Insurance Australia Group

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Insurance Australia Group Limited
Public
Traded as ASXIAG
Industry Insurance
Founded 2000 (renamed from NRMA Insurance Group in 2002)
Headquarters 388 George Street, Sydney, Australia
Area served
Australia
New Zealand
Thailand
Malaysia
Key people
Peter Harmer (CEO)
Products General, commercial, vehicle, home and contents insurance,
Revenue Increase A$11.8 billion (2017)[1]
Increase A$929 million (2017)[2]
Number of employees
13,500+
Subsidiaries NRMA Insurance, CGU Insurance, SGIO, SGIC, Swann Insurance, NZI, AMI, NZI Thailand, Safety Insurance, AmAssurance, Lumley Insurance, WFI
Website iag.com.au

Insurance Australia Group Limited (IAG) is a multinational insurance company headquartered in Sydney, Australia.

IAG was formed by the demutualisation of the NRMA Insurance business in July 2000 and a return of shares to the members of NRMA. According to its website, NRMA Insurance Group Limited changed its name to Insurance Australia Group Limited on 15 January 2002. IAG is the name of the listed entity; it is not a customer-facing brand, however it represents the umbrella organization that holds many well known insurance brands.

IAG is listed on the Australian Securities Exchange and is a constituent of the S&P/ASX 50 index.

Operations

Insurance Australia Group has operations in Australia and New Zealand and a presence in five countries in Asia. Its businesses include:

Australia

  • NRMA Insurance
  • SGIO, acquired in 1998
  • SGIC, acquired in 1998
  • CGU Insurance, acquired in 2003
  • Swann Insurance, acquired in 2003
  • WFI, acquired in 2014

IAG has a 70% shareholding in Insurance Manufacturers of Australia Pty Limited (the other 30% being held by RACV), which issues insurance under the RACV Insurance name that is sold by RACV in Victoria.

In 2014, IAG signed a ten-year agreement to distribute home and car policies for Coles Insurance.

New Zealand


Asia

  • Thailand - IAG holds a 98.6% beneficial interest in Safety Insurance, based in Thailand, which trades under the Safety and NZI brands
  • Malaysia - IAG owns 49% of the general insurance arm of Malaysian-based AmBank Group, AmGeneral Holdings Berhad, which trades under the AmAssurance and Kurnia brands
  • India - IAG owns 26% of SBI General Insurance Company, a joint venture with State Bank of India, India's largest and most recognised financial services organisation
  • Vietnam - IAG owns 63.17% of AAA Assurance Corporation
  • Indonesia - IAG owns 80% of PT Asuransi Parolamas

Sustainability recognition

2016

  • Ranked in the Dow Jones Sustainability Index World, Asia Pacific and Australia in 2016
  • Included in the FTSE4Good Index Series in 2016
  • Recognised by the Australian Council of Superannuation Investors as Leader for reporting practices and disclosure of sustainability risk in 2016

2015

  • Highly commended, 10 Year Sustainability Award, NSW Government Green Globe Awards
  • Women’s Employer of the Year, 2015 Australian and New Zealand Institute of Insurance and Finance Australian Insurance Industry Awards [3]
  • Included in the MSCI Global Sustainability Index Series in 2015
  • Winner of the CareerTrackers 2015 Business Co-ordinator Award
  • Ranked in the Dow Jones Sustainability Index World, Asia Pacific and Australia in 2015
  • Recognised by the Australian Council of Superannuation Investors as Leader for reporting practices and disclosure of sustainability risk
  • Ranked in the Top 10 in the Australian Centre for Corporate Social Responsibility’s State of CSR report

2014

  • Awarded Best Insurance Company in Socially Responsible Performance (ESG) by the Australian Business and Finance Insurance Awards 2014[4]
  • Ranked in the Dow Jones Sustainability Index World, Asia Pacific and Australia in 2014
  • Included in the FTSE4Good Index Series
  • Included in the Climate Disclosure Leadership Index for the ninth consecutive year, and the Climate Performance Leadership Index

On 31 August 2006, IAG was placed on the Dow Jones Sustainability Index.[5] IAG was the first Australian insurance company to achieve this recognition.

On 15 November 2006, IAG announced it intended to become carbon neutral within five years across all of its operations.[6]

Recent news

In 2004, speculation emerged that IAG would merge with Australia's then largest insurer QBE Insurance however IAG denied the merger at the time.[7] Speculation again emerged in 2006 only to be again denied.[8]

On 10 April 2008, QBE proposed a takeover with each IAG share being exchanged for 0.135 QBE shares plus 50 cents cash (an effective value of $3.75 per IAG share at the time). This proposal was rejected by the IAG board the next day. QBE responded by increasing its proposal to 0.142 QBE shares plus 70 cents per IAG share. On 14 April 2008, IAG also rejected this proposal. On 16 May 2008, QBE increased its proposal to 0.145 QBE shares plus 90 cents per IAG share (an effective value of $4.60 per IAG share at the time). This was rejected by IAG four days later and on 21 May 2008 QBE confirmed talks had collapsed and withdrew its proposal.[9]

Important items that were considered when QBE made its proposal : IAG's short tail personal insurance products are distributed in Victoria under the RACV brand, via a distribution relationship and underwriting joint venture with RACV Limited. These products are distributed by RACV and manufactured by Insurance Manufacturers of Australia Pty Limited (IMA), which is 70% owned by IAG and 30% by RACV. If one of IMA's shareholders were to experience a change of control, the other has a pre-emptive right to acquire that shareholder's interest in IMA at market value. The duration of the arrangements governing RACV's distribution of RACV-branded products in Victoria would be a relevant factor in determining this market value (as would the duration of the arrangements governing IMA's reinsurance of NRMA-branded products in NSW and the ACT).

On 16 December 2013 IAG announced that it had agreed to purchase Wesfarmers Insurance underwriting businesses. The acquisition comprises companies trading under the WFI and Lumley brands, as well as a ten-year distribution agreement with Coles.

In 2015, IAG share price has fallen 9% since it reported its interim result. The insurer's net profit for the six months to December fell 10% to $579m due to intensifying competition and a jump in natural disaster claims.Disaster claims of $421m exceeded the company's expectations by $71m, mainly on account of $165m in claims following Brisbane's November hail storm – the worst seen in 30 years.

IAG's New Zealand business delivered a 26% rise in gross written premiums, though entirely on account of adding Wesfarmers' NZ-based operations. The underlying profit margin increased from 14.2% to 15.9% due to a period of few natural disasters but the company is still feeling pain from the massive 2011 Canterbury earthquakes.[10]

In June 2015, Berkshire Hathaway acquired a 3.7 percent stake in the group for a fee of around $388 million in a partnership aimed at reducing IAG's capital requirements.[11]

See also

References

  1. ^ IAGL 2017 annual report
  2. ^ IAGL 2017 annual report
  3. ^ Lynn, Jordan. "Australian Insurance Industry Awards winners announced". Insurance Business. Retrieved 2018-05-08. 
  4. ^ Taylor, Chloe. "Australia's top ten companies for sustainability". HR Online. Retrieved 2018-05-08. 
  5. ^ Dow Jones Sustainability Index 2006 Archived 10 November 2006 at the Wayback Machine.
  6. ^ "Carbon Neutral Announcement Media Release" (PDF). IAG Website. Retrieved 2007-02-25. [dead link]
  7. ^ Hoyle, Simon (6 October 2004). "Insurance duo tipped to tie the knot". The Age. 
  8. ^ "QBE, IAG hose down takeover rumour". The Age. 13 January 2006. 
  9. ^ "Public offers and proposals (FAQ)". IAG. Archived from the original on 16 February 2008. Retrieved 8 February 2008. 
  10. ^ Witcomb, Graham (4 March 2015). "IAG: Interim result 2015". Intelligent Investor (Company). Retrieved 14 March 2015. 
  11. ^ Lincoln Feast (16 June 2015). "Buffett's Berkshire Hathaway takes $388 million stake in Australia's IAG". Reuters. Retrieved 16 June 2015. 

External links

  • Official website
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