Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — FY2024 Earnings Presentation
35 slides from Insurance Australia's earnings presentation, Aug 21, 2024
Slide 1: Financial Results
Financial Results Full year ended 30 June 2024 21 August 2024
Slide 2: Important information
Important information This presentation contains general information current as at 21 August 2024 (unless otherwise stated) natural peril events causing losses to exceed forecasts, and uncertainties in the Australian and global and is not a recommendation or advice in relation to any product or serv
Slide 3: Introduction – Nick Hawkins, Managing Director and CEO
Nick Hawkins Managing Director and Chief Executive Officer Introduction Financial Results • 21 August 2024 3
Slide 4: Acknowledgement of Country
Acknowledgement 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. Financial Results • 21 August
Slide 5: Making your world a safer place
Making your world a safer place Delivering on our purpose in FY24 Helping customers when Building customer and Making Australia and New they need us most community resilience Zealand safer and stronger • Enhanced frontline training and adopted new AI tools • Achieved milestone of 1 million customers
Slide 6: Supporting customers through current economic conditions
Supporting customers through current economic conditions Proactive help in challenging times Managing costs to help customers Natural perils and reinsurance costs* • Innovative long-term reinsurance agreements • Uplifted insurance fraud prevention 24% Stabilisation of perils / reinsurance costs 5,00
Slide 7: Building strength and resilience
Building strength and resilience Delivering outcomes Leading brands, high trust Deeper understanding Leading • NRMA Insurance #1 most trusted insurance Trusted of customers customer brand in Australia ‘23 (Roy Morgan) brands • AI enablement experiences • NRMA Insurance 2nd strongest brand in Austral
Slide 8: FY24 result highlights
FY24 result highlights Net profit after tax Insurance profit Gross Written Premium $898m $1,438m $16.4bn Return on Equity of 13.5% Up 79.1% Up 11.3% Reported insurance margin Strong capital position Final dividend 15.6% 1.27 CET1 17cps Above 13.5% to 15.5% Further on-market buyback 50% franked FY24
Slide 9: Direct Insurance Australia
Direct Insurance Australia Key highlights 406 384 381 • Strong FY24 GWP growth driven by Motor ( 13%) and Home ( 16%) 351 333 • Reported insurance margin improved to 15.2% (FY23: 14.5%) • Underlying insurance margin improved to 16.6% (FY23: 15.7%) reflecting improvement in claims ratio 248 247 • Sup
Slide 10: Intermediated Insurance Australia
Intermediated Insurance Australia Key highlights 166 160 162 146 • GWP growth of 6.4% with strong focus on underwriting discipline 133 135 • Reported Insurance Profit of $328m delivers on target of at least $250m insurance profit in FY24 • Improvement in reported insurance margin to 11.2% (FY23: 7.7
Slide 11: New Zealand Retail
New Zealand Retail Key highlights 123 124 • GWP up 18.6% to over A$2bn 97 94 • NZ$ underlying GWP growth of ~19% adjusting for timing of 79 77 processing changes and customer refunds 72 • Reported insurance profit rebounding strongly to $247m (FY23: 23.3% $45m) • Underlying insurance profit $176m (F
Slide 12: New Zealand Intermediated
New Zealand Intermediated Key highlights 129 • GWP growth of 12.2% to over A$1.7bn 100 • NZ$ GWP growth of ~11% 81 • Strong insurance profit rebound to $210m following small loss in 67 FY23 56 42 41 17.2% • Underlying insurance profit increased to $167m (FY23: $97m) 13.6% 13.5% • NZI is celebrating
Slide 13: Financials – William McDonnell, Chief Financial Officer
William McDonnell Chief Financial Officer Financials Financial Results • 21 August 2024 13
Slide 14: Financial summary
Financial summary FY23 FY24 Change GWP ($m) 14,729 16,400 11.3% NEP ($m) 8,326 9,244 11.0% Administration expense ratio ex levies (%) 11.9 11.9 - Flat Reported insurance profit ($m) 803 1,438 79.1% Reported insurance margin (%) 9.6 15.6 600bps Underlying insurance profit ($m) 1,052 1,337 27.1% Under
Slide 15: Strong top-line growth
Strong top-line growth Group GWP, GEP & NEP growth Reported FY24 GWP growth of 11.3%: 14% • Strong premium increases reflecting claims inflation, higher reinsurance costs and increased perils 12% allowance 10% • Strong renewal rates for direct channels in Australia and New Zealand 8% • Slight volume
Slide 16: Underlying insurance margin
Underlying insurance margin Strong NEP growth drives improvement in underlying insurance margin to 14.5% (FY23: 12.6%): • Increased perils allowance to $1,098m (FY23: $909m) • 200bps claims ratio improvement • Expense ratio increase to 23.4% (FY23: 23.1%), driven by higher levies, commissions and on
Slide 17: Improvement in underlying claims ratio
Improvement in underlying claims ratio Underlying claims ratio -160bps -200bps 200bps improvement in underlying claims ratio in FY24 • Benefit of 11% NEP growth exceeding claims inflation • Improved motor repair capacity and gradual benefit from reduction in used car prices • Motor frequency benefit
Slide 18: Favourable perils experience
Favourable perils experience $983m actual net perils costs, FY25 net perils allowance of $1,283m, up 17% $115m below FY24 allowance • Strong downside protection with the long-term volatility reinsurance • Slightly below ~$1,000m expectation • Net perils costs capped at $1,283m in over 90% of modelle
Slide 19: Innovative reinsurance protection
Innovative reinsurance protection Long-term natural perils volatility protection FY25 reinsurance program • Provides greater certainty over natural perils cost for customers • Improves future financial stability • Annual cost flat over the five-year arrangement • Attaches at $1,283m post-quota share
Slide 20: Expenses
Expenses Administration expenses ex-levies FY24 admin ratio ex-levies flat at 11.9% 1099 991 • Administration expenses up ~11% including higher technology costs including amortisation 12.1% 11.9% 12.2% 11.9% 11.9% 11.6% • Additional compliance spend, including costs related to cyber and data securit
Slide 21: Strong investment result across all asset classes
Strong investment result across all asset classes Technical reserves portfolio of ~$7bn Shareholders’ funds portfolio of ~$6bn 3%3% Fixed interest and cash 7% 4% 14% 'AAA' Equities 15% 'AA' 47% Global convertible 'A' bonds <'A' Higher yielding credit 32% 75% Private equity $271m $456m $212m $286m 44
Slide 22: Strong CET1 capital position
Strong CET1 capital position 0.9 to 1.1 CET1 target range Financial Results • 21 August 2024 22
Slide 23: Guidance & Outlook – Nick Hawkins
Nick Hawkins Managing Director and Chief Executive Officer Guidance & Outlook Financial Results • 21 August 2024 23
Slide 24: FY25 guidance
FY25 guidance1 GWP growth of ‘mid-to-high single digit’ Reported insurance profit of $1,400m to $1,600m $ % FY24 Reported insurance profit/ margin 1,438m 15.6 FY24 Underlying insurance profit/ margin 1,337m 14.5 FY25 Underlying insurance margin drivers • Net Earned Premium growth • Earn through of r
Slide 25: A stronger, more resilient IAG
A stronger, more resilient IAG Scalable business positioned for growth Retail (~$10.5bn GWP) Broker/Intermediated (~$6bn GWP) Australia New Zealand Australia New Zealand Owned Partner Enabled by Enterprise Platform Powered by Commercial Enablement Policies | Pricing | Administration | Claims Efficie
Slide 26: Strategic Focus
Strategic Focus Clear and consistent IAG strategy People Purpose Strategy Our people are the difference: bringing our We make your world a safer place Create a stronger, more resilient IAG purpose to life and delivering our strategy Focus Approach Ambitions1 Targets1 Grow with our Deliver outstandin
Slide 27: Investor Relations and Media contacts
Investor Relations Media Insurance Australia Group Limited Mark Ley Amanda Wallace ABN 60 090 739 923 M: +61 (0)411 139 134 M: +61 (0)422 379 964 Level 13, Tower Two, 201 Sussex Street E: mark.ley@iag.com.au E: amanda.wallace@iag.com.au Sydney NSW 2000 Australia Ph: +61 (0)2 9292 9222 Nigel Menezes
Slide 28: Appendix 1: FY25 Guidance and Outlook
Appendix 1: FY25 Guidance and Outlook IAG’s confidence in its underlying business is reflected in guidance for FY25 which This FY25 guidance aligns to IAG’s targets to deliver a 15% reported insurance margin includes: and a reported ROE of 14% to 15% on a ‘through the cycle’ basis. • GWP growth of ‘
Slide 29: Appendix 2: Group Profit & Loss
Appendix 2: Group Profit & Loss 1H23 2H23 1H24 2H24 FY23 FY24 GROUP RESULTS A$m A$m A$m A$m A$m A$m Gross written premium 7,061 7,668 7,947 8,453 14,729 16,400 Gross earned premium 6,853 6,985 7,550 7,875 13,838 15,425 Reinsurance expense (2,740) (2,772) (3,054) (3,127) (5,512) (6,181) Net earned pr
Slide 30: Appendix 3: Group Insurance Ratios
Appendix 3: Group Insurance Ratios Insurance Ratios 1H23 2H23 1H24 2H24 FY23 FY24 Loss ratio 70.8% 70.1% 69.1% 62.9% 70.5% 65.9% Immunised loss ratio 72.1% 71.2% 68.5% 63.7% 71.6% 66.0% Expense ratio 22.9% 23.5% 23.7% 23.2% 23.1% 23.4% Commission ratio 8.9% 9.4% 9.3% 9.3% 9.1% 9.3% Administration ra
Slide 31: Appendix 4: DIA Profit & Loss and Insurance Ratios
Appendix 4: DIA Profit & Loss and Insurance Ratios 1H23 2H23 1H24 2H24 FY23 FY24 DIRECT INSURANCE AUSTRALIA A$m A$m A$m A$m A$m A$m Gross written premium 3,219 3,421 3,647 3,843 6,640 7,490 Gross earned premium 3,097 3,190 3,439 3,618 6,287 7,057 Reinsurance expense (1,223) (1,266) (1,349) (1,416) (
Slide 32: Appendix 5: IIA Profit & Loss and Insurance Ratios
Appendix 5: IIA Profit & Loss and Insurance Ratios 1H23 2H23 1H24 2H24 FY23 FY24 INTERMEDIATED INSURANCE AUSTRALIA A$m A$m A$m A$m A$m A$m Gross written premium 2,303 2,502 2,436 2,678 4,805 5,114 Gross earned premium 2,270 2,221 2,402 2,461 4,491 4,863 Reinsurance expense (923) (863) (977) (969) (1
Slide 33: Appendix 6: NZ Profit & Loss and Insurance Ratios
Appendix 6: NZ Profit & Loss and Insurance Ratios 1H23 2H23 1H24 2H24 FY23 FY24 NEW ZEALAND A$m A$m A$m A$m A$m A$m Gross written premium 1,539 1,745 1,864 1,932 3,284 3,796 Gross earned premium 1,486 1,574 1,709 1,796 3,060 3,505 Reinsurance expense (593) (643) (728) (742) (1,236) (1,470) Net earne
Slide 34: Appendix 7: NZ Retail Profit & Loss and Insurance Ratios
Appendix 7: NZ Retail Profit & Loss and Insurance Ratios 1H23 2H23 1H24 2H24 FY23 FY24 NEW ZEALAND RETAIL A$m A$m A$m A$m A$m A$m Gross written premium 822 928 1,034 1,041 1,750 2,075 Gross earned premium 809 846 919 959 1,655 1,878 Reinsurance expense (302) (325) (368) (375) (627) (743) Net earned
Slide 35: Appendix 8: NZ Intermediated Profit & Loss and Insurance Ratios
Appendix 8: NZ Intermediated Profit & Loss and Insurance Ratios 1H23 2H23 1H24 2H24 FY23 FY24 NEW ZEALAND INTERMEDIATED A$m A$m A$m A$m A$m A$m Gross written premium 717 817 830 891 1,534 1,721 Gross earned premium 677 728 790 837 1,405 1,627 Reinsurance expense (291) (318) (360) (367) (609) (727) N
Insurance Australia Group — FY2024 Earnings Presentation on 6ix