Chairman’s
Review
I was delighted to take over the role of IAG’s chairman in March this year. IAG provides security for millions of motorists, homeowners, businesses and workers across Australia, New Zealand and in parts of Asia, so it is an honour to be its chairman.
OUR PURPOSE IN ACTION
IAG’s purpose – to make your world a safer place – is one I am proud to be associated with. This year, I have seen powerful examples of this purpose in action, as our people helped customers affected by events including the Victorian bushfires, a series of hailstorms, and the extreme weather caused by the east coast low in early June.
In addition, I had the privilege of visiting one of IAG’s longest-standing and most complex natural disaster recoveries, the rebuilding of Christchurch. To see first-hand the depth of skills and persistence IAG’s people are bringing to the reconstruction of the city, and the care they show for the individuals who live there, was a very moving experience. It showed how much a company can achieve when its people are committed to the community they are helping, contributing an enormous range of technical skills, resources and passion.
Meeting the team, and sensing the engagement, commitment and resilience that such a large endeavour demands, was to see a very special part of the insurance industry in action.
PREPARED FOR THE DIGITAL FUTURE
Like all major companies in Australia, IAG is deeply involved in the challenges and opportunities of the digital future. We believe the insurance industry and its customers will benefit from our work to provide the products and services people want and need, in ways that can be tailored to each customer using new digital technologies.
Our increasing moves into the digital world will continue to reflect the deep focus on customers that we can trace to our heritage as a mutual organisation. Our customers will be well-served by the commitment to them that is palpable in conversations with people across the company, and core to how we operate.
MANAGEMENT HAS DELIVERED SOUND RESULTS
It has been a great pleasure to work with Peter Harmer as he has settled into his new CEO role, and to become more aware of the depth of skills in his leadership team and the wider group of employees.
Despite the difficult pricing conditions in the commercial insurance market, management has been able to deliver sound financial results for the year.
There has also been a sharper focus on Asia, particularly directed to our established and mature businesses in Thailand and Malaysia.
Our gross written premium was $11.4 billion and we achieved net profit after tax of $625 million, cash earnings of $867 million and a cash return on equity of 13%.
STRONG CAPITAL POSITION REWARDS SHAREHOLDERS
The strength of the result enabled the Board to provide shareholders with a final fully franked dividend of 13.0 cents per share, bringing the full year payout to 26.0 cents per share. This equates to a full year cash payout ratio of 72.9%, in line with IAG’s increased dividend payout policy of 60-80% of cash earnings on a full year basis, which took effect from financial year 2016. The dividend will be paid on 5 October 2016 to shareholders registered on 7 September 2016
This year, shareholders benefited from a special dividend of 10.0 cents per share, paid with the interim dividend in March, and the Board has also determined to conduct an off-market share buy-back to the value of around $300 million, which is expected to be completed in mid-October 2016.
BUILDING ON A SUCCESSFUL LEGACY
In closing, it gives me great pleasure to recognise our former Chairman Brian Schwartz’s contribution to shaping IAG over the last decade. Brian, his Board and his management team had a great influence in making IAG the successful company it is today.
My fellow directors and I look forward to building on this legacy.
Elizabeth Bryan AM
Chairman