Performance highlights

• Top quartile TSR
• ROE ≥ 1.5 x WACC
• Secure position within chosen classes

• Did not achieve our top quartile TSR or ROE ≥ 1.5 x WACC in FY2010. However, these are long term, through the cycle targets, not one year targets
• Maintained our strong market share position in our core markets of Australia and New Zealand
• Delivered a strong GWP and insurance profit growth in our largest business, Australian Direct Insurance
• Improved the insurance margin in our Australian Intermediated Insurance business, CGU
• Delivered significant improvement in our New Zealand business, which reported GWP growth and a strong insurance margin
• Expanded the product offerings of our online business, The Buzz, to include home insurance
• Made significant progress in our Asian division, which produced strong operational performances in our established businesses in Thailand and Malaysia, and completed our general insurance joint venture with the State Bank of India, SBI General
• Strengthened our claims reserves for our specialist UK business, reflecting the increase in bodily injury claims affecting the UK motor insurance industry

Looking ahead:

• Maintain the improvement in our underlying operational performance
• Continue to build capability in our established Asian businesses and build market share in India
• In the UK, focus on remediating the business to restore profitability.

• Creating superior customer experiences

• Good progress has been made by each of our divisions, but there is still more work for us to do, including ensuring that our customer value propositions  are embedded within our strategies and delivered on by our people
• Our customer survey results indicate improvement or steady state, a positive result especially given increasing competition from new market entrants
• We have continued to focus on being more agile in responding to customer needs. This has included such activities as:
• upgrading to our NRMA, SGIC and SGIO websites
• introducing innovative campaigns including two year fixed price policies and extended loyalty discounts to customers who have a history with another insurance company.
• Launch of new products, such as the flood product by Direct Insurance and home insurance by The Buzz
• Responding quickly to assist our customers in dealing with losses incurred as a result of the significant storms that struck Melbourne and Perth in 2010

Looking ahead:

• Continue to innovate and deliver products and services that meet changing customer needs
• Maintain our focus on improving our customers’ or brokers experience with every interaction they have with us

• Right values, right capabilities, right place
• Creating a high performance organisation

• Each division has developed a robust people strategy and is in the process of implementing it. A common priority for all is ongoing training and development to ensure we are equipping our people with the skills and capabilities that they need to be effective
• Launched the Advanced Leadership Program to develop our future leaders and ensure that we have a credible succession pipeline across the Group
• Employee engagement continues to be strong at 80%. This represents only a small decline from prior year and continues to exceed benchmark for global financial services companies as set by our survey provider, Towers Watson.
• Whilst some turnover in a business is healthily, we have almost one third of new recruits in Australia leaving within the first year of tenure. This clearly has implications for recruitment costs and productivity so we are working on improving this
• Continued to refine the balanced scorecard management system to ensure that we link individual objectives with business priorities and performance, rewarding those people that perform above expectations
• Increasing the diversity of IAG’s workforce is a priority for IAG. We want to increase the number of women in senior management positions across the Group and recognise that there is work to do in understanding the drivers of the male: female pay ratio differentials that are experienced in lower levels of the organisation.

Looking ahead:

• We will continue to ensure individual balanced scorecard objectives, performance measures and remuneration outcomes are directly linked to strategic business priorities and performance
• We will also continue to build and strengthen our succession pipeline for executive positions and business critical roles
• The IAG Diversity Working Group, chaired by the Group CEO, will be implementing programs to further boost IAG’s diversity.

• Engaging effectively with our stakeholders and the communities in which we operate

• Targeted community investment in our Australian operations has fallen compared to prior year as a result of transition support from a number of existing charities to new opportunities that align with the business’ priority of building safe communities.
• Community spend in our New Zealand business has increased as the result of some significant new sponsorships.
• Continued to take a strategic approach to community investment, seeking partnerships that enable us to share knowledge and reduce risk. We are reviewing our partnerships in Australia with a view to launching a revised community program in early FY11.
• We have been disappointed by the reduced number of our Australian workforce taking advantage of their one day of volunteer leave. Consequently, each of the Australian divisions has reviewed their community programs during the year. Conversely, in New Zealand 33% of the workforce took a volunteer day.
• From a boarder stakeholder perspective, we have been liaising positively with government on a number of key policy initiatives resulting in positive change occurring and we continue to have good relationships with key industry bodies (e.g. the Insurance Council of Australia, Business Council of Australia).
• Engaged a number of our stakeholders to obtain specific input and feedback on IAG’s business sustainability report content and presentation

Looking ahead:

• In Australia we will be implementing the refreshed community programs in each division
• We will continue to look at the ways that we engage with our stakeholders to ensure that we get relevant and timely input and feedback

• 5% year on year reduction in CO₂e emissions
• Driving efficiency and effectiveness in the management of our resources
• Engaging with our customers and the communities in which we operate to help them manage the impacts of more severe weather events

• Unfortunately we have not met our 5% year on year reduction targets for FY2010
• Despite some significant consumption reductions, in Australia we have achieved a decrease of 2.3% in emissions (FY09 emissions restated to reflect an updated paper emission conversion factor).
• In our New Zealand business we have experienced a 4.3% increase in emissions (FY09 emissions restated to reflect and updated paper and electricity emission conversion factor).  This was due to dual occupancy electricity consumption as we relocated to new premises and increased air travel.
• On a more positive note, for the first time this year our reporting now includes our Thai and UK operations.
• A significant initiative implemented during the year includes the Desk Top Power Down Solution in Australia, which has been deployed to remotely shut down the desk top fleet at night when it is not in use
• Adaptation, and helping our customers adapt to the increasing severity and frequency of weather events has been an area of focus and will continue to be in the future. To date, IAG has taken a role on many different levels including understanding the risks and opportunities, sharing information to build adaptive capacity, forming partnerships where necessary and assisting in emergency readiness and response, influencing and advocating, as well as looking internally and adapting our processes where required.

Looking ahead:

• We are looking at a number of initiatives to help us drive our consumption and hence CO₂e emissions down in the coming year
• Preparing for National Greenhouse Energy Reporting Act compliance (IAG may be captured in the third year of operation)
• Formulating alternative offset options to assist us become carbon neutral in 2012