INSURANCE AUSTRALIA GROUP LIMITED ABN HALF YEAR REPORT 31 DECEMBER 2012 APPENDIX 4D

INSURANCE AUSTRALIA GROUP LIMITED ABN 60 090 739 923 HALF YEAR REPORT 31 DECEMBER 2012 APPENDIX 4D CONTENTS Page No Results for announcement to the market 1 Other information 2 Appendix 4D compliance matrix 3 Attachment A: Half year financial report 31 December 2012 5

RESULTS FOR ANNOUNCEMENT TO MARKET Up / Down % Change 31 December 2012 $m 31 December 2011 $m Revenue from ordinary activities Down (4.3)% 5,377 5,617 Net profit/(loss) after tax from continuing operations attributable to equity holders of the Parent Up 325.8 % 643 151 Net profit/(loss) after tax from discontinued operation attributable to equity holders of the Parent Down (2,500.0)% (182) (7) Net profit/(loss) after tax attributable to IAG shareholders Up 220.1 % 461 144 Commentary on the Group's operating result and review of operations can be found in attachment A: Half year financial report. DIVIDENDS - ORDINARY SHARES AMOUNT PER SECURITY FRANKED AMOUNT PER SECURITY Interim dividend 11.0 cents 11.0 cents The record date of the interim dividend is 6 March 2013. The dividend is to be paid on 3 April 2013. The Company's dividend reinvestment plan (DRP) will operate by acquiring shares on-market with no discount applied. The last date for the receipt of an election notice for participation in the Company's DRP is 6 March 2013. The DRP issue price will be based on a volume weighted average price over a 10 day trading window from 11 to 22 March 2013 inclusive. Eligible shareholders may now lodge their DRP elections electronically by logging on to IAG's website at http://www.iag.com.au/shareholder/manage/index.shtml. This report is to be read in conjunction with the annual report of Insurance Australia Group Limited for the year ended 30 June 2012 and any public announcements made by Insurance Australia Group Limited during the half year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. IAG Appendix 4D 1

OTHER INFORMATION During the reporting period Insurance Australia Group held an interest in the following joint venture and associates: OWNERSHIP INTEREST Joint venture NTI Limited 50.00 Associates AmG Insurance Berhad 49.00 SBI General Insurance Company Limited (SBI General) 26.00 First Rescue and Emergency (NZ) Limited 50.00 Loyalty New Zealand Limited 25.00 Sureplan New Zealand Limited 30.00 AAA Assurance Corporation 30.00 Arista Insurance Limited 29.35 InsuranceWide.com Services Limited 35.25 First Rescue Limited (UK) 50.00 Photosecure (NZ) Limited 50.00 Accident & Health International Underwriting Pty Limited (AHI) 50.00 Bohai Property Insurance Company Ltd (Bohai Insurance) 20.00 Insurance Australia Group Limited's aggregate share of profits or losses of these entities is not material. IAG Appendix 4D 2

APPENDIX 4D COMPLIANCE MATRIX APPENDIX 4D DISCLOSURE REQUIREMENTS 1 Details of the reporting period and the previous corresponding period 2 Key information in relation to the following. This information must be identified as ''Results for announcement to the market''. 2.1 The amount and percentage change up or down from the previous corresponding period of revenue from ordinary activities. 2.2 The amount and percentage change up or down from the previous corresponding period of profit/(loss) from ordinary activities after tax attributable to members. 2.3 The amount and percentage change up or down from the previous corresponding period of net profit/(loss) for the period attributable to members. 2.4 The amount per security and franked amount per security of final and interim dividends or a statement that it is not proposed to pay dividends. 2.5 The record date for determining entitlements to the dividends (if any). 2.6 A brief explanation of any figures in 2.1 to 2.4 necessary to enable the figures to be understood. 3 Net tangible assets per security with the comparative figure for the previous corresponding period. 4 Details of entities over which control has been gained or lost during the period, including the following. INSURANCE AUSTRALIA GROUP LIMITED APPENDIX 4D All financial data headings ''Results for announcement to the market'' page 1 Appendix 4D PAGE NUMBER Attachment A: Half year financial report 31 December 2012: Notes to the financial statements - Net tangible assets P.18 NOTE 11 Attachment A: Half year financial report 31 December 2012: Notes to the financial statements - Acquisition and disposals of businesses P.17 NOTE 7 4.1 Name of the entity. - Discontinued operation P.17 NOTE 8 4.2 The date of the gain or loss of control. 4.3 Where material to an understanding of the report the contribution of such entities to the reporting entity s profit from ordinary activities during the period and the profit or loss of such entities during the whole of the previous corresponding period. 5 Details of individual and total dividends or distributions and dividend or distribution payments. The details must include the date on which each dividend or distribution is payable and (if known) the amount per security of foreign sourced dividend or distribution. 6 Details of any dividend or distribution reinvestment plan in operation and the last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan. Attachment A: Half year financial report 31 December 2012: Notes to the financial statements - Dividends note P.15 NOTE 5 Attachment A: Half year financial report 31 December 2012: Notes to the financial statements - Dividends note P.15 NOTE 5 7 Details of associates and joint venture entities ''Other information'' page 2 Appendix 4D including the name of the associate or joint venture entity and details of the reporting entity s percentage holding in each of these entities and - where material to an understanding of the report - aggregate share of profits/(losses) of these entities, details of contributions to net profit for each of these entities, and with comparative figures for each of these disclosures for the previous corresponding period. NOTE NUMBER IAG Appendix 4D 3

APPENDIX 4D DISCLOSURE REQUIREMENTS 8 For foreign entities, which set of accounting standards is used in compiling the report (e.g. International Accounting Standards). 9 For all entities, if the accounts contain an independent audit report or review that is subject to a modified opinion, emphasis of matter or other matter paragraph, a description of the modified opinion, emphasis of matter or other matter paragraph. INSURANCE AUSTRALIA GROUP LIMITED APPENDIX 4D Not applicable Not applicable PAGE NUMBER NOTE NUMBER IAG Appendix 4D 4

ATTACHMENT A INSURANCE AUSTRALIA GROUP LIMITED AND SUBSIDIARIES HALF YEAR FINANCIAL REPORT - 31 DECEMBER 2012 IAG Appendix 4D 5

INSURANCE AUSTRALIA GROUP LIMITED AND SUBSIDIARIES ABN 60 090 739 923 FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2012

INSURANCE AUSTRALIA GROUP LIMITED AND SUBSIDIARIES TABLE OF CONTENTS Directors' Report... 1 Lead Auditor's Independence Declaration... 4 Financial Statements... 5 Directors' Declaration... 19 Independent Auditor's Review Report... 20

DIRECTORS' REPORT The directors present their report together with the consolidated financial report of Insurance Australia Group Limited and its subsidiaries for the half year ended 31 December 2012 and the auditor's report thereon. The following terminology is used throughout the financial report: IAG, Parent or Company - Insurance Australia Group Limited; and Group or Consolidated - the Consolidated entity consists of Insurance Australia Group Limited and its subsidiaries. DIRECTORS The Company's directors in office at any time during or since the end of the half year are as follows. Directors were in office for the entire period unless otherwise stated. Brian Schwartz (director since 1 January 2005), Yasmin Allen (director since 10 November 2004), Peter Bush (director since 7 December 2010), Phillip Colebatch (director from 1 January 2007 to 31 August 2012), Alison Deans (director since 1 February 2013), Hugh Fletcher (director since 1 September 2007), Anna Hynes (director from 1 September 2007 to 1 February 2013), Raymond Lim (director since 1 February 2013), Philip Twyman (director since 9 July 2008) and Michael Wilkins (director since 26 November 2007). PRINCIPAL ACTIVITIES The principal continuing activities of the Group are the underwriting of general insurance and related corporate services and investing activities. OPERATING AND FINANCIAL REVIEW OPERATING RESULT FOR THE HALF YEAR The Group's profit after tax for the half year was $521 million (2011-$167 million). After adjusting for non-controlling interests in the Group result, net profit attributable to the equity holders of the Company was $461 million (2011-$144 million). For the half year to 31 December 2012, the Group has announced: gross written premium (GWP) growth of 13.5%, to nearly $4.6 billion; a materially higher reported insurance margin of 19.9%; and an underlying margin of 12.1%. The increase in GWP reflects strong growth in Australia, New Zealand and Asia, sourced from rate increases, improved volumes and the acquisition of AMI in New Zealand, which was completed in April 2012. Excluding AMI, GWP grew by 9.5%. Aside from ongoing strength in the underlying performance of the business, the very strong reported insurance margin of 19.9% incorporates: benign natural peril activity, resulting in net claim costs of $133 million which are nearly $180 million below related allowances; a $90 million benefit from the narrowing of credit spreads since 30 June 2012; and prior period reserve releases of $90 million, equivalent to 2.2% of net earned premium (NEP). Significantly higher investment income on equity holders funds, of $207 million, was driven by much-improved equity market conditions (2011-loss of $27 million). A. AUSTRALIA DIRECT Australia Direct has reported a near-doubling of insurance profit to $453 million, owing to materially lower net natural peril costs and a favourable credit spread impact. Underlying performance has remained strong but at a slightly lower level than the 2012 financial year owing to profitability pressures in NSW CTP associated with lower investment yields, pricing constraints and increased claims frequency. The division increased GWP by 8.8% to $2,264 million, with rate-driven growth in home, to recover higher input costs, augmented by further volume growth, particularly in motor. B. AUSTRALIA INTERMEDIATED (CGU) CGU has reported a significantly higher insurance margin of 23.1%. Initial benefits have been realised from CGU s new operating model, contributing to a further improvement in underlying performance which places CGU firmly on track to achieve an underlying double digit margin outcome in the 2013 financial year. This has been supplemented by favourable natural peril, reserve release and credit spread movements. CGU increased GWP by 7.7% to $1,433 million, with growth sourced primarily from rate increases to recover higher input costs. C. NEW ZEALAND The New Zealand business continues to perform well at an underlying level. A higher reported margin of 8.3% (2012-7.3%) was after reserve strengthening of $40 million, partially offset by a benign natural peril experience. The AMI integration is proceeding to plan. The division reported an increase in GWP of nearly 40%, to $751 million, reflecting the contribution from AMI and further rate increases to recover substantially higher reinsurance costs. 1

D. ASIA Asia produced an insurance profit of $6 million, a significant improvement on the flood-impacted loss of $67 million in the same period last year. The Thai business continues to perform well. In Asia, consolidated GWP (in respect of Thailand) rose by over 46%, reflecting post-flood effects on car production and demand. REVIEW OF FINANCIAL CONDITION A. FINANCIAL POSITION The total assets of the Group as at 31 December 2012 were $25,349 million compared to $25,132 million at 30 June 2012. While representing a relatively modest increase of just over $200 million, notable movements therein include: the separate identification of all UK-related amounts as assets discontinued operation following the Group s decision to sell the UK operations, with associated reductions in most other asset categories; a greater than $500 million reduction in cash and cash equivalents, including the application of funds to increase the Group s investment in AmG Insurance in Malaysia following its purchase of Kurnia Insurans (Malaysia) Berhad (Kurnia) in September 2012; a corresponding increase to reflect investment in Kurnia; reduced reinsurance recoveries on major prior year events as related claims have been settled; and a greater than $300 million increase in deferred reinsurance expense reflecting completion of the calendar 2013 catastrophe renewal. The total liabilities of the Group as at 31 December 2012 were $20,581 million compared to $20,608 million at 30 June 2012. The modest decrease over the period includes the following notable movements: the separate identification of all UK-related amounts as liabilities discontinued operation following the Group s decision to sell the UK operations, with associated reductions in most other liability categories; reduced outstanding claims on major prior year events as related claims have been settled; an $87 million reduction in interest bearing liabilities following repayment of subordinated term notes in November 2012; and an approximately $300 million increase in other liabilities, largely reflecting the increase in reinsurance payable following completion of the calendar 2013 catastrophe renewal. IAG shareholders equity (excluding non-controlling interests) increased, from $4,343 million at 30 June 2012 to $4,562 million at 31 December 2012. This movement reflects the net effect of: a strong operating earnings performance from continuing operations in the current reporting period; the $182 million loss recognised in respect of the discontinued UK operation; and payment of 12 cents per share final dividend declared in respect of the 2012 financial year ($249 million). B. CASH FROM OPERATIONS The net cash inflows from operating activities for the half year ended 31 December 2012 were $942 million compared to $649 million for the prior period. The increase is mainly attributable to: increased gross written premium receipts of $557 million in Australia, New Zealand and Asian businesses, offset by, decreased reinsurance and other recoveries of $169 million and increased claims payments of $129 million. C. CAPITAL MANAGEMENT The Group s capital position, as reflected in the minimum capital requirement (MCR) multiple, was 1.80 times as at 31 December 2012. Further information on the Group s result and review of operations can be found in the 31 December 2012 Investor Report. This is available in the results and reports area of IAG's website, www.iag.com.au. LIKELY DEVELOPMENTS Insurance and investment operations are, by their nature, volatile due to the exposure to natural perils and industry cycles and thus profit predictions are difficult. Nonetheless, the Group is confident of delivering further improvement in operating performance in 2013. Its revised guidance for the year ending 30 June 2013 is: GWP growth of 9.5%-11.5%; and an insurance margin in the range of 12.5%-14.5%. This assumes: net losses from natural perils in line with budgeted allowance of $620 million; net prior period reserve releases equivalent to 1-2% of net earned premium; and no material change in foreign exchange rates or investment markets from 31 December 2012. DIVIDENDS Details of dividends paid or determined to be paid by the Company are set out in note 5. SIGNIFICANT CHANGES IN STATE OF AFFAIRS The Group has recently announced the sale of the United Kingdom (UK) operation following the completion of the strategic review process announced in May 2012. The UK operation has been classified as a discontinued operation as at 31 December 2012. The commercial broking business was sold on 17 December 2012; and The Equity Red Star business sale is subject to regulatory approval and is expected to be completed in the second half of the current financial year. As part of the sale agreement the existing pension fund liabilities will remain with IAG. 2 INSURANCE AUSTRALIA GROUP LIMITED

EVENTS SUBSEQUENT TO REPORTING DATE Detail of matters subsequent to the end of the half year is set out in note 12. This includes: the IAG Board determined to pay an interim dividend; and the Group is expected to incur an estimated cost of $120-$140 million in respect of ex-tropical Cyclone Oswald and $35 million in respect of bushfires in New South Wales, Tasmania and Victoria, which occurred in the month of January 2013. The Group's calendar 2013 catastrophe reinsurance programme has a maximum first event retention of $150 million. LEAD AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 The lead auditor's independence declaration is set out on page 4 and forms part of the directors' report for the half year ended 31 December 2012. Signed at Sydney this 21st day of February 2013 in accordance with a resolution of the directors. Michael Wilkins Director 3

LEAD AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF INSURANCE AUSTRALIA GROUP LIMITED I declare that, to the best of my knowledge and belief, in relation to the review for the half year ended 31 December 2012 there have been: no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and no contraventions of any applicable code of professional conduct in relation to the review. KPMG Dr Andries B Terblanché Partner Sydney 21 February 2013 4 INSURANCE AUSTRALIA GROUP LIMITED KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.

STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2012 NOTE CONSOLIDATED 31 December 31 December 2012 2011 * $m $m Premium revenue 4,494 3,916 Outwards reinsurance premium expense (399) (335) Net premium revenue (i) 4,095 3,581 Claims expense (2,819) (3,984) Reinsurance and other recoveries revenue 383 1,165 Net claims expense (ii) (2,436) (2,819) Acquisition costs (600) (558) Other underwriting expenses (277) (261) Fire services levies (168) (140) Underwriting expenses (iii) (1,045) (959) Underwriting profit/(loss) (i) + (ii) + (iii) 614 (197) Investment income on assets backing insurance liabilities 211 482 Investment expenses on assets backing insurance liabilities (10) (9) Insurance profit/(loss) 815 276 Investment income on equity holders' funds 207 (27) Fee and other income 92 86 Share of net profit/(loss) of associates (10) (5) Finance costs (50) (44) Fee based, corporate and other expenses (120) (80) Net income/(loss) attributable to non-controlling interests in unitholders' funds (4) (3) Profit/(loss) before income tax from continuing operations 930 203 Income tax (expense)/credit (227) (29) Profit/(loss) after tax from continuing operations 703 174 Profit/(loss) after tax from discontinued operation 8 (182) (7) Profit/(loss) for the period 521 167 OTHER COMPREHENSIVE INCOME AND (EXPENSE), NET OF TAX Actuarial gains and (losses) on defined benefit arrangements (a) 12 (49) Net movement in foreign currency translation reserve (b) 13 (15) Income tax (expense)/credit on other comprehensive income and (expense) (3) 19 Other comprehensive income and (expense), net of tax 22 (45) Total comprehensive income and (expense) for the period, net of tax 543 122 PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO Equity holders of the Parent - continuing operations 643 151 Equity holders of the Parent - discontinued operation (182) (7) Non-controlling interests 60 23 Profit/(loss) for the period 521 167 TOTAL COMPREHENSIVE INCOME AND (EXPENSE) FOR THE PERIOD ATTRIBUTABLE TO Equity holders of the Parent - continuing operations 668 105 Equity holders of the Parent - discontinued operation (185) (6) Non-controlling interests 60 23 Total comprehensive income and (expense) for the period, net of tax 543 122 * Prior year comparatives have been re-presented due to the discontinued operation. Refer to Note 8. (a) Item that will not be reclassified to profit or loss. (b) Item that may be reclassified subsequently to profit or loss. 5

STATEMENT OF COMPREHENSIVE INCOME (CONTINUED) EARNINGS PER SHARE - continuing and discontinued operations NOTE CONSOLIDATED 31 December 31 December 2012 2011 cents cents * Basic earnings per ordinary share 4 22.30 6.95 Diluted earnings per ordinary share 4 21.54 6.91 EARNINGS PER SHARE - continuing operations Basic earnings per ordinary share 4 31.10 7.29 Diluted earnings per ordinary share 4 29.89 7.25 * Prior year comparatives have been re-presented due to the discontinued operation. Refer to Note 8. The above statement of comprehensive income should be read in conjunction with the notes to the financial statements. 6 INSURANCE AUSTRALIA GROUP LIMITED

BALANCE SHEET AS AT 31 DECEMBER 2012 NOTE CONSOLIDATED 31 December 30 June 2012 2012 $m $m ASSETS Cash held for operational purposes 458 969 Investments 13,069 12,953 Premium receivable 2,366 2,502 Trade and other receivables 614 449 Assets discontinued operation 8 1,138 - Reinsurance and other recoveries on outstanding claims 3,044 3,928 Deferred levies and charges 187 178 Deferred outwards reinsurance expense 809 493 Deferred acquisition costs 738 753 Deferred tax assets 289 373 Property and equipment 253 274 Investment in joint venture and associates 536 384 Intangible assets 207 225 Goodwill 1,631 1,625 Other assets 10 26 Total assets 25,349 25,132 LIABILITIES Trade and other payables 1,099 1,135 Reinsurance premium payable 756 264 Restructuring provision 6 20 Current tax liabilities 147 257 Liabilities discontinued operation 8 1,103 - Unearned premium liability 4,817 4,942 Non-controlling interests in unitholders' funds 220 216 Employee benefits provision 294 358 Deferred tax liabilities - 9 Outstanding claims liability 10,528 11,709 Interest bearing liabilities 6 1,572 1,659 Other liabilities 39 39 Total liabilities 20,581 20,608 Net assets 4,768 4,524 EQUITY Share capital 5,353 5,353 Treasury shares held in trust (66) (55) Reserves (55) (68) Retained earnings (670) (887) 4,562 4,343 Non-controlling interests 206 181 Total equity 4,768 4,524 The above balance sheet should be read in conjunction with the notes to the financial statements. 7

STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2012 CONSOLIDATED SHARE CAPITAL TREASURY SHARES HELD IN TRUST FOREIGN CURRENCY TRANSLATION RESERVE SHARE BASED REMUN- ERATION RESERVE RETAINED EARNINGS NON- CONTROLLING INTERESTS TOTAL EQUITY $m $m $m $m $m $m $m 31 December 2012 Balance at the beginning of the financial period 5,353 (55) (94) 26 (887) 181 4,524 Profit/(loss) for the period - - - - 461 60 521 Other comprehensive income/(expense) - - 15-7 - 22 Total comprehensive income/(expense) for the period - - 15-468 60 543 TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Shares acquired and held in trust - (28) - - - - (28) Share based payment expense recognised - - - 12 - - 12 Share based remuneration vested - 17 - (14) (3) - - Dividends determined and paid - - - - (249) (35) (284) Dividends received on treasury shares held in trust - - - - 1-1 Balance at the end of the financial period 5,353 (66) (79) 24 (670) 206 4,768 31 December 2011 Balance at the beginning of the financial period 5,353 (57) (109) 25 (795) 163 4,580 Profit/(loss) for the period - - - - 144 23 167 Other comprehensive income/(expense) - - (11) - (34) - (45) Total comprehensive income/(expense) for the period - - (11) - 110 23 122 TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Shares acquired and held in trust - (14) - - - - (14) Share based payment expense recognised - - - 9 - - 9 Share based remuneration vested - 13 - (14) 1 - - Dividends determined and paid - - - - (146) (40) (186) Dividends received on treasury shares held in trust - - - - 2-2 Balance at the end of the financial period 5,353 (58) (120) 20 (828) 146 4,513 The above statement of changes in equity should be read in conjunction with the notes to the financial statements. 8 INSURANCE AUSTRALIA GROUP LIMITED

CASH FLOW STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2012 CONSOLIDATED 31 December 31 December 2012 2011 $m $m CASH FLOWS FROM OPERATING ACTIVITIES Premium received 4,899 4,342 Reinsurance and other recoveries received 780 949 Claims costs paid (3,442) (3,313) Outwards reinsurance premium expense paid (233) (235) Dividends received 21 18 Interest and trust distributions received 333 303 Finance costs paid (52) (47) Income taxes paid (238) (219) Other operating receipts 584 439 Other operating payments (1,710) (1,588) Net cash flows from operating activities 942 649 CASH FLOWS FROM INVESTING ACTIVITIES Net cash flows on acquisition of subsidiaries and associates (245) (5) Proceeds from disposal of UK broking business 5 - Proceeds from disposal of investments and property and equipment 7,276 3,400 Outlays for investments and property and equipment acquired (8,233) (4,025) Net cash flows from investing activities (1,197) (630) CASH FLOWS FROM FINANCING ACTIVITIES Outlays for purchase of treasury shares (28) (14) Proceeds from issue of trust units 98 71 Outlays for redemption of trust units (98) (76) Proceeds from borrowings - 246 Repayment of borrowings (79) - Dividends paid to IAG equity holders (249) (146) Dividends paid to non-controlling interests (35) (40) Dividends received on treasury shares 1 2 Net cash flows from financing activities (390) 43 Net movement in cash held (645) 62 Effects of exchange rate changes on balances of cash held in foreign currencies 7 2 Cash and cash equivalents at the beginning of the financial period 2,066 1,332 Cash and cash equivalents at the end of the financial period * 1,428 1,396 * Includes $458 million (31 December 2011 - $466 million) of cash held for operational purposes, $903 million of cash and short term money held for investment (31 December 2011 - $930 million) and $67 million cash in discontinued operation. The above cash flow statement should be read in conjunction with the notes to the financial statements. 9

NOTES TO THE FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Insurance Australia Group Limited (IAG, Parent or Company) is a company limited by shares, incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX). Its registered office and principal place of business is Level 26, 388 George Street, Sydney, NSW 2000, Australia. This half year financial report is for the half year ended 31 December 2012 and consolidated financial statements for the Company and its subsidiaries (Group or Consolidated entity). The Group is a forprofit entity. This general purpose half year financial report was authorised by the board of directors for issue on 21 February 2013. This report should be read in conjunction with the annual report for the year ended 30 June 2012 and any public announcements made by the Company during the half year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. A. STATEMENT OF COMPLIANCE This general purpose half year financial report has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standard AASB 134 Interim Financial Reporting, the recognition and measurement requirements of other applicable Australian Accounting Standards adopted by the Australian Accounting Standards Board (AASB) and the ASX Listing Rules. International Financial Reporting Standards (IFRS) refer to the overall framework of standards and pronouncements approved by the International Accounting Standards Board. IFRS forms the basis of the Australian Accounting Standards. This half year financial report of the Consolidated entity does not include all information required for annual financial statement presentation in accordance with IFRS. The current IFRS standard for insurance contracts does not include a comprehensive set of recognition and measurement criteria. The International Accounting Standards Board continues to work on a project to issue a standard that does include such criteria. Until the issuance of that standard, the financial reports of insurers in different countries that comply with IFRS may not be comparable in terms of the recognition and measurement of insurance contracts. B. BASIS OF PREPARATION OF THE FINANCIAL REPORT The accounting policies adopted in the preparation of this financial report have been consistently applied by all entities in the Consolidated entity and are the same as those of the previous year unless otherwise noted. These financial statements have been prepared on the basis of historical cost principles, as modified by certain exceptions noted in the financial report, with the principal exceptions for the Consolidated entity being the measurement of all investments and derivatives at fair value and the measurement of the outstanding claims liability and related reinsurance and other recoveries at present value. The presentation currency used for the preparation of this financial report is Australian dollars. The balance sheet is prepared using the liquidity format in which the assets and liabilities are presented broadly in order of liquidity. I. Australian accounting standards issued but not yet effective As at the date of this financial report, there are a number of new and revised accounting standards published by the Australian Accounting Standards Board for which the mandatory application dates fall after the end of this half year reporting period. None of these standards have been early adopted and applied in the current reporting period. These standards will be adopted in the year commencing 1 July after the operative date. For example, AASB 9 will be operative in the financial year commencing 1 July 2015. 10 INSURANCE AUSTRALIA GROUP LIMITED

TITLE DESCRIPTION OPERATIVE DATE NOTE AASB 9 Financial Instruments 1 January 2015 A AASB 10 Consolidated Financial Statements 1 January 2013 A AASB 11 Joint Arrangements 1 January 2013 A AASB 12 Disclosure of Interests in Other Entities 1 January 2013 B AASB 13 Fair Value Measurement 1 January 2013 A AASB 119 Employee Benefits (September 2011) 1 January 2013 A AASB 127 Separate Financial Statements (2011) 1 January 2013 A AASB 128 Investments in Associates and Joint Ventures (2011) 1 January 2013 A AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 1 January 2015 C AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 1 January 2015 C (December 2010) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual 1 July 2013 B Key Management Personnel Disclosure Requirements AASB 2011-7 Amendments to Australian Accounting Standards arising from the 1 January 2013 A Consolidation and Joint Arrangements Standards AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 1 January 2013 A AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 1 January 2013 A (September 2011) AASB 2012-2 Amendments to Australian Accounting Standards arising from AASB 7-1 January 2013 B Disclosures on Offsetting Financial Assets and Financial Liabilities AASB 2012-3 Amendments to Australian Accounting Standards arising from AASB 132 1 January 2014 A - Offsetting Financial Assets and Financial Liabilities AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual 1 January 2013 A Improvements 2009-2011 Cycle AASB 2012-6 Amendments to Australian Accounting Standards - Mandatory Effective 1 January 2015 A Date of AASB 9 and Transition Disclosures AASB 2012-9 Amendments to AASB 1048 arising from the Withdrawal of Australian 1 January 2013 A Interpretation 1039 AASB 2012-10 Amendments to Australian Accounting Standards - Transition Guidance and Other Amendments 1 January 2013 A, B TABLE NOTE A These changes are not expected to have a significant, if any, financial impact. B These changes will only impact disclosures when preparing the annual financial report. C This standard gives effect to consequential changes arising from the issuance of AASB 9. This standard is required to be adopted in the same reporting period when AASB 9 is adopted. II. Changes in accounting policies There were a number of Australian Accounting Standards applicable for the current reporting period. Adoption of these Standards has not had any material effect on the financial position or performance of the Group. III. Reclassifications of comparatives No items have been reclassified from the Consolidated entity's prior half year financial report to conform to the current period's presentation. IV. Rounding Amounts in this financial report have been rounded to the nearest million dollars, unless otherwise stated. The Company is the kind of company referred to in the class order 98/100 dated 10 July 1998 issued by the Australian Securities & Investments Commission. All rounding has been conducted in accordance with that class order. 11

NOTE 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS In the process of applying the significant accounting policies, certain critical accounting estimates and assumptions are used, and certain judgements are made. The estimates and related assumptions are based on experience and other factors that are considered to be reasonable, the results of which form the basis for judgements about the carrying values of assets and liabilities. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised, and future periods if relevant. The approach to key estimates and judgements for this reporting period are the same as the 2012 financial year, unless otherwise stated. The areas where the estimates and assumptions involve a high degree of judgement or complexity and are considered significant to the financial statements are: insurance contracts related: claims; reinsurance and other recoveries on outstanding claims; and liability adequacy test. The estimation process of the gross cash flows for the 2011 financial year natural catastrophe events in New Zealand is conducted in a similar manner to that described above, but is subject to a high degree of uncertainty owing to the unique nature of the events including the allocation of costs between the events for policies affected by multiple events, the decision process surrounding the zoning of land for rebuilding and the estimated cost of the event relative to the size of the New Zealand economy. There are other amounts relating to insurance contracts that are based on allocation methodologies supported by assumptions (e.g. deferred acquisition costs). The estimates relate to past events, do not incorporate forward looking considerations, and generally do not change from year to year. other: intangible assets and goodwill impairment testing; acquired intangible assets initial measurement and determination of useful life; income tax and related assets and liabilities; share based remuneration; and defined benefit superannuation arrangements. 12 INSURANCE AUSTRALIA GROUP LIMITED

NOTE 3. SEGMENT REPORTING The Consolidated entity has general insurance products in Australia, New Zealand and Asia. In Australia, the financial results are generated from three different divisions being Australia direct insurance, Australia intermediated insurance and Corporate and other. Reportable segments have changed since the annual financial report. As at 31 December 2012 the United Kingdom operation is classified as a discontinued operation and is not disclosed as a segment in this note. Refer to note 8 for further details about the United Kingdom discontinued operation. The Consolidated entity has identified its operating segments based on the internal reports that are reviewed and used by the Chief Executive Officer (being the chief operating decision maker) in assessing performance and in determining the allocation of resources. The operating segments are identified by management based on the manner in which the insurance products are underwritten and the related services provided to customers through the various distribution channels in various countries. Discrete financial information about each of these operating segments is reported to the Chief Executive Officer on a monthly basis. The reportable segments are based on aggregated operating segments as these are the source of the Consolidated entity s major risks and have the most effect on the rates of return. The reportable segments comprise the following business divisions. A. AUSTRALIA DIRECT INSURANCE This segment comprises insurance products distributed through a network of branches, franchises and country service centres throughout Australia as well as call centres and online facilities using predominantly the NRMA Insurance, SGIO and SGIC brands as well as via a distribution relationship and underwriting venture with RACV Limited. B. AUSTRALIA INTERMEDIATED INSURANCE This segment comprises insurance products primarily sold under the CGU and Swann Insurance brands through insurance brokers, authorised representatives and distribution partners. C. NEW ZEALAND INSURANCE This segment comprises the general insurance business underwritten through subsidiaries in New Zealand. The insurance products are predominantly sold directly to customers under the State and AMI brands, and through intermediaries such as brokers and agents using the NZI brand. Personal and commercial products are also distributed by corporate partners, such as large financial institutions, using third party brands. D. ASIA INSURANCE This segment comprises primarily the direct and intermediated insurance business underwritten through subsidiaries in Thailand and the share of the operating result from the investment in associates in Malaysia, Vietnam, India and China. The businesses offer personal and commercial insurance products through local brands. E. CORPORATE AND OTHER This segment comprises other activities, including corporate services, funding costs on the Group s interest bearing liabilities, inwards reinsurance from associates, investment management and investment of the equity holders funds. The results of the run off of the Alba Group are also included in this segment. There are no differences between the recognition and measurement criteria used in the segment disclosures and those used in the financial statements. 13

CONSOLIDATED AUSTRALIA DIRECT INSURANCE AUSTRALIA INTERMEDIATED INSURANCE NEW ZEALAND INSURANCE ASIA CORPORATE INSURANCE AND OTHER TOTAL $m $m $m $m $m $m 31 December 2012 External revenue 2,547 1,622 907 92 209 5,377 Total revenue 2,547 1,622 907 92 209 5,377 Underwriting profit/(loss) 315 240 53 4 2 614 Investment income net of investment fees - technical reserves 138 61 (1) 2 1 201 Insurance profit/(loss) 453 301 52 6 3 815 Investment income net of investment fees - equity holders' funds - - - - 207 207 Share of net profit/(loss) of associates - 1 - (3) (8) (10) Finance costs - - - - (50) (50) Other net operating result - 12 1 - (45) (32) Insurance / corporate result from continuing operations 453 314 53 3 107 930 Income tax expense (227) Profit/(loss) for the period from continuing operations 703 Acquisitions of property and equipment, intangibles and other non-current segment assets - - - - 42 42 Depreciation expense 13 5 4 1 5 28 Amortisation and impairment charges on acquired intangibles and goodwill 5 9 16 - - 30 Total depreciation and amortisation expense 18 14 20 1 5 58 31 December 2011 * External revenue 2,514 1,677 1,053 399 (26) 5,617 Total revenue 2,514 1,677 1,053 399 (26) 5,617 Underwriting profit/(loss) (43) (103) 19 (71) 1 (197) Investment income net of investment fees - technical reserves 273 182 14 4-473 Insurance profit/(loss) 230 79 33 (67) 1 276 Investment income net of investment fees - equity holders' funds - - - - (27) (27) Share of net profit/(loss) of associates - - - (1) (4) (5) Finance costs - - - - (44) (44) Other net operating result - 9 1 - (7) 3 Insurance / corporate result from continuing operations 230 88 34 (68) (81) 203 Income tax expense (29) Profit/(loss) for the period from continuing operations 174 Acquisitions of property and equipment, intangibles and other non-current segment assets - - - - 43 43 Depreciation expense 13 4 2 1 4 24 Amortisation and impairment charges on acquired intangibles and goodwill 5 4 1 - - 10 Total depreciation and amortisation expense 18 8 3 1 4 34 * Prior year comparatives have been re-presented due to the discontinued operation. Refer to Note 8. 14 INSURANCE AUSTRALIA GROUP LIMITED

NOTE 4. EARNINGS PER SHARE CONSOLIDATED 31 December 2012 31 December 2011 cents cents A. REPORTING PERIOD VALUES Continuing and discontinued operations Basic earnings per ordinary share (a) 22.30 6.95 Diluted earnings per ordinary share 21.54 6.91 Continuing operations Basic earnings per ordinary share (a)(b) 31.10 7.29 Diluted earnings per ordinary share (b) 29.89 7.25 (a) The basic earnings per ordinary share excludes the treasury shares held in trust from the denominator of the calculation, but includes earnings attributable to those shares in the numerator, to comply with AASB 133 Earnings per Share. If the amounts relating to those shares are excluded from both the numerator and denominator, the basic earnings per ordinary share for continuing and discontinued operations for the current half year would be reduced to 22.18 cents (31 December 2011-6.91 cents). The basic earnings per ordinary share for continuing operations for the current half year would be reduced to 30.93 cents (31 December 2011-7.25 cents). (b) Prior year comparatives have been re-presented due to the discontinued operation. Refer to Note 8. CONSOLIDATED 31 December 2012 31 December 2011 $m $m B. RECONCILIATION OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE Profit/(loss) for the period 521 167 (Profit)/loss attributable to non-controlling interests (60) (23) Profit/(loss) attributable to equity holders of the Parent used in calculating basic earnings per share 461 144 Earnings used in calculating diluted earnings per share Finance costs of convertible securities 9 - Profit/(loss) attributable to equity holders of the Parent used in calculating diluted earnings per share 470 144 Profit/(loss) from continuing operations attributable to equity holders of the Parent 643 151 Profit/(loss) from discontinued operation attributable to equity holders of the Parent (182) (7) CONSOLIDATED 31 December 2012 31 December 2011 Number of shares in millions Number of shares in millions C. RECONCILIATION OF WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES USED IN CALCULATING EARNINGS PER SHARE Ordinary shares on issue 2,079 2,079 Treasury shares held in trust (11) (11) Weighted average number of ordinary shares used in the calculation of basic earnings per share 2,068 2,068 Weighted average number of dilutive potential ordinary shares relating to Unvested share based remuneration rights supported by treasury shares held in trust 11 11 Convertible securities 100 - Weighted average number of ordinary shares used in the calculation of diluted earnings per share 2,179 2,079 NOTE 5. DIVIDENDS CENTS PER SHARE TOTAL AMOUNT $m PAYMENT DATE TAX RATE FOR FRANKING CREDIT PERCENTAGE FRANKED A. ORDINARY SHARES 31 December 2012 2012 final dividend 12.0 249 3 October 2012 30% 100% 30 June 2012 2012 interim dividend 5.0 104 4 April 2012 30% 100% 2011 final dividend 7.0 146 5 October 2011 30% 100% 250 15

It is standard practice that the IAG Board determines to pay the dividend for a period after the relevant reporting date. In accordance with the relevant accounting policy a dividend is not accrued for until it is determined to pay and so the dividends for a period are generally recognised and measured in the financial reporting period following the period to which the dividend relates. The dividends recognised in the current reporting period include $1 million (31 December 2011-$2 million) paid in relation to treasury shares held in trusts controlled by the Consolidated entity. B. DIVIDEND REINVESTMENT A Dividend Reinvestment Plan (DRP) operates which allows equity holders to elect to receive their dividend entitlement in the form of IAG shares. The price of DRP shares is the average share market price, less a discount if any (determined by the directors) calculated over the pricing period (which is at least five trading days) as determined by the directors for each dividend payment date. The DRP for the 2012 final dividend payable on 3 October 2012 was settled with the on-market purchase of 11 million shares priced at $4.3299 per share (based on a daily volume weighted average price for 10 trading days from 10 September 2012 to 21 September 2012 inclusive, with no discount applied). A copy of the terms and conditions for the DRP are available at www.iag.com.au/shareholder. C. DIVIDEND NOT RECOGNISED AT REPORTING DATE In addition to the above dividends, the IAG Board determined to pay the following dividend after the reporting date but before finalisation of this financial report and it has not been recognised in this financial report. CENTS PER SHARE TOTAL AMOUNT $m EXPECTED PAYMENT DATE TAX RATE FOR FRANKING CREDIT PERCENTAGE FRANKED 2013 interim dividend 11.0 229 3 April 2013 30% 100% On 21 February 2013 the IAG Board determined the interim dividend will be payable to shareholders on 3 April 2013. The Company's DRP will operate by issuing ordinary shares to participants by acquiring shares on-market with an issue price per share of the average market price as defined in the DRP terms with no discount applied. The last election notice for participation in the DRP in relation to this interim dividend is 6 March 2013. NOTE 6. INTEREST BEARING LIABILITIES CONSOLIDATED 31 December 30 June 2012 2012 $m $m A. COMPOSITION I. Capital nature a. TIER 1 REGULATORY CAPITAL * Convertible preference shares 377 377 Reset exchangeable securities 550 550 b. TIER 2 REGULATORY CAPITAL GBP subordinated term notes 156 155 NZD subordinated term notes - 78 GBP subordinated exchangeable term notes 244 241 NZD subordinated bonds 258 254 II. Operational nature Other interest bearing liabilities 3 22 Less: capitalised transaction costs (16) (18) 1,572 1,659 * These instruments are eligible for recognition as Tier 1 capital. A portion may be reclassified as Tier 2 capital to the extent the amount on issue is in excess of APRA's Tier 1 limits. B. SIGNIFICANT MOVEMENTS DURING THE PERIOD On 21 November 2012, Insurance Australia Funding 2007 Limited, a wholly owned subsidiary of the Company exercised the issuer call option on its NZ$100 million subordinated term notes and repaid the issue in full. 16 INSURANCE AUSTRALIA GROUP LIMITED

C. SIGNIFICANT CHANGES TO TERMS AND CONDITIONS DURING THE PERIOD GBP subordinated exchangeable term notes On 25 October 2012, Insurance Australia Limited, a wholly owned subsidiary of the Company redeemed and re-issued its 157 million subordinated exchangeable loan note instrument, and the terms of this issue were amended with immediate effect. Key terms and conditions including the amendments announced on 26 October 2012 : Floating interest rate of six month GBP LIBOR plus margin of 3.2% (1.875% prior to amendment) payable semi annually. The notes mature on 25 October 2037. The notes may be exchanged, at the option of the holder, into ordinary shares of IAG from 13 June 2014, or upon certain events subject to APRA approval and before 25 October 2017. The notes may also be redeemed by the issuer subject to APRA's approval from 25 October 2019. NOTE 7. ACQUISITIONS AND DISPOSALS OF BUSINESSES There have been no significant changes to the Group structure since 30 June 2012, other than the following: A. OTHER ACQUISITIONS I. For the half year ended 31 December 2012 The Group increased its investment by $245 million in the Malaysian joint venture business, AmG Insurance Berhad (AmG), to fund AmG's acquisition of Kurnia Insurans (Malaysia) Berhad (Kurnia). The investment was comprised of $153 million in equity and $92 million in preference shares. Kurnia is a leading non-life insurer and the largest motor insurer in Malaysia. B. DISPOSAL OF SUBSIDIARIES I. For the half year ended 31 December 2012 a. INDEPENDENT COMMERCIAL BROKERS (ICB) In December 2012, the Group disposed of its specialist UK commercial broking business trading as Independent Commercial Brokers (ICB) for a consideration of approximately 10 million (equivalent to $15 million). b. EQUITY RED STAR (ERS) The Equity Red Star business will be sold to Aquiline Capital Partners, a private equity investment firm specialising in financial services, for net tangible assets on completion of sale. The sale is subject to regulatory approval and is expected to complete in the second half of the current financial year. The Group retains control of ERS, and responsibility for the trading results, until completion. As part of the sale agreement the existing pension fund liabilities will remain with the Group. NOTE 8. DISCONTINUED OPERATION The Group announced in December 2012 the sale of its UK operations. This follows completion of the strategic review process which was announced in May 2012. As at 31 December 2012, the UK operation was classified as a discontinued operation. Relevant assets and liabilities of the discontinued businesses are separately recognised on the balance sheet and resulted in recognition of a $182 million loss for the period. CONSOLIDATED 31 December 31 December 2012 2011 $m $m RESULTS OF DISCONTINUED OPERATION Revenue 278 401 Expenses (296) (411) Loss before tax for the period (18) (10) Income tax expense - 3 Net loss on discontinued operation classification (164) - Loss for the period from discontinued operation (182) (7) CASH FLOW FROM/(USED IN) DISCONTINUED OPERATION Net cash from/(used in) operating activities (16) (17) Net cash from/(used in) investing activities (94) (105) Net cash flows for the period (110) (122) Other comprehensive income and (expense) for the period, net of tax for the discontinued operation was a $3 million expense (31 December 2011-$1 million income). 17

EARNINGS PER SHARE CONSOLIDATED 31 December 31 December 2012 2011 cents cents Basic earnings per share, from discontinued operation (8.80) (0.34) Diluted earnings per share, from discontinued operation (8.35) (0.34) The major classes of assets and liabilities of the UK business classified as a discontinued operation as at 31 December 2012 are: CONSOLIDATED 31 December 2012 $m Total Assets classified as discontinued operation Cash and cash equivalents 67 Investments 579 Trade and other receivables 71 Insurance assets 402 Other assets 19 1,138 Total Liabilities classified as discontinued operation Unearned premium liability 234 Outstanding claims liability 751 Other payables 118 1,103 NOTE 9. CONTINGENCIES There have been no material changes in the contingent liabilities or contingent assets since 30 June 2012. NOTE 10. RELATED PARTY DISCLOSURES The Group currently operates under a devolved model but there are shared services through the use of dedicated units (such as head office finance providing accounting and processing services to operational entities) and entities (such as dedicated entities that provide employee services, technology development services, and reinsurance services) which provide services across the Group. All such intragroup transactions are charged to the relevant entities on either normal commercial terms and conditions, a direct and actual cost recovery basis or time allocation basis. All transactions that have occurred among the subsidiaries within the Group have been eliminated for consolidation purposes. NOTE 11. NET TANGIBLE ASSETS CONSOLIDATED 31 December 30 June 2012 2012 $ $ Net tangible assets per ordinary share 1.31 1.20 Net tangible assets per ordinary share has been determined using the net assets on the balance sheet adjusted for non-controlling interests, intangible assets and goodwill. NOTE 12. EVENTS SUBSEQUENT TO REPORTING DATE As the following transactions occurred after reporting date and did not relate to conditions existing at reporting date, no account has been taken of them in the financial statements for the current half year ended 31 December 2012. A. INTERIM DIVIDEND On 21 February 2013, the IAG Board determined to pay an interim dividend of 11 cents per share, 100% franked. The dividend will be paid on 3 April 2013. B. SEVERE WEATHER AND NATURAL PERIL EVENTS The Group is expected to incur an estimated cost of $120-$140 million in respect of ex-tropical Cyclone Oswald and $35 million in respect of bushfires in New South Wales, Tasmania and Victoria, which occurred in the month of January 2013. The Group's calendar 2013 catastrophe reinsurance programme has a maximum first event retention of $150 million. 18 INSURANCE AUSTRALIA GROUP LIMITED

DIRECTORS' DECLARATION In the opinion of the directors of Insurance Australia Group Limited: the financial statements and notes 1 to 12, are in accordance with the Corporations Act 2001 including: giving a true and fair view of the financial position of the Consolidated entity as at 31 December 2012 and of its performance, as represented by the results of its operations and its cash flows, for the half year ended on that date; and the financial report also complies with International Financial Reporting Standards as disclosed in note 1.A; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed at Sydney this 21st day of February 2013 in accordance with a resolution of the directors. Michael Wilkins Director 19

INDEPENDENT AUDITOR'S REVIEW REPORT TO THE EQUITY HOLDERS OF INSURANCE AUSTRALIA GROUP LIMITED REPORT ON THE FINANCIAL REPORT We have reviewed the accompanying half year financial report of Insurance Australia Group Limited (Company), which comprises the consolidated balance sheet as at 31 December 2012, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement for the half year ended on that date, notes 1 to 12 comprising a summary of significant accounting policies and other explanatory information and the directors declaration of the Consolidated entity comprising the Company and the entities it controlled at the half year s end or from time to time during the half year. DIRECTORS' RESPONSIBILITY FOR THE HALF YEAR FINANCIAL REPORT The directors of the Company are responsible for the preparation of the half year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half year financial report that is free from material misstatement, whether due to fraud or error. AUDITOR'S RESPONSIBILITY Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Consolidated entity s financial position as at 31 December 2012 and its performance for the half year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Insurance Australia Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. INDEPENDENCE In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. CONCLUSION Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half year financial report of Insurance Australia Group Limited is not in accordance with the Corporations Act 2001, including: giving a true and fair view of the Consolidated entity s financial position as at 31 December 2012 and of its performance for the half year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. KPMG Dr Andries B Terblanché Partner Sydney 21 February 2013 20 INSURANCE AUSTRALIA GROUP LIMITED KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.