annual general meeting 2011€¦ · 26/10/2011 · returned cgu to profitability – now...

ANNUAL GENERAL MEETING 2011

Mike Wilkins

Managing Director & Chief Executive Officer

26 October 2011

1 GROUP PERFORMANCE

2

ACHIEVEMENTS AGAINST STRATEGIC PRIORITIES

CREATING A SOLID PLATFORM

Improve our performance in

Australia and New Zealand

STRATEGIC PRIORITES

2008–2011 Significantly improved collective insurance margin in Australia and New Zealand

Delivered strong Australia Direct performance

Returned CGU to profitability – now delivering top and bottom line growth

Achieved significant improvement in New Zealand

Pursue selective

international growth options

– Asia and other narrow

specialist opportunities

Launched SBI General in India

Increased ownership of AmG in Malaysia

Launched new online business, The Buzz, in Australia

ACHIEVEMENTS

Move to a devolved model

with the Corporate Office as

portfolio manager

Devolved operating model implemented in 1H09

Embedded return on risk based capital as portfolio management measure

Drive operational

performance and execution

Delivered $130m in annualised pre-tax cost savings

Invested in internal leadership, succession and capability programmes 3

FY11 FINANCIAL PERFORMANCE

SOLID PERFORMANCE IN CHALLENGING CONDITIONS

GROSS WRITTEN

PREMIUM ($M)

09 10

7,842 7,782

NET PROFIT

AFTER TAX ($M)

09 10

7.1 7.0

INSURANCE

MARGIN (%)

09 10

181

91

11

8,050

11

9.1

11

250

4

SIGNIFICANT NATURAL PERIL ACTIVITY

REINSURANCE LIMITED NATURAL PERIL CLAIM COSTS

09 10

451 463

11

610

08

502

07

411

NET NATURAL PERIL CLAIM

COSTS ($M)

5

• Significant reinsurance protection in FY11, against

major events in Australia and New Zealand

• Status of catastrophe cover for balance of

calendar 2011:

– Current maximum event retention (MER) of

approximately $200m for next event

– Approximately $25m of aggregate cover

remaining

• Main catastrophe reinsurance programme

renewal 1 January 2012

DIVISIONAL RESULTS

HOME MARKETS IMPROVED

1. 49% ownership of the general insurance arm of AmBank Group, AmG Insurance Berhad, trading under the AmAssurance brand. 2. 98% voting rights. 3. 26% ownership of SBI General Insurance Company.

4. RACV is via a distribution relationship and underwriting joint venture with RACV Limited. 5. RACV has a 30% interest in The Buzz.

Australia Direct

Australia Intermediated

New Zealand

United Kingdom

Asia

FY11 GWP

BUSINESS MIX

6

1

2

1

2

3

4

5

AUSTRALIA AND NEW ZEALAND

IMPROVEMENT IN HOME MARKETS

• Collective insurance margin of 12.9%

• Australia:

− Strong performance maintained in Direct Insurance

− Top line growth restored and underlying turnaround continuing in CGU

• New Zealand:

− Earthquake affected insurance profit, but underlying performance remains strong

7 1. RACV is via a distribution relationship and underwriting joint venture with RACV Limited.

2. RACV has a 30% interest in The Buzz

1

2

ASIA

GOOD PROGRESS IN INDIA AND CHINA

• Established businesses (in Thailand and Malaysia) continue to perform soundly

• Expanded launch of Indian general insurance joint venture

• Strategic investment in China announced

• Continue to pursue growth opportunities through partnerships in other emerging Asian markets

1.49% ownership of the general insurance arm of AmBank Group, AmG Insurance Berhad, trading under the AmAssurance brand.

2. 98% voting rights.

3. 26% ownership of SBI General Insurance Company. 8

1

2

3

UNITED KINGDOM

REDUCED 2H LOSS AS REMEDIATION ACTIONS TAKE HOLD

• Market conditions remained challenging, with bodily injury claim inflation affecting UK motor insurance industry

• Remediation plan accelerated to restore profitability

− New management team

− Aggressive rating action

− Exiting unprofitable broker relationships

− Ceasing external aggregator business

− Reviewing claim practices

• Encouraging improvement in second half

• Expect to move towards breakeven in FY12

9

2 CAPITAL, DIVIDEND AND INVESTMENTS

10

IAG REMAINS WELL CAPITALISED

CASH RETURN ON EQUITY AND FULL YEAR DIVIDEND UP

TOTAL

REGULATORY

CAPITAL ($M)

09 10

3,573

4,140

TOTAL

DIVIDENDS

(CPS)

09 10

10

13

11

16

11

3,933

CASH RETURN

ON EQUITY (%)

09 10

4.9

8.3

11

11.1

11

SOUND INVESTMENT RETURNS

GENERATED FROM CONSERVATIVE, HIGH QUALITY INVESTMENT MIX

$11.9B TOTAL

INVESTMENT

PORTFOLIO

TECHNICAL

RESERVE

RETURNS ($M)

11

554 489

SHAREHOLDERS’

FUNDS RETURNS

($M)

10

96

Shareholders’ funds Technical reserves 10

$3.6bn

$8.3bn

Shareholders' funds

Technical reserves

11

213

12

3 SUSTAINABILITY PERFORMANCE & BUILDING COMMUNITY RESILIENCE

13

SUSTAINABILITY PERFORMANCE REMAINED STRONG

DESPITE DIFFICULT INTERNAL AND EXTERNAL FACTORS

EMPLOYEE

ENGAGEMENT

CUSTOMER

SATISFACTION

COMMUNITY

INVESTMENT CO2

EQUIVALENT

EMISSIONS

Up from 80% and exceeded global

financial services companies’

benchmark

Direct insurance customer

satisfaction across claims,

sales and service

An improvement from last year

82% 80

1.7% $8.7m

Increased from last year’s

$8.3m

14

BUILDING COMMUNITY RESILIENCE

RECENT CATASTROPHES SHOW CRITICAL ROLE OF INSURANCE

15 © Newspix / Lyndon Mechielsen / John Wilson / Mark Mitchell

4 RESET STRATEGIC PRIORITIES AND OUTLOOK FOR FY12

16

REALISING OUR POTENTIAL

Long term

financial targets:

• ROE 1.5xWACC

• Top quartile TSR

Deliver superior

performance by

actively

managing our

portfolio and

driving

operational

performance and

accountability

• Accelerate growth in Australia

and New Zealand

• Boost Asian footprint – 10% of

Group GWP by 2016

• Restore profitability in UK

RESETTING OUR STRATEGIC PRIORITIES A CLEAR FOCUS ON AUSTRALIA, NEW ZEALAND AND ASIA

unchanged reset

TARGETS STRATEGY PRIORITIES

unchanged

To be the world’s

most respected

group of general

insurance

companies

AMBITION

unchanged

17

STRATEGIC PRIORITIES

A PLATFORM FOR DELIVERY

Accelerate growth in

Australia and New

Zealand

STRATEGIC PRIORITIES

2011-2016

• Australia Direct: increase the value of existing customers and attract new customers using insights to meet evolving customer needs

• CGU: continue turnaround through active portfolio management and underwriting expertise, sales-led, relationship-based account management, and customer and market insights

• New Zealand: continue to build disciplined insurance skills; make it easier for customers to buy products via e-platforms; use customer insights to drive innovation

Restore profitability

in UK

• Continue to exit unprofitable parts of market; accelerate repricing; focus on specialist classes

• Have focused accounts in fleet, motorbike and haulage

• Continue to build key insurance and management capabilities

ACTIONS

Boost Asian

footprint – 10% of

Group GWP by 2016

• Grow Indian joint venture to $1bn of revenue by 2016

• Grow business in Malaysia to number one position in motor

• Grow business in Thailand to number two position in motor

• Commence general insurance joint venture in China with Bohai

• Investigate general insurance joint ventures in Indonesia and Vietnam

18

FIRST QUARTER PERFORMANCE

FY12 GUIDANCE REAFFIRMED

1Q performance

• Encouraging GWP growth

• Relatively benign natural perils experience

• Adverse impact of volatile investment markets

On track to deliver FY12 guidance:

Guidance for FY12 assumes over the year:

• Net losses from natural perils in line with budgeted allowances of $580m

• Lower reserve releases of up to 2% of net earned premium (NEP)

• No material movement in foreign exchange rates or investment markets

FY12

Insurance margin 10–12%

GWP growth 6–9%

19

20

OUR BUSINESS MODEL AND BRANDS

annual general meeting 2011€¦ · 26/10/2011 · returned cgu to profitability – now...

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