I am extremely proud of what our company has achieved this year as we cemented our position as the leading general insurer in Australia and New Zealand, and continued to build on the growth opportunities we see in Asia.
Our success is evident in the strength of this year’s financial results. Our profit after tax has increased by nearly 60% to $1,233 million, and our cash earnings increased by 13% to $1,306 million.
PURSUING OUR STRATEGIC PRIORITIES
The Board has continued to work closely with management as we pursued our strategic priorities. It has been especially gratifying to see the outcomes which have been achieved, not the least of which was the successful acquisition of the Wesfarmers insurance underwriting business, which was completed on 30 June 2014. This transaction offers us a compelling strategic opportunity and we look forward to seeing the benefits flow through to the Group next year when the business contributes to our results.
Having achieved these milestones, and recognising the changing nature of insurance and customer expectations, management has considered how we might best be organised to face the future. The Board supported management’s decision to build on our position of market strength to introduce a new structure for our Australian businesses, which our Managing Director and CEO, Mike Wilkins, explains in more detail in his review.
SHARING OUR SUCCESS
Our success is reflected in the dividends we pay. The Board is pleased to declare a final dividend of 26 cents per share, taking the full-year dividend to 39 cents per share, an 8.3% increase on last year’s dividend. The final, fully franked, dividend will be paid on 8 October 2014.
The dividend is at the upper end of our dividend payout range of 50 – 70% of cash earnings, reflecting the positive performance of our businesses during the 2014 financial year, and our strong capital position.
This year, we performed well on the two long term financial targets captured in our strategy. Our cash return on equity of 23% exceeds our long term target of 15%, while our total shareholder return of 15.6% met our target of top quartile results.
It is very pleasing that one outcome of this performance is that both shareholders and management are being rewarded for their involvement in our Group: shareholders through the increased share price and dividend, and management under our long term incentive programmes.
THE RIGHT PEOPLE AT EVERY LEVEL
As the company and our strategy evolve, we are committed to ensuring the Board continues to have the diversity of experience and knowledge to provide the support and guidance the business needs and we have an ongoing process to consider the appointment of new directors who can assist us to do this.
We are in the excellent position of having long-serving directors who provide stability and deep corporate knowledge, aided by the approaches and views of those appointed more recently. By taking the time to identify and recruit the right people, we will ensure that a logical process of Board refreshment and renewal continues.
A similar focus by our businesses on developing our people ensures we have the right skills and an effective succession pipeline across the Group, and we are well-served for current and future leaders.
LEADING BY EXAMPLE
We continued to evolve our governance structures. This year we separated the Board committees for Risk and Audit, and added a separate Nomination committee. These changes allow a more focused approach on each of these important areas.
We also pursued a leading position in a number of other significant areas.
At IAG, we believe it is important to foster diversity in all its guises. This belief permeates the organisation, starting with the Board, where a third of our Directors are women and where we have representatives from different geographic and cultural backgrounds, from different age groups, and with different skills.
We also think it is important that we take a leadership role in the wider community.
This year, we launched our Reconciliation Action Plan – the 500th to be registered in Australia. Our plan brings together the existing work we do with Indigenous Australians and sets out initiatives that we will undertake over the next two years as part of our formal reconciliation journey.
Through our participation in the Australian Business Roundtable for Disaster Resilience & Safer Communities, we have continued to encourage debate about the importance of a national approach to disaster mitigation.
In closing, I thank our Managing Director and CEO, Mike Wilkins, his Executive team and all our people, for their outstanding achievements throughout the year. I also thank our shareholders for their continued support and encouragement.
BRIAN SCHWARTZ AM
CHAIRMAN