Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Investor Presentation (December 2023)
19 slides from Insurance Australia's investor presentation, Dec 4, 2023
Slide 1: News Release: AASB17 Analyst Presentation
News Release 4 December 2023 AASB17 Analyst Presentation IAG today released the attached presentation on AASB17, the Insurance accounting standard, which applies from 1 July 2023. IAG Chief Financial Officer, Michelle McPherson, said: “As we have previously indicated, the new accounting standard is
Slide 2: AASB 17 Presentation
For personal use only AASB 17 Presentation 4 December 2023 AASB 17 presentation | 4 December 2023
Slide 3: Important information
Important information This presentation contains general information current as 4 December 2023 (unless otherwise Forward-looking statements may generally be identified by the use of words such as "should", stated) and is not a recommendation or advice in relation to any product or service offered b
Slide 4: Acknowledgement of Country
Acknowledgement For personal use only of Country IAG acknowledges Traditional Owners of Country throughout Australia and recognises the continuing connection to lands, waters and communities. We pay our respect to Aboriginal and Torres Strait Islander cultures and to Elders past and present. 3 AASB
Slide 5: Presenters
Michelle McPherson For personal use only Chief Financial Officer Alana Bailey CFO, Group Finance Brett Ward Chief Actuary Mark Ley EGM, Investor Relations 4 AASB 17 presentation | 4 December 2023
Slide 6: Overview
Overview For personal use only 01 Key messages 02 Measurement models 03 Level of aggregation 04 Risk adjustment 05 Discount rates 06 Reinsurance cash flows 07 Balance sheet transitional impact 08 FY23 P&L adjustments 09 Reporting 5 AASB 17 presentation | 4 December 2023
Slide 7: Key messages
Key messages AASB 17 accounting principles are broadly consistent with AASB 1023 • First full reporting period under AASB 17 will be for FY24 For personal use only • AASB 17 is not expected to impact IAG’s underlying economics, cash flows, capital, dividend policy or strategic direction • Minor bala
Slide 8: Objectives of AASB Insurance Contracts
For personal use only Objectives of AASB 17 Insurance Contracts Aims to establish consistent principles for It requires insurers to reflect the current accounting of insurance contracts to value of their insurance contract liabilities improve the consistency and transparency of and reinsurance contr
Slide 9: Measurement models
Measurement models The measurement models under AASB 17 applicable to general insurance are the Premium Allocation Approach (PAA) and General Measurement Model (GMM) For personal use only Current AASB 1023 Premium Allocation Approach General Measurement Model (GMM) approach (PAA) CSM Liability for R
Slide 10: Adoption of measurement models
Adoption of measurement models For personal use only Premium Allocation Approach (PAA) General Measurement Model (GMM) IAG Assessment IAG Assessment • Vast majority of underwritten insurance contracts <12 Adverse development cover (ADC) contracts will months and automatically eligible to apply PAA b
Slide 11: Level of aggregation
Level of aggregation For personal use only Liability adequacy test Direct Insurance Australia Intermediated Insurance Australia New Zealand (AASB 1023) Geography Brand Product category (state) Onerous contracts Product category Product category assessment (AASB 17) Onerous contracts Onerous contract
Slide 12: Risk adjustment
Risk adjustment Risk adjustment replaces the concept of risk • Applies a ‘cost of capital’ approach in margin under AASB 1023 determining the risk adjustment For personal use only • The risk adjustment is a higher proportion of the net liability in the Business Interruption (BI) provision • This ris
Slide 13: Discount rates
Discount rates IAG will apply a ‘bottom- up approach’ - use of a Claims discounting risk-free rate adjusted to For personal use only Broadly consistent requirements incorporate an illiquidity premium AASB 1023 AASB 17 Higher discount rate Risk-free rate (%) Risk-free rate (%) Illiquidity premium (%)
Slide 14: Reinsurance cash flows
Reinsurance cash flows Cash flows deemed to be ‘not contingent on claims’ result in a reduction to amounts presented as reinsurance held expense and reinsurance held recoveries The FY23 adjustment to For personal use only AASB 17 AASB 17 FY23 GROUP RESULTS Statutory Adjustments1 Management reflect a
Slide 15: Balance sheet transitional impact at 1 July 2022 ($m)
Balance sheet transitional impact at 1 July 2022 ($m) For personal use only • On transition to AASB 17 at 1 July 2022, IAG applied the full retrospective approach to all insurance and reinsurance contracts • The impact of AASB 17 adoption on the Group’s reported net assets as at 30 June 2022 is an i
Slide 16: FY23 P&L adjustments ($m)
FY23 P&L adjustments ($m) For personal use only 15 AASB 17 presentation | 4 December 2023
Slide 17: FY23 Profit & Loss & Balance Sheet
FY23 Profit & Loss & Balance Sheet Statutory AASB 17 reconciliation to Management AASB 17 AASB 17 AASB 17 30 June 2023 FY23 GROUP RESULTS Statutory Adjustments1 Management View View $m Insurance revenue 13,838 - 13,838 Assets Insurance service expenses (12,040) (560) (12,600) Cash held for operation
Slide 18: Approach to external reporting
Approach to external reporting IAG’s key management disclosures will remain unchanged. We will continue to provide existing reporting metrics: For personal use only • GWP; • NEP; • Insurance Profit; and • Reported and Underlying Margin These will continue to form the basis of our FY24 guidance For s
Slide 19: Investor Relations
For personal use only Investor Relations Mark Ley Nigel Menezes Mobile. +61 (0)411 139 134 Mobile. +61 (0)411 012 690 Email. mark.ley@iag.com.au Email. nigel.menezes@iag.com.au Insurance Australia Group Limited ABN 60 090 739 923 Level 13, Tower Two, 201 Sussex Street Sydney NSW 2000 Australia Ph: +
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