Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — FY2020 Earnings Presentation
10 slides from Insurance Australia's earnings presentation, Jul 24, 2020
Slide 1: IAG outlines FY20 results
This presentation is based on a preliminary view of IAG’s FY20 results which remain subject to finalisation of audit and Board approval. IAG outlines FY20 results Peter Harmer Nick Hawkins Managing Director and Deputy Chief Executive Officer Chief Executive Officer 24 July 2020 This release has been
Slide 2: Financial summary
FY19 FY20 Change Financial GWP ($m) 12,005 12,135 1.1% summary Underlying insurance margin (%) 16.6 16.0 60bps Reported insurance margin (%)* 16.9 10.1 680bps Resilient underlying business performance Fee-based business ($m) (9) (23) nm and strong financial position Shareholders’ funds income ($m) 2
Slide 3: COVID-19 impacts
COVID-19 impacts Modestly adverse GWP effect, neutral insurance margin impact Operational impacts and initiatives • Rapid deployment of working from home arrangements >98% of staff • Up to 400 additional people employed locally in customer-facing roles • Range of support packages introduced for cust
Slide 4: Reported insurance margin
Reported insurance margin Reconciles to low end of guidance via peril, reserving and credit spread effects Margin impact FY20 revised reported margin guidance 12.5-14.5% 2H20 prior period reserve strengthening (~120bps) (-0.7% of NEP compared with +0.5% of NEP guidance) Natural perils above guidance
Slide 5: Underlying insurance margin
Underlying insurance margin Broadly neutral COVID-19 impact Softer 2H20 underlying margin of 15.1% Insurance margin • Neutral COVID-19 impact • Deterioration in Australian long tail commercial 20.1% profitability • Lower investment yields from lower interest 16.9% 16.9% 16.2% rates (~70bps margin he
Slide 6: Prior period reserving
Prior period reserving Reserve strengthening across Australian long tail classes (ex-CTP) Second half net reserve strengthening of $53m Prior period reserve movements • Driven by strengthening of Australian commercial long tail classes • Liability (over $40m), predominantly in silicosis and molestat
Slide 7: Customer refund provision
Customer refund provision Increased to cover two further refund programs Provision for customer refunds of $246m pre-tax ($141m post-tax) 1H20 2H20 FY20 CUSTOMER REFUND PROVISION • 1H20 pre-tax provision of $150m ($82m post-tax) for customer refunds A$m A$m A$m Gross provision 180 110 290 • Related
Slide 8: Capital, reinsurance and dividend
Capital, reinsurance and dividend Strong financial position Strong capital position maintained CET1 ratio • Stronger CET1 ratio of 1.23 at 30 June 2020 1.23 • Includes benefit of SBI General sale 1.15 • Comfortably above targeted range of 0.9-1.1 • Maintain conservative approach to capital in uncert
Slide 9: Australia
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Slide 10: Important information
Important information This presentation contains general information current as at 24 July 2020 and is not a recommendation or advice in relation to Insurance Australia Group Limited (IAG) or any product or service offered by IAG’s subsidiaries. It presents financial information on both a statutory
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