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NASDAQ OMX EDITED TRANSCRIPT IAG.AX - IAG Annual General Meeting EVENT DATE/TIME: OCTOBER 30, 2013 / 10:00AM (SYDNEY TIME)

OCTOBER 30, 2013 / 10:00AM (Sydney time), IAG.AX - IAG Annual General Meeting

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C O R P O R A T E P A R T I C I P A N T S Brian Schwartz Insurance Australia Group Limited - Chairman Mike Wilkins Insurance Australia Group – MD & CEO Chris Bertuch Insurance Australia Group Limited - Group General Counsel and Company Secretary Yasmin Allen Insurance Australia Group Limited - Independent Non-Executive Director Peter Bush Insurance Australia Group Limited - Independent Non-Executive Director Alison Deans Insurance Australia Group Limited - Independent Non-Executive Director Raymond Lim Insurance Australia Group Limited - Independent Non-Executive Director Nora Scheinkestel Insurance Australia Group - Independent Non-Executive Director C O N F E R E N C E C A L L P A R T I C I P A N T S Joe NagyShareholder Gregory SimoniShareholder Jack TilburnShareholder Michael Perry Proxy holder (ASA) Richard WilkinsShareholder Jonathan HillmanShareholder Celia CouckeShareholder Reginald LobbShareholder Paul LenehanShareholder Serena KeeShareholder Bronwyn UnderwoodShareholder P R E S E N T A T I O N

Brian Schwartz - Insurance Australia Group Limited - Chairman Good morning ladies and gentlemen and welcome to Insurance Australia Group's AGM. My name is Brian Schwartz. I am the Chairman of Insurance Australia Group and in accordance with the Company's Constitution, I am the Chairman of this meeting. The Company Secretary has informed me that a quorum is present, and I therefore declare the meeting open. In doing so, I would like to respectfully acknowledge the Gadigal people of the Eora Nation, the traditional custodians of the land and pay my respects to the elders both past and present. On the stage with me, from my far left are Non-Executive Directors, Nora Scheinkestel, Philip Twyman, Hugh Fletcher, the Managing Director and Chief Executive Officer, Mike Wilkins; the Group General Counsel and Company Secretary, Chris Bertuch; and Non-Executive Directors, Yasmin Allen, Raymond Lim, Alison Deans and Peter Bush. Dr Andries Terblanche, representing the Company's auditor is present, as are members of the IAG Executive. I would also like to welcome those shareholders viewing this meeting via the webcast. There are some housekeeping matters that I need to mention. (Conference Instructions).


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Persons entitled to vote at this AGM were provided with a key pad and a data card. The key pad will be used to record your voting intentions on each resolution put to the meeting. An instruction slide will be shown on the screen when you are asked to vote and staff will also be available to assist shareholders, if required. If you are unable to remain for the whole meeting and vote on each resolution electronically, you will be able to register your voting intentions on a voting card at the desk located just outside the auditorium as you leave. We included with our Notice of Meeting a form providing shareholders with the opportunity to send questions to the Company in advance of the AGM. Your views are important to us, and we received comments and questions from around 190 shareholders. I thank all of those shareholders who have taken the time to ask a question of the Company. We have sought to respond to as many of these questions as we can today in the addresses to be delivered by our CEO, Mike Wilkins, and myself. We have also published responses to the most frequently asked questions on our website. We are, of course, happy to take further questions or provide further responses about the items of business, as we move to the resolutions to be put to shareholders today. I now declare the polls to be open. Before we commence the formal business of the meeting, I would like to start by providing a brief overview of the Company's performance for the 2013 financial year. I will then ask Mike Wilkins to provide a more detailed review of our operational performance and strategy and an update on the Group's outlook for the current financial year. It is my great pleasure to address this meeting today and to celebrate the strength and success of our Company. By any measure, this has been a very good year as we realised the opportunities we have created over the past five years by relentlessly pursuing our strategy and building a solid platform for growth. At the same time, we have made significant progress in our goal to improve the broader understanding of risk, its prevention and its reduction, because we believe that over the long term this will play a key part in ensuring insurance remains affordable and accessible to all those who may need it. Our financial results this year have been outstanding, reflecting the strong underlying performance of all our businesses. Group revenue, measured as gross written premium, increased by around 12% to AUD9.5 billion. Our profit after tax grew by 275% to AUD776 million and our cash earnings increased by nearly 100% to approximately AUD1.15 billion. Mike will provide more detail around the results in his presentation. While we benefitted from lower peril costs compared to recent high years, we still experienced some natural disasters, and our people responded magnificently to customers affected by the extreme weather associated with ex-Tropical Cyclone Oswald in early 2013 and more recently, to those affected by the bushfires in New South Wales.

Unidentified Speaker They've been terrible.

Brian Schwartz - Insurance Australia Group Limited - Chairman They have been terrible. Mike will provide a bit more detail on the expected impact of the bushfires when he talks to the outlook for the year in hand. As always, our first priority is to help our customers affected by this devastating event and our thoughts are with them. The results achieved by our businesses in 2013 are testament to the success of our strategic priorities over recent years to achieve profitable growth in Australia and New Zealand and boost our Asian footprint. In Australia we are leveraging


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our strong brands, customer bases and strategic capabilities; in New Zealand, we are working hard to maintain our market-leading position and in Asia, we are on track to have our share of this business represent 10% of our gross written premium by 2016. We have committed increased capability to the region to ensure we realise the potential of the broader Asian platform over the medium to longer term. Last year, I advised that we were conducting a strategic review of our underperforming UK business and following this work, the Board resolved to sell the UK operation. I would like to acknowledge the excellent work undertaken by management to remediate the business to a point where the sale was successfully completed in April 2013. The strategic priorities we have set for our Australian and New Zealand and Asian operations continue to offer us considerable scope for growth. We are also scanning the horizon to assess the opportunities and challenges which will be important for the future of our organisation. In the coming years, we will concentrate on four key categories. These are customer expectations and the customer experience broadly; insurance affordability; the increasing significance of Asia, as the weight of global economic activity shifts towards the emerging economies and the ever increasing sophistication of technology and data analysis and its use in the pursuit of customer and business advantage. For many years, IAG has championed the importance of a better understanding and reduction of risk in our daily lives, be it on the road, at home, in business or in the natural environment. Our long-term goal is to reduce losses that may give rise to claims and ensure insurance remains affordable. To this end, we have undertaken many important initiatives during the past year, including the establishment of a Road Safety Council where experts from within our business are developing a program of initiatives to reduce risk on our roads; undertaking further research into how people manage risks on their homes, so we can help customers make better-informed decisions about how to prevent or reduce these risks; focusing on strategies to help small to medium sized enterprises understand and manage the inherent risks they face, and to offer support, particularly in the areas of business continuity and recovery in the face of natural disasters. Fourthly, we convened the Australian Business Roundtable on Disaster Resilience & Safer Communities. We have assembled a group of six CEOs and their organisations who are working collaboratively with government to bring about change in public policy and increase investment in building safer and more resilient communities. Mike will talk more about this significant initiative shortly. This year has been a considerable period of renewal for the Board. We appointed three new Directors; Alison Deans and Raymond Lim in February and Nora Scheinkestel in July. These appointments further expanded the Board's experience and expertise, providing an increased focus on digital and social media, and specialist knowledge about engagement with Asia, consistent with the Group's strategic priorities. All the new Directors are standing for election at this meeting, and each will speak briefly about their experience and skills when we come to that item of business. Suffice to say, we are delighted with what they add to our Board and the Board unanimously endorses their election. We also farewelled two long serving Directors, Anna Hynes and Phillip Colebatch, who retired from the Board during the year. I again take this opportunity to thank them again for their contribution to our Group. Today, I would like to acknowledge the transformative contribution of our former Chairman -- and my predecessor -- James Strong, who sadly passed away in March. During James' nine years as Chairman, our organisation more than doubled in size and our portfolio diversified to include commercial insurance and regions beyond Australia. It was a great privilege and a pleasure to know and work with


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James, and we are very proud to be honouring his distinguished career through the James Strong IAG Scholarship, one of six perpetual scholarships that have been established in his name at the University of Sydney Business School. You, our shareholders, are also benefiting from the strength of our financial performance, through an increased dividend and an improved share price, which we believe reflects market confidence in our long term strategy. Our significantly higher cash earnings allowed the Board to declare a final dividend of AUD0.25 per share, taking the full year dividend to AUD0.36 per share. This is a 112% increase on last year, and reflects our positive performance and our strong capital position. Our total shareholder return of 59% for the 12 months ended June 30 made IAG one of the best-performing companies in the ASX 200. When we move to the business of the meeting, you will be asked to vote on IAG's remuneration report and, before the vote is taken, you will have an opportunity to ask questions about the report and IAG's approach to remuneration. However, I would like to make some brief comments about our approach to remuneration at this time. From the many questions submitted by shareholders, we know that executive remuneration, particularly the relationship between the Company's performance and executive pay; continue to be a topic of significant interest. Overall, IAG's approach to remuneration is unchanged. The Group's strong performance this year means that short term incentive outcomes for the 2013 financial year have generally increased compared to last year, and executives have been rewarded under some components of the long term incentive plan, on the basis of IAG's Total Shareholder Return. The Board is confident that IAG's remuneration structure is appropriately designed to achieve alignment between management's interests and those of our shareholders by rewarding superior performance, and ensuring we can attract and retain the right people. In presenting this year's results to you, I would again like to thank you for your ongoing support of IAG. Our disciplined approach and well-formed strategy have enabled us to successfully build sound businesses across our chosen markets and have generated strong momentum that we believe will carry us into the future. Our performance is a tribute to the strong leadership provided by our Managing Director and CEO, Mike Wilkins, his Executive team and everyone who works at IAG. Commitment and enthusiasm are evident at every level in our organisation and we will ensure we continue to identify and realise opportunities for the benefit of you, our shareholders, our customers, and our people. I now invite Mike to provide some more detail on the operational and financial performance of the Group.

Mike Wilkins - Insurance Australia Group – MD & CEO Well, thanks, ladies and gentlemen and good morning to you all. I also extend my welcome to you today and I thank you for attending our AGM. I am pleased to present to you today following what has been a year of strong performance from the Group. It is especially satisfying that the culmination of five years of hard work and disciplined focus on our strategic priorities and business fundamentals is now paying off. I thank all of our people for their commitment and unwavering support during this time. It is because of their dedication that I can stand before you today and say that IAG is delivering on all fronts. Gross written premium grew by almost 12%, we achieved an increased insurance margin, and as Brian has previously mentioned, our increased dividend payout was at the high end of our targeted range.


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While our result does reflect lower peril costs compared to previously high years, as well as favourable credit spread outcomes, it is built on solid foundations and the undeniable fact is that our individual underlying businesses are performing well. This is the result of the disciplined adherence to our strategy and much hard work by all at IAG. Our Australia Direct continued to perform strongly; CGU delivered a double digit underlying margin reflecting an impressive turnaround since 2008; we saw a solid underlying performance in New Zealand; and Asia delivered a small but much improved profit and continues to be an important source of long term growth potential for the Group. During the year we also sold our UK operation allowing us to focus exclusively on the Asia Pacific region where we believe we can deliver the best shareholder value. Most importantly, we expect further strong performance in 2014. Looking at the numbers in a little bit more detail and we have seen a significant uplift across all of our key financial measures. Our GWP has grown to nearly AUD9.5 billion, sourced from a combination of rate and volume increases and a full year's contribution from the AMI acquisition in New Zealand. Our insurance profit increased by nearly 70% to over AUD1.4 billion, and our cash earnings increased by almost 100% to AUD1.15 billion. The business is performing well on any measure. Let me now outline how the individual businesses are performing, starting with our Australia Direct business. This is the Group's largest business and represents almost half of the Group's gross written premium. Despite its scale Australia Direct's GWP grew by 6.6% and while rate was the main contributor, it was supplemented by increased volume. The division reported a headline insurance margin of nearly 20%, reflecting the favourable natural peril and credit spread effects that I've already mentioned, while the business' underlying margin remained strong. You may have also noticed in the media the continuation of NRMA Insurance's Experience the Difference brand campaign highlighting our long and proud history of helping customers. This has run concurrently with the introduction of a number of new products, including income protection and life insurance, to better meet our customers' needs. For the 2014 financial year, we expect further GWP growth with a higher underlying margin. Overall, this is a strong result from Australia Direct. Our CGU business comprises all products sold in Australia through brokers, authorised representatives, motor dealers and business partners and accounts for around a third of the Group's GWP. In line with our previous commitments, I'm pleased to say that CGU has delivered an impressive turn around and has recorded an underlying double digit margin of 11.2%. Since 2008, CGU has seen a greater than AUD300 million improvement in its annual underlying profitability. This year's result was achieved on the back of strong GWP growth of 9.7%, which reflected rate increases across property classes, volume growth across some commercial lines and improved retention rates. Last year, I talked about CGU's new operating model and I can report that this has resulted in close to AUD30 million of cost savings, placing the business on track to realise total savings of AUD65 million by the end of the 2015 financial year. For 2014, we anticipate continued GWP growth and an improving underlying margin. CGU is performing well. New Zealand has maintained its strong underlying performance. GWP grew by around 30% with a large part of this attributable to a full year's contribution from AMI, the business we acquired in 2012. Operating performances remain strong with the business reporting an underlying margin of 11.1%. Meanwhile, the integration of AMI is tracking to plan and we continue to expect to realise synergies of at least NZD30 million within two years of this acquisition. For New Zealand, we expect further GWP growth in 2014 and a continuation of the business' strong underlying profitability. I'm also pleased with how our New Zealand business continues to support earthquake affected customers and I thank all of our people on the ground in New Zealand for their efforts.


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IAG's businesses have made a commitment to have all customers' homes in Christchurch rebuilt by December 2015. To date we have settled more than 46% of our total claims that cost over AUD2.4 billion and more than 2500 families have moved into new homes that we've either purchased, built or repaired for them, and a further 2300 are currently under construction. The outlook for our New Zealand business remains positive. Asia remains a key platform for the Group and it's fundamental to our long term success. It's a large regional market that's set to experience substantial growth and demand for general insurance products as middle class consumption and asset ownership both increase by around 200% by the year 2020. We have an established presence in five of our six targeted Asian markets, Thailand, Malaysia, India, China and Vietnam and we're in discussion with potential partners in Indonesia which would round out the six. As expected, our Asian businesses delivered a small profit for the year, which is a much improved outcome on the Thai flood affected result of the prior year. We remain on track to achieve our goal of Asia representing 10% of the Group's gross written premium by 2016 on a proportional basis and today it accounts for around 7%. Our established market interests in Thailand and Malaysia have continued to perform well. The integration of Kurnia in Malaysia makes us a clear leader in the motor market with about 21% market share. In our developing markets we've seen continued rapid growth in our joint venture in India and 2013 saw the first full year of contribution from our interests in China and Vietnam. We also took the opportunity to increase our ownership of Vietnam's AAA assurance to 60.9% following regulatory approvals which we received subsequent to our year end. For 2014 we expect Asia to again deliver high proportional GWP growth and to build on the positive operating momentum demonstrated in 2013 as the divisions focus moves from one of development, to one of delivery. Turning now to capital, dividend and investments. IAG's financial position remains strong with a regulatory capital position at June 30, 2013 of 1.67 times our regulatory prescribed capital amount. This compares to the groups benchmark of 1.4 to 1.6 times. Cash return on equity continued to increase and Brian's already mentioned the higher dividend paid to our shareholders. At June 30, our investment portfolio had funds at around AUD13.6 billion, an increase of nearly 5% over the course of the year. We continue to pursue a conservative investment strategy with a high quality investment mix. Our technical reserves back our claims liabilities and those reserves stood at about AUD9.4 billion at June 30. They're entirely invested in fixed interest and cash, and this won't change. Underlying returns on this portfolio have remained strong with a reported outcome influenced by mark-to-market requirements. Our shareholders funds' investments generated a significantly higher return of AUD347 million reflecting much stronger equity markets. At IAG our employees are a key asset and during the year we reaffirmed to our people what it means to work at IAG and what we value as an organisation. While our businesses have different markets, brands and customers as a Group, we share a common purpose to help people manage risk and recover from the hardship of loss. For our people we also made a commitment to make career and development opportunities our key point of difference and we continue to improve employment experiences in the areas of diversity, inclusion and flexibility, values and culture and reward. To that end we refreshed our development programs with an emphasis on building the knowledge and skills required to address the challenges of the future and to provide opportunities for our people to perform to their fullest potential.


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A new approach to the way we manage talent and succession is providing clearer visibility of our talent base right across the Group. Since year end, we have also made some changes to our executive team, with the appointment of our former Chief Executive in Asia, Justin Breheny, as our Group Chief Risk Officer. Managing risk is core to IAG and the value that we create for our customers and our shareholders. The appointment of Justin in this role builds on our robust and practical approach to risk management and further demonstrates our commitment to continuous improvement in IAG's risk and governance framework. Duncan Brain, formerly our Deputy Chief Executive in Asia, has replaced Justin. Duncan's appointment demonstrates the depth of talent that we have within our organisation and the outcomes that can be achieved when we invest in our people and I'm very pleased to welcome Duncan to our executive team. Ladies and gentlemen as you know our ambition to be the world's most respected group of general insurance companies, and to achieve that we've got to do more than just run a good insurance company that delivers financially. We must make a positive difference in the communities in which we operate. We've taken significant steps over the last year in our efforts to create safer and more resilient communities. As Brian previously mentioned, our flagship piece of work has been the creation of the Australian Business Roundtable for Disaster Resilience and Safer Communities, which has seen us partner with organisations that share our view that we can do more to protect and property before disaster strikes. The Roundtable has presented government with a white paper that details a policy framework which will save lives and taxpayer money as part of a rethink about how we prepare for natural disasters in Australia. It outlines how a greater focus on preventative expenditure, on mitigation rather than post disaster recovery, can deliver benefits for all. We're currently in discussions with the new federal government on this, on the implementation of this paper's recommendations and I'm proud that our Group is delivering a meaningful policy contribution that can make all Australians safer. There are copies of the white paper available in the foyer if you want to learn more about this initiative. Our next task will be to deliver similar work to reduce risk on the road, at home and in business. All of this work truly confirms our leadership position in the areas of risk understanding and mitigation and provides a valuable contribution to making the environment safer for our customers and for our society. Further to the initiatives that I've just talked about, I've highlighted here some key indicators on how we've performed on our sustainability measures and further details can be accessed on our website and in our reporting suite. Our community investment has increased as we continue to look to opportunities that align with our previously mentioned priority of helping to build stronger and more resilient communities. We've also maintained our carbon neutral commitment. Today I'm pleased to announce that we've commenced a program of work that will see the Group develop a reconciliation action plan and look at how we can support indigenous communities, and you'll hear more about this in coming months. And finally, ladies and gentlemen, to the outlook for the 2014 financial year. As I mentioned earlier, we expect the strong result that we've seen in 2013 will continue in 2014 and this is reflected in the Group's financial performance in the opening months of the current year.


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The opening months of this year have seen a strong underlying operating performance, placing us on track to deliver our full year guidance of an insurance margin of between 12.5% and 14.5% and gross written premium growth in the range of 5% to 7%. Our guidance contains all of the usual caveats, including net losses from natural perils, being in line with our allowance of AUD640 million. To date, we've received around 660 claims in respect of the recent bushfires in New South Wales and we currently anticipate that a net cost from these fires being in the region of AUD65 million to AUD85 million. On that basis, our current expectation is that our natural perils allowance for the year remains appropriate. So in summary, ladies and gentlemen, IAG is performing strongly. We know where we're going and we've got the structures, the people and the processes in place to help us get there. I'm proud of our achievements and I look forward to standing here in a year's time and reporting to you on a similarly successful year. I want to end today by thanking our Board for its wise counsel and guidance, my executive committee colleagues for their leadership and their unwavering support, and all of the people at IAG for their dedication, focus and commitment. And finally, ladies and gentlemen, I thank you, our shareholders, for your belief and for your continued support. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thanks Mike. (Conference Instructions). There are nine items of business before the Company's Annual General Meeting this morning and these are set out in the Notice of Meeting. Eight of these items are to be voted on at today's meeting. The purpose of the AGM is to discuss the matters and business set out in the Notice of Meeting and this is not the time or the place to discuss individual matters. If you do have questions or issues of this kind, please raise them with the staff at the information desks that have been set up in the foyer to assist you. Briefly the meeting procedures. The only items of business to come before the meeting today will be those specified in the Notice of Meeting. No notice of other business has been validly or duly given by any shareholders, pursuant to the Company's Constitution or the Corporations Act. Shareholders here today will have a reasonable opportunity to ask questions about, and make comments on, the resolutions and the management of the Company, and to ask questions of the auditor's representative. Questions to the auditors are limited to the matters specified in the Corporations Act. I ask speakers to confine their questions and comments to matters that are relevant to the business of the meeting and to the particular resolution that is being discussed at that time they ask the question. To allow all shareholders at today's meeting a reasonable opportunity to be heard, I ask that speakers restrict themselves to no more than two questions or comments at any one appearance at the microphone.


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(Conference Instructions). Only attendees who were issued with a handset and data card or red non-voting card, when registering for this AGM, are entitled to speak on the business before the meeting. Please show your handset and data card or red non-voting card to the microphone attendant to establish that you're entitled to speak. I remind speakers that I may give priority to a person who wishes to address the meeting for the first time. A speaker wishing to speak more than once may rejoin the queue for another turn. (Conference Instructions). Before we move to the business of the meeting, I confirm that the minutes of the last Annual General Meeting of shareholders held on October 23, 2012 have been approved and signed by me as the Chairman of that meeting in accordance with the Provisions of the Corporations Act. The minutes are available for inspection by shareholders at the information desk in the foyer. The Notice convening the meeting has been sent to all shareholders. Copies of the Notice are available at the information desk in the foyer. Shareholders have also had the opportunity to view the Notice on the Company's website. Unless there are any objections, I propose to proceed on the basis that the Notice is taken as having been read to the meeting. As there are no objections, the Notice of Meeting is taken to have been read and we will now move to the first item of business. This item is not subject to a vote and therefore does not require the use of the keypad technology. And the first item of business is the receipt of the financial statements. The Insurance Australia Group Limited financial statements for the year ending June 30, 2013; the Director's Statement and Report, and the Auditor's Report on the financial statements are before the meeting. A copy of these statements and reports was published in the 2013 Annual Report and sent to those shareholders that requested copies. Shareholders have also had the opportunity to view the statements on the website. The purpose of this agenda item is to provide an opportunity for shareholders to ask questions and make comments about the Company's performance, operations and management. As I noted earlier, the Company's auditor, KPMG, is represented at the meeting by Dr. Andries Terblanche. Andries is available to respond to questions relevant to the conduct of the audit to the Company's financial statements, the preparation and contents of the auditor's report, the accounting policies adopted by the Company since the preparation of the financial statements, and the independence of the auditor in relation to the conduct of the audit. All questions to the auditor should, in the first instance, be addressed to me, as Chairman and, if appropriate, I will ask Dr Terblanche to address the meeting. Bear in mind please, for those who want to say something on remuneration, we have a resolution on the remuneration report prior to which the Chair of the People and Remuneration Committee, Yasmin Allen, will give a brief statement and we will then address your questions or comments. The floor is now open for comments or questions on the financial statements. So if anyone wishes to speak in relation to this item of business, please make your way towards the microphone. We're ready at microphone two, thank you.

Operator Good morning Chairman, I would like introduce Mr. Joe Nagy.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Good morning Mr. Nagy


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Joe Nagy Shareholder Good morning. Mr. Chairman, these are the finest financial statements I have ever seen, full stop. They are detailed and comprehensive and I have no queries about them. However, I do have a question about your diversification into Asia. As you know, and as we all know, we should know, diversification is risky and this is because a business has to deal with a different culture, different languages and different business practices and customs. This is why many businesses lose money when they go overseas, especially in Asia. Given IAG's poor performance in the UK, what are the lessons the Board has learned? How will they be applied to the Asian business to avoid similar recurrence? Now, having said that, I expect IAG to experience a few bumps along its learning curve. Let's hope they are small. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Mr. Nagy and thank you for your comments on the accounts, they are much appreciated. In relation to Asia, as you would well imagine, it's a topic that receives much attention around the Board table, around the management table, and generally in the marketplace. And, I think, just to give it context and perspective, our investment in Asia is some AUD850 million with a market cap of about AUD12.5 billion, so just to put that in context. And of that AUD850 million, roughly AUD600 million is invested in two markets in Thailand and in Malaysia. And, Thailand and Malaysia are, as you know, mature businesses. We've been in those markets for a long time and indeed already give us returns that are in the level that we'd be looking for and are very satisfactory. So what we actually have is in addition to that is three much smaller investments in China, in India and in Vietnam. We've said we're also looking at Indonesia, but as yet, we've yet to conclude a transaction there. So, I think, to that point goes immediately some of the learnings perhaps that we have learnt from the UK. And, I think, the first one would be in the context of this discussion is that the size of the investment in Asia is nowhere near the kind of investment that we made on one asset in the UK. We've had, I think, what you call, bite-sized chunks of each of those investments and of the six investments we're hopeful all six will do well but the nature of those investments suggest, as you say, that we will have some issues along the way. Having said that, the other lesson that we learnt is that it's very important to choose the right partners in each of those markets that we've gone into. And, I think that we've done that really well. We're delighted with our partners. The Board has made the effort and gone to many of those markets already. And in choosing the right partner, one of the things that we require of them besides all their focus on risk and on people and everything else, is an acceptance that we will have our people in some of the key positions in each of those companies. And I think that's the other lesson that we learnt from the UK. And so in each of our companies we have, in the financial position, in risk, in claims, in the key areas of the business, underwriting, we have our own people. So I think those are some of the risks and some of the lessons that we've learnt from the UK and overriding that is the fact that whilst it's a big investment in totality, in new and emerging markets it's still relatively small. Thank you.

Unidentified Speaker Does this mean that Mr. Raymond Lim would be very qualified (inaudible-microphone inaccessible).


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Brian Schwartz - Insurance Australia Group Limited - Chairman Yes. No it's a good point and the point that is made is that Raymond Lim would be well qualified to advise us. It goes -- I was going to talk about him later. But that's absolutely right. Raymond is--

Unidentified Speaker (inaudible-microphone inaccessible).

Brian Schwartz - Insurance Australia Group Limited - Chairman You can see that. Thank you, thank you. I hear the point. Let me respond to the point. Thank you. I think we will talk about Raymond later. But the point of Raymond is that he does have exposure to almost all of the markets that we are in in Asia and indeed at Monday's strategy session that the Board had was a major contributor to that discussion. But I will talk about him later on, thank you. I think there's a question from microphone one.

Operator Good morning Chairman. I would like to introduce Mr. Gregory Simoni.

Gregory Simoni Shareholder Good morning through-- Chairman Schwartz, forgive me for my ignorance--but through the IAG website and phoning Computer Share Investor Services I've been unable to find any financial reports for the financial years 1928, 1929, 1971,1972, 1998, 1999. Maybe to make it easier, maybe you could point me in a direction to find any IAG Insurance services or products from those years.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Mr. Simoni. I think, let us take that on notice and I'm sure that Chris will come back to you. Although Mike I think's got an answer.

Mike Wilkins - Insurance Australia Group - CEO Mr. Simoni, IAG was created in the year 2000 when NRMA was demutualised. The years you refer to going back to 1925, this Company was a mutual. We don't have access to those financial statements and hence they're not on our website.

Brian Schwartz - Insurance Australia Group Limited - Chairman That answer your question? I think you were talking NRMA. But I think Mike's given you the answer on the broad IAG accounts. Thank you. I think we have another question from microphone two.


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Operator Good morning Chairman, I would like to introduce Jack Tilburn.

Brian Schwartz - Insurance Australia Group Limited - Chairman Good morning Mr. Tilburn.

Jack Tilburn Shareholder Yes and a very good morning to you Mr. Brian Schwartz. A very good Chairman of a very good Company. This is my 510th Annual General Meeting ladies and gentlemen and I'm here to try to keep you entertained as well as trying to keep the people on the stage here honest and helpful to all shareholders. This year has been outstanding in that regard and I wish to make comments on that Mr. Schwartz and then I'll ask one quite nitty gritty question about India, with another couple of questions I hope later. Ladies and gentlemen it is a very fine Company indeed and I wish to make comments along the following lines. The Chairman, including a wonderful tribute to the passing of our previous Chairman Mr. James Strong. Thank you very much Mr. Schwartz for that special message. The Managing Director and CEO Mr. Mike Wilkins, with his announcement of a long awaited sale of the underperforming assets in the United Kingdom. It's been a long time coming, ladies and gentleman and we've lost a lot of money. But we have turned the corner and sold the assets. Part three, the Chief Financial Officer, Mr. Hawkins and having a comfortable AUD1.6 billion only in long term debts. Many other companies have AUD2 billion, AUD3 billion, AUD5 billion, AUD10 billion in debts, but we're way down with only AUD1.6 billion. The Chief Strategy Officer, Ms. Leona Murphy, reporting on the formation of the Australian Business Round Table, on disaster resilience and safer communities. Well we'll certainly need all that for the Blue Mountains tragedy. Part five, Mr. Andy Cornish, reporting on Australia Direct and our iconic insurance policies for our 3.5 million customers -- 3.5 million customers out of our 22 million. Very good going Mr. Schwartz and the Company. Part six, Mr. Peter Harmer, disclosing achievements of our important CGU insurance company. Number seven, Ms. Jacki Johnson, reporting on much progress on our New Zealand businesses and lastly number eight, Mr. Justin Breheny, informing us of brighter prospects for our push into Asian insurance. Having studied the annual review quite well as always, my homework and the annual report, ladies and gentlemen we have very, very good performance growth and results shown in the annual review and the annual report. To check it all out, you've got to refer to the five year financial summary on page 1. Absolutely splendid and one of the best companies performing in Australia, as Mr. Schwartz told us earlier in his address of a good 15 minutes. Our half year dividend was AUD0.11. But wait for it, our final year dividend was AUD0.25. Absolutely exceptional, absolutely wonderful, AUD0.36 for the year. Thank you to the board of directors and to Mr. Wilkins.


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Lastly on my special comments there, we have one question for Mr. Schwartz as he asked for comments and questions, under Section 250 as to the Corporations Act. Many chairmen of course forget about having comments and all they do is to push for questions, which is not ethical and moral. So after all those hardy congratulations ladies and gentlemen, let me put this first question about the IAG prospects in India and I want something a bit heavy going from you and Mr. Wilkins. You have set out briefly on page 19 of the annual review about your travelling, travelling along in India for insurance policies. Now, my idea of the question so that you can get into the nitty gritty parts of it to help us is; what about the business culture going on in India? Because everywhere I read about South East Asia or Asia in general there's corruption, there's dishonesty, there's embezzlement. I want to know how you're travelling with the business culture of India and the business corruption I put down in India and Asia. Lastly, how is the business travelling along and getting any profits out of India for 2014, 2015? Thank you Mr. Schwartz.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Mr. Tilburn and thank you for your comments. I'll make a few comments and then perhaps it's appropriate to hand to Mr. Wilkins because he only returned from India on Sunday evening. So he'll be able to give us a very current update. Suffice to say that consistent with my comments a bit earlier, the real strength in the first instance of our investment in India was our choice of partner. Our partner in India is the State Bank of India, by far the biggest bank in India with some I think 19,000 branches is that right? It's quite unique in that marketplace. In doing that, they have also again given us the opportunity to have our own people in the roles that we sought to have them and having been there now for some years we're finding this bear fruit. The market is -- our business, which was a start-up has grown very substantially and Mike gave us some really good comfort on his return on Sunday. So perhaps Mike if you'd like to comment on the culture, because culture again, every country we go into in new markets it's a fundamental thing that we challenge as a Board that we ask questions about as a Board and want to get comfortable that we can work within those practices. Mike.

Mike Wilkins - Insurance Australia Group - CEO Thanks Brian. Thanks Mr. Tilburn. I echo Brian's comments. I think the important thing in a lot of these Asian markets is our choice of partner and the moral and ethical attitudes that they have to business. I think that the State Bank of India, which is the largest financial institution in India is an exceptional partner and one that displays all of the characteristics that you would expect it to display and all that we want to see. They're a partner that is very aligned with our view of building a business here. In a lot of these Asian markets you can grow very, very quickly so your top line looks great, but you don't necessarily like the financial outcome that you get. What we have done is we have patiently tried to build this business, over now two and a half years, starting as Brian said from a greenfields position. Such that the business today has a premium pool well in excess of AUD200 million, mainly penetrating the State Bank customer base where the bank already knows those customers which helps us as well.


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A couple of statistics which I like to quote, the business grew 130% last year, admittedly from a small base. But it just demonstrates the potential that is there and the losses, because this is a start-up business and it is in losses, but the losses were significantly reduced. We've currently said that in India, we expect this business to be profitable in the 2015 calendar year, which is a pretty good effort I think from a start-up position and I think that's been made possible by the focus that the IAG people that we've got on the ground have brought to this business, but more particularly by the support that we've seen from the State Bank. They're a wonderful organisation. Justin and Duncan and I spent an hour or so with their new chairman who's only just been appointed. But she was kind enough to give us some time, just to make sure that we were able to confirm her alignment with the progress of the business. So I'm delighted. On the wider question about Asia, I think it comes back to the choice of partner, the shared vision of what this business is going to be and the shared ideals about how we are also going to do that business.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thanks Mike and thank you for the question.

Operator Good morning Chainman. I would like to introduce Mr. Michael Perry.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Good morning Mr. Perry.

Michael Perry (ASA) Proxy holder Good morning Chairman. I'm carrying proxies for some 500 shareholders, mainly members of the Australian Shareholders Association, representing in all something like 1.7 million shares. It is indeed pleasing to see your results for the last financial year and perhaps even more so the confidence with which both you and Mr. Wilkins have predicted that that situation will continue into the next year. I have just a couple of questions on the accounts. Firstly, following thank goodness the sale of the disastrous UK operation, can we be assured that there are no residual liabilities or contingent liabilities hanging around that can turn back and bite you in the future?

Brian Schwartz - Insurance Australia Group Limited - Chairman Maybe I'll take that one and then the second one.

Michael Perry (ASA) Proxy holder


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Sure.

Brian Schwartz - Insurance Australia Group Limited - Chairman I think it disclosed in the accounts our liabilities amounting to some AUD106 million. They primarily relate to pension funding liabilities that we agreed as part of the transaction to take onto our balance sheet. As of today, the two major liabilities have in fact been removed by way of transactions. So I think as of this moment, the number is somewhat less than AUD30 million and precisely in accordance with the transaction. So the answer to your question is yes.

Michael Perry (ASA) Proxy holder That's very good to hear Chairman. My second question relates to the AUD212 million that you transferred out of your release from prior period reserves in your 2013 accounts. Now I understand that's a reasonably routine operation each year that you adjust the level of those reserves. But of course we're aware that it can affect the profitability between years. So can -- is that an unusually large amount or do you expect to make further transfers during the current year?

Brian Schwartz - Insurance Australia Group Limited - Chairman The disclosure that we've made for the current year is that we expect those releases to be between 1% and 2% and in the long term closer to 1%. For this year, though, 2.5%. So yes, they are higher than those numbers. Essentially, what they represent is claims liabilities that were in existence at the start of the year that are essentially no longer required. Why does that happen? For a range of reasons, fundamentally because I think we are conservative in creating those provisions. We always have chosen to be and I think that we are. They relate primarily to the long tail Australian classes, so that is worker's comp and CTP. In the current year specifically there were some settlements of cases that actually resulted in us being able to release some of those reserves as well.

Michael Perry (ASA) Proxy holder Thank you Chairman, that's fairly clear. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Any other questions? Microphone two.

Operator Good morning Chairman. I would like to introduce Mr. Richard Wilkins.

Brian Schwartz - Insurance Australia Group Limited - Chairman


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Thank you. Mr. Wilkins, good morning.

Richard Wilkins Shareholder Good morning Chairman. I should just reassure you that I'm not related to the CEO. I wonder if you'll humour me. I've actually got four questions, but the first three are really yes or no type things. Do you have any reassurance cover for the long tail liability book, is the first one. Secondly, are all the debts, in other words, the notes, hybrids and so forth, subordinated to all claims and other creditors? Thirdly, roughly how many shareholders use the small shareholder sale facility during the year to remove themselves? And fourthly and this is probably the only major question, the minority interest in the profit and loss account for the Victorian JV with RACV shows an extraordinary high level of profitability, particularly on your historical level of equity in that. That's obviously been a very successful business. Have you had any thought of trying to buy out the minority? I have no doubt it would cost a fortune, but alternatively is it actually such a good distribution channel that you'd rather just keep the 70% rather than go to 100%? Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Maybe -- again, I'll answer -- maybe I'll answer the last one first. I think Mike can answer the others. You've got the answers for them? I'll give you time to have a look for them. I think the answer to your question about RACV and our joint venture, which of course we own 70% of, is that it is a very, very good joint venture and we do well together. I think we -- our focus is to continue to keep our heads down and run that business as well as we can. Of course, it represents both our New South Wales and Victorian direct insurance businesses and it's fair to say we're very happy with the relationship and with the business as it's currently running. Mike, you've got the answers to the others.

Mike Wilkins - Insurance Australia Group - CEO I have them Mr. Wilkins, yes. Nice to meet you and I can confirm that no, I don't believe we're related. In terms of some of our long tail classes of business, yes we do. But it's more of a stop-loss or catastrophe-type arrangement. There are some very old liabilities sitting in there that came with the purchase of CGU and the NZI business that we have in New Zealand, where we also did get some protections provided, either by reinsurers or by the vendors of those businesses. But others are open but the individual policy holders are not material in the -- they're not material individually. They could be material in the aggregate, but not material individually. In terms of the subordinated notes and hybrids, yes they are. As you suggest, they're subordinate to ordinary creditors and to the interests of policy holders. They also count as capital for our regulatory and Standard & Poor's purposes, so they have to be structured in a particular way. As to the number of small shareholders that avail themselves of the share sale position, that is an answer I don't have. I don't know whether our Company Secretary's got one. I think there was a smallish number. We still have some 760,000 retail shareholders on our register. Chris, I don't know whether you--

Chris Bertuch - Insurance Australia Group Limited - Group General Counsel and Company Secretary


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It was 15,000 shareholders--

Mike Wilkins - Insurance Australia Group - CEO 15,800 shareholders.

Richard Wilkins Shareholder Thank you very much gentlemen. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Any other questions? Microphone one.

Operator Good morning Mr. Chairman. I would like to introduce Mr. Gates.

Brian Schwartz - Insurance Australia Group Limited - Chairman Mr. Gates, good morning.

Unidentified Audience Member Good morning Mr. Chairman. Before I start, I'd like to thank you for your continuing support of the State Emergency Services -- for the partnership in it. As a volunteer, I am very grateful for it. Thank you. First question, your premiums in flood-prone areas. There seems to be a lot of political spin that's been going on about what causes it. Could you stop -- could you explain what the actual facts are as far as the premiums in flood-prone areas are, how they affect the people, et cetera? Secondly, on page 67 of your annual report, your credit rating has seemed to have been downgraded by [one B] and AUD84 million. Could you explain that as well please? Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thanks. Mike, you want to answer the question on the flood?

Mike Wilkins - Insurance Australia Group - CEO Mr. Gates, in terms of flood-prone areas, we now do offer a flood solution in Australia. We think that the data that we have enables us to identify those areas and we try to price accordingly for that flood risk. One of the things that I think a responsible insurance company needs to do is to make sure that it is getting an appropriate premium for the risk it's being asked to take, but also we see a responsibility to actually send a risk signal through our pricing to those people who are in the most exposed areas.


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That is certainly what we've been doing for the last eighteen months or so since we actually did introduce this product. That's seen some of our customers not necessarily like the price of the risk that we've been pointing to. But we believe that that's the appropriate thing to do because we should not also disadvantage those customers who are not exposed to flood to the risk that others are taking. As always we try to keep our premiums as reasonable as they can be, but one of the other things that has had an impact on our premiums in recent times is not just the introduction of flood insurance but also the very significant increases that we've seen in our reinsurance costs over the last couple of years which we've needed to pass on to our customers. In terms of the debt rating, I think I can answer that question unless you want to?

Brian Schwartz - Insurance Australia Group Limited - Chairman No, no go on.

Mike Wilkins - Insurance Australia Group - CEO Go for it. No no, after you.

Brian Schwartz - Insurance Australia Group Limited - Chairman I think what you're referring to in fact is the debt rating relating to our insurance recoveries, and I think all that has happened is that we've actually received approximately AUD 1 billion worth of those recoveries which is why that number is reduced.

Unidentified Audience Member Oh right, okay.

Brian Schwartz - Insurance Australia Group Limited - Chairman Yes.

Unidentified Audience Member Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Okay. One more question, oh number two?

Operator


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Good morning Chairman. I'd like to introduce Mr. Jonathon Hillman.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Mr. Hillman?

Jonathon Hillman Shareholder Good morning Chairman, good morning Board members and a hearty congratulations, you must be very pleased with yourselves, deservedly, with these results. And no higher accolade than a congratulatory comment from Mr. Tilburn. My question relates to profitability, and particularly future profitability. I -- before I get on to that --- I would like also to include all of your staff in the very good result. Having worked as a manger in financial services, I know it can be a pretty tough game and I particularly want to acknowledge the tremendous appreciation from me at least as a shareholder, for all of your staff right from the very entry level.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thanks John.

Jonathon Hillman Shareholder Now Mr. Chairman, Board members, as I said my question relates to future profitability. You're specifically to be congratulated on this initiative, the Deloitte Access Economics, building our nation's resilience to natural disasters. I, when in the financial services industry, learned very quickly we have to take a very conservative, very prudent approach to risk management. This Company particularly with the results it's achieved deserves to be on the pedestal of leadership. I certainly hope that you will now, and this is the question, will you please use this deserved pedestal of leadership to be leaders in making sure that the financial impacts of climate change are absolutely minimised? Now put aside the dreadful social impacts of for example, the recent bushfires, going back further; the floods. Put aside all of the social impacts of natural disasters and climate volatility, put aside all of the environmental impacts, with apologies to my children and grandchildren. Let's focus on the financial impacts, purely and simply at a shareholders meeting. We've heard underwriting and reinsurance costs have gone up, understandably because of these increased risks. We see clearly that there's the potential for claims to spike at any time, be it a flood or be it a bushfire. I read briefly through the summaries and through the recommendation at the back and I'm sure it's in there somewhere, but it's very diplomatically and unfortunately I think not quite punchy enough a report. I implore you as business leaders to make sure that the overwhelming science that indicates that we must do something about, whatever the degree of it is, the human impact on causing climate change is addressed. Please, for your children and your grandchildren and our grandchildren, and for the financial impacts to be managed, please show leadership so that our 2014 and thereafter financial results can be just as great. And of course I know, you can simply adjust premiums. But we all know that if premiums keep going up because we have failed as a society and failed as business leaders to do something now, then what will happen we all know, is that people will drop out of insuring. And ultimately then, when disasters do happen, there'll be enormous reputational damage for insurers and financial services leaders.


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Please, show the kind of leadership that we desperately need in our society, that you've shown in producing this magnificent financial result this year. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Mr Hillman and I think that you raise a lot of really important issues, and it won't surprise you, again, to know that many of those I've discussed regularly at all our senior forums in the organisation. Right at the end you referred to we could keep just increasing premiums. Of course, we can't because affordability, ultimately, becomes a key issue as well. That's something that we continue to focus on and consider. I think that the initiative--the round table that you referred to--is precisely the kind of initiative and the kind of focus that we are giving to the issue. Clearly, there is an issue. Clearly, it impacts on our industry, but as you say, more importantly, it impacts on our society, and we do need to continue to address it. Having said that, I don't think that we alone can address it. I think we need Government to work with us. We need Government to look at and work with us on mitigation, on making sure that the planning is appropriate in where they build and where they allow buildings to occur. This whole range of issues gets regular airings with Government through our people and, more broadly, in the marketplace. Mike, do you want to add anything to that?

Mike Wilkins - Insurance Australia Group - CEO No, apart from saying thank you, firstly, for your comments on the initiative. It was an initiative that IAG actually put together, so we were the ones that approached the other five organisations. I think there's a great cross-section of not only the business community, but with the Australian Red Cross being involved there as well we are trying to look at the humanitarian issues that go with this. The report we're very proud of, but I said during my presentation that we were proud to actually keep that initiative on track. We are getting a hearing from Government. The key thrust is that, in the report, indicates that, on average, we spend about AUD560 million a year in terms of handouts from the Government for people that are affected by disasters. Yet we spend only AUD50 million a year in mitigation against those disasters, so the preventative piece. The thrust of that report indicates that with a prudent spend over the course of the next decade we can save something like AUD12 billion a year in the year to 2050. Now, it's projections obviously, but I think the numbers are there, and it's something we'll continue to prosecute very vigorously.

Jonathon Hillman Shareholder Thanks, Mike.

Unidentified Audience Member (Inaudible - microphone inaccessible).

Brian Schwartz - Insurance Australia Group Limited - Chairman People can't hear you. You need to go to a microphone if you want to speak. While you do that we'll take a question from microphone one.


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Unidentified Audience Member Good morning, Chairman.

Brian Schwartz - Insurance Australia Group Limited - Chairman You go (inaudible) on this Mrs. Cook.

Operator I would like to introduce Mr.Finnerty.

Unidentified Audience Member Good morning, Mr Chairman.

Brian Schwartz - Insurance Australia Group Limited - Chairman Good morning, Mr. Finnerty.

Unidentified Audience Member Thank you both for your comments on that last question. My question relates to an innovation introduced by the Australian Stock Exchange earlier this month called the ASX BookBuild. It promises to make fundraising more fair, efficient and cost effective. Will the Board undertake to use this new product if it does a placement or for the sale of (inaudible) rights if it does a rights issue? As a shareholder I'd like to be able to purchase shares if you did a placement, so I'd like to get a comment back on that please.

Brian Schwartz - Insurance Australia Group Limited - Chairman I thank you for your question. I am aware of the ASX initiative. I think, in time, when we do consider future raisings we'll look as to its applicability. At this point in time nothing in train but, certainly we--and I'm looking at our Finance Director and our CFO, and he is nodding his head.

Unidentified Audience Member Thank you very much.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Mrs. Cook.


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Unidentified Audience Member (Inaudible - microphone inaccessible).

Brian Schwartz - Insurance Australia Group Limited - Chairman Oh.

Operator I'll come over here. Good morning, Chairman. I'd like to introduce Celia Coucke.

Celia Coucke Shareholder (Inaudible - microphone inaccessible). Global warming is a terrible thing. My son creates solar powered motor cars. They don't take any energy, just from the oxygen, from, yes, the sun. So we've got to keep the sun going now, haven't we? So you can do many things, but it's very good that the universities are behind it because we need that. I'd like to drive in his solar motor cars. I think that would be great fun.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you.

Celia Coucke Shareholder I don't think we'd have so many accidents.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you, Mrs. Coucke. Certainly, there are lots of things that are going on that will impact. Clearly, your son's investigating one of them, so thank you for the comments. I think we've got another question from [Chip].

Operator Good morning, Chairman. I'd like to introduce Mr. Reginald Lobb.

Brian Schwartz - Insurance Australia Group Limited - Chairman Mr. Lobb.

Reginald Lobb Shareholder


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Thank you, Mr. Chairman. The major--I'd like to speak on--just a few areas--very short questions. When something seems to be too good to be true it often is. Your major competitor is offering car insurance for new or relatively new cars that I hope not too many younger drivers are insuring with. I'd like a comment on, more or less, the perpetual insurance of a new car. The other things--we never know what premium--often, we don't know what premium to pay, what amount to insure a home for, given that disasters occur, and the repairers are very, very expensive. It's often very difficult. I'm wondering any comment about how well people are insured in disaster areas? The other point--supermarkets, as I understand, are entering into insurance. Now, I have respectful fear of insurance companies declaring everything. I have not very much respect for our two major supermarkets, given their attitude to so many things. Your comment in that regard would be appreciated. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Thank you, Mr. Lobb. I'm going to ask Mike to respond. I know that in responding he won't be keen to comment on what our competitors are doing because I think our role is to do what we do really well and to make sure that we keep ahead of the pack. Mike, do you want to comment on some of those questions?

Mike Wilkins - Insurance Australia Group - CEO Thanks, Brian. Good morning, Mr. Lobb. Yes, it's very difficult for us to comment on our competitors. What I like to do is make sure we focus on our business and meeting the needs of our customers. Certainly, both the anecdotal feedback that I receive, but also the information that we get through our regular customer surveys, certainly indicates that--particularly at claim time--there is none better than our organisation. I think that's the moment of truth for any company. In terms of your question about home insurance and the sums to be insured, we try to do as much as we can, particularly on our website. We have calculators to attempt to help people to understand what their home is worth and to help them to calculate what they want to insure that home for, or those contents. It's a sad thing--and it seems to be a very static number--that when we see disasters strike roughly 25% to 30% of the people that are affected have no insurance. Of those that are affected about 30% seem to have underinsured. We do encourage people. In fact, with our home insurance, we actually almost--we indicate what their sum insured would move by in terms of the CPI, to try to help them with that. It's a sad fact of life that, unfortunately, people remain underinsured or don't see the benefit of the insurance safety net until, sometimes, it's too late. In terms of supermarkets in insurance, we regard all of our competitors as very worthy competitors. We will treat the supermarkets in the same way. I think the important thing for us is to make sure that we're there to fulfil the promises that we make. That promise is best demonstrated when we're there for our customers at their times of need.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Hang on a sec. There are others. Number 2.

Operator Good morning, Chairman. I'd like to introduce Mr. Paul Lenehan.


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Brian Schwartz - Insurance Australia Group Limited - Chairman Good morning, Mr. Lenehan.

Paul Lenehan Shareholder Paul it is. Good morning, gentlemen. Just a little bit of a housekeeping thing. Usually you find when things are going good not many people turn up. Things are going good. You've got a tremendous audience. I think that's a little bit out of the ordinary, so it must have some sort of confidence we must have. My point is housekeeping. We're all old, getting old, and I believe that two microphones is insufficient. I think you should, I suggest, have more microphones because the inability of the people here find it most difficult to come to a microphone. So if you'd put that on notice I'd be most grateful. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman A point well made. Thank you.

Unidentified Speaker (Inaudible - microphone inaccessible).

Brian Schwartz - Insurance Australia Group Limited - Chairman Not--can we do that a bit later? Would you mind? Thank you. Any other questions? Number two.

Operator Good morning, Chairman. I'd like to reintroduce Mr. Joe Nagy.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Mr. Nagy.

Joe Nagy Shareholder Thank you, Mr. Chairman. My question is to do with Vietnam. I spent one month in Hanoi conducting a seminar for Vietnamese bankers, so I'm interested in knowing what has enticed IAG into Vietnam and, secondly, what products or services are being offered? Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman I think what's enticed us there is we see an opportunity. We identified only six countries in Asia that we thought there were opportunities, and Vietnam was one of them. It's fair to say that, at this point in time, our investment is still a very


26

small investment, but I think we would like to have a good look--and we have, again, our own people in place there--to have a good look at the market and to see if there are opportunities for us. Mike, do you want to add anything?

Mike Wilkins - Insurance Australia Group - CEO Mr Nagy, yes, I guess Vietnam shows the same characteristics as a lot of the higher growth markets that we've targeted. That is a relatively young population, a rapidly emerging middle class, that middle class starting to accumulate assets and recognising the benefits of protecting those assets. The product that we're offering, primarily, in Vietnam is motor insurance. If you've been in Hanoi you understand the number of cars on the road and, more particularly, the number of motor bikes and motor scooters that are on that road.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thanks, Mike. We have another question from two.

Operator Good morning, Chairman. I'd like to reintroduce Mr. Jack Tilburn.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Mr. Tilburn.

Jack Tilburn Shareholder Yes. Thank you very much, Mr. Schwartz, again. Ladies and gentlemen, I'll be using up my quota of two questions now to finish. When I was mentioning earlier in my comments about the key management personnel, ladies and gentlemen--private investors you are now, not retail investors--I forgot to mention that I'm sure that myself and everybody in this audience, as a private investor, would be very, very pleased with the great contributions made by the 13,000 staff and employees. My two questions please, Mr. Schwartz--the absolutely important question, ladies and gentlemen, about the devastation and the tragedy that has occurred in the Blue Mountains. I'd like to ask through you, to Mr. Wilkins, how he gets his troops on the ground and how they go about helping and caring and wellbeing for the poor, poor people devastated and with their tragedies in the Blue Mountains' fires. The second question is back on to Asia; thank you, Mr Schwartz and Mr Wilkins. I'd like you to explain how you'll go about the attempts that you make to invest in Indonesia, how you go about checking up on their culture, because it's quite different to the Australian culture and how you are thinking of prospects there in 2014, or of course, it could be in 2015. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you and particularly on your first question, I think we would very much agree with you that what happened in the Blue Mountains and the way our people reacted have been extraordinary. My sense is that they don't need to be asked too much, they're up and running before we can, before we can ask them and I saw a number of instances where our people were out there. The morning it all started and we heard of claims being paid before people could even understand how they could be paid.


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So I think it is, when our people get involved in a situation that needs them, we find their response is just extraordinary and I think they're just well trained to do it. It is a credit to them and I think it's great that you recognize them. Thank you. On the second question about Asia and Indonesia, of course we're, I think a good question and again the fact that it's taken us - we've been looking at Indonesia for a number of years. We're absolutely convinced that it's a great market place to be in and that it had great opportunities but equally we know that we have to find the right partners and partners that fit with us culturally and we're still doing that. We think we're a lot closer than we have been but we're very alive to the issues that you raise and they are fundamental to any decision that finally does get signed off. Mrs. Cook, to the microphone please. Is there another, any other questions over there? No.

Celia Coucke Shareholder I'm a heritage convener. I have the oldest house you could possibly imagine and yet it's a house that has solar panels. Now, in order to make sure that the re - that everything was re-wired, which it was, I was assistant to my electrician. Now, being a wise person, I made sure that I did everything he said because you don't want an electric shock, but it's amazing how the oldest house you could possibly imagine had the first set of solar panels, everywhere.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you, Mrs. Coucke. Can I just say they are interesting stories for people to hear but I think if you could restrict them because people do understand your view on energy and on conservation and we certainly appreciate you having told us those, I think.

Celia Coucke Shareholder Because it seems, you know--

Brian Schwartz - Insurance Australia Group Limited - Chairman No we are--

Celia Coucke Shareholder Always obey your electrician.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Any--


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Celia Coucke Shareholder And I took all the junction boxes away.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Mrs. Coucke, thank you. Any other questions from one or from two? I think not and I think that shareholders have now had a reasonable opportunity to ask questions or make comments about the financial statements, except for one.

Operator Good morning again, Mr. Chairman. I would like to introduce Serena Kee.

Brian Schwartz - Insurance Australia Group Limited - Chairman I'm sorry, the name was?

Operator Ms. Serena Kee.


Serena Kee Shareholder Good morning, Chairman.

Brian Schwartz - Insurance Australia Group Limited - Chairman Good morning, Ms. Kee.

Serena Kee Shareholder I wasn't going to speak but I think I'd better. I was unfortunate enough to have an accident in mid-September. My car was written off and the car was only insured and registered three weeks prior to the accident. I've been driving for nearly 40 years, I have no accident at all before and I've been a loyal member of NRMA Insurance and CTP for nearly 40 years. I received the agreed value of my sum insured but not the remaining unused portion of the CTP which is 11 months and one week of the accident, since the accident. CTP is compulsory third party, which is for damages done to other parties


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when I'm driving. The car is written off now and I wouldn't be using any more CTP to be doing third party injuries to other people. So even the RTA and the RMS, as they're called now, when I went to cancel my registration, I was given a letter which says you may be entitled to a refund of CTP insurance fees for the remaining registration period.

Brian Schwartz - Insurance Australia Group Limited - Chairman Ms. Kee, I'm sorry to interrupt you. The issues before the meeting today are shareholders issues. The issue that you're raising, whilst very important, is a customer issue. There are people out the front who will be able to help you on the issue and clearly it sounds like - well, if you wouldn't mind, if you could take it up with them I think that would be more--

Serena Kee Shareholder With the people out front.

Brian Schwartz - Insurance Australia Group Limited - Chairman Yes there are.

Serena Kee Shareholder Yes, this gentleman did tell me but I thought there's other people that have talked about other things.

Brian Schwartz - Insurance Australia Group Limited - Chairman I know. It's not always - you're quite right.

Serena Kee Shareholder I'm a bit more related to--

Brian Schwartz - Insurance Australia Group Limited - Chairman You're quite right but I think this is so specific that it would be best handled by the people out the front. But your point is well made.

Serena Kee Shareholder I thought this was--

Brian Schwartz - Insurance Australia Group Limited - Chairman


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No, this is not a shareholder issue. This is a customer issue that you're raising.

Serena Kee Shareholder But I was paid by IAG, actually.

Brian Schwartz - Insurance Australia Group Limited - Chairman But that's as a customer, not as a shareholder. So this is just shareholders here that are addressing shareholder issues.

Serena Kee Shareholder Okay, yes--

Brian Schwartz - Insurance Australia Group Limited - Chairman If you could--

Serena Kee Shareholder Because I was paid the agreed value by IAG, not--

Brian Schwartz - Insurance Australia Group Limited - Chairman Yes, I understand, understand.

Serena Kee Shareholder So speak to somebody out the front.

Brian Schwartz - Insurance Australia Group Limited - Chairman If you would please.

Serena Kee Shareholder Sorry about that.

Brian Schwartz - Insurance Australia Group Limited - Chairman Not at all, not at all. Thank you. No, I think we're moving on. Thank you, you're right.


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So to moving onto the voting. There've been a large number of votes cast directly and by proxy and those shareholders here today are obviously only a small minority of the some 760,000 members on the Company's register. Each share in the Company carries the right to one vote and the poll reflects those voting entitlements more fully. Accordingly, I will not ask for a show of hands but direct that we move straight to a poll for each resolution. I believe that this is the fairest way to proceed. The returning officer, Mr. Allan Weinberg, has given me a report on the result of the direct and proxy voting instructions received from each item of business. I have accepted his recommendations as to the admission and rejection of proxies and direct voting instructions that have made rulings accordingly. The preliminary results of direct voting, proxies and votes from attendees of today's meetings will be combined and displayed on the screen at the close of the poll on each of the resolutions. Once the polls have been closed and the votes compiled, a report from the final results will be announced to the Australian stock exchange and then be published on the Company's website and be made available at the Company's registered office. The first resolution for consideration at this year's AGM is the adoption of the remuneration report. The Resolution is put to the meeting in accordance with the corporations act. The Resolution is that the Company's remuneration report for the financial year ending June 30, 2013 be adopted. Under the corporations act, this vote is advisory only, meaning the result of the Resolution will not bind the directors of the Company. The Board will however, as we do every year, consider the outcomes of the vote and comments made by shareholders when reviewing the Company's remuneration policies. The remuneration report you said on pages 26-42 of the Company's 2013 annual report and provides extensive disclosure of director and executive remuneration. Please note that the proposal to increase aggregate board fees is the subject of a separate resolution and will be discussed when we get to that item of business. As mentioned previously, before we begin this discussion on this Resolution, Yasmin Allen, the Chair of the IAG People and Remuneration Committee will provide a brief overview of IAG's approach to remuneration. Thank you, Yasmin.

Yasmin Allen - Insurance Australia Group Limited - Independent Non-Executive Director Thank you, Brian, and good morning ladies and gentlemen. As you've already heard from Brian and Mike, the Group's strategic priorities have delivered further improvement in our underlying business performance. These outstanding results in turn have contributed to higher remuneration for the executive team as both short and long term incentives have increased compared with last year. This is a pleasing outcome because it reflects the successful relationship between executive remuneration and the creation of long term financial performance that generates value for IAG shareholders. The Board believes strongly that the fundamental driver for executive remuneration should be long term performance and value creation. To achieve this alignment the remuneration structure for the group's CEO and the executive team comprised a mix of fixed pay and at risk or incentive remuneration. Last year, increases in fixed pay for executives remained modest with an average 2% increase. This compares to 3% to 3.5% increase for general IAG employees. The average increase for executives in 2014 will also be 2% and increases in non-executive director fees were similarly modest with a 2% increase. At risk remuneration has two components, one short term and the other long term. Short term incentive consists of a cash component equal to two thirds of the incentive payment with the remaining one third being deferred as equity over a two year period. The short term incentive is directly linked to Company strategy and performance through a balanced scorecard which sets performance objectives which strive the execution of IAG's strategy. Half of the balanced scorecard outcomes are based on financial measures and half on measures that relate to our customers, our people and project delivery.


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To address requests for more detail and to provide greater visibility around our performance measures we have included more information on the balance scorecard objectives on page 34 of this year's annual report. Each individual executive's STI outcome is linked to the financial performance of the group as well as the execution of his or her division's strategic goals during the year. The Group's strong performance this year means that short term incentive amounts for the Group CEO and executive team are on average 11% higher than last year. Second, we use a long term incentive plan to align remuneration with longer term financial performance. Long term incentive is provided as a grant of executive performance rights which are subject to two performance hurdles, relative total shareholder return and return on equity over a 3to5 year period. The return on equity hurdle is measured relative to IAG's weighted cost of capital and uses the Group's cash earning. And this aligns to the Group's dividend policy which targets a payout ratio of 50-70% of cash earnings. Total shareholder return is measured against the top 50 industrials within the SMP ASX 100 index. This year, our TSR of 57% saw executives rewarded under the total shareholder return component of the LTI with portions of the awards granted in 2008, 2009 and 2010 vesting. Also, part of the increase in the value of LTI is due to the increase in our share price which rose by 38% from AUD3.17 to AUD4.38 over that relevant period. The 50% portion of the awards granted in 2007, 2008 and 2009 that were subject to the return on equity hurdle did not meet the required ROE performance and subsequently did not vest. Each year we will continue to incorporate feedback from our shareholders and from evolving market practice into our review of remuneration structure. For example, this year, we revised the terms and conditions of the group's long term incentive plan to remove retesting of the TSR performance hurdle which will now be subject to a 4 year performance period. In summary, the Board remains committed to ensuring IAG's remuneration practices support our objectives to reward superior and sustainable performance to attract and retain high quality people, striking a balance between rewarding short and long term performance, and importantly, to align remuneration with the returns that you as shareholders receive. Thank you ladies and gentleman, I'd now like to hand back to the Chairman for discussion on the 2013 remuneration report.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Yasmin. If anyone wishes to speak in relation to this Resolution, please make your way towards the microphone queue and direct your questions to me. No, no you're not at the microphone and unless you're talking on the topic we need please to hear the other people talk first.

Operator Good morning Chairman, I would like to reintroduce Joe Nagy.



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Joe Nagy Shareholder I agree with IAG's policy, it's good to hear that and I hope other businesses and companies follow suit. Just one question, this may sound silly based on what I've just heard said, but can IAG reject performance payments when performance suffers? Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman The short answer is yes, the longer answer is that the performance measures are set both for short term and long term across a range of areas from balance scorecards to the meeting of hurdles, and the Board ultimately does have discretion in relation to any payments that ultimately get made beyond that, if that answers your question. We also have every year we look at whether there is a need to claw back any amount that is due to be paid. Thank you.

Unidentified Audience Member Well can I just ask --

Brian Schwartz - Insurance Australia Group Limited - Chairman No, others would like to ask questions first. Number one?

Operator Good morning Chairman, I would like to reintroduce Mr. Simoni.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Mr. Simoni?

Gregory Simoni Shareholder To Chairman Schwartz, notwithstanding that you'll share the spoils of the Company's result with an ordinary share total end-of-year dividend of AUD0.36, I suspect this will satisfy the likes of J.P Morgan, UBS wealth national nominees, throw in the shareholders as well to name a few. But for a vote of --what is it, will probably be 99% in favour fait accompli-- but that aside, it's all about the money but it would be great to see key performance indicators available to front of house employees. Take for example your [King Street] branch in the city, they could ride as let's call it a [Gail Kelly] ladder of opportunity to become key management personnel and ultimately maybe CEO. If this is the case, great. If not, why not?

Brian Schwartz - Insurance Australia Group Limited - Chairman Mr. Simoni, we have balanced scorecards right across the business. Every person in the business has a balanced scorecard that relates to the ultimate strategy of the Company, I dare say for the Board as well. So the answer to your


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question is yes, it -- every person is given the opportunity to be measured and to rise in the organisation and there are many here who have been in this organisation a long time and have risen through the ranks. Okay.

Operator Good morning Chairman, I would like to reintroduce Jack Tilburn.

Jack Tilburn Shareholder Oh yes, thank you monitor and through to you Mr. Schwartz, on the remuneration report ladies and gentleman, I've given it a cool and calm examination because it's a cool and calm document. Ms. Allen has helped us out to understand it, and I'd like to throw my support behind it because I think it's a very solid, sustainable and supportable remuneration report. I notice Mr. Schwartz, that on page 39 the executive remuneration table is set out explaining and showing what the top seven key management (technical difficulty) increase in their salaries for the 2013 year, over the 2012 year. So I think that's very conservative arrangements indeed, and I think the 13,000 staff who are doing such a good job and the Board of Directors, that we all should get behind to give a yes vote for the remuneration report for 2013. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Mr. Tilburn, we appreciate that. Thank you.

Operator Good morning Chairman, I would like to reintroduce Mr. Perry.


Michael Perry (ASA) Proxy holder Michael Perry again, Chairman. Thank you Ms. Allen for that clear explanation of your remuneration strategy and I found the remuneration report very clearly written as well, it covered all the details that we could reasonably expect. I'm pleased to see that you've extended the vesting period for the TSR component of your long term incentive to four years; I think that's an excellent move. I would like to suggest that you also extend the ROE component in the same way, because I still feel that you're --the overall balance of your remuneration arrangements particularly the CEOs remuneration are too slanted to the short term, after all the CEOs job is a long term strategic job and I think the reward should come in the long term. I also am somewhat concerned, going back to the TSR component, that I see that 50% of the total reward rests on achievement of the median position in the comparator list. I've never understood that, I've commented on it before, as have some of my colleagues in Australian Shareholders' Association.


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Surely median means middle of the road performance, and that's what we actually expect. The extremely large reward should only come for absolutely exceptional performance, and median performance is not exceptional. I also have some concerns and this is not to detract from Mr. Wilkins excellent performance in any way. But I just worry that you have to pay the CEO more than double that of the next reports, on a consistent basis. You know, in an exceptional year, that's understandable. But it seems to go on year by year. I don't understand it. I mean when I worked, which admittedly is a long time ago now, we were a team and the CEO is the first among equals. Why this huge gap, which has got so much wider over the years and I wonder where it will stop? I think the scale of CEO packages is just outrageous today and this is not a comment only on IAG. It's a general comment on large listed companies and causes me immense concern and many other retail shareholders as well. Thank you Chairman.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Thank you Mr. Perry and as you point out, these are issues that we've discussed before and that you've discussed in this forum before and we welcome your input. Now let me -- and you asked a lot of questions there. I'll try and answer them in totality rather than go through each one. Let me start by assuring you that you spoke about a team. I've never seen a team operate as effectively as this team operates. I think that everybody understands their role in the team and everybody is very comfortable with that team and what everybody else earns. Remuneration is as you know complex. It's a very complex issue and we take into account a whole range of issues in our case from the fact that risk, 75% of Mr. Wilkins, but indeed all our executives there or thereabouts of their remuneration is at risk, which means they have to perform before they really get paid at those levels. I think that's a good indicator of the mindset. That would be the first thing. I think the second thing is that we have a market that we operate in and I know your argument that we are part of -- and creating the market and therefore we're part of the problem. The reality is we want the best people and we believe that in the executive team sitting in the front row and in our CEO we have the best team. To do that, we pay according to what the market requires us to pay. Having said that, we believe from all the homework we do and every year we sit and listen to your comments and everyone else's and we go and do our homework and we test the market and we understand what the market is and we're comfortable that this is within that market. In terms of the length, again something you have raised before. We actually, if you look at our remuneration structure, as I said, 25[%], 75[%]. But in addition to that, our short term incentive is also split two thirds, one third. So one third of it is paid after two years and then the ROE measure is paid after three and the TSR after four, yes. So what actually -- it has a continuum and then it starts again the following year around. So it's quite by design and we think that the four years that is covered is appropriate, particularly given the extent that's at risk. But thank you for your questions.

Michael Perry (ASA) Proxy holder Thank you Chairman. I do acknowledge that you are moving very gradually in the right direction. I'd just like to see it speed up a bit. Thank you.



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Operator Good morning Chairman. I would like to re-introduce Richard Wilkins.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Cousin Richard.

Richard Wilkins Shareholder Good morning Chairman. Thank you. I've got quite a few observations which I'll try and run through quickly and just a couple of questions embedded in it. I think basically I endorse very much all of what Mr. Perry's just said. I certainly would congratulate you on the clarity and transparency of the Rem Report. It's very well written. I do acknowledge there are many good things in it and certainly have made a lot of valuable improvements since last year. The observations I make now really apply also to the second Resolution where it's relevant. So if you'll indulge me I'll make all the points now and then won't stand up again for the next one. On STI, I think it's, even though the structure is good, there's just a negative point that the potential amount is so high, 150% for the base pay for the CEO and 120% for the other KMP. One question on that, but so could then continue is whether continued employment is the only hurdle for vesting of the DARs, in other words there's no further performance testing, actually they just have to stay there and they get it?

Brian Schwartz - Insurance Australia Group Limited - Chairman That's correct, although there is always the clawback mechanism and the discretion that the board has.

Richard Wilkins Shareholder Thank you. On the LTI which is perhaps more problematic. Again as with STI I think that the, whilst I fully hear what you say about the need to incentivise people, the LTIs are a further 150% potential of base pay for the chief executive and 125% to the other people. So the maximum potential rem is clearly 400% of base for the CEO and 350% for the other people and I think really those amounts are too high and a lot of people here probably wouldn't realise that the consequence would be that the CEO could get AUD8 million a year. Just on the retesting point, Ms. Allen and the rem reports say in several places that the TSR has moved to four years and you've taken the retesting away which is great. However, there is a comment at the top of page eight, of the Notice of Meeting, that is within the text on the CEO's LTI, but I don't know if it applies more widely, that it actually says that the Board may have discretion to use other [dates]. I wonder if you could clarify that please.

Brian Schwartz - Insurance Australia Group Limited - Chairman I think it goes again to the overriding discretion rather than specific. Certainly in my knowledge it's never been exercised. I think it relates more to if people should leave, as good leavers, we would assess the situation as indeed has happened.


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Richard Wilkins Shareholder As exceptional?


Richard Wilkins Shareholder Right, thank you. Finally on the ROE hurdle, it's a bit like Mr. Perry's comment on the TSR that the maximum is awarded at only 1.6 times cost of capital, so effectively about 16% ROE. The Company's objective is to earn about 15% through the cycle. So it strikes me that if you basically achieve what you think you should achieve just as a reasonably good company, the Chief Executive would actually have 80% vesting which just doesn't seem enough [of a stretch] and likewise some LTI would actually vest at only 12% which is, since it's actually quite well below your objective, that seems frankly too easy to achieve. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. So the measure of ROE is one that's interesting. I've said in this forum in the past that when we finally get to pay out all these LTIs, we'll be doing okay. I wait for that day. I think we're sort of reaching some of that day now. So, I think that that's something that is worth considering that actually what's happened is management have earned this because they have performed and delivered a great result which then converts to shareholders as well. But on the specific of the ROE, we changed that measure from memory in about 2010, 2011, somewhere there. We changed it after doing a lot of work, including getting external input on the scheme and we went to speak to many of our major shareholders. The reason we changed it was because the research showed that in two of the 10 years prior to that point in time, only in two years had 1.5[%], 1.2[%] been achieved. So what happened was that the long term incentive had stopped being an incentive. So we tried to pick a measure that actually would incentivise management and indeed up until last year, it still hadn't been paid. So we should be very cognoscenti of that as well. It's only in the coming year for the first time in many years that it will be paid. As I say, I'm hopeful we'll pay it again in the future. Because then we'll have achieved the kind of results that we are talking about. So that was the logic behind it.

Richard Wilkins Shareholder Thank you. Can I just respond quickly. I fully agree with the logic and I think in general the structure of everything, the rem is fine. It's really just (a) the absolute amounts that are possible--



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Richard Wilkins Shareholder --and (b) the points at which they start to vest. I think it would be interesting, not now, but perhaps in the next rem report if you could actually articulate why your target for the Group is through the cycle 15% and yet that seems to be out of kilter with where the stretched targets are for these very generous incentives. To me as a shareholder it doesn't actually really seem to make sense.

Brian Schwartz - Insurance Australia Group Limited - Chairman But not out of kilter with the reality of what's happened over the last five years. (Multiple Speakers)

Brian Schwartz - Insurance Australia Group Limited - Chairman But your point is made and I think we will certainly have a look at that and see if we can explain that better.

Richard Wilkins Shareholder Yes my complaint is not about what's happened in the past, just how it works in the future.

Brian Schwartz - Insurance Australia Group Limited - Chairman Understand. Thank you. Any other questions? I'm not at my notes yet, you've caught me. I'll go back to them now. That then does conclude discussion on Resolution 1. I now direct that the poll for Resolution 1 be taken. That attendees register their voting intention by pressing the appropriate number on their keypad as shown on the screen. You press one if you agree, two if you don't. Someone's explaining to you. Have we got them? No still going. Be a few more moments. Everybody who is going to vote has voted, even though it's not showing that you have. I think I'm going to declare the poll closed on Resolution 1. Thank you ladies and gentlemen. Your votes have been added to the direct and proxy votes received by the voting deadline and the preliminary result on Resolution 1 will be shown on the screen. That's 98.85% in favour. Thank you very much. Thank you. Resolution 2 is in relation to the allocation of share rights to Mike Wilkins. Approval is sought to allocate Deferred Award Rights and Executive Performance Rights. Shares for the DAR and the EPR plans will continue to be purchased on market and the Company is not required to seek this approval. However in the interests of transparency, shareholder agreement and good governance -- engagement and good governance, the Company has decided to seek shareholder approval. As noted by Yasmin earlier, DARs and EPRs aligns the performance of Mike Wilkins with shareholder interests over a two to five year period. There is a detailed explanation of the Deferred Awards Right Plans and Executive Performance Right Plans in the Notice of Meeting. A Deferred Award Rights and that's DARs, are granted as part of the annual short term incentive plan. The Board has decided that rather than providing a short term incentive to Executives entirely as a cash payment, a portion should be


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provided in the form of rights over shares which vest to the Executive over a two year period. The Board has taken this approach to ensure that Executives continue to be focused on business performance. The Executive Performance Rights are granted as a long term incentive. These share rights may be exercised for shares between three or four years after they're granted and then only if challenging performance hurdles are achieved. It is important to stress that the exercise of executive performance rights for shares is subject to achieving performance hurdles which align with the value for shareholders. If the performance hurdles are not achieved Mr Wilkins will get no value from these grants of executive performance rights. If the performance hurdles are achieved shareholders will receive substantial returns, and Mr Wilkins will be rewarded by the vesting of these rights.


Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. The Board, with Mr. Wilkins abstaining, recommends that you vote in favour of this Resolution. If anyone wishes to speak in relation to this Resolution please make your way to the microphone, recognising, obviously, that a lot of the issues were addressed in the previous discussion on the make up and structure of the rights.


Brian Schwartz - Insurance Australia Group Limited - Chairman Not yet. When I say you do. Not yet. All right. It looks like there are no questions. You've got a question over there. Thank you.

Operator Good morning, Chairman. I would like to reintroduce Mr. Simoni.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Mr. Simoni.

Gregory Simoni Shareholder G'day again. Through Chairman Schwartz, a highly likely pay increase--which is what the allocation of share rights amounts to--should reflect Mr Wilkins's control of the very rules that have resulted in IAG's share price at six year highs, for the variable of natural peril claims. Not in this presentation, but in the investor presentation (inaudible) ratioed financial year 2013, 59.9% lower than the financial year 2012, 73.8%.


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The variable positive credit spread movement--page 67 of the annual report--with regards to investments rated financial year 2013, AUD12.127 billion, financial year 2012 AUD11.683 billion, and the variable of higher reserve releases as per Mr. Wilkins's presentation today, financial year 2013 AUD212 million compared to AUD195 million financial year 2012. So how has Mr Wilkins and his team synergised what seems to be variables and serendipity? Why doesn't IAG's current Goldilocks moment pull share rights and benefits into a fund on top of existing reinsurance arrangements to lessen the impact of luck not going your way?

Brian Schwartz - Insurance Australia Group Limited - Chairman Do you understand that?


Brian Schwartz - Insurance Australia Group Limited - Chairman Yes, I think, Mr. Simoni--and I'm trying to understand the question--I think we do. I think we've always said that when we have a very good year we will pay out a dividend in accordance with that performance. By the same token, when we have the down sides, then the reverse happens. I don't think we have to smooth it out, which I think would be the impact of what you're suggesting, but I think we should recognise that we do--as we have this year, where the dividend has gone up by 112%--that is a reflection on the performance for this year. So that is--


Brian Schwartz - Insurance Australia Group Limited - Chairman Any other questions?

Operator Good morning, Chairman. I'd like to introduce Bronwyn Underwood.


Bronwyn Underwood Shareholder To you, Mr. Schwartz. I would like to make a comment please that before we vote on any issues could the proxies be put up before--


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Bronwyn Underwood Shareholder --we put the announcements on this little machine, particularly for the new remuneration report when, as you know, some companies can get a second strike if it is close or actually goes over 25% against it? Most companies will do that before we vote rather than after it, and technology allows us to do it anyway. So I would appreciate it if you could do that please.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. We have considered that. Our view is that--particularly on the numbers, like you saw earlier on--we don't want to distort the--or just impact on the voting that may go on on the floor. We would like to give people the opportunity to vote based on what they're feeling, rather than look on the screen there and see that it was 98% or 99%. There's no right answer to that, but we'll certainly take that on board and we'll have a look at it.

Bronwyn Underwood Shareholder It would be a good idea. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. All right--sorry, another question.

Operator Good morning, Chairman. I would like to reintroduce Jack Tilburn.


Jack Tilburn Shareholder Mr. Schwartz, on this Resolution number two it's quite an important principle for--ladies and gentlemen, private investors--that any resolution should be tackled, should be debated. You shouldn't let it go through to the wicket keeper undebated. I would like to throw in my ideas on the matter of this Resolution. You find on the explanatory notes that the deferred award rights are a relatively good figure--low figure--of [AUD154,000]. When you turn over the page you find that the executive performance rights are reaching a much higher number--four or five times more--of [AUD575,000]. I'd like just to ask, Mr. Schwartz, please, what do you do about the weight of the DAR against the executive rights? Is there any weighting? Is there any balance that's made? Is there any equality that is


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made? The equity is quite differential. So I'd like to know why you can have a figure of [AUD154,000] by some mathematical calculations, but on other mathematical calculations you get four or five times higher, of [AUD575,000]. Thank you, Mr. Schwartz.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you, Mr. Tilburn. It's a good question, but they are different measures , the DARs and the EPRs. So the DARs relate to a much shorter term but they essentially are the one third of the short term incentive that is paid by way of shares rather than by way of cash. So remembering that two thirds of that short term incentive is paid in cash and one third is deferred through the DARs, which is why it's not an insubstantial amount but why it's a lesser amount. The EPRs are the long term incentive. Now the really significant thing, and it was raised earlier, the really significant thing about the EPRs, the long term incentives, of course is they are still subject to substantial hurdles that need to be met. So what you're seeing in those numbers is the maximum that might be available should everything work out the way we'd like it to, but in fact history has shown that a substantially lesser amount gets paid, or has been paid in the past. We hope it will be different in future.

Unidentified Audience Member I'd like to vote (inaudible-microphone inaccessible)

Brian Schwartz - Insurance Australia Group Limited - Chairman We'll be ready to vote in a few minutes. Any other questions? Okay, Mrs. Coucke, we're there. That concludes the discussion on Resolution 2. I now direct that the poll for the Resolution 2 be taken and that attendees register their voting intention by pressing the appropriate numbers on the keypad, as shown on the screen. Alright, there may be a few to go but I think they're all in, or relatively all in. I now declare the poll closed on Resolution 2. Thank you, ladies and gentlemen, your votes have been added to the direct and proxy votes received by the voting deadline and the preliminary result of the Resolution 2 is now shown on the screen. That's 98.15% in favor. Thank you very much.

Unidentified Audience Member Thought it'd be better than that.

Brian Schwartz - Insurance Australia Group Limited - Chairman Well, have to keep working on it. Resolution 3 and 4 relate to the reelection of directors and the first director is Peter Bush who stands for reelection. Peter, would you like to address the meeting please?


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Peter Bush - Insurance Australia Group Limited - Independent Non-Executive Director Thank you, Brian and good morning everybody. I joined the IAG Board in December 2010 and have served on the Audit, Risk Management and Compliance Committee. More recently I joined the Remuneration Committee. My career path was primarily in fast moving consumer goods marketing in companies including Johnson & Johnson, Unilever, Arnotts and McDonald's. In the course of my career I've had the great fortune to work on some of Australia's best known and best loved brands. Additionally, I've held several CEO roles and have experience overseas in the UK, the US and in Asia. Consumer relationships with brands have probably never been through a more volatile period, with changes in consumer purchasing now influenced by new media, creating unique, unforeseen challenges and indeed opportunities for companies. Brands built over decades can be undermined by social media and consumers buying all manner of products and services are able to compare quality, features and price from their living rooms. In this environment, my vast experience in marketing management and leadership are more relevant than ever and complement the diverse skills and experience of my colleagues. In addition to IAG, I'm currently a non-executive director and chairman of Pacific Brands Limited. I'm pleased to offer myself for reelection to the IAG Board and look forward to your support. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you, Peter. The Board with Peter abstaining recommends that you vote in favor of his reelection. If anyone wishes to speak in relation to this Resolution, please make your way to the microphone.

Operator Good afternoon, chairman. I would like to reintroduce Jack Tilburn.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you, Mr. Tilburn. Now there's a welcome, Jack.

Jack Tilburn Shareholder Well, I always want a bit of humor in AGMs, whether I'm for AGMs or against them, but I'm certainly 110% behind the corporation governance of this wonderful Company and I certainly don't envy our Peter Bush who says he's the chairman of Pacific Brands. I'm not in that company but I don't know what Pacific Brands are going to bring to IAG. They're opposite and polarized situations.


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I mean IAG is top of the list at the North Pole, Pacific Brands, ladies and gentlemen, down the bottom of the South Pole. But enough of that. But my investigation, as always, as a crusader and investigating shareholder, is that I find on page 49, I think it is, the page numbers are far too small, Mr. Schwartz. I'll have to write in about that.

Brian Schwartz - Insurance Australia Group Limited - Chairman I was worried you weren't going to comment on that.

Jack Tilburn Shareholder Yes, page 43 I think it is. I noticed that Mr. Peter Bush is mentioned and he was appointed in December 2010. So three years later he comes up by the laws of the land for reelection. But I notice that he has not any holding of shares in this Company. Now myself, I put forward about 35,000 shares in this Company, I believe in it tremendously. What is the peculiar, strange and queer situation to say the least, that Mr. Peter Bush, after 3 years, does not possess according to page 43 one share in this wonderful Company.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you, there is a good reason. Let me first say, that Mr. Bush, in addition to what you describe around also around McDonalds in Australia for many years amongst other things and that was indeed the reason that we invite him onto the board because of his great knowledge of brands and consumers in the market. The good news is Mr. Bush does indeed now own shares in our Company. The challenge always is to find a time where you can actually buy the shares as we are limited as to when we can buy shares given the knowledge that we have on the Company but I think in September he bought some shares and I think his intention is to buy more shares. There is a requirement that after four years, each director owns one years' worth of income in shares and Mr. Bush will certainly reach that goal. So he agrees with you that it's worth buying shares.

Jack Tilburn Shareholder Thank you.

Operator Good morning chairman, I would like to reintroduce Mr. Simoni.

Gregory Simoni Shareholder I'm hoping to be as comparable as Jack on that hmm moment but, okay. Through Chairman Schwartz again as a member of the IAG people in remuneration committee and as Mr. Bush has had a rather short time on that committee, has there been a greater increase in the casualisation of the IAG group workforce and a greater alliance on contracted employment. How has this affected the balance sheet.


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Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Mr. Simoni, it's not the role of the people on the remuneration committee to dictate how management runs the Company and we leave that to management. That's the answer. Thank you. If there are no other questions, that concludes the discussion on resolution 3. I now direct that the poll for resolution 3 be taken, and that attendees register their voting intention by pressing the appropriate number on the keypad as shown on the screen. I now declare the poll closed, thank you ladies and gentlemen, your votes have been added to the direct and proxy votes received by the voting deadline and the preliminary result of resolution 3 is now shown on the screen. Or is about to be. Based on this preliminary result, the resolution has been carried very unanimously, congratulations Peter, well done. As resolution is for my own re-election as a director I will now step down as chairman of the meeting and hand over to Yasmin Allen, the Chair of the People and Remuneration Committee to chair the meeting until votes on resolution 4 is concluded.

Yasmin Allen - Insurance Australia Group Limited - Independent Non-Executive Director Thank you Brian.

Unidentified Audience Member A very good name, Yasmin.

Yasmin Allen - Insurance Australia Group Limited - Independent Non-Executive Director Resolution 4 is that Brian Schwartz be re-elected as the Director and I would now like to invite Brian to the lectern to talk to the meeting, thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Yasmin, ladies and gentlemen I'm conscious that you've already heard a lot from me today so I'll be as concise as I can. My background and qualifications I have set out in the Notice of Meeting sent to you. In brief after a long career as CEO of Ernst and Young Australia and Investec Bank, I decided to take on some new challenge some 8 years ago and became a board director. That's when I joined IAG's Board and I became Chairman in 2010. I was last re-elected in 2011 and it's fair to say that since then, we as a Company, have made substantial progress. This progress has included a very strong result, particularly in the current year and an equally improved dividend, a focus on strategy that has seen us exit the UK market, continue to grow in Australia and New Zealand organically, and via the acquisition of AMI in New Zealand. Good growth in profitability in Asia with acquisitions in Malaysia and Vietnam. A focus on management succession and we are in a very strong position today, much stronger than we have been in recent years. And Board renewal which is ongoing with the appointment this year of Alison, Raymond and Laura. And a cohesive and productive Board which was confirmed just in the last couple of days in a Board review that we did. As a result of this I believe that the Company is on a sound footing with strategic clarity and the right team in place. In addition to IAG I am the deputy chairman of Westfield and the Football Federation of Australia and a director of Brambles. I believe these activities help me to do a better chair, a better job as Chairman of IAG and I have never compromised my


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IAG Board commitments, I am keen to continue to work on your behalf with my colleagues to improve the performance of our Company and deliver shareholder value to you. I look forward to your support, thank you.

Yasmin Allen - Insurance Australia Group Limited - Independent Non-Executive Director Thank you Brian. The Board with Brian abstaining recommends that you vote in favour of the re-election of Brian Schwartz to the Board. If anyone wishes to speak in relation to this resolution please make your way to the microphone thank you.

Operator Good afternoon Acting Chairman, I would like to reintroduce Richard Wilkins.

Richard Wilkins Shareholder Thank you Ms. Allen, just a very quick question, I'm very happy to vote for Mr. Schwartz, he's done an excellent job. Just raises one question though about tenure policy that at the end of this next term he will have been a director for nearly 12 years, I'm very happy with that but a number of corporate governments oddly suggest that once it starts getting beyond 10 years that's probably about the appropriate limit, I just wondered what the general policy on tenure is for this board not for Mr. Schwartz in particular.

Yasmin Allen - Insurance Australia Group Limited - Independent Non-Executive Director Yes, we have a guide line and it is around the 10 years but of course it's always a discretion of the board and we'll be discussing in the next 12 months for the board renewal.

Richard Wilkins Shareholder Thank you.

Operator Good afternoon Acting Chairman, I would like to reintroduce Mr. Simoni.

Gregory Simoni Shareholder Through Chairwoman Allen, can Mr. Schwartz today make a guarantee that during his future Board tenure if IAG has a repeat of its UK business, specifically the sale of Hastings Direct Insurance GBP23.5 million in 2008 and that same company now valued by Goldman Sachs of March 2013 this year is GBP500 million, 20 times its original value, in Asia, not issue a media release on behalf of IAG to the market whinging about unfairness and getting IAG's money or assets back or words to that effect.

Yasmin Allen - Insurance Australia Group Limited - Independent Non-Executive Director


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I think we'll just take that as a comment. Thank you Mr. Simoni.

Operator Good afternoon Acting Chairman, I would like to reintroduce Jack Tilburn.

Unidentified Audience Member No.

Jack Tilburn Shareholder Wow, I get support every time I get up from that lady. Thank you, through to you Miss Allen, Acting Chairmen of the IAG great, great Company. It wouldn't be right for me as a campaigner in crusading proactively shareholder if I didn't get up for any chairmen. I'm not dead, I'm on my feet. I want to say some good remarks about Mr. Brian Schwartz so that he'll keep going for another 3 years for us. He's a gentleman chairman, I repeat, a gentleman chairman, which you don't always get at AGM's. I ought to know, 510 AGM's I've seen some very rotten chairpersons. He's a very good listener; we've all seen him do that today. Calm and cool and collected person indeed. Sometimes shareholders aren't too good, but in our democracy we have for and against in debate, and for and against chairmen in boards. I would consider Mr. Schwartz has a high moral compass which is very very good for the IAG Company and us as shareholders. Thank you. And I have great, great support in voting for Mr. Schwartz for another 3 years. Thank you ladies and gentlemen.

Yasmin Allen - Insurance Australia Group Limited - Independent Non-Executive Director Thank you Mr. Tilburn, we agree with your comment. I think that concludes the discussion on resolution 4. Is there another question?

Operator Excuse me, good afternoon Acting Chairman; I have another question from Mrs. (inaudible). Thank you.

Unidentified Audience Member I do apologise as my question is actually a request and has nothing to do with remuneration. But since we politely switched off our mobiles, could you please next time spend less time on your mobile, because -- time. Thank you.

Yasmin Allen - Insurance Australia Group Limited - Independent Non-Executive Director Alright. I think that does conclude discussion on Resolution 4. Thank you for that. I now direct that the poll for Resolution 4 be taken and that attendees register their voting intention by pressing the appropriate number on their keypad as shown on the screen.


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I now declare the poll closed on Resolution 4, thank you ladies and gentlemen. Your votes have been added to the direct and proxy votes received by the voting deadline and the preliminary result of resolution 4 is now shown on the screen. Based on this preliminary result, the resolution has been carried, congratulations Brian, and I'd now like to hand the meeting back to Brian.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Yasmin, and ladies and gentlemen thank you very much for your support.

Unidentified Audience Member You deserve it.

Brian Schwartz - Insurance Australia Group Limited - Chairman The meeting will now discuss Resolutions 5, 6 and 7 which relate to the election of directors to the Board. Resolution 5 is the election of Alison Deans to the Board and I now invite Alison to address the meeting.

Alison Deans - Insurance Australia Group Limited - Independent Non-Executive Director Thank you Chairman, and good morning ladies and gentlemen. I am honoured to be standing for election to serve you as the director of this Company. I have spent the last 14 years building digital businesses in Australia, working with 16 digital businesses across sectors across media, ecommerce and financial services. Most of these businesses were built in partnership with world class US technology companies such as ebay, Microsoft, and Charles Schwab and I have had the privilege to work with these companies directly, each a leader in its class. I served as ebay's first managing director in Australia, and as the CEO of ecorp, a publicly listed technology company. Most recently I served as CEO of [Netus] a private technology investment company. And with these businesses I've experienced the challenges and the opportunities presented by the digital economy. I've gained a deep understanding of the changes in customer behavior and the new business models enabled by technology. With the growing importance of digital and data capabilities over the next decade, I believe this experience will be increasingly relevant to IAG. Before working in digital businesses I spent 8 years with global consulting firm McKinsey and Company working with large corporations primarily on issues relating to strategy and organisation for growth. This gave me an understanding of the challenges of sustaining growth in large successful organisations and ensuring an agile organisation that can adapt to the changing environment we face today. I have both the time and energy to fulfill my duties as a Non-Executive Director of IAG. Last month I concluded my time as CEO of Netus and I will now focus on non-executive roles. I believe that my experience in agile, technology driven businesses can complement the depth and diversity of experience of my colleagues on the IAG Board and management team. As such, I believe I can add value for shareholders and if elected I look forward to doing so. Thank you.

Unidentified Audience Member Thank you.


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Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Alison. The Board, with Alison abstaining recommends that you vote in favour of the election of Alison Deans to the Board. If anyone would like to speak in relation to this Resolution, please make your way to the microphone.

Operator Good afternoon Chairman. I would like to re-introduce Mr. Simoni.

Gregory Simoni Shareholder Considering Ms. Dean's skill set, should we expect a resurrection and reinvention of the buzz in the short to medium term?

Brian Schwartz - Insurance Australia Group Limited - Chairman We will continue to look at all options and look at the whole range of issues. I'm not sure that the buzz is necessarily again, Mrs. Deans is not management and no doubt her input will be keenly sought and heard. Thank you. I think if there are no other questions, that concludes discussion on Resolution 5. I now direct that the poll for Resolution 5 be taken and that attendees register their voting intention by pressing the appropriate number on their keypad as shown on the screen. I now declare the poll closed on Resolution 5. Thank you ladies and gentlemen. Your votes have been added to direct and proxy votes received by the voting deal line and the preliminary result of Resolution 5 is now on the screen. That's 99.55%, congratulations Alison and welcome. Well done. Resolution 6 is the election of Raymond Lim to the Board. I now invite Raymond to address the meeting.

Raymond Lim - Insurance Australia Group Limited - Independent Non-Executive Director Thank you Chairman. Good morning to all of you. I am glad to be given this opportunity to say a few words to of all you, shareholders of this Company. IAG is a wonderful Company and I'm proud to be associated with it. Inviting me to join the Board, Board, Brian and Mike explained to me IAG's strategic push into Asia. Like Mr. Tilburn, I had the same considerations at the back of my mind. But I met him, met Brian, Mike, the other directors and senior management of the team. I was not just reassured, but impressed. Impressed because the Asian strategy was well thought through and well considered, thoughtful in conception and sober in execution. The aim is always was enhance shareholders value in the long term, by establishing a meaningful presence in Asia which is one of the fastest growing regions of the world today and in the foreseeable future. Both Brian and Mike felt that given my extensive experience in Asia, both in government and in the financial markets, that I would be in a position to offer helpful insights and perspectives on doing business in Asia and I think just as importantly, to add to the diversity in the Board's thinking, given my different background and life experiences. I was a former cabinet minister in the Singapore government for more than a decade, various responsibilities including finance, trade and industry and foreign affairs. In that capacity, I had the opportunity to engage extensively with both policy makers and business leaders in Southeast Asia, China and India. I was also a former member of the Board of Governance of the International Monetary Fund, the IMF and the World Bank.


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Prior to that I was the Managing Director of Temasek Holdings, which is Singapore Sovereign Wealth Fund, with extensive investment in Asia and the Chief Executive Officer of DBS Vickers Securities, a leading Asian broker with offices in Singapore, Hong Kong, Thailand and Indonesia. I'm currently Chairman of a specialist Asian asset manager and Senior Advisor to John Swire and Sons, a 200 year old greater China industrial conglomerate. I would like to end on a personal note. I studied in Australia in the late 1970s. I was a recipient of the Colombo Plan Scholarship which was an Australian aid program for developing countries. Those were some of the best years in my life. Actually I met my wife in Australia. Those were some of the best years of my life. Australia gave me a head start and I have never forgotten this. So I am glad that I am given this opportunity to serve in an Australian board, as Australia's the country in which I have great affection for. With your support, I hope that I may indeed be able to help in some way or other, to contribute to IAG's continued success. I thank you and I wish you well.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Raymond. The Board, with Raymond abstaining recommends that you vote in favour of the election of Raymond Lim to the Board. If anyone wishes to speak in relation to this Resolution, please make your way up to the microphone, microphone two.

Operator Good afternoon Chairman. I would like to re-introduce Joe Nagy.


Joe Nagy Shareholder Mr.Chairman, are there any specific reasons for electing Mr. Lim. This is not a criticism. Just wondering in terms of strategy and you may not want to answer that. But I'm just interested because I think it's a good choice.

Brian Schwartz - Insurance Australia Group Limited - Chairman Yes, very strongly so. I think it took us a long time to find the right person. We're very comfortable we found him in Mr. Lim. But strategically when we decided that we were not going to be in the UK and Philip Colebatch stood down, it became clear to us that we needed to find a director that fitted in with that longer term strategy, who was based in Asia. Now as you know Asia's a big continent and to say we wanted an Asian director was almost a bit of a nonsense. But in Raymond we found through particularly his work in the Singapore government, somebody who had actually been exposed to many, many parts of Asia as a Minister of Foreign Affairs and Finance. So we were delighted when we did find him and it is very consistent, indeed each of today's new Board directors are right in line with that strategic direction.

Operator


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Good afternoon Chairman. I would like to re-introduce Mr. Simoni.


Gregory Simoni Shareholder I'll try. Through Chairman Schwartz again. On Mr. Lim's attendance of the people and remuneration committee since February 1 this year and his vast experience in South East Asia as he pointed out, can you make any assurances of confidence, you know given that the banking systems in Vietnam, Thailand, Malaysia, India and China are all Swiss owned and these countries have a Westminster system of law and the investors there don't want 51% of any joint venture partnerships in terms of ownership, that IAG's people in Asia are involved in business activities and processes which comply with Australian and international law?

Brian Schwartz - Insurance Australia Group Limited - Chairman I think what I would say is that as you would imagine, Mr. Lim has a very broad experience and makes a major contribution every time any such issues are discussed, yes. Okay, think that concludes -- oh I'm sorry.

Operator We have one more question.

Brian Schwartz - Insurance Australia Group Limited - Chairman Yes, I'm sorry.

Operator I'd like to introduce Mr. Michael Perry.


Michael Perry (ASA) Proxy holder Thank you Chairman. Certainly Mr. Lim's credentials look extremely impressive and I can understand how he may well be able to add considerable value to your board with the push into Asia. I have just one question though. I understand Mr. Lim is a member of the Singapore Parliament still in which I would imagine is a fairly arduous job. I just wonder how you're going to fit that in with your duties with the Board of this Company?


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Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Raymond, would you like to answer that? Why don't you, thank you.

Raymond Lim - Insurance Australia Group Limited - Independent Non-Executive Director I think that's actually a very good question. Just to give a sense of perspective. Members of Parliament in Singapore, it's not a full time position. So many members of Parliament would be lawyers, doctors or senior executives of companies. But having said that, the question is still relevant and still important and it was a question in which I ask myself when I was approached to join the IAG Board, that whether or not I would have sufficient time to commit to the Board so as to do a proper job. Because in my case, because I'm based in Singapore, the time involved is actually more as you can appreciate it. I have to fly in. So a day is actually maybe two or three days for me. So I had to be very clear in my mind that I will be able to commit that time. I thought about it. I came to the conclusion that yes I can do that. I think to date that has been the case. I have been able to attend meetings across the region. Not just the Board meetings but the subcommittee meetings. So I would like to ensure you, ensure all of you that if ever my personal circumstances were to change in the future and I find that I am not in a position to commit time to get this job done properly, because it deserves to be done properly, I would be the first one to go to the Chairman and inform him that I would like to step down from the Board and allow someone else who could do the proper job.

Brian Schwartz - Insurance Australia Group Limited - Chairman I would add only to that that Mr. Lim hasn't missed a meeting or a committee meeting since he's been on the Board. Thank you Mr. Perry. No other questions? Okay, that concludes discussion on Resolution 6. I now direct that the poll for Resolution 6 be taken and that attendees register their voting intention by pressing the appropriate number on their keypad as sown on the screen. I now declare the poll closed on Resolution 6. Thank you ladies and gentlemen. Your votes have been added to the direct and proxy votes received by the voting deadline and the preliminary result of Resolution 6 is now shown on the screen. Based on that result Raymond, Resolution 6 has been carried. Congratulations Raymond. Resolution 7 is the election of Nora Scheinkestel to the Board. I now invite Nora to address the meeting.

Unidentified Audience Member This is another lady. I like ladies.

Nora Scheinkestel - Insurance Australia Group - Independent Non-Executive Director Thank you Chairman. Good morning ladies and gentlemen. As the Chairman said my name is Nora Scheinkestel and I joined your Board in July of this year. I followed the Company for many years now, during certainly it's more tumultuous early period, but also obviously it's much more impressive recent turnaround. The most obvious reason why I was approached to join the Board was my


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financial services background. Much of my executive career was spent as a banker in structured and project finance, working in the Asia Pacific region both with investment and commercial banks. Later I became a non-executive director of AMP and served on its main board as well as the boards of its funds management arm, and AMP Bank, and I retired from AMP in May this year after ten years' of service on that board. But perhaps of even more value to IAG, is the breadth and depth of my background as a Non-Executive Director over some 20 years now, I've had the good fortune to serve on a wide range of companies in many different sectors. I've worked in heavily regulated industries, where compliance must be part of your DNA. I've been involved in major industry restructurings, I've long been active in sectors where large capital expenditure is required but efficiency and productivity must be pursued relentlessly. I've worked in highly competed markets where fundamental changes to business models have been required in response to competitive pressures, and I've been directly exposed to the significant technological change that's happening in our world and is affecting the way we live and play and work. In every sector I've been involved with, there's also an acute awareness of getting a deep understanding of our customers; what their needs are and how they want to interact with us. All of these things are relevant to IAG. My career, while Australian-based, has been strongly international. I'm bilingual, I have financed projects in Australasia and South-East Asia, and many of my directorships have been with companies operating in all corners of the globe. This makes me both supportive, but also very excited by IAGs Asian strategy. Should you choose to support my election today, I believe I can make a significant contribution to our Board and executive team. I have the time and commitment to fully meet my obligations to the Company, and the experience and background to help realise our strategic goals. Thank you.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you Nora. The Board with Nora abstaining unanimously recommends that you vote in favour of the election of Nora Scheinkestel to the Board. If anyone wishes to speak in relation to this Resolution, please make your way to the microphone.

Operator Good afternoon Chairman, I would like to reintroduce Joe Nagy.


Joe Nagy Shareholder Thank you, it seems we have a good director--well all the directors are good, but very pleased that Nora is a director and I just want to ask one question considering your activities while she was in banking. Did you have experience in analysing risk, and if so, I think that'll do IAG in good stead as it continues to grow and succeed, because the next step after you grow and succeed is usually some failure because we get too contented. So I'm hoping that you will provide some sort of balance to the push for growth. I'm saying it as a banker.


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Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you, and I'm sure that she will. Microphone one?

Operator Good afternoon Chairman, I would like to reintroduce Mr. Simoni.

Brian Schwartz - Insurance Australia Group Limited - Chairman Mr. Simoni.

Gregory Simoni Shareholder Again through Chairman Schwartz, on Dr. Scheinkestel's background in developing major Australian projects as she pointed out in the presentation, is she of the belief that corporate governance in Vietnam, Thailand, Malaysia, India and China is of a standard comparable with Australia and minimal risk to the IAG brand?

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. I'm not sure that she is--any of us are of that view. We all recognise that each country is different and you have to treat each country differently and you have to make sure that you put in place appropriate processes. To suggest that all companies are absolutely equal in those areas clearly just wouldn't be true. Any other questions? If not, that concludes discussion on Resolution 7; I now direct the poll for Resolution 7. I now declare the poll closed on Resolution 7. Thank you ladies and gentleman your votes have been added to the direct and proxy votes received by the voting deadline and the preliminary result for Resolution 7 is now shown on the screen. And based on this result the Resolution has been carried, congratulations Nora. Thank you. Resolution 8 relates to the maximum aggregate fees payable to non-executive directors, from the number of questions we've received there appears to be some confusion on the Resolution which I want to clarify. The increase in fees for approval at today's AGM is not the maximum amount that can be paid to each non-executive director. It is the pool of funds from which all non-executive directors' fees are paid. As I noted in my address, the proposal is to increase the maximum fee from AUD2.75 million to AUD 3.5 million in total. This increase in non-executive directors' fees is the first increase in six years, since the 2007 AGM. It should be noted that an additional non-executive director has been added to the Board, I would anticipate based on current Board structure of eight non-executive directors that this increased pool of funds will cover the Board into the foreseeable future, and allow some overlap as non-executive directors retire and are replaced by new appointments. I hope that this brief overview will allay some of the shareholders' concerns; I will of course answer any additional questions that you have on the Resolution. Further detailed information about this Resolution is contained in the explanatory notes that accompany the notice. Please note that the voting exclusion statement for Resolution 8 extends to all Directors and their Associates, including the Managing Director and Chief Executive officer and his Associates. As the Resolution relates to the non-executive Directors, the Directors did not make a recommendation on Resolution 8.


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As Chairman I will only vote proxy's in favour of the Resolution if the shareholders so indicate it on the voting form. If anyone wishes to speak in relation to Resolution 8, please make your way to the microphone queue.

Operator Good afternoon, Chairman. I would like to reintroduce Richard Wilkins.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Mr. Wilkins?

Richard Wilkins Shareholder Thank you very much, Chairman. We're obviously not talking about a vast amount of money in the scheme of things here. But I think just from the -- you give standard, quite reasonable justifications in the notice, which are fair, but I think this resolution is perhaps a couple of years premature. Note that the current cap of [AUD]2.75 million did comfortably meet the total amounts paid in FY13 in the previous year, with about of 30% margin to spare, even though in those years there were some overlapping periods of Directors retiring and rejoining. So I think that the current cap would serve quite adequately. It could accommodate, for example, another Director for an entire year at, say, [AUD] 275,000, as well as, say 50% across the board increase. So clearly the Resolution will go through, but in this context, perhaps it would be good to have an understanding from you that over, say, the next two or three years you wouldn't really be contemplating individual fee rises beyond about the rate of CPI.

Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Yes, I can. I think we probably could have waited for one more year, but being the kind of Company we are we like not to rush things and we like not to catch anybody's surprise, by surprise. You're right, this amount, we think, will take us through quite a number of years. The fee increase, which had been agreed for the year ending 2014 is only 2%, but of course the numbers for the current year don't include the extra Director, so that will come in, and there are some other things that are being contemplated in the Company, and then as I said, some overlap. The idea is not that -- there is nothing planned in here to sub (technical difficulty) 2% and before that it was nothing for a number of years. So, rest assured that that is squarely in the mind every time we do sit down to discuss the subject.

Richard Wilkins Shareholder Thank you very much.


Operator


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Good afternoon, Chairman. I would like to reintroduce Mr. Simoni.

Brian Schwartz - Insurance Australia Group Limited - Chairman Mr. Simoni.

Gregory Simoni Shareholder Again, and finally, through Chairman Schwartz, can yourself or any non-executive Directors point to any procedures or any processes covered by any IAG Committee or subcommittee that have had a tangible effect on the Group's current insurance margin, natural peril, claims costs, reserve releases or credit spreads. Surely these are variables spawned from luck. Should not luck be given a Board position and any fees payable be made out to luck?

Brian Schwartz - Insurance Australia Group Limited - Chairman Very good. I think the first thing, amongst many, that this Board does is select a CEO and agree a strategy, and agree on all the people that the CEO selects. So your point is made, but I think it should be so easy but it isn't, and I think that this result is a reflection on outstanding management and not luck.

Operator Good afternoon, Chairman. I would like to reintroduce Jack Tilburn.


Jack Tilburn Shareholder On this last Resolution, number 8, I give it my 110% support, ladies and gentlemen. Private investors, as you are supposed to be called now, by the media -- as I've said before, not retail investors. Well, the increase for these very good Directors of this very good Company is AUD800,000, which is around about 24% ,25% increase after 6 years. It hasn't been altered since 2007, ladies and gentlemen, and now it's 2013. Six further years on. They're entitled to it, why? Well I'll tell you why. It's a rule of thumb. If the Company that is asking for AUD800,000 extra for the eight Directors, it gets it, it is approved by us, because of, number one, the performance of the Company over the last five years. The growth of the Company over the last five years. Number two point, and number three point, was there as outstanding results for this year brought on by Mr. Wilkins and these 13,000 staff. Your dividends -- I've said earlier -- were wonderful, excellent, remarkable. The final dividend of AUD0.25 on top of a half year of AUD0.11. Therefore on those rule of thumbs, reasons, we are asked to give to this Board of Directors an increase. They are thoroughly deserving of it and we all should give support and the figure up there should be 99.9%. Thank you.


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Brian Schwartz - Insurance Australia Group Limited - Chairman Thank you. Thanks Mr. Tilburn, appreciate your support. Doesn't look like there are any more questions. If that is so, I'm looking for the poll and it is over here. Please note that -- I think I've said it -- I'm sorry. Right. That concludes the discussion on Resolution 8. I now direct that the poll for Resolution 8 be taken and that attendees register their voting intention by pressing the appropriate number on their keypad as shown on the screen. I now declare the poll closed on Resolution 8. Thank you, ladies and gentlemen. Your votes have been added to the direct and proxy votes received by the voting deadline and the preliminary results of Resolution 8 is now shown on the screen. Thank you. Based on this preliminary result the Resolution has been carried. The business of this meeting has been completed. As I indicated earlier the final result of the polls will be provided to the Australian Security Exchange and will be placed on the Company's website and made available at the Company's registered office by tomorrow. On behalf of the Board of Directors of the Company, I would like to take this opportunity to thank shareholders for attending today's meeting and for contributing to the discussion on the business before the meeting. (Conference Instructions) I now declare the meeting closed, subject to the determination of the results of the poll. Thank you very much.

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