BRISTOL GRIMSBY HEANOR (1) CAMBERLEY HINKLEY CHANDLERS FORD (1) CHELTENHAM CIRENCESTER (1) CRAWLEY EXETER FAREHAM KING'S LYNN LEDBURY MALVERN MARKET HARBOROUGH MELTON MEXBOROUGH FRESHWATER FROME NEWBURY POOLE PORTSMOUTH PULBOROUGH RYDE SALISBURY SHAFTESBURY SOUTHAMPTON STROUD SUTTON SWINDON WESTON WINDSOR WORKINGHAM WORTHING YEOVIL (1) MICKLEOVER NEWARK NEWCASTLE OAKHAM RETFORD RUGELEY STONE SUTTON SWAFFHAM WIGSTON (1) Includes Commercial (2) Commercial only (1)#1918 2006 Highlights IAG Insurance Australia Group Direct Broking . Launch of new schemes for first direct, Renault and Alliance & Leicester Development of new online quote and buy sites for Ryanair, first direct, Alliance & Leicester, Skipton Building Society and insure.co.uk . Inclusion of insure.co.uk on confused.com aggregator . • Relocation of Contact Centre to Colchester New business volumes in December exceeded forecast, original budget and highest since March 2005. January 2007 184% up on 2006 Branch Network . • • 21 acquisitions (11 branches; 10 infills) with estimated annualised GWP of £17.8m and 36.9k policies Acquired Open + Direct Insurance Services 52% of Branch GWP with ERS by December 2006 (2002 6.4%) • 14 branches refurbished . All branches rebranded to 'Equity Insurance'#2019 Hastings Direct and Advantage Hastings DIRECT advantage insurance company IAG Insurance Australia Group#21Business Model - Hastings Direct Hastings DIRECT IAG Insurance Australia Group 20 20 Intermediary Distribution Internet 213k Policies 304k Policies Telephone Direct Distribution 548k Policies Hastings Direct Panel 2006 Hannover Advantage 26% 24% Panel 50% Note: Hannover ceased in 2007, we expect Advantage to write the majority of this business Advantage#22Business Model - Advantage IAG Insurance Australia Group 21 24 advantage insurance company UK Administration Hastings DIRECT Direct Distribution (62%) Intermediary Distribution - AA, Budget etc (38%)#23Introduction to Hastings IAG Insurance Australia Group Hastings Insurance Services Limited - a personal lines insurance broker launched in January 1997 . 2 Trading Divisions - Hastings Direct and Peoples Choice (acquired in July 2003) Hastings offers a totally integrated panel solution of over 40 insurers with 60. products, giving the ability to quote widely and competitively Full claims handling for Advantage and other insurers The Company's IBM iSeries 8.30 computer system and Meridian telephone switch have been planned and implemented from new, specifically for Hastings Insurance Services Robust, dedicated data and telephony links are now in place between the three sites, offering resilience and flexibility 22 22#24Key Facts IAG Insurance Australia • 1,417 staff in 3 locations / Contact Centres Bexhill-on-Sea, Leicester and Manchester Group • The Group received just over 4.6 million calls during 2006 (2.5 mill sales calls) • Nearly 900,000 policyholders • The Company administered £200 million gross written premium in 2006 23 23 . • In 2006 turnover increased to £64 million, from £55 million in 2005 Ranked in the top 5 Personal Lines Insurance Intermediaries in the UK by Insurance Times (August 2006)#2524 Highlights and Unique Selling Points IAG Insurance Australia Strong and distinctive brand identity, including Harry and 1066 telephone numbers Hastings was the first insurance provider to validate claims history at point of sale (as opposed to point of claim) using the Claims and Underwriting Exchange Register (CUE) and in January 2003 became the first to go live with CUE PI (Claims and Underwriting Exchange Personal Injury/Illness claims database) Group Hastings DIRECT.COM C Battling to save you money and time online Welcome to Hastings Direct If you're looking for cheaper motores you've come to the right place! Hastings Dinect looks its provide car and motorcycle Insurance panties at the best possible reading Users and check our pros mit to grit sal van, classic car and travel Que Ear Quote im Motorcyle Don't pay too much for your insurance-get your mote Harry Harry Cam Onl HastingsDIRECT.COM Battling to save you money and time online Welcome to Car Insurance FAS C the 0800 015 5982 • New Hastings Direct branded website, launched in September 2006 The site leverages the power of the existing iSeries rating engine and brings together the latest in website architecture - providing maximum tolerance and resilience with built-in scalability to support corporate growth The site is designed around optimum functionality whilst considering the delicate balance between providing the most competitive price and the shortest possible customer journey (a price being obtained after 33 questions)#2625 25 Distribution % Policies Online IAG Insurance Australia Group % Quotes Offline % Quotes Online % Policies Offline 2006 57% 43% 81% 19% 2007 40% 60% 72% 28% (expected) Hastings DIRECT Telephone Private Car Motorcycle Travel Home Commercial Vehicle H 0800 00 1080 Internet Private Car Motorcycle Coming Soon: Travel and Commercial Vehicle Pet#2726 26 Claims IAG Insurance Australia Group#28Claims: Locations & Staff IAG Group Management 42 Manchester AD & TPD 27 FTE'S AD & TPD 436 PI & Litigation - 16 FTE'S P.I. & Litigation 114 Swansea Total 592 27 27 Operations Centre 225 FTE's Brentwood Group 14 FTE's P.I. & Litigation 41 FTE's Colchester Group 23 FTE's P.I. & Litigation 30 FTE's Bexhill Group 5 FTE'S PI & Litigation 27 FTE'S AD & TPD 184 FTE'S#2928 28 People IAG Insurance Australia Group#30Headcount February 2007 was 3,028 The workforce is split 47% to 53% Male/Female respectively The average age of the workforce is 33 years old IAG Insurance Australia Group Our People The average length of service is 4.5 years 29 29#3130 30 Our Behaviours Analytical Commercial Improvement Focus Outperformance Passion Speed IAG Insurance Australia Group#322006 Highlights 31 =1 Strengthening of management team - Richard Brewster - Phil Anderson Strategic owner following the sale to IAG Large Affinity wins - Alliance & Leicester - First Direct - Renault • Launch of the new Insure site / White Label site / Hastings Direct site ⚫ Full roll out of TV adverts featuring 'Harry' Acquisition of ODIS IAG Insurance Australia Group#33UK Market Overview March 2007 IAG Insurance Australia Group#342 Important notice The information contained in these presentations is intended to provide an overview of certain information relating to the businesses operated by Insurance Australia Group Limited ('IAG') in the United Kingdom and Gibraltar and the markets in which those businesses operate. It does not purport to be a complete description of these businesses. The information 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 (any of which may change without notice). 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. The information does not take into account your investment objectives, financial situation or particular needs. In making an investment decision, investors must rely on their own examination of IAG and its operation, including the merits and risks involved, and take independent professional advice in relation to the Information and any action to be taken on the basis of the Information. This presentation is not an offer for subscription, invitation, recommendation or sale with respect to the purchase or sale of any shares in any jurisdiction. The presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United Sates 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 be offered or sold in the United States unless the securities have been registered under the U.S. Securities Act or an exemption from registration is available. 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 IAG's 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, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this presentation will actually occur. In particular, such forward-looking statements are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of IAG. Nothing in this document forms the basis of any contract or commitment, or constitutes investment, legal, tax or other advice. IAG is not licensed to provide financial product advice in relation to an investment in its shares and there is no cooling-off period in relation to any such investment. IAG Insurance Australia Group#35Market Statistics IAG Insurance Australia Group#36The UK Car Parc There are over 30 million cars on the road in the UK The rate of growth in cars on the road over the past five years is 9.7% 72% of all households own one or more cars IAG Insurance Australia Group By 2011 it is estimated that the will be 33.6m cars on the road but the adult population will only grow by 3.5% Volume 18,596,072 19,034,744 19,470,944 19,948,475 20,655,557 21,543,079 22,500,296 23, 123, 196 23,351,210 Year 4 Source: Society of Motor Manufacturers and Traders 2006, Mintel 2006 23,640,664 24,038,997 24,470,962 24,962,263 25,547,607 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 26,318,329 27,010,437 27,539,160 27,959,691 28,604,238 29,320,899 29,895,832 30,267,204 30,674,000#37The UK Motorist • • • 32 million people in the UK hold driving licences - Prevalence is among 35 – 64 year olds Number of licence holders under 30 has been declining, partly because: Introduction of the theory test Economics of running a car at younger ages 100% • As a result of the ageing population, the most significant growth is in: Males over 70 (up 13%) Females 60-69 (up 11%) 5 Source: Mintel 2006 Male Licence Holders UK 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1992 2000 2002 2004 Female Licence Holders UK 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1992 2000 2002 2004 IAG Insurance Australia Group 70 plus 60 to 69 50 to 59 40 to 49 30 to 39 21 to 29 17 to 20 70 plus 60 to 69 50 to 59 40 to 49 30 to 39 21 to 29 17 to 20#386 The Age of our Cars Effectively half the cars on the road are less than six years old IAG Insurance Australia Group 2004-2002 26.2% 2001-1999 1998-1996 1995-1993 Pre 1992 23.3% 20.3% 15.5% 14.6% 60 7,901,719 Less than three years old 7,011,672 Three to six years old Source: Society of Motor Manufacturers and Traders 2006 6,118,064 Six to nine years old 4,663,549 Nine to 12 years old 4,394,708 More than √2 years old C)#39The Type Of Cars We Buy Those increasing market share between 1996 and 2005: IAG Insurance Australia Group Minis and Super minis now make up over 60% of all new registrations but currently only 31% of the entire market • . - SUVs and multi purpose vehicles have each at least doubled market share but: . Are still under 10% each . SUV sales started to slide in 2006 due to 'green' pressures Specialist sports cars have marginally increased Mid sized and executive cars have lost market share Manufacturers leading the charge to develop lower emission vehicles are Honda, Toyota, Renault and Hyundai - VW, General Motors and Ford are lagging behind 7 Source: Society of Motor Manufacturers and Traders 2006#40Fleet and Commercial Vehicles Company cars make up 36.3% of the commercial market IAG Insurance Australia Group Light goods vehicles make up 40.9% of the market and has shown the most significant growth New fleet registrations have been rising each year from just above 1m in 2000 to 1.184m in 2005 New commercial vehicle registrations have risen year-on-year from 256,869 in 1996 to 385,969 in 2005 80 7,000 6,000 5,000- 4,000- 3,000- 2,000- 1,000- 0. 2000 2001 2002 2003 2004 Other vehicles Agricultural vehicles Buses and coaches □ Goods Light goods Taxis Company cars Source: Datamonitor analysis of DfT figures 2005, Society of Motor Manufacturers and Retailers 2006#41Motorcycles • • • • • 1.2 million motorcycles, scooters and mopeds licensed in the UK but 1.1m insured units Scooters/Mopeds and larger bikes are on the increase Five times more likely to be an additional mode of transport in a household 70% are ridden by those in the family life stages (30-59) Government strategy to reduce Bike fatalities by 40% by 2010. Two key initiatives are: Introducing a register of accredited post test trainers in 2007 to assist in advanced driving skills Have more stringent bike licensing by 2011 000s 1400 1200 1000 800 600 400 200- 9 Source: DfT . Bikes over 125cc will not be allowed to be ridden before age 19 . Large bikes will not be allowed to be ridden before age 24 Motorcycle stock by engine size, cc 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 IAG Insurance Australia Group Over 1,000 ■■■701-1,000 501-750 151-500 50-100 Less than 50#4210 10 • • Trends Environmental interest - Manufacturers have reduced emissions in most segments Consumers are opting for mini or super mini cars Hybrids are starting to appear and are being encouraged by exemption from Congestion Charging in London The cost of motoring in the UK - Additional taxation through road usage charging - Diesel registrations have 0 increased 144% since 1996 -5% Diesel registrations in the fleet market have increased by 155% -10% Time Inner city congestion has seen metropolitan growth of scooters/mopeds -15% -20% -25% 5% 10% Mini . Telematics IAG Insurance Australia Group Developments in telematics are being used for pay-as- you-drive insurance and commercial fleet management and premium discounts Reductions in CO2 Emissions by Segment 1997-2005 Supermini Lower Medium Upper Medium Executive Luxury Sports Dual Purpose- 4x4s/SUVs MPV#4311 Market Structure IAG Insurance Australia Group#44Motor insurance market · Mature and competitive market Total Motor GWP approx. £13bn in 2005 IAG Insurance Australia Group Private Motor insurance accounts for the largest percentage of total motor GWP The top 5 insurers controlled more than 65% of premiums earned in 2005 Motor GWP by sector Fleet, 17.0% Commercial Vehicle, 9.8% Motorcycle, 1.1% 12 Source: Datamonitor and FSA Returns Rest of the market, 34.6% Top 10 Motor Insurers RBS, 27.6% Private, 72.0% Equity, 5.4% Zurich, 9.1% R&SA, 11.3% Norwich Union, 12.1#45Private Motor Insurance • Private motor market was worth £9.224bn GWP in 2005 • Growth of 3.7% over the period 2000 - 2005 . IAG Insurance Australia Group This was driven by growth in comprehensive cover as non comprehensive cover remained relatively static 10,000 9,000 8,000- Private Motor Market Growth 2000-2005 7,000- 6,000 5,000 4,000 3,000 2,000 1,000 0 2000 2001 2002 2003 2004 2005 13 Source: Datamonitor Non-comprehensive Comprehensive#4614 Fleet Insurance • . • Fleet market saw 1.4% growth in 2005 to £2.24bn GWP The top 3 insurers - R&SA, Norwich Union and Zurich - share 59% of the market Predominantly it is distributed by brokers Leading brokers include: - Aon - - - Marsh Willis HSBC Towergate - THB - RL Davison - Smart & Cook - Giles - Heath Lambert - Jelf Source: Datamonitor Fleet Market Share 2005 IAG Insurance Australia Group Royal & SunAlliance 24% Others Equity 16% 4% HSBC 1% Groupama 1% Highway 2% NIG 2% Brit 2% AXA 4% Allianz 9% Zurich 15% Norwich Union 20%#4715 Commercial Vehicle Insurance • Commercial vehicle market was worth £1.62bn GWP in 2005 • NFU Mutual was the leading . provider at £175.6m GWP Norwich Union's market share has steadily decreased from 25% since 2000 Of the top ten only R&SA and Axa showed significant year-on-year GWP growth - 43.7% and 28.8% respectively Source: Datamonitor IAG Insurance Australia Commercial Vehicle Market Share 2005 Group Others 17% NFU Mutual 15% Equity 7% NIG 4% Tradex 5% AXA 5% Highway CIS Royal & 5% 5% SunAlliance 10% QBE 14% Norwich Union 13%#4816 Motorcycle Insurance • • • • • Motorcycle insurance market was worth £187m GWP in 2005 Equity Red Star had nearly 30% at £55m Nearest competitor is Norwich Union at £32m New entrants to the market are rare but EBike entered in 2005 Competitive pressure kept growth low in 2005 at 2.5% but 2004 saw an overall decrease by c. 6.2% Distribution remains strongly through specialist brokers, manufacturers and dealers Motorcycle Insurance Market Share 2005 Groupama HSBC CIS Other 2% 1.2%/4.5% 3.3% Landmark 5.1% Highway 7.2% AXA 8.3% Royal & SunAlliance 9.0% NIG 12.9% Equity Red Star 29.4% Norwich Union 17.1% IAG Insurance Australia Group Source: Datamonitor#4917 Pricing movement The cost of an average car insurance premium rose sharply over the last quarter of 2006 to its highest ever level The average quoted premium rose by 4.35% to £805.70 (up 1.24% over the previous quarter) • Premiums have risen 5.7% year-on-year The trend over the last quarter is supported by the RBS Group with Tesco, Direct Line and Churchill all raising their prices since August 2006 and sharp rises in the last quarter AA British Insurance Premium Index Market average trends since 1994 230.00 220.00 210.00 200.00 190.00 180.00 170.00 160.00 150.00 140.00 130.00 120.00 110.00 100.00 H 90.00 80.00 70.00 60.00 Jul-94 Oct-94- Jan-95 - Apr-95 Jul-95 - Oct-95- Jan-96- Apr-96 Jul-96- Oct-96- Jan-97 Apr-97 Jul-97- Oct-97- Jan-98 - 1 Buildings Contents Comprehensive Non-Comprehensive Apr-06 -90-Inr Oct-06 IAG Insurance Australia Group#50Market Performance Combined Ratio and Market Share Market average = 99.5% RBS Aviva R&SA Zurich 30 50 25 25 IAG Insurance Australia Group Market Share % 20 20 15 10 equity REDSTAR 5 Co-op AXA ♦ Allianz Fortis◆ Liv Vic NFU Highway Groupama HBOS MMA HSBC Provident Brit 130 120 110 100 90 2003-2005 Combined Ratio % (FSA / GAAP 18 Note: HBOS includes First Alternative from 2005 basis) 80 0 70 70#51Major Insurance Groups/Players Retail NORWICH UNION RAC Aviva an AVIVA company RBSI direct line privilege Broker NORWICH UNION an AVIVA company nig finsure Affinity Partner NORWICH UNION an AVIVA company Uki PARTNERSHIPS IAG Insurance Australia Group R&SA MORE TH>NⓇ ROYAL & ROYAL & SUNALLIANCE SUNALLIANCE AXA esure.com HBOS swiftcover.com Wheels AXA A FIRST ALTERNATIVE HALIFAX Cornhill Pet the pet people Allianz Direct Zurich IAG Z ZURICH Hastings DIRECT insure open + direct insurance Diamond 19 Admiral .co.uk ADMIRAL Confused.com GLADIATOR part of part of the Admiral Group Bell Allianz Cornhill z ZURICH equity REDSTAR advantage insurance company AYA Allianz Cornhill Z ZURICH ® equity INSURANCE BROKERS#52Royal Bank of Scotland Insurance FACTS • £5.2bn GWP in 2005 Accounts for 20% of RBS income 91% of business is personal lines Multi-brand strategy Also owns Tracker, a vehicle tracking device provider 12.2% of total General Insurance Market Sells motor insurance in Spain, Italy and Germany and has 2 million policyholders in these countries Combined ratio of 104.9% on motor insurance in 2005 Retail DIRECT LINE churchill privilege TRACKER www.TRACKER.co.uk RBS brand strategy XRBS The Royal Bank of Scotland Group IAG Insurance Australia Group Broker nig finsure Devitt INSURANCE BROKERS RBS The of Sc Business Insurance Service Partner Uki PARTNERSHIPS Green Flag 0000 Inter Group Insurance Services Limited 20 20 Source: Datamonitor 2006#53Direct Line FACTS • £1.68bn GWP in 2005 - - £1.167bn GWP in 2005 from motor insurance £296m in 2005 from household insurance Seventh largest general insurer on its own Direct to consumer brand through above the line and below the line marketing Used to be price champion brand Latest positioning is about giving better value 21 24 Source: Datamonitor 2006 IAG Insurance Split of book 2005 Australia Group Travel Personal pecuniary loss 11.7% 1.1% Household 17.6% direct line Private motor 69.6%#54Churchill FACTS £1.23bn GWP in 2005 - £622m GWP from motor insurance in 2005 22 22 - £541m GWP from household insurance in 2005 Acquired by RBS in 2003 Direct to consumer brand through above the line and below the line marketing Major above the line campaign in force - Challenge Churchill Source: Datamonitor 2006 Split of book 2005 Personal pecuniary loss 5.3% Private motor 50.6% IAG Insurance Australia Group Household 44.1%#55UK Insurance FACTS £1.35bn GWP in 2005 - £776m GWP from motor insurance in 2005 - £203m GWP from household insurance in 2005 Operates through affinities, such as Tesco Personal Finance, Nationwide and Saab Uki PARTNERSHIPS TESCO Finance & Insurance 23 23 Source: Datamonitor 2006 Split of book 2005 Travel 45% Personal pecuniary loss Household 15.0% 232% Private motor 57.3% IAG Insurance Australia Group#5624 24 Norwich Union FACTS £6.1bn net written premium in 2005 64.9% of business is personal lines Combined ratio of 92% in H1, 2006 Owns RAC brand with c. 2.2m motor breakdown customers Distributes direct, through corporate partners (Abbey, ASDA, Saga, Lloyds TSB) and brokers Biggest advertising spend in general insurance c. £35m in 2005 Norwich Union Direct has a marketing platform of Quote Me Happy Leading innovation through Pay As You Drive Insurance NORWICH UNION an AVIVA company Estimated share of personal distribution Direct: 25% IAG Insurance Australia Group 100% 90% 80% 70% 60% Intermediaries: 29% 50% 40% 30% 20% Corporate Partners: 45% 10% 0% 2001 2005 Split of advertising spend 2005 Home emergency, 4.4% Ins range, 3.1% Pet, 0.8% Travel, 5.3% Health, 7.3% Motor, 52.4% Home, 26.7% Source: Datamonitor 2006#57Royal & Sun Alliance FACTS International general insurance group that derives 50% of premium income from the UK Direct, broker and affinity distribution (Halfords, Land Rover, Volvo) Direct brand is More Th>n that wrote £432m NWP in 2005. Advertising spend for More Th>n in 2005 was £22.7m MORE TH>N° Split of advertising spend in 2005 General/combined range 5.9 % Pet 2.8% IAG Insurance Australia Group ROYAL & SUNALLIANCE R&SA Split of book 2005 Other 4.2% Home 18.9% Motor 72.4% 25 25 Source: Datamonitor 2006 Household 44.1% Motor 51.6%#58Allianz FACTS Allianz Group showed a £3 billion net income in 2005 Personal lines is 33% of business Pecuniary loss book larger than motor and household combined Expanding motor proposition into vintage and veteran cars Allianz ⑪Cornhill Allianz Cornhill Split of book 2005 Legal Expenses, 27.5m Allianz Cornhill Commercial Allianz Cornhill Personal Allianz Cornhill Speciality Animal Cornhill Direct, 72.8m Schemes, Health, 113.1m 150.9m 26 26 Source: Datamonitor 2006 Cornhill Direct Personal Lines Broker Animal Health Schemes Personal Lines Broker, 193.7m Legal Expenses Allianz Cornhill Speciality Allianz Cornhill Personal IAG Insurance Australia Group#59AXA FACTS UK and Ireland contributed 23% of E18.9bn general insurance earnings of the group in 2005 £1.07bn GWP in UK and Ireland in 2005 in personal lines and £1.365bn in commercial lines Distributes through corporate partners (Capital One, Egg, Portman Building Society), intermediaries and direct in the SME market Closed down direct to consumer operations 60% of business is through intermediaries Recently acquired Swiftcover - an on-line provider IAG Insurance Australia Group AXA swiftcover.com 27 27 Source: Datamonitor 2006 Split of book 2005 Personal: 43.9% Commercial: 56.1%#6028 HBOS FACTS Owns St Andrews, ESure, Sheila's Wheels and First Alternative £1.977bn GWP in 2005 St Andrews is the largest underwriter in the Group £327m GWP from motor insurance in 2005 £507m GWP from household insurance in 2005 ESure's motor insurance book was £237m GWP in 2005 and household insurance was £36.9m Distributes through some major corporate partners (Sainsbury's) Other Split of book 2005 Gross written premium, 2005 ₤m A FIRST ALTERNATIVE Source: Datamonitor 2006 Motor Repayment (Third party) Household Repayment (Group business) HBOSple IAG Insurance Australia Group Shetlas Wheels 0 100 200 300 400 500 600 esure HALIFAX#61Zurich FACTS £2.6bn GWP in UK in 2005 (£848.6m in personal lines and £1.773bn in commercial lines) - £442m GWP from private motor insurance in 2005 £367.7m GWP from household insurance in 2005 Motor book has been growing at 1.1% compound since 2000 but private motor book has decreased by 3.8% Heavily intermediated business and a public sector focus with a cautious approach to growing direct operations Advertising theme 'Because change happenz' IAG Insurance Australia Group Z ZURICH Intensifying market competition Increased marketing spend Strategy Our response ■ Remain committed to all three channels - Leverage leading broker position - Explot proven partnership capabilities Split of book 2005 _ - Growdirect in profitable segments Fine margins in partnerships ■ Move to customer centric approach • Enhance insight and analytical capabilities Total commercial 67.6% Ongoing broker consolidation ■ Wider product range/cross selling 29 29 Source: Datamonitor 2006 • Exploit Zurich pan-European opportunities Total personal 32.4%#6230 30 0 AA 20 2005 Brokerage (£m) 40 Swinton (incl Budget branches) 60 80 IAG (UK) 120 100 Budget (ex. Branches) 160 140 Endsleigh 200 180 Top UK Personal Lines Brokers IAG Insurance Australia Group RIAS Kwik-Fit ....... A Plan Group • • The combined UK business is now the 3rd largest personal lines broker in the UK Previously 5th (Hastings), 8th (Equity) and 15th (ODIS) Source: Insurance Times Top 50 Brokers (July 2006) Carole Nash BDML Allen & Allen Highway Retail Outright#63Broker Distribution Direct (Telephone + Internet) Hastings DIRECT insure insurance rented Face to Face Direct and Face to Face equity INSURANCE BROKERS open + direct insurance IAG Affinity Insurance Australia Partners Group equity INSURANCE BROKERS 31 34 the AA.com A M a-plan Direct Kwik-Fit INSURANCE ◆RIAS Insurance for the over 50s GROUP LTD MyMotor Quote.com ma masterquole Highway Insurance AUTO direct GET IT MIGHT FIRST a-plan SMART PEOPLE Swinton BUDGET YYY ENDSLEIGH CAROLE NASH SMART PEOPLE BUDGET Junction ENDSLEIGH BD CN CAROLE NASH CONNECT Waring gether Coueting people) OutRight make insurance your next new product#64• • • Distribution ownership £418.6m of Brokerage (52% of largest 15 personal lines brokers) is now owned and controlled by Insurers Remainder of personal lines broking market still largely independently owned Commercial lines remains largely independent (but Axa acquired Stuart Alexander & Layton Blackham on 16 January 2007; combined GWP £200m) IAG Insurance Australia Group Swinton Insurer Owned EIBL/Hastings/ODIS Endsleigh RIAS Carole Nash Highway Retail Outright Non-Insurer Owned MMA AA IAG Zurich Fortis Groupama Highway Fortis Budget Kwik-Fit A Plan Group BDML Allen & Allen CVC/Pemira Capricorn/Mgt ΡΑΙ Independent Capita Independent 32 32 Source: Insurance Times Top 50 Brokers (July 2006)#65AA FACTS . Largest motor breakdown organisation in the UK c. 15 million members £188.6m in brokerage Broker proposition that behaves like a direct writer Significant above the line marketing spend of £12.3m on car insurance in 2005 IAG Insurance Australia Group the AA.com 33 33 Source: Datamonitor 2006#66Swinton/Budget FACTS • Largest chain of brokers in the UK - 260 branches Owned by MMA Swinton purchased Budget branches only £151.8m brokerage from Swinton and Budget branches £2m advertising spend in 2005 Budget (non branch) brokerage in 2005 was £88.4m IAG Insurance Australia Group - Strong affinity deals through Junction brand (post Office and M&S) SMART PEOPLE Swinton BUDGET 34 Source: Insurance Times Top 50 Brokers July 2006, Equity#6735 Endsleigh FACTS Originally positioned as a student specialist broker founded by the National Union of Students £60.1m in brokerage Now owned by Zurich Education union affinities (NASUWT and USU), NUMAST and Association of Optometrists, as well as direct to consumers ENDSLEIGH IAG Insurance Australia Group Source: Datamonitor 2006, Endsleigh#68Empty#69Kwikfit FACTS Launched in 1995 by leading tyre and exhaust fitting service £41.3m in brokerage 300,000 policyholders Kwikfit has been private equity owned since 1999 (PAI Partners in September 2005 from CVC) IAG Insurance Australia Group Kwik-Fit INSURANCE 332 37 Source: Datamonitor 2006, Kwikfit#7038 A-Plan FACTS Independent leading personal lines and motorcycle specialist £33m in brokerage in 2005 54 branches in the South of England - within a 100 mile radius of Oxford Branch and telephone driven marketing Focused on mid to high net worth market On-line quotes through Motorcycle Direct A a-plan Insurance MotorCycle Direct IAG Insurance Australia Group Source: Insurance Times Top 50 Brokers July 2006, Equity, A-Plan#7139 Allen & Allen FACTS Specialist in performance cars and higher risk £18.3m in brokerage Hyperformance, Prestige and MyMotorQuote.com brands Telephone and Internet based Began trading in 1968 and trading as Allen & Allen in 1975 the A A GROUP LTD MyMotorQuote.com Source: Insurance Times Top 50 Brokers July 2006, Equity, Allen & Allen IAG Insurance Australia Group#72Carole Nash FACTS Motorcycle insurance specialism £25.3m in brokerage Recently purchased by Groupama On-line and telephone based service 40 40 (CN) CAROLE NASH Source: Insurance Times Top 50 Brokers July 2006, Equity, Datamonitor 2006 IAG Insurance Australia Group#7341 BDML FACTS Intermediary and third party administrator Used by Norwich Union (and it's partners Asda and Barclays) and RAC £19.9m in brokerage Owned by Capita Administers over 500,000 policies Own brand to consumers through masterquote.co.uk BD ML CONNECT Warking together, Connecting people ma masterquote Source: Insurance Times Top 50 Brokers July 2006, BDML IAG Insurance Australia Group#74Highway FACTS Stock exchange listed £16.5m in brokerage 600,000 customers Marketed predominantly through intermediaries 42 42 Source: Highway Highway Insurance IAG Insurance Australia Group#75Outright FACTS £14m in brokerage Owned by Fortis Manages schemes, books of business and operates through AutoDirect brand OutRight make insurance AUTO direct GET IT RIGHT FIRST TIME your next new product 33 43 Source: Insurance Times Top 50 Brokers July 2006, Outright IAG Insurance Australia Group#7644 Market Developments IAG Insurance Australia Group#77• • How Consumers Buy IAG Insurance Australia The internet is now the second most common way of arranging motor insurance Group Consumers also use the internet as a research tool and therefore this platform plays a more important role than is indicated simply by sales figures Datamonitor predict that 29% of all motor insurance will be sold online by 2009 100% 80% 60% 40% 20% 0% 1999 2001 2003 2004 2005 45 Source: Datamonitor 2006 Internet Post Face-to-face Phone#78The broker of the future 17% of motor insurance sales now on-line and rising • 8.1% of household insurance sales now on-line and rising Growth of this method of research and purchase has led to the growth of the aggregators • Price is cited as the most influential factor in the purchase of motor insurance Aggregators are becoming the 'broker of the future' The share of new internet sales by aggregators in 2006 is estimated to be 25% Traffic is generated through: - Heavy above the line spend Good natural search positioning Good sponsored search positions on key words such as 'Cheap Car insurance' moneysupermarket.com the price comparison site [R] Quote DETECTIVE IAG Insurance Australia Group 46 46 iN insurancewide.com COMPARETHEMARKET.COM™ THE AUTOMATIC WAY TO FIND CHEAPER INSURANCE gocompare.com welcome to ✓ Confused.c U Source: Datamonitor 2006 uSwitch.com#79Telematics and insurance Norwich Union Pay As You Drive IAG Insurance Australia Group • Two products: Young drivers (18-23); Low mileage drivers (24-65) Mobile phone style bills with: · -A tariff for each type of road and price per mile that increases for after 11 pm and in the morning rush hour. -A tariff per daily mileage for driving abroad. An estimate is quoted at the outset based on the mileage data you provide. Upfront cost is £50 installation fee (done by sister company RAC) and part of the base premium. Charge also made to take the blackbox out. Monthly charges comprise a portion of the rest of the base premium, plus usage premium and any other flat rate charges. There is an optional £1.99 fee per month for itemised billing. Other add-ons are SatNav (£9.99 pm) and traffic camera alert (£9.99 pm/£16.99 pm for both options combined). 47 17 NORWICH UNION an AVIVA company "Pay As You Drive" ™ insurance#8048 88 Telematics and insurance IAG Insurance Australia Group More Th>n DriveTime • • • . Aimed at young drivers (18-25). Looking for 2,000 for pilot. Offer is a 40% discount for not driving between 11 pm and 6 am. Any mileage recorded between these hours incurs an automatic £25 additional charge for each night that it happens (i.e. 4 nights a month would be £100 additional charge). Charge applies from 11.01 pm or before 5.59 am. Policy would expire on the renewal date after the 25th birthday of policyholder. Policyholder can track the account through a secure website. Blackbox is usually installed behind the dashboard and is installed free of charge. Cover rules are more restrictive than NU as NU doesn't restrict driving hours but charges a higher tariff. DRIVETIME™ FROM MORE TH>N#81Ecoinsurance • . introducing the UK's first eco-friendly car insurance ecoinsurance for cars offset 20% of your car's CO2 emissions* at no extra cost to you IAG Insurance Australia Group Offsets 20% of the car's CO2 emissions by investing in projects like reforestation, renewable energy sources and third world education schemes 10% discount available for cars in tax band A - those that emit less than 100g of CO2 per kilometre - Eco-friendly repair network – they pay appointed repairers more than any other insurance provider to ensure they recycle materials like used oil and old bumpers. 49 49 CIS COOPERATIVE INSURANCE#8250 50 Working with Aggregators Utilising the marketing spend of the aggregators to generate business for insure.co.uk as part of the panel in motor and household insurance • Live on screen-scrape technology with: - - - - Insurancewide Confused Moneysupermarket Quote detective In screen-scrape build phase with: - QuoteZone Several partners in the pipeline IAG Insurance Australia Group#83Telematics and Insurance Investigating a joint venture with a producer of the blackbox technology Currently developing: - Proposal for the joint venture model - Product requirements - - - - - 200 car market research project with existing renewing customers to start in May 2007 Evaluating marketing propositions Motor manufacturer opportunities Europcar rental fleet (following a 100 car test by Europcar that is starting) IAG Insurance Australia Group Direct to consumer proposition following market research project - good driving behaviour proposition • • 51 54#84• Evaluating the market size • · IAG Insurance Australia Group Looking at and weighting the potential 'green' opportunities to be factored in Starting to generate 'green' motoring attitudinal research to create media stories Developing the proposition and business case for approval Eco-insurance 52 52#85Equity Red Star 29 March 2007 equity REDSTAR#862 Important notice equity REDSTAR The information contained in these presentations is intended to provide an overview of certain information relating to the businesses operated by Insurance Australia Group Limited ('IAG') in the United Kingdom and Gibraltar and the markets in which those businesses operate. It does not purport to be a complete description of these businesses. The information 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 (any of which may change without notice). 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. The information does not take into account your investment objectives, financial situation or particular needs. In making an investment decision, investors must rely on their own examination of IAG and its operation, including the merits and risks involved, and take independent professional advice in relation to the Information and any action to be taken on the basis of the Information. This presentation is not an offer for subscription, invitation, recommendation or sale with respect to the purchase or sale of any shares in any jurisdiction. The presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United Sates 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 be offered or sold in the United States unless the securities have been registered under the U.S. Securities Act or an exemption from registration is available. 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 IAG's 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, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this presentation will actually occur. In particular, such forward-looking statements are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of IAG. Nothing in this document forms the basis of any contract or commitment, or constitutes investment, legal, tax or other advice. IAG is not licensed to provide financial product advice in relation to an investment in its shares and there is no cooling-off period in relation to any such investment.#87Agenda • • • ERS today Acquisition History Key Personnel • Locations • . Underwriting Control Structure Breakdown of Business 3 • Specialist areas • Broker Sales & Marketing equity REDSTAR#884 Equity Red Star Equity Red Star – the origins • • • - Equity Motor Policies was established in 1946 underwriting less than £200,000 annual income. Until the "merger" with Red Star in 1987, annual income was c £20m. Following the creation of Equity Red Star income moved to over £40m. Income was close to £100m at the start of the 1990's and a combination of acquisition and organic growth saw significant growth from there. Equity Red Star - today • Gross Written Premium of more than £500m • The 5th largest motor insurer in the UK and the largest Lloyd's motor syndicate • The largest motorcycle insurer in the UK • A track record of over 38 years of unbroken profit and a market leading operating ratio equity REDSTAR#895 Acquisition History Acquisitions Acquisition of "Right to Renew" equity REDSTAR 1976 Lion/Charter Motor Synd. 495 1978 Kinloch Motor Syndicate 82 1994 Service Motor Syndicate 979 1982 Trinity Motor Syndicate 999 1995 Dominion Insurance Co. 1987 Red Star Motor Syndicate 675 1995 Lion Insurance Co. 1987 Barbican Motor Syndicate 325 1996 UF GI Insurance Co. 1990 Beacon Motor Syndicate 81 1997 East West Insurance Co. 1991 Mitre Motor Syndicate 195 2002 Crowe Motor Syndicate 963 1992 HGP Motor Syndicate 560 2006 1999 Shead Motor Syndicate 866 Legal & General Ins Co - motor policies#906 Key Underwriting Personnel Volume Underwriting Keith Charlton Class Underwriters Stuart Heath Non Motor Andrew Hill Motorcycle Alan Partlett Private Car Andy Cook Ro Hart Direct Motor Breakdown Bespoke Underwriting John Josiah equity REDSTAR Class Underwriters Sally Cole Steve Nethercoat Mike O'Mahoney Malcolm Cawsey Special Risks Fleet (Provincial) Fleet (London Mkt) Agricultural Underwriting support Technical & Audit Ken Lambert David Cole Gavin Ewart Derek Perry Reinsurance Statistics Projects Sales & Marketing David Grant Elaine Jewitt IT Liaison#917 Key Underwriters join through acquisition equity REDSTAR HGP Motor Syndicate Shead Motor Syndicate Dominion Insurance Co. - Ken Lambert Deputy Underwriter Alan Partlett Private Car Class Underwriter - Andy Hill Motor Cycle Class Underwriter Mike O'Mahoney London Market Fleet - John Josiah, Joint Underwriter Steve Nethercoat Provincial Broker Fleet, Malcolm Cawsey Agricultural Class Underwriter Elaine Jewitt IT Liaison East West Insurance Co. - Derek Perry, Projects Crowe Motor Syndicate David Cole, Reinsurance#92Locations Brentwood • Head Office Motor Underwriting Accident & Health equity REDSTAR • NI P Car Underwriting • Household Underwriting (Broker Carrickfergus 8 India • Back office processing support • • Services) Breakdown Recovery Sales & Marketing Colchester Direct Referral Underwriters Reinsurance London • London Market Fleet Non Motor#939 Underwriting Control Structure "Auditor" Underwriting Division Auditor Audit carried out Auditor reports to Report sent to Individual Underwriting within the Department Class Underwriter Class Underwriter Quality Assurance Team Quarterly Underwriting within each Division Deputy Underwriter Internal Audit Agreed Programme Audit Committee Underwriter Deputy Underwriter Class Underwriter Audit Committee Underwriter Deputy Underwriter Class Underwriter ISO 2000 Six Monthly Quality Audit Independent Underwriter Deputy Underwriter Class Underwriter All Underwriters have detailed Underwriting Authority Quality Assurance Team report to Compliance and quarterly to 218 Management Committee and ESML Board equity REDSTAR#9410 Breakdown of Business • • . Broker Private Car Direct Motor Cycle . Fleet • Special Risks · Agricultural Vehicle . Household • Personal Accident • Motor Breakdown Agricultural 3% PA 2% Household 8% Private car broker 21% Roadside Rescue 3% Fleet 22% Special Risks 20% equity REDSTAR Private car direct 9% Motorcycles 12%#9511 Specialist Areas From learner bike to Super Sports equity REDSTAR ERS is the largest motor cycle insurer in the UK In 2006 Equity Red Star insured nearly one in every three motor cycles in the UK ERS cover the whole range of motor cycles from "Learner Bike" to "Super Sports Bike" . ERS were the first UK insurer to introduce group rating for motor cycles#9612 Specialist Areas Fleet - Relationship driven On larger fleets, an ERS underwriter will visit the policyholder regularly creating a three way relationship with the Broker m.real This approach helps establish long term relationships OS TRANSPORT BOOG DOCUS GROUP DODD'S TRANSPORT Dodds Transport has been insured with us 60 years The Chief Executive of Prestons of Potto was a long time Chairman of the haulage trade body (RHA) and a good reference point for ERS PRESTONS SCANIA Relationships drive 80% plus retention rate LER QUALITY 0:00 W equity REDSTAR#9713 Specialist Areas Special Risks mix of business equity REDSTAR Motor Trade 4% Taxi Specialist 15% Vehicle 18% Minibus & Coach Vans 27% 7% Bespoke P Car 13% Misc CV Haulage 2% 14% Special Risks Income 2006#9814 Autonational Rescue Website Join online or call The breakdown service with the no-claims bonus Autonational RESCUE The brown service with the no-claims bonus Home About us * Introductory offer Our services Join today Members equity REDSTAR Autonational RESCUE Hallina D 08459 500 999 Contact us | Sitemap | Recommend a friend | Print Page About us Autonational Rescue the nationwide car breakdown service are introducing Britain to a new kind of rescue organisation... ...one that looks after its members whether they breakdown or not! You may already belong to a breakdown service. But is it because you expect to breakdown or because you appreciate the security and reassurance that membership provides? Fleet rates Nearly new cars But have you ever asked yourself: FAQS Driving tips Press area Downloads Brochure request Eurorescue Insurance ring you back "Why should I pay the same price as members who regularly break down once, twice or even three times a year?" The plain fact is that you shouldn't. And if you join Autonational Rescue, then our No Claims Bonus will ensure that you don't. What's more, you can now have one breakdown in any two years - without losing your no-claims bonus. So why not join us today, the breakdown service with the no claims bonus! Our policy wording has been approved by the Plain English Campaign and awarded their Crystal mark for clarity. For more information their address is www.plainenglish.co.uk BO 39 15 1 to 10 NE 15 35 30 3 20 Plain English MINUTES Campaign Terms and Conditions Privacy Policy Cookies Statement#9915 Brokers • Approx 3,500 brokers • 40+ agencies with annual premium income over £1m • • 250 agencies with annual premium income between £50,000 and £1m 150 agencies with annual premium income between £25,000 and £50,000 Types of Broker National equity REDSTAR Networks Wholesalers Large Chain / Group Scheme / Specialist Brokers Large Commercial Brokers Community Brokers • Aon, Marsh, Willis Broker Network, Cobra RL Davison, Thompson Heath & Bond. A-Plan, Swinton Adrian Flux, Footman James, Carole Nash Towergate, Barnett & Barnett High Street independent brokers Equity has strong relationships with Brokers in each type • Most profitable type for Equity has traditionally been scheme / specialist • Most difficult to develop widely has been large commercial Challenge is to manage the relationship appropriately#10016 Broker Sales & Marketing Equity Team Head of Sales & Marketing Sales Managers Agency Manager David Grant Scotland North Midlands South West South East Agency team of 6 in Brentwood providing sales and agency support equity REDSTAR Towergate Towergate Underwriting Agency Management undertake sales activity and support for Equity including awareness of Equity products Sales Managers Agency Team 7 managers increasing to 12 in 2007 Team of 5 providing sales and agency support#10117 equity Relationship Management Categorisation of Brokers REDSTAR Categorisation of Brokers is being introduced to drive sales activity and to assist broker relationship management Star Brokers Significant value - major contributor to one class or several. Key relationship likely to be with Class Underwriter Target Brokers Not yet the size to be a Star or not as high a value, but has some type of special - facility likely to be larger number than Star brokers. Main focus for business development targets for Equity Sales Managers Standard Others, not sizeable or considered to have as much value – the majority by number relationship management Review Those concerned with e.g. poor performance or other issues. Should look to improve or consider cancellation.#10218 Underwriting approach tailored to suit Broker's needs equity REDSTAR Equity's focussed underwriting approach to development provides specialist underwriters, who are able to use their knowledge to develop relationships with broker partners. This specialisation helps a continual revision of underwriting parameters, and ensures that growth is for the longer term. The underwriting approach is varied to meet different broker needs. The variety of approach also ensures that underwriting is controlled in the most appropriate fashion. • Large schemes are developed with appropriate brokers and, if necessary, special scheme rates agreed ("Star Brokers") For other brokers with appropriate experience, general rating guide may be issued and the broker is able to quote within defined guidelines ("Target Brokers") The remaining brokers are able to contact Equity and individual quotations are supplied ("Standard Brokers")#103equity Broker Marketing Activity • Product Support REDSTAR 2007 will see the launch of three key products for Equity. Each will be supported by its own unique campaign under the "delivery" theme (Orchid, Coral and Vans) • Product Promotional Literature Conferences & Briefings Representation at the leading industry conferences, BIBA and Broker Expo Five Regional briefings are planned following on those successfully completed in 2006. They enable Equity to have a dedicated platform to present on products and issues to targeted brokers PR Opportunities will be exploited to gain favourable press coverage. This to include new product launches or enhancements as well as encouraging press interviews to put across strategic messages and demonstrate leadership on key issues Product Trade Advertising Commencing with a minibus campaign Communications Spotlight Broker News Magazine Equity News - for one off information Wall-planner/calendar - issued to all brokers Internet Development of e-mail campaigns to brokers and broker use of Equity web site Corporate Entertainment Broker Survey Measure broker's recognition of products and review service factors 199#10420 20 Private car Classic car Motor trade road risks Vans Private car ROV Com Classic car Motor trade road risks অ Vans Motorcycle Taxis Minibus DAF equity REDSTAR Motorcycle Taxis Minibus Fleet Haulage Agricultural vehicles Motor breakdown Household Personal accident For more information on our other products, please call: 0845 603 1883 Come on board with us Minibus insurance from Equity Red Star ⚫Breakdown recovery cover ⚫ Special benefits for charities and schools ⚫ Cover for private hire available Competitive prices Our minibus team can be contacted on: 0845 600 3893 Pound by Buy Red Star are administered by Equity Red Star Services Limited an appointed representative of Cox Syndicate Management United (which becomes Equity Syndicate Management United In early 20061 which authorised and regulated by the Financial Services Autorky. Equity Red Star is one of the leading motor insurers in the UK and a benchmark for: Underwriting excellence Technical expertise Claims management • Service delivery equity REDSTAR Fleet Haulage Agricultural vehicles Motor breakdown Household Personal accident For more information on our other products, please call: 0845 603 1883 All shapes and sizes Fleet insurance from Equity Red Star • All types of fleet: private car, haulage and beyond Flexible approach to underwriting and rating ⚫ Competitive prices Our fleet team can be contacted on: Equity Red Star is one of the leading motor insurers in the UK and a benchmark for: • Underwriting excellence Technical expertise Claims management • Service delivery 0845 602 5809 If you already access us through a wholesale broker, please continue to do so Police underwenby quay Red Sarane administered by quay Red Star Send and an appointed representative of pay Syndicate Muragement Lived which authored and ngubated by the uncil Servon Authority equity REDSTAR Private car Classic car Motor trade road risks Vans Motorcycle Taxis Minibus Fleet Private car Classic car Motor trade road risks Vans Motorcycle Taxis Minibus Fleet Haulage Agricultural vehicles Motor breakdown Household Personal accident All revved up Motorcycle insurance from Equity Red Star ⚫ UK's largest motorcycle insurer Highly competitive bike and scooter products Specialist referral facility for non-standard risks Equity Red Star is one of the leading motor insurers in the UK and a benchmark for: Underwriting excellence Technical expertise ■Claims management Service delivery Our motorcycle team can be contacted on: 0845 602 5803 For more information on our other products, please call: 0845 603 1883 Police underwenby quay Red Star are adattered by quay Red Star Sendon Lad an appointed pensive of Equaly Syndicate Muragement Limited which authorised and nged by the uncul Services Authority equity REDSTAR Haulage Agricultural vehicles Motor breakdown Household Personal accident For more information on our other products, please call 0845 603 1883 Built to last Household Insurance from Equity Red Star +Silver product for standard •Gold product for mid net worth Let properties: - Professional - Student DSS UK holiday homes •Competitive prices Our household team can be contacted on: Equity Red Star is one of the leading personal lines insurers in the UK and a benchmark for: ■ Underwriting excellence ⚫Technical expertise Claims management ■ Service delivery 0845 603 1686 equity NEDSTAR#10521 Minibus Assist Private car POLICY equity REDSTAR equity REDSTAR equity REDSTAR#106Equity Claims - Introduction 29th March 2007 IAG Investor Presentation London Phil Anderson Managing Director equity CLAIMS#1072 Important notice equity CLAIMS The information contained in these presentations is intended to provide an overview of certain information relating to the businesses operated by Insurance Australia Group Limited ('IAG') in the United Kingdom and Gibraltar and the markets in which those businesses operate. It does not purport to be a complete description of these businesses. The information 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 (any of which may change without notice). 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. The information does not take into account your investment objectives, financial situation or particular needs. In making an investment decision, investors must rely on their own examination of IAG and its operation, including the merits and risks involved, and take independent professional advice in relation to the Information and any action to be taken on the basis of the Information. This presentation is not an offer for subscription, invitation, recommendation or sale with respect to the purchase or sale of any shares in any jurisdiction. The presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United Sates 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 be offered or sold in the United States unless the securities have been registered under the U.S. Securities Act or an exemption from registration is available. 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 IAG's 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, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this presentation will actually occur. In particular, such forward-looking statements are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of IAG. Nothing in this document forms the basis of any contract or commitment, or constitutes investment, legal, tax or other advice. IAG is not licensed to provide financial product advice in relation to an investment in its shares and there is no cooling-off period in relation to any such investment.#1083 Agenda Introduction to Claims Process & Performance Management Control Strategy equity CLAIMS#1094 Introduction: Purpose & Values - FINANCIAL Control SPEND to deliver optimised settlements appropriate and equitable. Self-manage OPERATING COSTS improving efficiency and productivity (whilst not harming spend control, customer service or our people objectives) • equity CLAIMS BUSINESS SUSTAINABILITY Reputation • Risk • Environmental • Social • Competitor Activity CUSTOMERS Deliver a service to customers* which enhances the reputation of the operation and the Group. Use our market activity to raise our profile. Pay claims. Recommendations / Cross buy / Retention *Policyholder/Broker/Supplier/Exec/ Analysts etc PEOPLE • Recruit good people • Motivate & Engage • Inspire · Develop • Retain . Create advocates FOCUS COMMERCIAL IMPROVEMENT PASSION OUTPERFORMANCE SPEED ANALYTICAL#1105 Introduction: Senior Management • Pat Griffin Liability Claims Manager (Colchester) Fergus Curran Group Claims Manager (Brentwood) Phil Anderson Managing Director (Brentwood) Eddie Phillips Deputy Group Claims Manager (Brentwood) Nigel Ward Deputy Group Claims Manager (Brentwood) equity CLAIMS Phil Anderson (Managing Director) Joined Equity in 2006. Previously with RBS, Fortis and Zurich. Fergus Curran (Group Claims Manager) - ERS Claims Manager for 25 years. A contributor to the LMA and various ABI committees, also a member of the MIB technical committee. Previously with Pegasus Motor policies. Nigel Ward (Deputy Group Claims Manager) Joined Equity in 1984. Responsible for Swansea operations centre, QAD and Training. Previously with Northern Star. Eddie Phillips (Deputy Group Claims Manager) Joined Group in 1987. Responsible for research and development, suppliers and contracts and policy setting. Overseen several run-off accounts into the business and amalgamation of 11 branch offices. Previously with Barbican Motor policies. Pat Griffin (Liability Claims Manager) - Joined EIG in 1986. Responsible for all Personal Injury and litigation claims handling. Previously with The Lion Insurance Company.#1116 Introduction: Locations & Staff equity CLAIMS Group Management 42 AD & TPD 436 Manchester AD & TPD 27 FTE'S P.I. & Litigation 114 PI & Litigation - 16 FTE'S Total 592 Swansea Operations Centre 225 FTE's Brentwood Group 14 FTE's P.I. & Litigation 41 FTE's Colchester Group 23 FTE's P.I. & Litigation 30 FTE's Bexhill Group 5 FTE'S PI & Litigation 27 FTE'S AD & TPD 184 FTE'S#1127 Introduction: Experience equity CLAIMS Acquisition/Merger & Run-off In addition to servicing Equity, claims from the following companies have been managed or absorbed into Equity Claims: ABSORBED • Trinity . Kinloch • Mitre • Barbican · Trojan • Crowe • Red Star • Beacon • Shead • HGP • MANAGED Dominion Equitas MIB Chiyoda . Norwich Union • Lion Insurance • Anthony Kidd Agencies • Royal London Legal & General#113Introduction: Scale Per Annum 8 equity CLAIMS Claims Paid: Operational Expenditure: New Claims Total: approaching £350,000,000 £18,000,000 196,000 - Travel & PA - Home Motor 4,000 12,000 180,000#1149 Introduction: Scale Motor: Per Annum CLAIMS REPORTED 180,000 TP INJURY AD TP DAMAGE 92,000 40,000 (&TECHNICAL) 13,500 REPAIRABLE TOTAL LOSS NO AD CLAIM / TPF&T COVER WINDSCREEN 76,000 16,000 44,000 40,500 APPROVED REPAIRER NON APPROVED SUPPLIER APPROVED SUPPLIER 16,000 60,000 23,500 NON APPROVED SUPPLIER 17,000 equity CLAIMS#11510 Process & Performance: Process Overview HELPLINE FUNCTION equity CLAIMS New Claims Notification Claims Helpline (45%) Paper (45%) In House Processes Incident Management Claims Handled in Swansea / Brentwood & Colchester. Teams split by main product/channel/ class underwriter lines Specialist Areas Liability Claims P.I./ Litigation / Legal AD Total Loss/Theft/ Recovery Third Party Pro-activity, DamageLitigation, Car Hire Email (10%) IN HOUSE: 85% OUTSOURCE: 15% Outsourced Processes Claims Helpline (EIBL) Destiny Legal Services ClaimFlo Document Scanning GraphicData (Shoeburyness) Document Indexing WNS (India) (Manchester) Bordereaux Payments WNS (India) Subrogated Recoveries (EIBL) Destiny Legal Services#11611 Process & Performance: Accidental Damage Overview equity CLAIMS Volumes Repairs 76,000 Total Loss (instructions) 16,000 Salvage (Cleared) 13,000 Windscreen 40,500 Engineers 54,000 All totals provided are for 2006 totals, unless otherwise stated#117Process & Performance: Accidental Damage - Repair Approach: Opportunity: equity CLAIMS • . Unique average price deal leverages recoverable expenditure against non recoverable expenditure. Enhance process surrounding paper FNOL to increase approved repairer rate. Explore shared commissions with brokers. Get better penetration into Fleet and Motorcycle markets. If business structure leads to greater volumes of direct business, leverage this. Leverage Fault and Non-Fault ratios. 20000 Approved Repairer Volumes 15000 10519 8636 Fault 10000 7507 Non-Fault 5000 8072 6870 6206 0 12 2004 2005 2006#11813 Process & Performance: Accidental Damage - Total Loss equity CLAIMS Approach: Valuation & Negotiation process Early identification of total losses with a view to quick settlements. Streamlines process for quick dispute resolution. Opportunity: • TLSS Scheme - Increase Volumes, Decrease Timeline Renegotiate Rates Further streamlining of the process.#11914 Process & Performance: Accidental Damage - Salvage Approach: Two suppliers, 1 x motorcycle, 1 x all other classes of business Opportunity: Hastings account opens opportunities for enhanced salvage deals. Opportunities for a sole supplier deal. equity CLAIMS#12015 Process & Performance: Accidental Damage - Windscreen equity CLAIMS Approach: Opportunity: Bulk Purchase agreement with preferred supplier. Increase use of preferred suppliers - squeeze brokers. . Review Autoglass - (use of IAG worldwide) Volumes Trend: Approved Supplier - v - Non Approved Suppliers 28,730 30,000 24,687 23,496 20,000 4,451 3,821 9,135 10,000 5,622 7,826 7,924 0 2004 2005 2006 □ Approved (RAC) □ Non Approved (Autoglass) □ Non Approved (Other)#12116 Process & Performance: AD & TP Claims - Engineers. Approach: Opportunity: Desktop inspections carried out with Approved repairers, where cases are non-fault. Fault cases are not inspected if they are within the Approved scheme, but have physical inspections otherwise. Non approved repairer cases requiring inspection are done as physical inspections. A small estimate scheme exists for claims under £400. Increase desktop % / increase approved repairer penetration. Deploy systems direct to engineers. % Split: Desktop - v - Physical 100 80 60 31.54 26.73 28.11 60 □ Desktop 40 Physical 73.26 68.45 71.88 20 20 0 2004 2005 2006 equity CLAIMS#12217 Process & Performance: External Subrogation Schemes equity CLAIMS Approach: Opportunity: • Pursue recoveries vigorously, and litigate as soon as appropriate. Litigation handled by 2 suppliers, Proddow McKay on all non EIBL claims, Destiny on all EIBL claims. Further specialisation. Set up in house solicitors, or purchase an existing business. Deploy systems to suppliers, enabling more efficient process.#12318 Process & Performance: Third Party Damage (overview) Approach: Opportunity: Third Party intervention scheme. Non adversarial approach where reasonable. Settle quickly - Better analysis of newly available data – identify streams and patterns. Improve intervention rates. Target critical areas such as hire. Build KPI's for staff. equity CLAIMS#12419 Process & Performance: Revenue Generation Approach: Opportunity: • Maximise commissions on all areas. • Extend into fleets. • Extend into the broker market. equity CLAIMS Application of alternative revenue models e.g. credit repair.#125Management Controls: Key Performance Indicators Examples: FINANCIALS equity CLAIMS New Claims Volumes Average Incurred / Settled Total Operational Expenses Operational Expense per Claim Headcount / Overtime / New Claims per FTE Systems BUSINESS SUSTAINABILITY Risk Drivers & Controls 20 20 CUSTOMERS SLA's Call Volumes Workload Satisfaction Complaints PEOPLE Objectives & Development Reviews Recruitment / Retention Talent programme Succession Planning Engagement Sickness/Absence#126Management Controls: Process Review Report 21 Month / Qtr Exec Committee Managing Director Month Week Senior Management Team Group Claims Management Team Operational Team Executive: Commentary MI Pack Day Intra Day . Meeting Minutes Balanced Business Scorecard equity CLAIMS Operational: • Departmental Reports - AD, IT, TP, QAD, Non- motor • Work state • New Claims • Call Volumes, SLA's Feed#127Management Controls: Risk Management Drivers & Controls SPEND equity CLAIMS OPERATING COSTS Driver Backlog Ineffective Inappropriate Spend Inefficient Exception Manage SLA Failures Segregation Reporting Resource Increased Of Duties Performance Spend Supply Chain Monitoring Impact Management Business Continuity Risk Logs Practices & Increased Overtime Counter Fraud Audit - Internal/External / Departmental Procedures Control Lloyds' / FSA Training Complaints Objectives & Development/ ISO Accreditation Low Motivation High Resolution Complaints Data Staff Surveys Poor Protection Reputation Customer Surveys Health & Safety Poor Service CUSTOMER Lost Retention SLA High Failures Turnover/Absence Low Productivity Ineffective and demotivated Staff PEOPLE 22 22#12823 Strategy equity CLAIMS STRENGTHS: Highly Experienced & Well managed - Broad mix of Industry Backgrounds - Reputation in the market for quality - History of low Inflation - Quality Assurance & Audit Controls - Supplier terms / rates participate in market bodies/ Active in the community Environmentally responsible Strong internal and external communication programmes 7. Extend our PROFILE and INFLUENCE 1. Control SPEND Review and respond to paid claim performance Reserving aligned to Group philosophy + Consistant Focus on key projects selected to deliver substantial financial benefit, e.g. TP Intervention; Total Loss valuations Focus on recovery performance Counter fraud initiatives Supply chain management Reinsurance Recoveries Constantly striving to expand our thinking Working in partnerships/ Seeking & applying synergies Evaluating revenue generation opportunities 6. INNOVATION Claims Strategic Plan 2007 5. Management CONTROLS Suite of Management information Reports - review - action. check results - communicate Audit/QAD Risk Matrix Benchmarking Regulatory 4. Value our PEOPLE 330 FTE 2. Efficient & Effective Operation Specialisation Organisation design - fit skills to task Ongoing systems enhancement Track Op Ex and productivity performance Consistency; do it right first time, every time, minimise leakage Audit/QAD 3. Service CUSTOMERS, enhance REPUTATION 180k New Claims PA Benchmark Performance Track SLA's; Abandoned Calls, workload, time to settle, satisfaction & complaints Action Plans & Impact Analysis Retention Cross Buy/Recommendations Recruit and retain great people Improve performance and behaviour Objectives & PDR's Talent Programme Succession Plans Engage Promote Values Sickness/Absence Turnover Repeat poor performance management#129Hastings Direct: Scale Per Annum 24 24 • Claims Paid: equity CLAIMS approx £145,000,000 119,000 36,500 7,000 • New Claims Total: - - - - Windscreens Technical (PI & Litigation) 53% Advantage (Insured) 47% Delegated Authority (Serviced) Staff - 259 FTE • 216 Bexhill • 43 Manchester#13025 Integration Objectives: What success looks like equity CLAIMS CUSTOMERS Service Levels are met. Complaints ratio stable or reduced. Levels of customer satisfaction are appropriate. • The reputation of the business is good. FINANCIAL Equity & Advantage claims spend is managed & controlled. Synergies with suppliers have been achieved and savings are realised. Operating expenses are stable and well managed with the benefits of integration being realised. • Revenue opportunities are realised, and further income streams are being sought. • • • BUSINESS SUSTAINABILITY The business model is adding value to all areas of the claims business and pursuing a strategy of continuous improvement. Alignment with IAG values has occurred. The business is adhering to all regulatory / FSA requirements. The business has a keen social awareness, and is continuing to achieve environmental efficiencies. The business has constructed a robust operating model upon which it can develop and expand. The business is protected through risk management controls. · • PEOPLE A strong and focussed management team is in place. An engaged and productive workforce is consistently producing quality work. • "Your Voice" survey results are consistent and improving.#131Integration: Approach Integrate the 2 businesses 26 26 Bottom Up: Leverage Natural Synergies Supplier rates T's and C's Management Information Productivity Ratios Process Harmonisation Top Down: Build a Foundation for the future Organisational Design Cost / Profit Model Commercial Opportunities equity CLAIMS Build a foundation for the future#13227 Thank You equity CLAIMS#133HASTINGS INSURANCE SERVICES Hastings DIRECT equity INSURANCE BROKERS IAG Insurance Australia Group Overview March 2007#134Important notice The information contained in these presentations is intended to provide an overview of certain information relating to the businesses operated by Insurance Australia Group Limited ('IAG') in the United Kingdom and Gibraltar and the markets in which those businesses operate. It does not purport to be a complete description of these businesses. The information 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 (any of which may change without notice). 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. The information does not take into account your investment objectives, financial situation or particular needs. In making an investment decision, investors must rely on their own examination of IAG and its operation, including the merits and risks involved, and take independent professional advice in relation to the Information and any action to be taken on the basis of the Information. This presentation is not an offer for subscription, invitation, recommendation or sale with respect to the purchase or sale of any shares in any jurisdiction. The presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United Sates 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 be offered or sold in the United States unless the securities have been registered under the U.S. Securities Act or an exemption from registration is available. 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 IAG's 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, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this presentation will actually occur. In particular, such forward-looking statements are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of IAG. Nothing in this document forms the basis of any contract or commitment, or constitutes investment, legal, tax or other advice. IAG is not licensed to provide financial product advice in relation to an investment in its shares and there is no cooling-off period in relation to any such investment.#135• Company Background Hastings Insurance Services Limited - a Personal Lines insurance broker launched in January 1997. IAG Insurance Australia Group • . • 2 Trading Divisions - Hastings Direct and Peoples Choice (acquired in July 2003). 1,450 staff in 3 locations / Contact Centres - Bexhill-on-Sea, Leicester and Manchester. Hastings offers a totally integrated panel solution of over 40 insurers with 60 products, giving the ability to quote widely and competitively. The Company's IBM i570 computer system and Meridian telephone switch have been planned and implemented from new, specifically for Hastings. Robust, dedicated data and telephony links are now in place between the three sites, offering resilience and flexibility. HASTINGS INSURANCE SERVICES 3#136• Dimensions The Group handled just over 6.4 million calls during 2006 (2.5 million sales calls). Nearly 900,000 policyholders. The Company administered £200 million gross written premium in 2006. In 2006 turnover increased to £64 million, from £55 million in 2005. Ranked in the top 5 Personal Lines Insurance Intermediaries in the UK by Insurance Times. IAG Insurance Australia Group HASTINGS INSURANCE SERVICES#137Premises Conquest House Bexhill-on-Sea Square Footage 80,000 Senlac House 30,000 Leicester 55 55 King Street Manchester 23,000 2nd and 4th Floors IAG Insurance Australia Group HASTINGS INSURANCE SERVICES 5#138Hastingsolter Telephone Current Products H Private Car Motorcycle Private Car Internet Motorcycle Classic Car Commercial Vehicle IAG Insurance Australia Group Home Travel Commercial Vehicle Hastings DIRECT 6#139Brand Also Available: Conquering Car Insurance Home Motorcycle. Travel Call OQ clicc Cheapest Car Insurance provider 2006 2005 2004 0800 00 1066 HastingsDIRECT.COM *According to independent telephone research (average savings) by Consumer Intelligence from January 2004 to December 2006. Hastings Imurance Services Limite trading an Hastings Direct, is an independent intermediary and authored and regulated by the Financial Services Authority Registered Office Hastings Direct, Conquest House, Collington Avenue, Bexhill-on-Sea, East Sussex TN39 Alloca anteria. Call may be monitored or reconded Specimen policies are avail • distinctive Strong and brand identity, including Harry and 1066 telephone numbers. Current core message 'Conquering Car Insurance is designed to create image of Harry Hastings Direct being on the side of the customer. Consistent messages built around the USP of being cheapest car insurance provider 2004 to 2006 with 'save up to' statistics featuring prominently. IAG Insurance Australia Group Hastings DIRECT 7#140• Brand (2) The Hastings Direct current brand identity will develop further to sustain its customer appeal and to increase differentiation against other insurance providers. New TV creative, for March 2007, to introduce Harry Junior. Creating a family for Harry reflects target customer's lifestyles and aspirations and associates the brand with trustworthy imagery. Also will review how corporate activities align with brand. H JNR IAG Insurance Australia Group Hastings DIRECT 8#1412006 2007 (expected) Marketing % Quotes Offline % Quotes Online IAG Insurance Australia Group 57% 40% 43% 60% Hastings DIRECT.COM 0800 00 1066 Cheap Car and pedded saving based on indicendophone ch Leads are generated through a combination of mass lead generation and targeted direct marketing programmes including directory advertising, national press and magazine advertising, direct mailings, sponsorship and a growing investment in online marketing. Hastings Direct took its first steps into TV advertising in July 2005 with a 30-second advert. The campaign has proved to be a huge success and a third advert has just been launched - 5th March 2007. 2004 2005 2006 Subject to status Calls monitored or recorded Hastings DIRECT 9#142sure Call FREE on 0800 169 0177 We guarantee to beat your cum coincie reirewal quotation" insure We guarantee to beat your car insurance renewal quotation!" Save time, effort and money by simply calling us FREE on 0800 169 0177 Direct mail: Renewal dated Resolicitation Car Insurance Direct Marketing insure welcome to ✓ Confused.com Car Insurance insure Low Cost Insurance On-line aggregators low cost bike insurance IAG Insurance Australia Group OVER 25? YOU NEED TO CALL US TORREKT grounding kw ch insure Sinsure 169 0177 Find out how much you could save by calling us one For a further discount 0800 169 0177 when you buy online www.insure.co.uk Advertising: Yellow Pages Specialist press On-line banners £200 Churchill E211 Esun € 220 TheAA Norwich Union E 296 I 240 You can save up to £96" by switching your car insurance to us! MARANT CHIA TO equity INSURANCE BROKERS 10#143Hastings DIRECT.COM Battling to see you money and time online Welcome to Hastings Direct HastingsDIRECT.COM Harry Battling to save you money and time online Welcome to Car Insurance 0800 015 5982 Battling to save you money and time online HastingsDIRECT.COM Welcome to Motorcycle Insurance 0800 11 1066 Saving you! Online Aim to become a 'broker of the future' with core dominant in-house underwriter and panel to provide depth and breadth of coverage. A new Hastings Direct branded website was launched in late September 2006. The site is designed around optimum functionality whilst considering the delicate balance between providing the most competitive price and the shortest possible customer journey (a price being obtained after 33 questions). The site provides maximum tolerance and resilience with built-in scalability to support corporate growth. peoples Ochoice Hastings DIRECT.COM IAG Insurance Australia Group 11#144Hastings Direct Private Car Panel 2006 Chaucer 1% IAG Insurance Australia Group HSBC 1% RSA NIG 1% Service Sabre 1% 2% 2% Highway 2% AXA 4% Fortis 4% Others 8% Advantage/Hannover 74% Hastings DIRECT 12#145Insurer Support Programme IAG Insurance Australia Group • National Address Register. DVLA Database. • No Claim Bonus Proof Validation. • Proposal Form Completion. • Claims History Validation at Point of Sale using the Claims and Underwriting Exchange Register (CUE). HASTINGS INSURANCE SERVICES 13#146Bought-in Leads 2006 • 27% of non-internet quotes (249,733) sourced from partners. IAG Insurance Australia Group the AA.com Diamond Created for women MORE TH>N® 2007 Current Partners More Th>n, Diamond, AA, Call Connections and Lancaster. More Th>n contract due for renewal in July 2007. Pilot with CIS from March 2007. • Phasing out Call Connections and AA. • The Future Source leads from insurers where we can be more competitive. - Hastings DIRECT 14#147Motor Manufacturers ROMEO + SUBARU INSURED Key Affinity Partners Financial Services Other mutual matters SKIPTON RYANAIR FLY CHEAPEK CHEVROLET FIAT first direct > Member Services The Camping and Caravanning Club The friendly Club MOTORY HARLEY-DAVIDSON CYCLES RENAULT insurance TRIUMPH SUZUKI NISSAN MARKET HARBOROUGH BUILDING SOCIETY Traditional values in a changing world bonmarché insurance services KENT reliance BUILDING SOCIETY Alliance Leicester AGE Concern IAG Insurance Australia Group equity INSURANCE BROKERS 15#148Equity Direct Broking 2006 Highlights Launch of new schemes for first direct, Renault and Alliance & Leicester Development of new online quote and buy sites for Ryanair, first direct, Alliance & Leicester, Skipton Building Society and insure.co.uk IAG Insurance Australia Group • Inclusion of insure.co.uk on confused.com aggregator • Relocation of Contact Centre to Colchester • New business volumes in December exceeded forecast, original budget and highest since March 2005. Hastings Direct • • • TV advertising has helped Hastings Direct increase its quote volume, broaden brand awareness and generally raise its profile. Cheapest Car Insurance Provider 2004 - 2006 New Hastings Direct branded website, launched in September 2006 16#149Sustainability - Carbon Neutral CARBON TRUST Making business sense of climate change IAG Insurance Australia Group . • Hastings Equity are committed to achieving Carbon Neutral Status by 2012. Project Carbon initiated on 1st February across all UK sites Baseline being established in key areas i.e. energy utilisation, paper usage, car and air travel mileage, recycling and CO2 emissions. Using Carbon Trust Action Plan Tool within this assessment. Considering green products and services around motor and household • insurance. 17#150Introduction to Equity Insurance Brokers Limited Branch Network 29 March 2007 equity INSURANCE BROKERS#151Important notice equity INSURANCE BROKERS The information contained in these presentations is intended to provide an overview of certain information relating to the businesses operated by Insurance Australia Group Limited ('IAG') in the United Kingdom and Gibraltar and the markets in which those businesses operate. It does not purport to be a complete description of these businesses. The information 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 (any of which may change without notice). 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. The information does not take into account your investment objectives, financial situation or particular needs. In making an investment decision, investors must rely on their own examination of IAG and its operation, including the merits and risks involved, and take independent professional advice in relation to the Information and any action to be taken on the basis of the Information. This presentation is not an offer for subscription, invitation, recommendation or sale with respect to the purchase or sale of any shares in any jurisdiction. The presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United Sates 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 be offered or sold in the United States unless the securities have been registered under the U.S. Securities Act or an exemption from registration is available. 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 IAG's 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, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this presentation will actually occur. In particular, such forward-looking statements are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of IAG. Nothing in this document forms the basis of any contract or commitment, or constitutes investment, legal, tax or other advice. IAG is not licensed to provide financial product advice in relation to an investment in its shares and there is no cooling-off period in relation to any such investment.#152Agenda • Top UK Personal Lines Brokers Ownership of Personal Lines Distribution Broking Business Model 2006 Key Facts/Highlights Distribution Channels & Business Mix . Branch Headcount by Location • Growth of Branch Network Branch Locations Branch Acquisition Rationale Increasing Share of Business Underwritten in house equity INSURANCE BROKERS#1530 AA 20 40 Swinton (incl Budget branches) Source: Insurance Times Top 50 Brokers (July 2006) 2005 Brokerage (£m) 80 60 60 60 100 140 120 IAG (UK) Direct Budget (ex. Branches) Endsleigh RIAS Kwik-Fit 160 180 Budget Branche ODIS Top UK Personal Lines Brokers 200 equity INSURANCE BROKERS A Plan Group Carole Nash . • The combined UK business is now the 3rd largest personal lines broker in the UK Only Swinton, EIBL Branch/ODIS, Endsleigh and A Plan have branch networks BDML Allen & Allen Highway Retail Outright#154Ownership of Personal Lines Distribution Insurer Owned Swinton MMA EIBL/Hastings/ODIS IAG Endsleigh Zurich RIAS Fortis Carole Nash Groupama Highway Retail Highway Outright Fortis £418.6m Non-Insurer Owned AA Budget CVC/Pemira Capricorn/Mgt Kwik-Fit CVC/Pemira A Plan Group Independent BDML Allen & Allen Capita Independent equity INSURANCE BROKERS £188.6m £33m £18.3m £149.6m • • • . • AAA Plan Group Allen & Allen Non Insurer Owned Insurer Owned £418.6m of Brokerage (52% of largest 15 personal lines brokers) is now owned and controlled by Insurers. This will increase to over 75% if AA is acquired by an Insurer. Primary objective is to protect distribution/routes to market and underwriting share/profit. • Remainder of personal lines broking market still largely independently owned. Commercial lines remains largely independent (but Axa acquired Stuart Alexander & Layton Blackham on 16 January 2007; combined GWP £200m). Source: Insurance Times Top 50 Brokers (July 2006)#155Business Model Customers National Distribution channel Servicing/ Administration Manufacturing 0800 169 0172 Telephone and Internet OVER 257 THE GALL insure first direct RENAULT insurance Direct Marketing Affinity Contact centres ERS 86% Local JARDINE LLOYD THOMPSON Imer Seniors equity equity INSURANCE BROKERS Mator & Home Insurance Alexander Forbes Transfers Face-to- Face Branch network Panel ERS 48% 52% Panel 14%#156Distribution Channels & Business Mix Split of Business by Distribution Channel (2006 Commission Income) Split of Business by Class (2006 GWP) ODIS 36.7% Acquisitions 7.1% Commercial 8.4% • Northern Ireland 14.4% South 17.3% North 16.2% Commercial 24.3% Other 0.8% equity INSURANCE BROKERS Travel 0.3% Motorcycles 1.3% Private Car 66.2% Household 7% ODIS, although not owned in 2006, now represents 37% of the branch network • Private Car business represents 66% of total#157Broking FTE Headcount by Location equity INSURANCE BROKERS ODIS 26% Branch Network - NI 11% • 250 Branch Network - 200 North 30% 150 100 50 Branch Network South 33% 0 Branch Network - North Branch Network - South Branch Network - NI EIB ODIS Total FTE Headcount 516 (including ODIS 136) • North FTE 151 South FTE 171 • NI FTE 194 (including ODIS 136)#158Growth of Branch Network 8 CO 6 5 Profit (£m) + 3 2 1 100 90 90 equity INSURANCE BROKERS 80 80 70 60 60 Number of Branches 50 50 40 40 30 20 20 10 10 0 0 2000 2001 2002 2003 2004 2005 2006 EIB ODIS No of Branches Less competition following closure of Hill House Hammond and Budget's sale of branches to Swinton. Competition for personal lines branches now largely limited to Swinton, NU Direct, and local broker consolidation. Growth in 2003/2005 led by Bennetts and JMW acquisitions (20 and 8 branches respectively). ODIS significantly increases scale in 2007. Low (and certain) acquisition cost. Note: Profit is Earnings Before Interest and Tax#159Branch Locations NORTHERN IRELAND (17 BRANCHES) BALLYMENA BELFAST (x3) COLERAINE (x2) DUNGIVEN (x2) GLENGORMLEY LISBURN LONDONDERRY (x2) (1) MAGHERAFELT MOIRA NEWTOWNARDS (x2) LURGAN €3 (1) (1) SOUTHERN REGION (30 BRANCHES) BASINGSTOKE BRENTWOOD (2) BOURNEMOUTH BRIGHTON BRISTOL CAMBERLEY CHANDLERS FORD (1) CHELTENHAM CIRENCESTER (1) CRAWLEY EXETER FAREHAM FRESHWATER FROME NEWBURY POOLE PORTSMOUTH PULBOROUGH RYDE SALISBURY SHAFTESBURY SOUTHAMPTON STROUD SUTTON SWINDON WESTON WINDSOR WORKINGHAM WORTHING YEOVIL (1) equity INSURANCE BROKERS NORTHERN REGION (29 BRANCHES) ALFRETON BELPER BIRSTALL BISHOPS STORTFORD BULWELL BURTON BURTON ON TRENT COVENTRY DONCASTER GRANTHAM GRIMSBY HEANOR HINKLEY KING'S LYNN LEDBURY MALVERN MARKET HARBOROUGH MELTON MEXBOROUGH MICKLEOVER NEWARK NEWCASTLE OAKHAM RETFORD RUGELEY STONE SUTTON SWAFFHAM WIGSTON (1) Includes Commercial (2) Commercial only (1) (1) (1) (1) • . • • First branches acquired in February 2000. Now 76 branches (including ODIS). Achieved through single branch purchases and acquisition of four larger chains. Acquisitions have added scale and profitability to the Group's distribution activities. Further acquisitions planned as part of the Group's strategy going forward. Strong pipeline.#160Branch Acquisition Rationale • • • • • • • • . Opportunity continues as market consolidates Limited (and declining) competitor activity Increases ownership of distribution/customers Low acquisition cost Certainty of acquisition cost Only pay on business retained. Strong retention of customers Loyal to this channel Proven track record Strong acquisition, integration and management teams High return on capital Ability to leverage income and margin significantly post acquisition Scaleable infrastructure/Economies of scale Increasing volume of business for ERS - £17.6m Private Car GWP in 2006 - Up from £0.7m in 2002 Good underwriting returns for ERS - c.10 percentage points better than average for 2005. equity INSURANCE BROKERS#161Percentage of Branch Private Car Business with ERS Percentage of GWP with ERS 60 50 40 30 30 20 20 10 2002 2003 ERS Penetration • 2004 2005 equity INSURANCE BROKERS 2006 - Typical ERS Penetration of Personal Lines Broker's book ERS penetration of Branch Private Car business has increased from 6.4% in 2002 to 47.9% in 2006 (December 2006 53.8%). • Driven by 'ERS 50' transfer initiatives. • Typical ERS penetration of an external broker book is <5%. • · • Acquisitions 'dilute' percentage share until initiatives start to 'bite'. Household share increased to 47.6% in December 2006 (Q305 8.8%). Potential to become 'tied agent' in future (once acquisitions completed).#162Branch Network 2006 Highlights equity INSURANCE BROKERS Highlights • • 21 acquisitions (11 branches; 10 infills) with estimated annualised GWP of £17m and 37k policies Agreement to acquire Open + Direct Insurance Services (£46m GWP; 90k policies) - completed 17 January 2007. Now largest broker in Northern Ireland. • 52% of Branch GWP with ERS by December 2006 (2002 6.4%) . 14 branches refurbished . All branches re-branded to 'Equity Insurance' . Short-listed for Insurance Times "Personal Lines Broker of the Year" Award