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Insurance Australian Group Limited has announced the launch of unsecured, subordinated, convertible notes.

A brief summary of the offer is set out below.

Issuer: Insurance Australia Group Limited

Type of Instrument: Unsecured, subordinated convertible notes

Issue Credit Rating: BBB by S&P

Issue Amount: Up to NZ$250 million plus up to NZ$100 million oversubscriptions

Maturity Date: 15th June 2043 (27 year)

Optional Redemption Date: Any scheduled interest payment date from (and including) the 15th June 2022 to (and including) the 15th June 2023

Holder Conversion Date: Any scheduled interest payment date from (and including) 15th June 2025 and the Maturity Date

Indicative Issue Margin: 2.60% – 2.90% per annum (currently equating to 5.10-5.40%)

Interest Rate:

• From Issue Date until 15th June 2022: the interest rate will be the fixed rate; the sum of the 6 year swap rate prevailing on the Rate Set Date plus the Margin

• From the 15th June 2022 until redemption: the interest rate will be the Floating Rate; the applicable 3 Month Bank Bill Rate plus the Margin reset quarterly

Interest Payments: Payable quarterly in arrears in equal amounts on the 15th March, 15th June, 15th September and 15th December each year, commencing the 15th September 2016

Deferred Interest: Interest may be deferred if an interest deferral condition exists. Deferred interest accumulates, and accrues daily

Early Bird Interest: Interest will be paid under the General Offer at 4% for the period from (and including) the date on which your application money is banked to (but excluding) the Issue Date, and will be paid within 5 Business Days of the Issue Date.

No early bird interest will be paid on the application money returned to you or on applications made under the re-investment Offer

Re-investment Offer: Current Holders of IAGFA notes can request that all or some of their holdings be purchased by IAG on the Issue Date for re-investment in the Notes

Holder Conversion: The notes may be converted into ordinary Shares at the election of a holder on a Holder Conversion Date

Denominations: Minimum of NZ$5,000 and in multiples of NZ$1,000 thereafter

Conversion following a Non-Viability trigger Event: Some or all of the Notes will be converted into Ordinary Shares if a Non-Viability Trigger Event occurs. A Non-Viability Trigger Event can occur if IAG or another entity in the IAG Group encounters severe financial difficulty

Write-Off: If conversion is required following a Non-Viability Trigger Event and your Notes are not converted into ordinary shares for any reason, those Notes will be written-off

Early Redemption: IAG may at its option repay all (but not some only) of the Notes on an Optional Redemption Date or if a Regulatory Event or Tax Event occurs


Information Materials: The Product Disclosure Statement outlining the terms of the offer is available at IAG website at: http://www.iag.com.au/news-events/announcements


Key Risk: Investments in debt securities have risks. A key risk is that IAG does not meet its commitments to repay you or pay you interest (credit risk). Section 8 of the PDS (risks of investing) discusses the main factors that give rise to the risk.

Important Dates

MENZ Firm Bid: Tuesday, 17th May 2016, 4pm
Rate Set Date: Wednesday, 18th May 2016
Closing Date: Friday, 10th June 2016
Issue Date: Wednesday, 15th June 2016
Expected Quotation: Thursday, 16th June 2016