Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Investor Day (April 2013)
33 slides from Insurance Australia's investor day presentation, Apr 23, 2013
Slide 1: IAG in Focus: New Zealand
23 April 2013 ABN 60 090 739 923 IAG IN FOCUS NEW ZEALAND
Slide 2: Important Information
IMPORTANT INFORMATION This presentation contains general information in summary form which is current as at 23 April 2013. It presents financial information on both a statutory basis (which has been prepared in accordance with Australian accounting standards, which comply with International Financia
Slide 3: Agenda
AGENDA WELCOME AND IAG OVERVIEW Mike Wilkins IAG IN NEW ZEALAND: LEADERSHIP IN A CHANGING MARKET Jacki Johnson DIRECT INSURANCE Craig Olsen CANTERBURY EARTHQUAKE RECOVERY UPDATE Video NZI (INTERMEDIATED) Karl Armstrong PANEL DISCUSSION - REINSURANCE David Priebe – Guy Carpenter Edouard
Slide 4: IAG Overview
IAG OVERVIEW Mike Wilkins Managing Director and Chief Executive Officer
Slide 5: IAG Strategic Priorities: A Clear Focus on Australia, New Zealand and Asia
IAG STRATEGIC PRIORITIES A CLEAR FOCUS ON AUSTRALIA, NEW ZEALAND AND ASIA 5
Slide 6: IAG New Zealand: Growth Through Acquisition
IAG NEW ZEALAND GROWTH THROUGH ACQUISITION 2,000 17% 2001: 1,900 1,800 15% 15% 15% 15% 14% 1,700 14% 14% 14% 1,600 13% 13% 1,500 1,400 11% 2003: 1,300 1,200 1,100 1,000 1,912 900 800 1,552 700 2012: 600 4% 1,107 1,137 1,187 1,207 1,247 500 1,040 1,082 1,087 400 769 300 200 475 100 168 NEW ZEALAND NO
Slide 7: IAG in New Zealand: Leadership in a Changing Market
IAG IN NEW ZEALAND LEADERSHIP IN A CHANGING MARKET Jacki Johnson Chief Executive Officer New Zealand
Slide 8: IAG's New Zealand Executive Team
IAG’S NEW ZEALAND EXECUTIVE TEAM LEADING AND SECURING THE NEW ZEALAND MARKET Jacki Johnson Chief Executive Officer Dan Coman Dean MacGregor Karl Armstrong Craig Olsen Tanya Hadfield Allan Dornan Chief Financial Officer EGM Canterbury Recovery EGM NZI EGM Direct Insurance EGM People & Culture Chief O
Slide 9: New Zealand Economy: Sound Economic Fundamentals
NEW ZEALAND ECONOMY SOUND ECONOMIC FUNDAMENTALS 2012 GDP growth of 2.5%, forecast average approaching 3% over next two years Economic growth is solid and broad-based with increases across almost all industries Canterbury recovery is a key driver – more protracted than originally anticipated
Slide 10: Overview of the Insurance Market: Short Tail Market – NZ$5bn GWP
OVERVIEW OF THE INSURANCE MARKET SHORT TAIL MARKET – NZ$5BN GWP IAG participates in an available GWP pool of NZ$5bn MARKET SPLIT BY SEGMENT - 2012 Essentially short-tail in nature 5% 9% Growth of ~35% since 2009, driven by significant rate 26% increases to recover post-earthquake increase in r
Slide 11: Competitive Landscape: IAG a Clear Leader in a Consolidated Market
COMPETITIVE LANDSCAPE IAG A CLEAR LEADER IN A CONSOLIDATED MARKET 2012 – NZ$5BN NEW ZEALAND GENERAL INSURANCE MARKET 5 10% 3% 4 3% 3% 39% NZ$bn 4% 3 6% 2 9% 1 23% 0 2009 2010 2011 2012 IAG Vero Lumley QBE Tower AIG FMG Allianz Other Source: ICNZ, IAG estimates (calendar 2012) Source: ICNZ, IAG estim
Slide 12: Regulation and Reform: Active Engagement
REGULATION AND REFORM ACTIVE ENGAGEMENT Broad and robust engagement Focus on maintaining a sound Support framework that delivers with government on reforms and efficient insurance industry, contractual certainty for insurers with effective management of risk and customers Industry Risks Customers
Slide 13: Overview of IAG's New Zealand Business
OVERVIEW OF IAG’S NEW ZEALAND BUSINESS WELL-BALANCED PORTFOLIO WITH STRONG MARKET SHARES PREMIUM BASE OF ~NZ$2BN GWP BY CLASS GWP BY CHANNEL 12% 34% Personal Intermediated 44% Commercial Direct Affinity 66% 44% Source: IAG results, six months to 31 December 2012 13
Slide 14: Business Performance: Strong Underlying Margin
BUSINESS PERFORMANCE STRONG UNDERLYING MARGIN Underlying performance has been strong, throughout a challenging period – Dip in FY11 reflects post-earthquake 11.8% reinstatement costs 11.2% 11.5% Pass-through of steep increase in reinsurance costs 8.5% – From c.8% of GWP in FY10, to 15% in 1H13 1
Slide 15: New Zealand Strategy: Clarity of Purpose and Targets
NEW ZEALAND STRATEGY CLARITY OF PURPOSE AND TARGETS PURPOSE AMBITION STRATEGY TARGETS What we stand for: Our ambition is: Our strategy is: Our financial targets include: As New Zealand’s leading To be New Zealand’s To deliver sustainable, Underlying long term margin general insurer, our insu
Slide 16: Strategic Horizons: Focus on Sustainable and Profitable Growth
STRATEGIC HORIZONS A FOCUS ON SUSTAINABLE AND PROFITABLE GROWTH HORIZON 1 Strengthen underlying business 3. Consider new Integrate AMI / initiate synergy realisation opportunities Disciplined underwriting / pricing Product development 2. Consolidate and Enterprise value upgrade systems Gro
Slide 17: Home Insurance Changes: Awareness Campaign Leads the Industry
HOME INSURANCE CHANGES AWARENESS CAMPAIGN LEADS THE INDUSTRY CHANGE Most New Zealand home policies written on unspecified replacement basis Reinsurers require greater visibility of total exposures - move to specified sum insured Change across most of industry – up to 1.4m homeowners STRATEGY
Slide 18: Direct Insurance Division
DIRECT INSURANCE DIVISION Craig Olsen Executive General Manager Direct Insurance Division
Slide 19: Direct Insurance Industry in New Zealand
DIRECT INSURANCE INDUSTRY IN NEW ZEALAND LEADING POSITION IN A NZ$1.5BN MARKET DIRECT INSURANCE MARKET SHARES SPLIT OF IAG’S DIRECT BUSINESS 7% 6% 11% 28% 13% 14% 27% 94% State AMI Tower AA FMG Others SME Personal Source: ICNZ, IAG estimates (calendar 2012) Source: IAG results, six months to 31 Dece
Slide 20: IAG Direct Insurance in New Zealand: Critical Mass Secures Position
IAG DIRECT INSURANCE IN NEW ZEALAND CRITICAL MASS SECURES POSITION Two strong brands with long pedigrees: – State Insurance – founded by the New Zealand government in 1905 SHARE OF GWP – AMI – origins as a mutual, dating back to 1926 HOME & CONTENTS 45% 51% Distinct brands with differing distrib
Slide 21: Strategic Priorities: Sustained Market Leadership
STRATEGIC PRIORITIES SUSTAINED MARKET LEADERSHIP STRATEGIC PRIORITIES SUSTAINED OUTCOMES Customer retention Profitable customer growth MARKET LEADING Scope and scale opportunities POSITION – Customer service – Operating efficiencies Improved market coverage (via two-brand STRONG PROFITABILIT
Slide 22: Two-Brand Strategy
TWO-BRAND STRATEGY BUILDING ON THE BEST OF BOTH WORLDS PROVIDING CHOICE FOR CUSTOMERS ON WHEN AND HOW TO DO BUSINESS WITH US Opportunity for new products to AMI customers SHARE OF GWP – Travel insurance launched 77% 63% NORTH ISLAND Rationalise and focus marketing activity to improve 23% 37% mar
Slide 23: AMI Integration: Tracking to Plan
AMI INTEGRATION TRACKING TO PLAN SYNERGY BENEFITS BREAKDOWN NZ$30M BY APRIL 2014 80 INTEGRATION PROJECTS UNDER WAY OR 13% COMPLETE Notable milestones to date: 42% Shared services integration 29% Employee contractual transfer complete HR systems and processes largely integrated AMI marketing
Slide 24: Canterbury Recovery Video Update
CANTERBURY RECOVERY VIDEO UPDATE Dean MacGregor Executive General Manager Canterbury Recovery
Slide 25: NZI (Intermediated)
NZI (INTERMEDIATED) Karl Armstrong Executive General Manager, NZI
Slide 26: Intermediated Insurance in New Zealand: Leading Position in a NZ$3.5bn Market
INTERMEDIATED INSURANCE IN NEW ZEALAND LEADING POSITION IN A NZ$3.5BN MARKET Intermediated market of NZ$3.5bn GWP, with significant INTERMEDIATED INSURANCE MARKET SHARES personal lines component NZI holds a strong position with a 32% market share: 7% 4% – New Zealand’s oldest insurance company,
Slide 27: NZI – Business Overview
NZI – BUSINESS OVERVIEW STRONG PERSONAL LINES CONTRIBUTION NZI GWP SPLIT – BY MARKET SEGMENT NZI GWP SPLIT – BY PRODUCT 1% Commercial Property 5% 6% Home Owners Commercial 35% Personal Motor Vehicle 12% 42% Personal Commercial Motor Vehicle 58% Contents 12% Liability 14% 15% Other Commercial Other P
Slide 28: NZI Strategic Priorities: Driving from the Inside Out
NZI STRATEGIC PRIORITIES DRIVING FROM THE INSIDE OUT STRATEGIC PRIORITIES SUSTAINED OUTCOMES Industry leadership Appropriate pricing and sustainable risk underwriting Results driven Strong relationships MARKET LEADING Drive efficiencies through POSITION Customer focus simplification / business
Slide 29: Stepping Up to the Challenges: 'Can Do'
STEPPING UP TO THE CHALLENGES ‘CAN DO’ THE BIG THREE Reorganisation of team to enhance account management 1. Affordability KEY INITIATIVES Sophisticated pricing precision 2. Capacity Driving efficiency and continuous 3. Home insurance changes improvements Roll out personal lines B2B (Integra
Slide 30: Panel Discussion
PANEL DISCUSSION Jacki Johnson David Priebe Edouard Schmid Julie Batch Chief Executive Officer Vice Chairman Head of Property Group General Manager, New Zealand Guy Carpenter & & Speciality Reinsurance Company LLC Swiss Re IAG
Slide 31: Summary & Outlook
SUMMARY & OUTLOOK Jacki Johnson Chief Executive Officer New Zealand
Slide 32: Summary: Clearly Defined Goals and Strategies
SUMMARY CLEARLY DEFINED GOALS AND STRATEGIES SUSTAINED OUTCOMES DIRECT INSURANCE MARKET LEADING POSITION STRONG PROFITABILITY Customer growth and retention Two-brand, ‘best of both worlds’ approach Effective and direct engagement with government, regulators, industry, Complete AMI integratio
Slide 33: A Market Leading Presence in New Zealand
A MARKET LEADING PRESENCE IN NEW ZEALAND 33
Insurance Australia Group — Investor Day (April 2013) on 6ix