Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Trans-Tasman Business Circle (October 2008)
19 slides from Insurance Australia's conference presentation, Oct 16, 2008
Slide 1: Getting the Fundamentals Right Today for a Stronger Future
GETTING THE FUNDAMENTALS RIGHT TODAY FOR A STRONGER FUTURE 16 OCTOBER 2008 MICHAEL WILKINS MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
Slide 2: Agenda
AGENDA 1 CONTEXT: WHO WE ARE AND OUR INDUSTRY 2 REFINING OUR FOCUS AND OPERATING MODEL 3 DELIVERING ON OUR PROMISES 4 INSIGHTS AND LOOKING AHEAD PAGE 2
Slide 3: Context
= CONTEXT IAG ice Australia Group
Slide 4: Who We Are: Our Brands
WHO WE ARE OUR BRANDS DIRECT INTERMEDIATED DIRECT DIRECT INTERMEDIATED INSURANCE INSURANCE INSURANCE INSURANCE INSURANCE UNITED KINGDOM eVENTURES NEW ZEALAND AUSTRALIA INTERMEDIATED INTERMEDIATED INSURANCE INSURANCE ASIA * • RACV is via a distribution relationship and underwriting joint venture with
Slide 5: About the General Insurance Industry
ABOUT THE GENERAL INSURANCE INDUSTRY AUSTRALIAN MARKET SHARE (BASED ON GWP) 23% 23% 11% 11% IAG Suncorp QBE Allianz Source: APRA data as at June 2007 PAGE 5
Slide 6: Market Conditions Tough for Entire Industry
MARKET CONDITIONS TOUGH FOR ENTIRE INDUSTRY AUSTRALIANInsurance Industry INDUSTRY GENERAL INSURANCE Profitability PROFITABILITY 24 23 22 21 20 19 ROE % 18 17 16 15 2004 2005 2006 2007 2008 Year YEAR Source: KPMG and Credit Suisse. PAGE 6
Slide 7: Refining Our Focus and Operating Model
2 REFINING OUR FOCUS AND OPERATING MODEL
Slide 8: Our Business Remains General Insurance
OUR BUSINESS REMAINS GENERAL INSURANCE OUR BUSINESS • General insurance products and services • A portfolio of high performing, customer- OUR focused, diverse operations providing CORPORATE general insurance in a manner that delivers INTENT superior experiences for our stakeholders and creates share
Slide 9: We Will Actively Manage Our Portfolio
WE WILL ACTIVELY MANAGE OUR PORTFOLIO OUR • Top quartile Total Shareholder Return (TSR) FINANCIAL • ROE > 1.5x WACC (through the cycle) TARGETS • Deliver superior performance by actively OUR managing our portfolio, exiting businesses STRATEGY that do not fit our intent or return hurdles, and driving
Slide 10: Strategic Decisions
STRATEGIC DECISIONS • Improve our performance in Australia and New Zealand • Pursue selective international growth options – OUR STRATEGIC Asia and other narrow specialist opportunities PRIORITIES • A devolved model with the Corporate Office as portfolio manager • Driving operational performance and
Slide 11: A New Way of Working
A NEW WAY OF WORKING • Revised corporate strategy with a focus on execution and active management of our portfolio of general insurance businesses • This has driven change throughout our organisation, including our operating model - Devolved model with end-to-end businesses - Shared services integra
Slide 12: Delivering on Our Promises
= DELIVERING ON OUR PROMISES IAG ice Australia Group
Slide 13: Delivering on Our Promises
DELIVERING ON OUR PROMISES Priority Status Move to a simpler operating model by end of September 3 Delivered Implement cost reduction measures to deliver $130m in annual 3 before-tax (run rate) savings by end of September Delivered Scale back of operations in the UK On track Pursue select opportunit
Slide 14: NRMA Insurance New Brand Campaign
NRMA INSURANCE NEW BRAND CAMPAIGN UNWORRY PAGE 14
Slide 15: Insights and Looking Ahead
= INSIGHTS AND LOOKING AHEAD IAG ice Australia Group
Slide 16: Insights
INSIGHTS • Focus on what you do best – Get back to the fundamentals – Be in markets where you have a competitive advantage, and ensure you stay relevant • Eliminate unnecessary complexities and drive accountability – Devolve responsibility and accountability as close to the customer as possible • Bu
Slide 17: Implications for Insurers in Challenging Financial Markets
IMPLICATIONS FOR INSURERS IN CHALLENGING FINANCIAL MARKETS • Consumers turning to brands they can trust – flight to quality • Investment strategy – technical reserves and shareholders’ funds • Reinsurance strategy and exposure • Strong capital and risk management protocols • Sound business strategie
Slide 18: FY09 – A Rebuilding Year
FY09 – A REBUILDING YEAR • Underlying GWP growth of 3-5% • Reported GWP growth of 0-2% due to the Group’s change in its UK strategy • Insurance margin of 10%+ (now including corporate expenses) Subject to no material movement in foreign exchange rates and no catastrophes or large losses beyond our a
Slide 19: Our Business Model and Brands
OUR BUSINESS MODEL AND BRANDS DIRECT INTERMEDIATED DIRECT DIRECT INTERMEDIATED INSURANCE INSURANCE INSURANCE INSURANCE INSURANCE UNITED KINGDOM NEW ZEALAND eVENTURES AUSTRALIA INTERMEDIATED INTERMEDIATED INSURANCE INSURANCE ASIA * ACTIVE PORTFOLIO MANAGEMENT & GOVERNANCE (CORPORATE OFFICE) • RACV is
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