IAG annual report—Concise

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BUSINESS OVERVIEW A SNAPSHOT OF IAG IAG is the leading general insurance group in Australia and New Zealand, with annual gross written premium of more than $6.6 billion. We hold the number one position in seven major general insurance markets in Australia: motor, home, CTP, workers’ compensation, rural, consumer credit and extended warranty. We insure more than $858 billion worth of property, including more than 5 million cars, 2.5 million homes, 245,000 businesses and 82,000 farms in Australia, and provide workers’ compensation services to 209,000 employers. In New Zealand, we insure more than 1 million cars, 580,000 homes, 187,000 businesses and 215,000 rural risks. The Group employs more than 12,000 people and has a network of 320 branches and country service centres throughout metropolitan, regional and rural Australia and 39 sales centres and branches in New Zealand. IAG’s PORTFOLIO OF RISKS % OF GWP IAG’s AUSTRALIAN OPERATIONS % OF GWP IAG’s BUSINESS OPERATIONS % OF GWP IAG’s BUSINESS BY DURATION % OF GWP Motor 34% Australian personal lines 70% Australian personal lines 60% Short-tail 81% Short-tail commercial 22% Australian commercial lines 30% Australian commercial lines 25% Long-tail 19% Home 21% International 15% Compulsory third party (CTP) 10% Liability 6% Other short-tail 4% Workers’ compensation 3% The name Insurance Australia Group was established in January 2002 after shareholders of NRMA Insurance Group voted to change the name of the holding company to better reflect its size, diversity, geographical distribution and aspirations. IAG companies own the NRMA Insurance, SGIC, SGIO, CGU, NZI, State and Swann brands. 20 IAG Annual Report 2005 NRMA Insurance is the brand used predominantly for our personal insurance products, such as home and motor (comprehensive and CTP), sold in NSW, ACT, Queensland and Tasmania. The brand dates back to 1925 when the NRMA Motoring & Services club was established. The insurance arm of the road service association, which was set up to provide motor insurance to members, demutualised in July 2000 and became a separate group, now IAG. SGIO is the brand used for our personal insurance products in Western Australia and has been a part of the Western Australian community since 1926. Its origins were as a government-owned entity, providing workers’ compensation insurance to miners in the goldfields. SGIO was acquired by IAG in 1998. SGIC is the brand used for our personal insurance products in South Australia. SGIC was established by South Australian Parliament in 1971 to provide the community with an insurer that was dedicated to the State. SGIC was acquired by IAG in 1998.
AUSTRALIA AUSTRALIAN PERSONAL INSURANCE OPERATIONS Our Australian personal insurance business develops and underwrites personal insurance products, and manages claims and assessing services. It is the largest insurance underwriting and claims and assessing operation in Australia. It represents approximately 60% of our business. Our personal insurance products are sold primarily under our NRMA Insurance brand in NSW, ACT, Queensland and Tasmania. SGIO is our primary brand in Western Australia, and SGIC in South Australia. In Victoria, we distribute home, motor and other insurance products through RACV. Products are distributed through our branches, call centres and representatives. In addition, we sell a range of personal insurance nationally under the Swann Insurance brand and through a number of fi nancial institutions. Personal insurance products distributed nationally by CGU are generally sold by intermediaries (insurance brokers and agents) and business partners (fi nancial institutions and alliances). INSURANCE PRODUCTS INCLUDE: • Motor vehicle • Home and contents • Compulsory third party • Niche insurance, such as pleasure craft, veteran and classic car, boat, caravan, and travel insurance • Consumer credit. AUSTRALIAN COMMERCIAL INSURANCE OPERATIONS Our Australian commercial insurance business develops and underwrites insurance for businesses. Our commercial insurance products are sold primarily under our CGU Insurance brand through a network of more than 1,000 intermediaries (insurance brokers and agents). We are a leading provider of workers’ compensation services in Australia and operate in every State and Territory where there is private involvement. In NSW, Victoria and South Australia, we collect premiums on behalf of the Government and manage claims. In Western Australia, Tasmania, ACT and the Northern Territory, we underwrite policies and manage claims. Comprehensive risk management services are available to all our employer customers. Commercial insurance packages are also sold directly under the retail brands NRMA Insurance, SGIO and SGIC. These are largely targeted at sole operators and smaller businesses. INSURANCE PRODUCTS INCLUDE: • Commercial property • Commercial motor and fl eet motor • Construction and engineering • Farm, crop and livestock • Home warranty • Marine • Public and product liability • Professional indemnity • Directors and Offi cers • Workers’ compensation. INTERNATIONAL NEW ZEALAND INSURANCE OPERATIONS Our New Zealand business is the leading general insurance provider in the country across both the direct and intermediated channels. We hold approximately 37% of the New Zealand market according to Insurance Council of New Zealand Statistics, and are strongly positioned in all geographic markets. We provide insurance products directly to customers under our State brand and through insurance brokers under our NZI brand. Our personal lines and simplifi ed commercial products are also distributed through agents and under third party brands by our corporate partners, including large fi nancial institutions. INSURANCE PRODUCTS INCLUDE: • Motor vehicle • Home and contents • Commercial property • Commercial motor and fl eet motor • Construction and engineering • Marine • Niche insurance, such as pleasure craft, boat, caravan, and travel • Rural and horticultural • Surgical • Income protection • Personal liability • Commercial liability. ASIAN INTERESTS IAG owns China Automobile Association and a Thai general insurance business (purchased in July 2005). It also has a strategic shareholding (22%) in another Thai insurer, Safety Insurance. CAPTIVE REINSURER The Group purchases most of its reinsurance protections through its captive reinsurer (IAG Re Limited). The results of that business are refl ected in the Group’s international operations. CGU is one of Australia’s largest intermediary-based insurers with a history spanning over 130 years. It offers a diverse mix of personal, commercial, rural insurance and workers’ compensation products, sold through a comprehensive distribution network of brokers, agents and business partners. IAG acquired CGU in January 2003. Swann Insurance is one of Australia’s largest niche insurers, offering a range of consumer credit and motor vehicle related products. IAG acquired Swann Insurance in January 2003. NZI was formed in 1859 and is one of New Zealand’s largest and longest serving general insurers with a leading position in commercial insurance. It is now the brand under which IAG’s New Zealand operations distributes all its insurance products through brokers. IAG acquired NZI in January 2003. State is the brand under which most of IAG’s direct insurance business in New Zealand is now sold. State began as the New Zealand Government’s State Insurance Office in 1905 and grew to become the largest general insurer in New Zealand. IAG acquired State in February 2001. 21
Page 1 and 2: IAG ANNUAL REPORT 2005 A RISK MANAG
Page 3 and 4: More than one in fi ve homes and on
Page 5 and 6: PAYING CLAIMS PAYING CLAIMS UNDERST
Page 7 and 8: UNDERSTANDING AND PRICING RISK PAYI
Page 9 and 10: MANAGING COSTS PAYING CLAIMS UNDERS
Page 11 and 12: REDUCING RISK PAYING CLAIMS UNDERST
Page 13 and 14: HOW INSURANCE WORKS PREMIUMS CLAIMS
Page 15 and 16: QUALITY PERFORMANCE It gives me gre
Page 17 and 18: PERFORMING IN A COMPLEX OPERATING E
Page 19 and 20: The next pages highlight some impor
Page 21: MEASURING THE SUSTAINABILITY OF OUR
Page 25 and 26: CHRISTINE McLOUGHLIN BA, LLB HONS,
Page 27 and 28: This year saw a new addition to our
Page 29 and 30: Drawing on the existing expertise i
Page 31 and 32: Customer satisfaction results demon
Page 33 and 34: MR GA (GEOFFREY) COUSINS Age 62 - I
Page 35 and 36: • Ensuring that reporting and dis
Page 37 and 38: • Making recommendations to the B
Page 39 and 40: The roles and composition of the ex
Page 41 and 42: FINANCIAL REPORT CONTENTS 40 Five Y
Page 43 and 44: DIRECTORS’ REPORT The concise fin
Page 45 and 46: DIRECTORS’ REPORT Cash flows from
Page 47 and 48: DIRECTORS’ REPORT The following t
Page 49 and 50: DIRECTORS’ REPORT During the year
Page 51 and 52: DIRECTORS’ REPORT (b) Remuneratio
Page 53 and 54: DIRECTORS’ REPORT 2.7 Long Term I
Page 55 and 56: DIRECTORS’ REPORT 3. NON-EXECUTIV
Page 57 and 58: DIRECTORS’ REPORT 3.5 Retirement
Page 59 and 60: DIRECTORS’ REPORT ROUNDING OF AMO
Page 61 and 62: DISCUSSION AND ANALYSIS OF THE FINA
Page 63 and 64: CONSOLIDATED STATEMENT OF FINANCIAL
Page 65 and 66: NOTES TO THE FINANCIAL STATEMENTS F
Page 73 and 74:
NOTES TO THE FINANCIAL STATEMENTS F
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Page 79 and 80:
SHAREHOLDER INFORMATION You can acc
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SHAREHOLDER INFORMATION IAGPA RESET
Page 83 and 84:
GLOSSARY Actuary APRA An actuary ap
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IAG annual report—Concise

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