Achievements
On the financial side of the business, IAG met or exceeded all targets. The company completed the program to integrate CGU and NZI into the Group to deliver the $160 million (pre-tax) in annual synergy benefits promised at the time of the acquisition. On the capital management side, a $414* million off-market share buy-back was completed and recorded a regulatory capital position as at 30 June of 1.75* times the minimum capital required by APRA.
Challenges
A major challenge will be to maintain the Group's leading positions across all market segments and continue to build profitable and sustainable earnings growth. The Group's insures approximately one in three cars, one in three homes, one in two farms, and one in six businesses in Australia. The economics of the business is based on scale. Scale allows access to volume discounts across the supply chain, without sacrificing quality. For customers, that means better, more competitively priced products and services. Scale also allows risk and costs to be spread across a larger number of policies, delivering greater stability of earnings for shareholders.
IAG recognises that future non-organic growth opportunities are likely to be offshore. As such, another challenge is to expand internationally, subject to finding the appropriate opportunities at the right price. For over two years, IAG has undertaken a considerable amount of research and developed capabilities on the assumption that any international move will rely on the Group being able to use the competencies that have been built in its home markets. Parts of Asia have been identified as having the best potential for IAG to generate value for shareholders by using the Group's skills in underwriting motor insurance, motor claims management and direct distribution. Of course, international investments will need to be carefully reviewed to ensure they are in the best interests of IAG and its shareholders.
indicates that KPMG has provided assurance on the figures. For more information please see the Assurance statement.