Ann: FIRST Interview - Taking stock of the year a, page-4

re: Ann: FIRST Interview - Taking stock of th... Hi PD

There was a bit of discussion at the AGM, mainly around whether the company should be investing reserves in the share market or fixed interest. Some shareholders felt that timing was wrong as the share market has had such a good run over the last 2 years, and if we were going to do it, it should have been done 2 years ago. The Chairman advised that 2 years ago, the company did not have enough coverage of liquidity ratios to invest in the share market. At the end of the day, I think the consensus view was that 5% of reserves in the share market was a reasonable compromise.

The only red flag on previous profit forecasts was the increase in competition for consumer insurance, particularly motor vehicles. You only have to look at TV for half an hour to see the aggressive advertising from NRMA, Coles and more recently QBE offering a 20% discount. So on this basis, I would be expecting earnings to be at the lower end of the target range.

Other than that, I think most shareholders were pretty happy to see a return to profitability, dividends flowing, and a forecast of earnings increasing by at least 20% in 2014.

Regards Westwind