Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — FY2020 Earnings Presentation
15 slides from Insurance Australia's earnings presentation, Jul 24, 2020
Slide 1: IAG outlines FY20 results
News Release 24 July 2020 IAG outlines FY20 results IAG today provided an update on its results for the year ended 30 June 2020 (FY20), within which it expects to report: Gross written premium (GWP) growth of around 1%, consistent with the ‘low single digit’ guidance maintained throughout FY20; an
Slide 2: Customer refund provision, SBI sale and no final dividend
An increased pre-tax customer refund provision of $246 million for multi-year pricing issues (1H20: $150 million), included in the net corporate expense line; A total profit after tax of $326 million on the sale of IAG’s 26% interest in SBI General Insurance Company in India, which completed at
Slide 3: Prior period reserve strengthening
Prior period reserve strengthening IAG has strengthened its prior period reserves by over $50 million in 2H20, compared to previous guidance of reserve releases equivalent to 1% of net earned premium (NEP) in that period. Contributing to a full year net strengthening of $48 million, this action refl
Slide 4: Aggregate catastrophe reinsurance cover purchase
In addition, IAG has continued to pursue initiatives that strengthen its overall reinsurance position, including: The purchase of an aggregate catastrophe reinsurance cover for the 12 months to 30 June 2021, providing $350 million of gross protection in excess of $400 million ($236 million in exce
Slide 5: IAG outlines FY20 results
1H19 2H19 1H20 2H20 FY19 FY20 IAG PRELIMINARY RESULTS - SUBJECT TO AUDIT AND BOARD APPROVAL A$m A$m A$m A$m A$m A$m Gross written premium 5,881 6,124 5,962 6,173 12,005 12,135 Gross earned premium 5,984 5,958 6,105 6,059 11,942 12,164 Reinsurance expense (2,373) (2,331) (2,396) (2,405) (4,704) (4,80
Slide 6: IAG outlines FY20 results
This presentation is based on a preliminary view of IAG’s FY20 results which remain subject to finalisation of audit and Board approval. IAG outlines FY20 results Peter Harmer Nick Hawkins Managing Director and Deputy Chief Executive Officer Chief Executive Officer 24 July 2020 This release has been
Slide 7: Financial summary
FY19 FY20 Change Financial GWP ($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 8: 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 9: 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 10: 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 11: 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 12: 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 13: 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 14: Australia
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Slide 15: 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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