Insurance Australia Group Ltd · ASX:IAG

Insurance Australia — Investor Presentation (March 2012)

25 slides from Insurance Australia's investor presentation, Mar 9, 2012

  1. Slide 1: Australia Intermediated (CGU) Investor Briefing

    9 March 2012 ABN 60 090 739 923 AUSTRALIA INTERMEDIATED (CGU) INVESTOR BRIEFING Mike Wilkins Peter Harmer Managing Director and Chief Executive Officer Chief Executive Officer Australia Intermediated (CGU)

  2. Slide 2: Important Information

    IMPORTANT INFORMATION This presentation contains general information in summary form which is current as at 9 March 2012. It presents financial information on both a statutory basis (which has been prepared in accordance with the Australian accounting standards, which comply with International Finan

  3. Slide 3: Agenda

    AGENDA 1. Overview Mike Wilkins 2. CGU Update Peter Harmer 3. Panel Discussion Peter Harmer Steve Nevett, Chairman, Pacific Region, Aon Robert Kelly, Chairman and CEO, Steadfast 4. Summary and Q&A Mike Wilkins Peter Harmer 3

  4. Slide 4: Overview

    OVERVIEW Mike Wilkins Managing Director and Chief Executive Officer 4

  5. Slide 5: IAG Strategic Priorities: A Clear Focus on Australia, New Zealand and Asia

    IAG STRATEGIC PRIORITIES A CLEAR FOCUS ON AUSTRALIA, NEW ZEALAND AND ASIA 5

  6. Slide 6: Improved Performance: CGU Progress to Date

    IMPROVED PERFORMANCE CGU PROGRESS TO DATE CUMULATIVE FTE REDUCTION  Since 2008, CGU has improved CGU’S REPORTED VS UNDERLYING INSURANCE MARGIN (%) underlying performance by around $160 million on an annualised basis 14.3%  Focus has been on remediation, 11.8% 9.3% rebuilding core competencies and

  7. Slide 7: CGU Update

    CGU UPDATE Peter Harmer Chief Executive Officer CGU 7

  8. Slide 8: A Clear Direction: Strategic Review in 2011

    A CLEAR DIRECTION STRATEGIC REVIEW IN 2011 COMMITMENT TO FOCUS ON BUILDING DRIVING IMPROVED CORE STRATEGY COMPETITIVE ADVANTAGE PERFORMANCE  Four years into five-year  Sales-led relationship-based  Commitment to delivering strategy account management double digit margin in FY13  Solid platform t

  9. Slide 9: Accelerating Performance

    ACCELERATING PERFORMANCE DELIVERING SUSTAINABLE GROWTH THROUGH THE CYCLE REQUIRES CHANGE Double-Digit Insurance Margin HORIZON 1 HORIZON 2 HORIZON 3  Portfolio remediation  Focus on competitive  Embed competitive  Rebuild core competencies advantage advantage  Business Development  New operati

  10. Slide 10: One CGU Operating Model

    ONE CGU OPERATING MODEL A SIMPLER, EASIER AND MORE EFFECTIVE WAY TO DO BUSINESS Financial  One account management team for each channel Brokers & Direct to Motor Agents Institutions Employers Dealers  Easier to do business with CGU & Affinity  Maintain specialist workers’ compensation division On

  11. Slide 11: One Account Team per Channel

    ONE ACCOUNT TEAM PER CHANNEL MAKING IT EASIER TO DO BUSINESS WITH CGU One account CURRENT STATE management team  Intermediaries value relationship with CGU, but find organisation difficult to navigate  Current service model does not fully reflect strength of relationship with CGU, or our One under

  12. Slide 12: One Underwriting Team

    ONE UNDERWRITING TEAM DRIVING PORTFOLIO STRATEGY AND UNDERWRITING DISCIPLINE One account CURRENT STATE management team  Distributed underwriting and portfolio management – governance through common frameworks and underwriting licences One underwriting  Duplication of underwriting functions impacts

  13. Slide 13: One Claims Model

    ONE CLAIMS MODEL IMPROVED SERVICE, SCALABILITY AND REDUCED COSTS One account CURRENT STATE management team  Systems and processes vary across states One underwriting  Mix of centralised claims teams and teams embedded in business units team KEY CHANGES One claims  A more unified structure around

  14. Slide 14: One Operations Approach

    ONE OPERATIONS APPROACH IMPROVING EFFICIENCY AND REDUCING OPERATING COSTS One account CURRENT STATE management team  Policy administration, credit control and some underwriting and claims functions delivered locally in regional and rural offices One underwriting team  Inconsistent experience for i

  15. Slide 15: One Support Team

    ONE SUPPORT TEAM CENTRALISED FUNCTIONS DRIVE EXCELLENCE AND REDUCE COST One account CURRENT STATE management team  Support functions are a mix of distributed and centralised teams One underwriting  Significant duplication of functions, processes and frameworks team  Specialised expertise is distr

  16. Slide 16: One CGU Operating Model: Transforming the Way We Do Business

    ONE CGU OPERATING MODEL TRANSFORMING THE WAY WE DO BUSINESS End-to-end business units, generalist roles Function-based, specialist roles Multiple account teams servicing each channel One CGU team per channel Underwriting and claims duplication Centres of excellence Office-based processing and admini

  17. Slide 17: One CGU Delivery: Implementation Progress

    ONE CGU DELIVERY IMPLEMENTATION PROGRESS Capture benefits Transition and Ongoing to embed model end of FY15 Most activity New structure completed  live in FY13 Senior End of March  appointments Implementation  plan Detailed design 17

  18. Slide 18: One CGU Transition: Significant Benefits

    ONE CGU TRANSITION SIGNIFICANT BENEFITS  Annual run rate benefits will reach $65m pre-tax by end of FY15 – CUMULATIVE FTE REDUCTION initial $25m delivered in FY13  Implementation cost estimated at $75m pre-tax to be recognised as corporate cost: 700 – $35m of implementation costs to be recognised

  19. Slide 19: The Path to Delivery: One CGU Target Outcomes

    THE PATH TO DELIVERY ONE CGU TARGET OUTCOMES  160-year heritage  More effective and efficient  Double digit insurance margin operating model in FY13  Strong national brand  Building competitive  Continued improvement in  Strong intermediary and advantage around channel underlying performance

  20. Slide 20: Panel Discussion

    PANEL DISCUSSION Peter Harmer Steve Nevett Robert Kelly Chief Executive Officer Chairman Chairman and CEO CGU Pacific Region, Aon Steadfast 20

  21. Slide 21: Summary and Q&A

    SUMMARY AND Q&A Mike Wilkins Managing Director and Chief Executive Officer 21

  22. Slide 22: IAG Strategic Priorities: A Clear Focus on Australia, New Zealand and Asia

    IAG STRATEGIC PRIORITIES 22 A CLEAR FOCUS ON AUSTRALIA, NEW ZEALAND AND ASIA 22

  23. Slide 23: Appendix: CGU Business Overview

    APPENDIX CGU Business Overview 23

  24. Slide 24: CGU Business Overview: Diverse Portfolio Mix

    CGU BUSINESS OVERVIEW DIVERSE PORTFOLIO MIX  Large SME portfolio  Australia’s largest regional and rural insurer  Growing capability in the corporate market  Major provider of workers’ compensation services PRODUCTS CUSTOMER SEGMENTS 7% 10% 8% Commercial Short Tail SME 11% 40% Personal Lines Con

  25. Slide 25: CGU Business Overview: Diverse Distribution Footprint

    CGU BUSINESS OVERVIEW DIVERSE DISTRIBUTION FOOTPRINT  ~8% of total Australian general insurance market  ~14% of Australian intermediated general insurance market DISTRIBUTION CHANNELS GEOGRAPHIC SPLIT 1% 7% 3% Brokers 10% VIC & agents 27% 20% NSW/ACT QLD Financial 19% WA institutions & affinity SA

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