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Media Release - May 13 2004

QBE Purchases Balance of QBE Mercantile Mutual Joint Venture in Australia

QBE Insurance Group Limited today advised that, subject to regulatory consents and definitive contracts, it had agreed to purchase ING’s 50% share in the QBE Mercantile Mutual joint venture in Australia and ING’s Australian general insurance underwriting business conducted by Mercantile Mutual Insurance (Australia) Limited (“MMIA”) and Mercantile Mutual Insurance (Workers’ Compensation) Limited.

QBE’s additional gross written and net earned premium from the purchase for a full year are expected to be $650 million and $580 million respectively. This includes ING’s 30% share of workers’ compensation business underwritten by QBE.

The initial purchase price for the general insurance underwriting interests is $740 million. Net tangible assets of these interests at date of completion, which is expected to be 30 June 2004, is a minimum $380 million, including close to $1 billion of cash and liquid investments and $620 million of net insurance liabilities. An additional $25 million is payable in February 2007 subject to run off of pre-joint venture net insurance liabilities.

To initially fund the purchase, QBE intends to use existing funds and short term bank facilities. These will be replaced during the remainder of 2004 through a combination of medium and long term debt. QBE also intends to arrange an orderly conversion of up to 70% of the LYONs hybrid securities to ensure QBE retains a strong capital adequacy and a debt to equity ratio of less than 40% by 31 December 2004.

Mr Frank O’Halloran, CEO of QBE Insurance Group Limited, said “We are confident that the acquisition of ING’s 50% interest in the Australian joint venture, together with the 30% share of QBE’s workers’ compensation business, will be earnings per share positive from year one after the conversion of 70% of the LYONs securities”. He added “The price paid for the acquisition reflects the quality of the insurance profitability of the joint venture and workers’ compensation business.”

QBE has also agreed to purchase, subject to definitive contracts, Mercantile Equities Pty Limited, a small subsidiary of MMIA, the price and profits of which are not material and are not included above.

For further information, please contact:

Frank O'Halloran Chief Executive Officer +61 2 9375 4400
Neil Drabsch Chief Financial Officer +61 2 9375 4216
Gayle Tollifson Chief Risk Officer +61 2 9375 4102