Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Corporate Update (December 2021)
47 slides from Insurance Australia's corporate update, Dec 7, 2021
Slide 1: IAG Business Update
Presentation 7 December 2021 IAG Business Update IAG is today hosting a Business Update. The presentation is attached. The briefing will comprise an overview of IAG’s strategy, sessions with the Group Executives leading IAG’s Direct Insurance Australia, Intermediated Insurance Australia and New Zeal
Slide 2: Business Update: Create a stronger, more resilient IAG
Business Update Our strategy: 7 December 2021 Create a stronger, more resilient IAG 1 IAG Business Update | 7 December 2021
Slide 3: Introduction
Introduction Nick Hawkins Managing Director and Chief Executive Officer 2 IAG Business Update | 7 December 2021
Slide 4: Five reasons for confidence
Five reasons for confidence Enterprise-wide Focused on operating and Rapidly improving ability efficiency outcomes from structural advantages Purpose-led with a strong to deliver on growth New leadership team simplified processes and that can differentiate our culture agenda technology company • Int
Slide 5: Program outline
Strategy and Targets Nick Hawkins Direct Insurance Australia Julie Batch Intermediated Insurance Australia Jarrod Hill New Zealand Amanda Whiting Program outline Financial Matters Michelle McPherson Panel hosted by Nick Hawkins: • Julie Batch Q&A Panel • Jarrod Hill • Michelle McPherson • Neil Morga
Slide 6: IAG's leadership team
Nick Hawkins Michelle Neil Morgan Managing Director & McPherson Chief Operating Officer Chief Executive Officer Chief Financial Officer Started in role 10 Mar 21 Started in role 2 Nov 20 Started in role 2 Nov 20 Julie Batch Jarrod Hill Amanda Whiting Group Executive, IAG’s Group Executive, Chief Exe
Slide 7: Recap: strategic focus
Recap: strategic Purpose Strategy We make your world a safer place Create a stronger, more resilient IAG focus Focus Approach Outcomes Grow with Deliver unparalleled personalised service More customers, more our customers when our customers need us the most products and greater scale Focus on underw
Slide 8: IAG's five year ambition: one million new customers
IAG’s five year ambition one million new customers Increased market share by More than 80% of interactions making the world a safer place initiated through a digital for more Australians and New channel Zealanders Customer growth ambition targeting new regions and Delivery of automation and market s
Slide 9: Enterprise Platform powering efficient, secure, informed experiences
Enterprise Platform Consistent products and services to customers wherever they are – from wherever our Single, core insurance platform underpins our digital ambitions to enable >80% of interactions powering people are across digital channels efficient, secure, Support for all three business units t
Slide 10: Innovation to improve our customer proposition
Innovation Ancillary businesses to improve our customer proposition Firemark Ventures investments Investment leverage activity • Integrated into NRMA Insurance digital quote pre-fill, improving quote conversion by 13% Computer vision imagery • Integrated into property claims • Developing and support
Slide 11: Three specific climate contributions in action
Three specific climate contributions in action Cyclone Testing Station sponsored since the early 2000s Contributing to the scientific discussion Reducing climate risk Flood Mitigation Priorities report about current and future climate for shareholders, provided to National Recovery and Resilience He
Slide 12: Our value proposition
Our value proposition Medium-term margin target Our strengths Our strategy Key value drivers Our aspirations • Leading brands • Grow with our customers • Customer growth • “Create a stronger, • Scale and reach • Build better businesses • Claims management more resilient IAG” • Superior customer expe
Slide 13: Direct Insurance Australia
Direct Insurance Australia Julie Batch Group Executive, Direct Insurance Australia 12 IAG Business Update | 7 December 2021
Slide 14: Help Australians like no-one else
Five year ambition 1. Grow across Australia 2. Capture the attention of Help Australians the younger generation 750k new customers like no-one else 3. Digitise the future of small business insurance 4. Next evolution of Claims $400m of value1 13 IAG Business Update | 7 December 2021 Note (1) $400m o
Slide 15: Australian market dynamic environment
Low population growth expected Australian market to rebound in 2023 dynamic environment Strong economic recovery with high household spending and low unemployment Rate of new business registrations has doubled We will take advantage of the dynamic environment Competitive market with • Focusing on po
Slide 16: Grow across Australia
Grow across NRMA Insurance National underpins IAG’s strategic pillar to Grow with our customers Australia NRMA Insurance now a national brand 400k new Customers in WA, SA and NT can now purchase an NRMA Insurance policy for the customers first time, with RACV in Victoria. In core markets of NSW and
Slide 17: Capture the attention of the younger generation
Grow our share of the younger generation and build our customer base of the future Capture the Launched a new digital business, Rollin’, aimed attention of the younger at customers in their 20s and 30s, providing a customer-centric, flexible and integrated subscription-like insurance proposition Inn
Slide 18: Digitise the future of small business insurance
Our service proposition will be tailored to nine segments Digitise the future critical to future growth of small business Simple, tailored value proposition through use Right partnering to extend our offering to reach SMEs insurance of analytics and data Seamless omni-channel Target key growth secto
Slide 19: Shaping the next evolution of claims
Fast, efficient, effective claims experience Create the claims experience of the Streamline and automate processes future – fast, easy and efficient – to for better customer experience Shaping the deliver quality customer outcomes and sustainable value Efficiently removing waste without compromising
Slide 20: Concluding remarks DIA
Summary Concluding Four key areas of growth: The strategy is being delivered now • NRMA Insurance National remarks • Younger generation We have the right people, the energy and momentum to deliver • Small business on our strategy DIA • Claims effectiveness This will deliver our ambition of 750k new
Slide 21: Intermediated Insurance Australia
Intermediated Insurance Australia Jarrod Hill Group Executive, Intermediated Insurance Australia 20 IAG Business Update | 7 December 2021
Slide 22: Immediate priority: $250m insurance profit by FY24
Immediate We will establish continuous portfolio management capability to rapidly adjust pricing and risk selection, ensuring consistent profitability and performance priority At least Horizon 1 Horizon 2 Horizon 3 $250m Recent remediation 1 Simplification Growth Differentiation insurance profit by
Slide 23: Supportive Australian insurance environment
Industry conditions support growth, with IIA achieving average rate increases of 9% in 1Q22 Supportive Brokers are investing in digital tools Australian Hardening market continues and creating efficiencies around product distribution insurance Partner and Broker channels gaining Evolving legal and r
Slide 24: We will grow: enhanced product offerings, digital connectivity and selective expansion
We will grow: enhanced product offerings, digital connectivity and selective expansion Customer segment Strategic objective Intermediated Personal Lines Simplified product set and Protecting Australians with home and motor enhanced delivery capability insurance distributed via intermediaries to part
Slide 25: Trusted brands, deep relationships and large network set us up for growth
Brokers Agriculture and Rural Strategic industry NIBA 2021 survey: 79% partnerships: National Trusted brands, deep of brokers view CGU as Farmers Federation a ‘Trusted Partner’ 5 years, NSW Farmers Association 20 years relationships and large Agencies Partners network set us up Underwriting Agency o
Slide 26: Concluding remarks IIA
We will Concluding remarks Consistently deliver Establish a cost base Position the on our profit targets that allows us to price business to competitively in grow IIA market Portfolio Completion of Workers management Insurance profit Compensation Expense ratio practice >$250m capability review <FY22
Slide 27: New Zealand
New Zealand Amanda Whiting Chief Executive IAG New Zealand 26 IAG Business Update | 7 December 2021
Slide 28: New Zealand's most relevant insurer with a deep heritage
New Zealand’s most relevant insurer with a deep heritage $3bn GWP and Scale efficiency Best-in-class A leader in Strong relations 2m customers drives lower capital Climate Risk with Government expense ratio strength reporting and Regulators • 250k new customers • Stronger digitally • Costs out throu
Slide 29: Insurance brands established over 150 years
Consumer Division Insurance brands established over 150 years Business Division Core target: Trusted Core brands Focus of growth and partner for three of the 50% investment four largest Personal lines banks market share Smaller brands underwritten by Potential to consolidate IAG New Zealand 29% Comm
Slide 30: New Zealand favourable, evolving environment
Medium–term economic factors Continued system growth across housing and vehicles Claims inflation challenges being met New Zealand Long-term structural factors favourable, Customer preferences evolving environment shifting to be more digital Nascent market for embedded insurance partners 29 IAG Busi
Slide 31: New Zealand five year strategy: two phase approach to growth and efficiency
New Zealand five year strategy two phase approach to growth and FY22 – FY23 FY24 – FY26 efficiency Growth Invest in growth • NZI Broker growth via Portal • Direct customer growth • Adjacency businesses that complement the core Strengthen foundations and optimise the base • Simplify business to reduc
Slide 32: Strengthen claims foundations
Strengthen claims foundations improve customer experiences and reduce costs More AI and automation One-touch claims experience Higher digital claims lodgement 20% reduction in suppliers through consolidation Supply chain efficiency Deeper supplier relationships Value-chain extension Repairhub launch
Slide 33: Business division: brokers choose NZI
Business division brokers choose NZI Strengthen foundations Invest in growth NZI remediation success Different solutions for different customer needs NPS +36 pts ahead NPS 1400 of key competitors 35 Large High contact advice model 1200 30 Custom & 1000 25 value-add services 96% retention for Fleet R
Slide 34: Consumer division: Protect every Kiwi's future
Consumer division: We are there to “Protect every Kiwi’s future” Strengthen foundations Invest in growth Transforming the customer journey New customer propositions Enhanced customer Customer-led culture 97% Young Drivers value propositions Improved service levels of NZ businesses are 20% do not Sma
Slide 35: Concluding remarks New Zealand
Summary Concluding 250k new Stronger digitally Costs out through remarks customers in the Consumer connected Broker business automation and process optimisation New Zealand business Enhanced Repairhub #4 partner Hamilton capabilities FY22 FY23 Focus Targets September October November May April July
Slide 36: Financial Matters
Financial Matters Michelle McPherson Chief Financial Officer 35 IAG Business Update | 7 December 2021
Slide 37: Key financial messages: guidance reaffirmed
FY22 guidance reaffirmed Strong capital position Key financial Strengthened messages Confidence in quota perils allowance guidance share renewals reaffirmed Expenses broadly Targeting profitable flat to down customer growth and group margin expansion 36 IAG Business Update | 7 December 2021
Slide 38: FY22 GWP and reported margin on track to meet guidance
Features of FY22 guidance GWP • ‘Low single-digit growth’1 for the full year Reported margin FY22 GWP and Margin impact reported margin Initial FY22 reported margin guidance 13.5-15.5%1 on track to meet Modest positive COVID-19 impact + guidance (Lower motor vehicle claims frequency in 1Q22, partly
Slide 39: Natural perils expertise to price risk
Natural perils Scientific contribution Change in Catastrophe models extensive weather extremes • Storm surge frequency/intensity • • • Tropical cyclone Bushfire Storm / hail / East Coast low expertise to • Sea level rise • Flood / storm surge • East Coast Low frequency • Rainfall annual maxima price
Slide 40: Strengthened allowance reflected in pricing
Positive & negative perils experience vs allowance ($m) 200 100 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 10-year average -100 (FY12-FY21) – perils Strengthened -200 costs exceeded allowance by 0.8% allowance -300 of NEP -400 reflected in Perils allowance/NEP pricing 10.0% 9.5% 9.0% 8
Slide 41: Leveraging capabilities to hold expenses broadly flat
Gross Expenses Expenses to maintain ~$2,500m ~$2,250m Leveraging FY21 FY22 FY23 FY21 FY22 FY23 capabilities to hold Expenses to transform Growth initiatives (largely Expenses to transform expenses DIA) Efficiency initiatives (largely ~$250m IIA and NZ) broadly flat Digital & Systems Risk & Regulator
Slide 42: Unique and diversified capital structure
Equity Debt / hybrid Reinsurance Reduced emphasis Additional Tier 1 Capital Various forms Capital Limited M&A appetite Hybrid equities Catastrophe capital platform Capital management options Tier 2 Capital P&L volatility protection Unique and Subordinated term notes Quota shares diversified Whole-of
Slide 43: Strong capital position provides optionality
Strong capital position provides optionality 1.31 1.26 FY20 and FY21 risk issues 1.23 1.14 1.14 • Positive business interruption 1.09 1.06 1.09 1.06 developments (original provision a ~50 0.99 point drag on CET1) • Maintain net nil trade credit exposure to BCC/Greensill claims (modest capital charge
Slide 44: Medium-term margin target
Medium-term margin target Supportive rate environment Cash ROE 12-13% 1 Reported Margin 15-17% 1 Operating model focus DIA and Constrained expense growth New Zealand $250m IIA Productivity customer insurance initiatives 2 growth 2 profit 2 Higher perils allowance Productivity and digitisation Invest
Slide 45: Q&A panel hosted by Nick Hawkins
Panel hosted by Nick Hawkins • Julie Batch Q&A • Jarrod Hill • Michelle McPherson • Neil Morgan • Amanda Whiting 44 IAG Business Update | 7 December 2021
Slide 46: IAG Business Update | 7 December 2021
45 IAG Business Update | 7 December 2021
Slide 47: Disclaimer and Basis of Preparation
Disclaimer and Basis of Preparation This presentation contains general information current as at 7 December 2021 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
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