Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Investor Day (April 2018)
50 slides from Insurance Australia's investor day presentation, Apr 11, 2018
Slide 1: IAG Investor Day news release
News release 11 April 2018 For personal use only IAG Investor Day IAG is today hosting an Investor Day at the Amora Hotel Jamison Sydney. Attached for immediate release are the presentation materials. The event will be available via live webcast from 8.55 am at www.iag.com.au. A transcript of the In
Slide 2: Introduction and Strategy overview
For personal use only Investor Day 11 April 2018 INTRODUCTION and Strategy overview Peter Harmer Managing Director and Chief Executive Officer 1
Slide 3: Program outline and value proposition
09.00 am Introduction & Strategy overview Peter Harmer, Managing Director and CEO 09.20 am Customer Julie Batch, Chief Customer Officer For personal use only 09.40 am Simplification / Australia Mark Milliner, CEO Australia 10.00 am New Zealand Alistair Smith, CFO New Zealand 10.20 am Morning tea (we
Slide 4: Three strategic priorities and eleven capabilities
For personal use only Three strategic PRIORITIES Eleven capabilities Optimise our core insurance business while creating future growth options 5 IAG Investor Day | 11 April 2018 CUSTOMER Organisational capabilities Customer Data Analytics Digital Innovation Experience & AI 6 IAG Investor Day | 11 Ap
Slide 5: Simplification and agility capabilities
SIMPLIFICATION Organisational capabilities For personal use only Technology transformation Operational partnering Supply chain Reduce organisational complexity by Leverage operational partners to Improve allocation and maximise use of consolidating technology platforms, optimise the operating model
Slide 6: Leading@IAG and Workforce of the Future
LEADING@IAG A system of work that is essential to how we For personal use only operate at IAG and live the spirit Organisational Consistency & Alignment Agility & Trust Sequence, in leadership routine and driving… behaviour that builds… 9 IAG Investor Day | 11 April 2018 Workforce of the FUTURE Infl
Slide 7: Alignment to purpose and IAG business model
ALIGNMENT TO PURPOSE We make your world a safer place For personal use only A purpose-led organisation that shapes its internal and external environment • Improving community engagement • Strategic partnerships with the NSW and Queensland State Emergency Services, Australian Red Cross and Lifeline •
Slide 8: Customer
For personal use only CUSTOMER Julie Batch Chief Customer Officer CUSTOMER Organisational capabilities Customer Data Analytics & AI Digital Innovation Experience Use data to power Embed cognitive Connect our customers Develop an innovation A delivery platform that decision making by capabilities tha
Slide 9: Segmenting our customers
CUSTOMER Segmenting our customers For personal use only Customer Experience Customer Data A delivery Analytics & AI platform Digital that Innovation Experience Use data to power decision making by transforms customer experiences Embed cognitive capabilities that anticipate Connect our customers Deve
Slide 10: Disruptive life needs model
DISRUPTIVE LIFE NEEDS MODEL Connecting to the hearts and minds For personal use only of our customers Consumer How consumers How consumers Category life needs satisfy those needs aspire to satisfy behaviour their needs 17 IAG Investor Day | 11 April 2018 CONTENTED Independence & Affiliation & 14 Fre
Slide 11: Go Getters and bringing segmentation to life
GO GETTERS For personal use only Help me focus on achieving my goals and gaining the recognition I seek 19 IAG Investor Day | 11 April 2018 BRINGING segmentation to life Informs • Product Segment development Design performance • Partnerships experiences & profitability • Marketing Brand proposition
Slide 12: Customer capabilities and innovation ecosystem
CUSTOMER Organisational capabilities For personal use only Customer Data Analytics & AI Digital Innovation Experience Use data to power Embed cognitive Connect our customers to Develop an innovation A delivery platform that decision making by capabilities that anticipate real time experiences approa
Slide 13: Australia optimisation program
For personal use only AUSTRALIA Mark Milliner CEO Australia OPTIMISATION PROGRAM On track to achieve 10% reduction in cost run rate exiting FY19 Three core pillars Progressive realisation of benefits Expected net profile 1 Effective partnering 2 Core systems consolidation 3 Procurement maximisation
Slide 14: Australian market update and single Australia division
AUSTRALIAN MARKET UPDATE Favourable environment For personal use only Continued system growth Retention holding up Rate increases Claims inflation across commercial challenges being met and personal lines Addressing Positive margin momentum underperforming portfolios 25 IAG Investor Day | 11 April 2
Slide 15: Simplification outcomes in Australia
SIMPLIFICATION OUTCOMES IN AUSTRALIA Improved customer and employee experience For personal use only Single Guidewire claims platform Effective partnering – largely complete by end of FY18 – accessing process expertise Strong webchat take-up Automation of processes Increased claim lodgement capabili
Slide 16: New Zealand market-leading position
For personal use only NEW ZEALAND Alistair Smith CFO, New Zealand MARKET-LEADING POSITION achieved through acquisition A clear market leader 1H18 GWP mix ~44% overall market share 41% 59% 16% 43% Strong local brands • State, AMI (consumer) • NZI (business) Affinity relationships with three of major
Slide 17: New Zealand market update and issues
NEW ZEALAND MARKET UPDATE Favourable environment For personal use only Sound economic and system Growing population growth Claims inflation Hardening commercial challenges being met market, post-Kaikoura Large presence in consolidated Strong underlying market performance maintained 31 IAG Investor D
Slide 18: Leadership role and future opportunities
LEADERSHIP ROLE For personal use only Leadership and influencer role on public policy issues Industry Memorandum of Understanding with Earthquake Commission (EQC) Kaikoura claims over 97% closed EQC Act changes Home cover raised to NZ$150K; contents excluded; notification limit extended 33 IAG Inves
Slide 19: Zones: Future of motor insurance
For personal use only ZONES FUTURE OF MOTOR INSURANCE David Harrington Investor Day Group Executive, Strategy and Corporate Development 11 April 2018 18
Slide 20: IAG's views on future of motor insurance
IAG’S VIEWS ON FUTURE OF MOTOR INSURANCE For personal use only 1. We’re still early on the pathway to driverless vehicles but expect rapid adoption of driver assistance systems 2. Private motor vehicle ownership will continue to be important but we expect an accelerated shift to shared vehicle trips
Slide 21: Dual forces shaping future mobility
DUAL FORCES ARE SHAPING FUTURE MOBILITY For personal use only Driverless Shared Private Autonomous technology Autonomous Autonomous Electric Vehicles Vehicles Private Shared Motor Motor Vehicles Vehicles Assisted Private Shared Vehicle sharing IAG Investor Day | 11 April 2018 ASSISTED DRIVING WILL B
Slide 22: Shift in trips to shared autonomous vehicles
SHIFT IN TRIPS TO SHARED AUTONOMOUS VEHICLES For personal use only Driverless Shared Autonomous Private Electric Autonomous technology Autonomous Vehicles Vehicle $0.50-0.60 / km Car Sharing (GoGet) $1.20 / km Ride Sharing Private Ride Hailing (Uber Pool) Motor Vehicles (Uber X) $1.50 / km $0.60-1.0
Slide 23: Continued motor insurance growth to 2030
CONTINUED MOTOR INSURANCE GROWTH TO 2030 For personal use only ANZ motor insurance market GWP (A$m nominal) ? Autonomous Commercial Motor 32% 23% Personal Motor 68% 77% Sources: IAG estimates IAG Investor Day | 11 April 2018 IAG IS LEADING THE WAY Autonomous Insurance Shared Mobility Insurance • IAG
Slide 24: Future of SME
For personal use only FUTURE OF SME Ben Bessell Investor Day Executive General Manager, Business Distribution 11 April 2018 Group Executive SME REPRESENTS A GROWTH OPPORTUNITY AS WE ADAPT AND RESPOND TO MARKET CHANGES SME market landscape Five trends will shift SME expectations and insurance market
Slide 25: Making it easier for SMEs to do business
WE ARE MAKING IT EASIER FOR SMEs TO DO BUSINESS WITH US For personal use only We are helping to build resilient and successful SMEs by connecting them to our knowledge, our products and our partners IAG Investor Day | 11 April 2018 LONG TERM INCREASE IN DIRECT PROPORTION OF SME BUSINESS EXPECTED Key
Slide 26: Investor Day brand update
For personal use only INVESTOR DAY BRAND UPDATE Brent Smart Investor Day Chief Marketing Officer 11 April 2018 Brand has never mattered more in our category. IAG Investor Day | 11 April 2018 25
Slide 27: Brand is main driver of advocacy
BRAND IS MAIN DRIVER OF ADVOCACY For personal use only NRMA Insurance has market-leading NPS scores, with a 10-point gap ahead of its competitors. Main drivers of advocacy after a Home Insurance claim: Brand Reputation Claims Experience Price 41% 35% 24% Includes Outcome, Staff & Process Source: NPS
Slide 28: NRMA: Help is who we are
For personal use only With NRMA, we are reclaiming our roots and owning the emotional high ground through HELP. IAG Investor Day | 11 April 2018 HELP IS WHO WE ARE IAG Investor Day | 11 April 2018 27
Slide 29: CGU brand refresh
For personal use only With CGU, we are refreshing the brand with a bigger focus on growing direct business and a more progressive voice. IAG Investor Day | 11 April 2018 28
Slide 30: Small business owner
SMALL BUSINESS OWNER For personal use only IAG Investor Day | 11 April 2018 29
Slide 31: Pricing for climate risk
For personal use only PRICING FOR CLIMATE RISK Mark Leplastrier Investor Day Executive Manager, Natural Perils 11 April 2018 30
Slide 32: Objective: view on climate risk by location
For personal use only Objective: provide a view on climate risk for any location where IAG writes business. IAG Investor Day | 11 April 2018 31
Slide 33: Bushfire?
For personal use only IAG Investor Day | 11 April 2018 Bushfire? Bushfire? IAG Investor Day | 11 April 2018 32
Slide 34: Bushfire?
Bushfire? Bushfire? For personal use only IAG Investor Day | 11 April 2018 Bushfire? Bushfire? IAG Investor Day | 11 April 2018 33
Slide 35: Flood? Bushfire?
Flood? Bushfire? For personal use only IAG Investor Day | 11 April 2018 Flood? Bushfire? IAG Investor Day | 11 April 2018 34
Slide 36: Property A and Property B
Flood? Bushfire? For personal use only IAG Investor Day | 11 April 2018 Property A Property B IAG Investor Day | 11 April 2018 35
Slide 37: Global temperature record (land + sea)
GLOBAL TEMPERATURE RECORD (LAND + SEA) For personal use only Difference from 1961 – 1990 average (ºC) Met Office Hadley Centre and Climatic Research unit NOAA National Centers for Environmental Information NASA Goddard Institute for Space Studies IAG Investor Day | 11 April 2018 IAG Investor Day | 1
Slide 38: Rose Bay, New Year's Day 1947
For personal use only Rose Bay, 2.35 pm, New Year’s Day 1947 Photo: Bob Rice, Sydney “Sun” newspaper IAG Investor Day | 11 April 2018 37
Slide 39: Hail size before and after
For personal use only March 2010 November 2016 March 2010 December 2011 December 2017 Hail size IAG Investor Day | 11 April 2018 Before After IAG Investor Day | 11 April 2018 38
Slide 40: For personal use only
For personal use only IAG Investor Day | 11 April 2018 IAG Investor Day | 11 April 2018 39
Slide 41: Debris racking, batten to rafter, wall to rafter
For personal use only Debris Racking Batten to Rafter Wall to Rafter IAG Investor Day | 11 April 2018 IAG Investor Day | 11 April 2018 40
Slide 42: IAG-NCAR cyclone modelling project
Panorama of ruins Innisfail For personal use only Ingrid Cape Trib. Larry Ada 1918 Cyclone, Edith Street Innisfail IAG Investor Day | 11 April 2018 IAG – NATIONAL CENTER FOR ATMOSPHERIC RESEARCH CYCLONE MODELLING PROJECT SE Queensland rainfall swathes Left: Control model Centre: +2oC SST Right: +4oC
Slide 43: Observed trends in maximum lifetime intensity
OBSERVED TRENDS IN MAXIMUM LIFETIME INTENSITY For personal use only US Saffir Simpson Hurricane Scale All cyclone basins, all available years since 1965 (Holland / Bruyere 2013) Category % of insurance % of annual premium frequency 1 or less 5% 43% 2 8% 26% 3 47% 22% Proportion 4 87% 26% 31% 7% 5 14
Slide 44: For personal use only
For personal use only 43
Slide 45: Driving risk reduction; Capital
DRIVING RISK REDUCTION For personal use only 1 Land Planning 5 2 Response and Building Code/ Recovery Construction 4 3 Residence/ Catastrophe Insurance IAG Investor Day | 11 April 2018 CAPITAL Nick Hawkins Chief Financial Officer 44
Slide 46: Optimising our capital mix
SIMPLIFICATION and lower For personal use only volatility Operational Capital platform Optimisation program Sustainable funding structure SIMPLIFICATION Portfolios Flexible in nature and lower Commercial remediation Diversify by form and counterparties volatility Focus on core markets Costs vs benef
Slide 47: Reinsurance capital and quota shares
REINSURANCE CAPITAL Increased use of quota shares For personal use only Catastrophe capital P&L volatility protection Quota shares • Driven by concentrated peak exposures • Tactical and strategic covers • Conducted with major global reinsurers • Long standing relationships with • Take-up influenced
Slide 48: Strong regulatory capital position
STRONG REGULATORY CAPITAL POSITION Intent to manage in line with CET1 For personal use only benchmark range CET1 is key capital measure Balance date CET1 ratio 1.19 1.09 1.14 1.14 Retained earnings – dividend payout policy 1.06 1.09 of 60-80% of cash earnings 1.07 Modest anticipated organic or acqui
Slide 49: FY18 outlook unchanged
FY18 OUTLOOK UNCHANGED Further underlying improvement expected in 2H18 For personal use only FY18 guidance Underlying assumptions GWP growth Low single digit 1 Net losses from natural perils of 2 Reserve releases of around 3% 3 No material movement in foreign $627m, in line with exchange Reported Ra
Slide 50: Investor Q&A and important information
For personal use only Investor Q&A Day 11 April 2018 Important information This presentation contains general information current as at 11 April 2018 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.
Insurance Australia Group — Investor Day (April 2018) on 6ix