Manager
Company Announcements Office
Australian Stock Exchange Limited
Level 4, Exchange Centre
20 Bridge Street
SYDNEY NSW 2000
Fax: 1300 300 021

FOR IMMEDIATE RELEASE TO THE MARKET

Insurance Australia Group Limited (IAG) today announced a dividend rate of 5.80% for its Reset Preference Share (RPS) offer* which will open tomorrow, Thursday 16 May.

IAG CFO, Mr George Venardos said in response to strong demand for the securities from institutional investors and participating brokers during the bookbuild, IAG intends to issue a total of $350 million in RPS, including $50 million in oversubscriptions.

The dividend rate on the RPS has been fixed until the first reset date of 15 June 2007 at 5.80% per annum as follows:

Market rate (five year swap rate) 6.38%
Margin (as determined by bookbuild) 1.90%
Subtotal 8.28%
Adjustment for franking 70%
Dividend rate 5.80%

"We are delighted with the response from bookbuild participants to the RPS offer, which is the first stage of the capital management initiatives we announced on 6 May 2002," Mr Venardos said.

"The RPS will provide IAG with an alternative form of Tier 1 Capital which the company intends to use to Buy-back IAG ordinary shares.**

"The introduction of hybrid capital will move us closer to our target mix of capital," Mr Venardos said.

The RPS Offer is scheduled to close on 31 May 2002 but may close earlier due to demand. Trading of RPS on the ASX is expected to commence on a deferred settlement basis on 5 June under the code IAGPA.

The lead manager and bookrunner, Macquarie Equity Capital Markets Limited, has provided settlement credit support, as contemplated in the prospectus, for the full $350 million issue of RPS. An amount has been reserved for the public offer.

The co-managers to the RPS offer are ABN AMRO Morgans Limited, Commonwealth Securities Limited and JBWere Limited.

The RPS prospectus is available from:

  • lead manager, Macquarie Equity Capital Markets Limited on 1800 621 656 (www.macquarie.com.au/iag)
  • co-managers ABN AMRO Morgans Limited on 1800 777 946, Commonwealth Securities Limited on 13 15 19 and JBWere Limited on 1800 003 355
  • IAG web site, iag.com.au/rps
  • or by calling (02) 8218 8405
  • for further information call the IAG RPS information line on 1300 666 635.

IAG owns some of Australia and New Zealand's leading brands - NRMA Insurance, SGIO, SGIC, State Insurance, and Circle.

Na​me
Carolyn McCann

Telephone
(02) 9292 9557

Mobile
0411 014 126

Name
Anne O'Driscoll

Telephone
(02) 9292 3169

Mobile
0411 012 675

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