Que son los delitos informáticos y que son las políticas de seguridad

0–1 1–2 2–3 3–4

Years from 30 June 2009

4–5 5–10 10–20 Perpetual Legal maturity date

Call/reset date $ MILLION 0 100 200 400 300 111 81 350 350 376 220 220 295 0 0 0 0 0 0 0 0

Only USD subordinated term notes and the derivatives related to them will be due for reset/mature within the next 12 months.

The IAG Group also has the reset exchangeable securities which are set off on the balance sheet which are perpetual with reset dates and which are convertible at any time into preference shares.

E. INTEREST RATE RISK

Details about the exposure to interest rate risk as at reporting date for interest bearing liabilities is provided in the tables and detailed instrument descriptions in sections C and D of this note.

The interest bearing liabilities bear a fixed interest rate and are measured at amortised cost and so the IAG Group is not exposed at a particular reporting date to changes in the fair value of the liabilities relating to interest rate movements or to changes in the related cash flow obligations. The IAG Group will however be exposed on a call or reset or maturity date when the terms of a liability, including the interest rate, may need to be reset to market rates.

F. CURRENCY RISK

Details about the exposure to currency risk as at reporting date for interest bearing liabilities is provided in the tables and detailed instrument descriptions elsewhere in this note.

The foreign currency risk exposure from interest bearing liabilities arises primarily from long term borrowings denominated in USD, NZD and GBP. There is no significant impact on profit from foreign currency movements associated with these borrowings as the USD subordinated term notes are specifically hedged with cross currency swaps and interest rate swaps for which hedge accounting is applied (refer to section C.II of this note) and the NZD and GBP subordinated term notes are effectively hedging a portion of the net investment in the New Zealand and United Kingdom operations respectively for which hedge accounting is applied (refer to sections C.III and C.IV of this note).

For information regarding the management of currency risk refer to the financial risk management note.

G. USE OF DERIVATIVES

The IAG Group uses derivatives to manage the exposure to risks relating to the interest bearing liabilities. Hedge accounting is applied to only a limited number of these arrangements. In each case where hedge accounting is applied the arrangements are designated as cash flow hedges. Additional information is provided below for those related derivative positions. For information regarding the notional contract amounts associated with these derivative financial instruments together with a maturity profile and reporting date fair values refer to the financial risk management note.

It is important to note that some of the interest bearing liabilities themselves are used to hedge currency risk relating to the net investment in foreign operations by forming part of arrangements for which hedge accounting is applied, refer to the financial risk management note. Cross currency swaps were also previously used to convert the currency exposure on the Euro floating rate notes into British pounds but hedge accounting was not applied for those economic hedges.

I. Cross currency swaps on USD subordinated term notes

Insurance Australia Limited (IAL) has entered into cross currency swaps to fully hedge the Australian dollar value of principal and interest flows on the Consolidated entity’s USD subordinated term notes. The swaps mature in 2010. Over the term of the swaps, the Consolidated entity will receive US dollar payments equal to the interest payable on the notes and will pay interest at either a fixed rate or variable rate of the three month bank bill swap rate plus a margin on a principal amount of A$401 million. On maturity of the swap, the IAG Group will repay the principal amount of A$401 million and receive US$240 million based on the original spot exchange rate at inception. This has the economic effect of converting the USD borrowing into an Australian dollar borrowing. Hedge accounting is applied in relation to these swap agreements.

II. Interest rate swap agreements on USD subordinated term notes

IAL has entered into interest rate swap agreements to manage the interest rate exposure on the Consolidated entity’s USD subordinated term notes (previously swaps were also used in relation to a portion of the now redeemed AUD subordinated term notes). IAL pays a fixed rate of interest under the swap agreements and receives a variable rate of interest equal to the amount payable on the underlying hedged borrowings. The interest income and expense associated with the swap agreements are recognised in profit or loss on a daily basis over the term for which the swap is effective as a hedge of the underlying borrowing. As at reporting date, the weighted average fixed interest rate payable under the swap agreements was 6.92% per annum (2008—6.92% per annum) and the weighted average floating rate receivable was 4.56% per annum (2008—9.36% per annum) for the Consolidated entity.

H. COMPLIANCE RISK

Throughout the current reporting period the IAG Group has conformed with the requirements of its debt agreements, including all financial and non financial covenants (2008—full conformance).

I. FAIR VALUE INFORMATION

The interest bearing liabilities are initially measured at fair value (net of transaction costs) but are subsequently measured at amortised cost. Based on market conditions at any point in time, the carrying value of the liabilities may not be representative of the fair value of the liabilities. A comparison of the carrying amount and fair value for the liabilities is provided in the table below.

2009 2008

Carrying value Fair value Carrying value Fair value

$m $m $m $m

I. Capital nature

a. TIER 1 REGULATORY CAPITAL

AUD reset preference shares* 350 350 350 298

b. TIER 2 REGULATORY CAPITAL

USD subordinated term notes 295 298 250 249

Derivatives for USD subordinated term notes 111 111 151 151

GBP subordinated term notes* 220 168 519 433

NZD subordinated term notes 81 75 79 78

II. Operating nature

Various instruments – – 64 65

Total 1,057 1,413

Less: capitalised transaction costs (4) (12)

1,053 1,401

* These instruments are liabilities of the Parent. The GBP subordinated term notes of the Parent are $293 million.

The differences between the carrying value of the liabilities and the fair value have been driven predominantly by widening credit spreads in the current period. Under the IAG Group’s current accounting policy of measuring the interest bearing liabilities at amortised cost in line with the purpose and nature of the instruments, the differences in value will not be realised by the IAG Group as the liabilities are not transferable.

c. METHODOLOGY

The fair value of the individual interest bearing liabilities cannot be determined by simple reference to traded market prices with the exception of the AUD reset preference shares for which the fair value is determined using the reporting date offer price per the Australian Securities Exchange. Hence the fair values have been determined by mark to model applying valuation techniques using objective market inputs sourced from third parties wherever possible. The inputs are based on financial instruments in the market around reporting date noting that some of the liabilities are not as directly comparable to other market instruments as some liabilities in which case a greater level of judgment has been applied in determining the inputs.

J. FINANCING ARRANGEMENTS

TABLE

NOTE CONSOLIDATED

Facilities drawn

at reporting date Facilities available

2009 2008 2009 2008

$m $m $m $m

Standby letter of credit facilities I. 61 52 66 53

Debt issuance program II. – – 750 750

NZ medium-term note program III. – 40 – 40

Receivables refinancing debt – – – 31

Various entities within the Consolidated entity have facilities outstanding with external service providers, mostly banks, providing short term financing arrangements for specific situations not significant to the Consolidated entity including standby letters of credit, and guarantees for lease guarantees and performance bonds.

Table notes

I. The standby letter of credit facilities are denominated in US dollars and are translated into equivalent Australian dollars using the reporting date exchange rate. The majority of the amount shown relates to standby letter of credit issued in support of the Consolidated entity’s participation in Lloyd’s of London.

II. Insurance Australia Limited has a $750 million debt issuance program. Standard & Poor’s has assigned its AA– long term and A–1+ short-term ratings to the program’s senior obligations and A+ to its subordinated notes. Insurance Australia Limited is rated AA– for its insurer financial strength and counterparty credit ratings.

III. IAG (NZ) Holdings Limited had a NZ$100 million medium term note program, guaranteed by Insurance Australia Limited. All remaining notes outstanding under the program matured during the current reporting period.