New Zealand

Jacki Johnson
CEO, NEW ZEALAND
IAG’s New Zealand business results reflect a solid performance in a challenging environment. Our acquisition of AMI enhanced our market position and contributed to the Group’s strategy of accelerating profitable growth.

Results

GWP increased 24.4% in local currency terms, led by strong growth in NZI and rate increases across all our businesses to offset higher reinsurance costs. Coupled with a strong underlying claims performance, these factors contributed to an insurance result of $103 million and an insurance margin of 10.4% (up from 0.4% last year).

THIS YEAR

We welcomed AMI into IAG’s New Zealand family of brands, adding nearly 30% to our existing New Zealand premium base on an annualised basis. This strengthens our leading position in a market we know well and demonstrates our commitment to the local community.

We are making good progress on integrating AMI, and expect to generate at least NZ$30 million per annum in pre-tax synergies within two years.

IAG is well positioned to drive improved underlying performance in spite of challenging market conditions that include increased regulatory requirements, higher reinsurance costs and a trebling of the Earthquake Commission levies.

Progress is being made to support Canterbury’s earthquake recovery. Settlement of commercial claims is progressing in line with expectations although residential claims have been slower to finalise owing to work being completed on land zoning, land remediation and repair methodologies – all necessary to ensure a sustainable long term solution for residents. At 30 June 2012, more than NZ$1.3 billion of claim settlements had been paid.

NEXT STEPS

We will continue to improve underlying performance by:

■ strengthening our customer focus;

■ nurturing a constructive culture that supports achievement;

■ ensuring the smooth integration of AMI;

■ transforming our direct insurance business by leveraging the best of both the AMI and State businesses;

■ NZI continuing to take advantage of growth opportunities as customers choose the security of dealing with a well-established company; and

■ continuing to focus on sound underwriting principles, risk selection, claims and pricing disciplines and expense management.


OVERVIEW

IAG is New Zealand’s largest general insurer, offering most of its products under the State, AMI and NZI brands through a nationwide network of call centres, and more than 100 branches and sales centres. IAG’s New Zealand operations accounted for over 13% of the Group’s GWP in financial year 2012.

The underlying performance of New Zealand has remained strong, and the reported outcome has shown substantial improvement over the earthquake-affected result for financial year 2011.

Financial results

gross written premium ($m)

Profit before tax ($m)

non-Financial results
Excluding AMI

business volume (m)

Greenhouse gas emissions (tonnes co2e)

Consistent levels of greenhouse gas emissions for New Zealand in 2012 reflect ongoing additional air travel undertaken by our people to Christchurch.

staff turnover (%)

community Investment (NZ$M)

frontline advocacy 2012

A State B NZI C Business Partners

This year, within Australia and New Zealand, a change has been made from a customer satisfaction score to a frontline or broker advocacy measure. The studies are carried out by third parties among IAG customers (direct or intermediated) who have had a recent interaction with IAG. The studies include a question that asks the customers (direct or intermediated) their likelihood of recommending IAG on a scale of 0-10 in Australia and 1-10 in New Zealand. Those who rate the experience as less than six (6), are deemed detractors while those who rate the experience nine (9) or ten (10) are deemed promoters. The advocacy measure is calculated by subtracting the percentage of detractors from the percentage of promoters.