HIH And QBE Announce Joint Venture

HIH And QBE Announce Corporate Insurances Joint Venture In Australia And New Zealand

6 March 2001. HIH today announced that, subject to regulatory approvals and other conditions, it has reached agreement with QBE Insurance Limited to the main terms for a corporate insurance joint venture.

A new entity, called QBE Corporate Insurances Limited, will offer to renew all corporate insurances written through major brokers by HIH and QBE in both Australia and New Zealand.

QBE will have management control of the new entity, which will be 60% owned by QBE and 40% by HIH.

The insurance liabilities on past and current insurance policies of the Australian operations of HIH and QBE, including unexpired policies, will be runoff by the respective companies. QBE Corporate Insurance Limited will not assume any past or existing insurance liabilities of QBE in Australia or of HIH (including FAI runoff in New Zealand).

QBE Corporate Insurances Limited will, however, assume the remaining insurance liabilities of HIH in New Zealand, with assets being transferred for an amount equal to the insurance liabilities assumed.

QBE Corporate Insurances Limited is expected to renew around $900 million of gross premium income and net premium income of around $700million.

Initial shareholders’ funds are expected to be $300 million, funded $216 million by QBE and $84 million by HIH. The higher contribution by QBE reflects the larger proportion of premium being contributed by HIH to the joint venture.

After discussions with Standard & Poor's, it is expected that QBE Corporate Insurances Limited will achieve an A category rating.

QBE and HIH will seek to obtain regulatory and other approvals by the important renewal date of 30 June 2001. Commencing immediately, QBE will offer renewals to HIH major corporate clients through its licensed A+ rated subsidiary QBE Insurance (Australia) Limited.

HIH Chief Executive, Randolph Wein, said: "The proposed joint venture is an important initiative to preserve and enhance value for HIH shareholders. The creation of one of Australia's largest corporate insurance providers in combination with QBE will provide HIH with both an ongoing earnings stream and a valuable investment.

"The joint venture also offers the Australian and New Zealand corporate insurance markets an outstanding combination of technical skills, expertise and capacity. The new joint venture will provide corporate clients and many insurance brokers with a more permanent alternative to the transitional agency structure that HIH already has in place via the Gerling Group.

"When the Gerling managing general agency was announced in November 2000, HIH indicated that the arrangement was transitional and designed to enable HIH to ‘preserve and enhance our corporate portfolios ... while corporate restructuring is completed'".

Mr Wein expressed the appreciation of HIH to the Gerling Group for their assistance but indicated that, in the interest of shareholders, the more permanent and comprehensive arrangement offered through the QBE joint venture was the best course for the future.

For more information, contact:

Ross Chapman, Managing Director HIH New Zealand on (09) 379 7697 or 021 965 303

John Clarke, General Manager, Public Affairs, HIH Ltd: + 61 2 9650 2000 or + 61 418 361 778

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