Insurance Australia : FY21 Management presentation (473.08 KB)

This release has been authorised by the IAG Board

Financial results

Full year ended 30 June 2021

Nick Hawkins	Michelle McPherson
Managing Director and Chief Executive Officer	Chief Financial Officer

FY21 financial results | 11 August 2021

Investor Relations		Media	Insurance Australia Group Limited
James Coghill	Nigel Menezes	Amanda Wallace	ABN 60 090 739 923
Mobile. [phone]	Mobile. [phone]	Mobile. [phone]	Level 13, Tower Two, 201 Sussex Street
Email. [e-mail]	Email. [e-mail]	Email. [e-mail]	Sydney NSW 2000 Australia
			Ph: [phone]

FY21 results overview

• Underlying financial results sound and resilient
• Solid cash earnings of $747m supporting dividend payments
• Addressing challenges that contributed to FY21 reported loss
• New organisational structure to embed accountability and drive performance
• Progress towards achieving our 3-5 year goals

2 FY21 financial results | 11 August 2021

FY21 highlights

Sound performance, guidance reintroduced

FY21 GWP growth

5.6%

4.3%

3.8%

Improving GWP growth, resilient underlying business performance

• 3.8% GWP growth, largely rate driven
• Lower underlying margin of 14.7% vs. 16.0% in FY20
• Steady 2H21 underlying margin trends against 1H21 across each division
• • Excluding COVID-19 impacts, one-off costs and different large loss experience in New Zealand

Reported margin recovered to 13.5%

• Further net reserve strengthening
• Perils above allowance but down on FY20
• Positive credit spread impact

Net loss after tax of ($427m) reflects impact of unusual items

• BI pre-tax charge of $1.15bn unchanged from 1H21

3 FY21 financial results | 11 August 2021

• Additional $238m pre-tax charge for customer refunds, increasing the component for uncertainty in the provision to $100m
• $51m pre-tax charge to address prior year payroll compliance matters
• Proposed sale of AmGeneral triggered impairment of ~$90m, with expected ~$150m improvement in regulatory capital position expected on completion

Cash earnings of $747m and Cash ROE of 12.0%

• Excludes unusual items
• FY21 dividend of 20cps (2H21: 13cps)

Reintroduction of guidance for FY22

• Forecast 'Low single digit' GWP growth*
• Forecast reported insurance margin 13.5- 15.5%*
• • Refer to "Appendix 1: FY22 Guidance and Outlook" for more detail

				0.9%
	Group	Direct Insurance	Intermediated Insurance	New Zealand
		Australia	Australia

Insurance Margin

16.0%

14.7%

13.5%

10.1%

FY20		FY21
		Reported margin		Underlying margin

Divisional highlights

Solid underlying trends

DIA

• GWP growth of 4.3%, included volume growth of over 1%
• • Rate increases in line with claims inflation and underlying perils allowance increase
• Strong underlying margin of 21.4%
• • ~2% lower than FY20 on normalised basis following increase in costs and lower investment yield

IIA

• Strong GWP growth of 5.6%, driven by average rate increases of ~8%
• Underlying margin improvement to 3.9% in FY21, steady across both halves
• Reported margin affected by perils experience and reserve strengthening

New Zealand

• Solid NZ$ rate-driven GWP growth of 2.8%
• Normalised margins remain healthy
• • Lower underlying margin in 2H21 of 14.3% reflects property consolidation costs and normalised large loss experience compared to benign 1H21

4 FY21 financial results | 11 August 2021

DIA - GWP growth

6.8%

5.7%

	3.6%															4.3%
								2.3%
	Motor	Home			CTP				Commercial		Total GWP
						IIA - GWP growth / underlying margin
	6.3%										5.7%	5.5%
														3.8%	3.9%
								~1%
				1H20*		2H20 (ex- COVID			1H21		2H21
									impact)*						* 2H20 adjusted for approximate one-off
								GWP Growth			Underlying margin	COVID-19 impact; No GWP comparisons
										available for FY20 growth
				New Zealand - GWP growth / underlying margin
	18.9%				18.3%		18.6%
																	14.3%
	6.3%
	4.2%
														2.8%		2.7%
					1.0% 0.8%		1.5%	0.3%
			1H20				2H20		1H21	2H21
				A$ GWP growth			NZ$ GWP growth			Underlying margin

Financial summary

5 FY21 financial results | 11 August 2021

	FY20	FY21	Change
GWP ($m)	12,135	12,602	3.8%
Insurance profit1 ($m)	741	1,007	35.9%
Underlying insurance margin2 (%)	16.0	14.7	130bps
Reported insurance margin (%)	10.1	13.5	340bps
Shareholders' funds income ($m)	(181)	306	nm
Net profit/(loss) after tax ($m)	435	(427)	nm
Cash earnings ($m)	279	747	nm
Diluted cash EPS (cps)	12.12	28.51	nm
Dividend (cps)	10.0	20.0	nm
Cash ROE (%)	4.5	12.0	nm
CET1 multiple	1.23	1.06	17pts

1. The FY21 reported insurance profit in this document is presented on a management reported (non-IFRS) basis which is not directly comparable to the equivalent statutory (IFRS) figure in IAG's FY21 Financial Report (Appendix 4E). A reconciliation between the two is provided on page 6 of the FY21 Investor Report and on page 8 of the Financial Report to comply with the Australian Securities and
   Investments Commission's Regulatory Guide 230. IAG's FY21 net loss after tax is the same in this document and in the Financial Report.
2. IAG defines its underlying insurance margin as the reported insurance margin adjusted for net natural peril claim costs less the related allowance; reserve releases or strengthening and credit spread movements. Prior to FY21, the definition adjusted for reserve releases in excess of 1% of net earned premium. Comparative periods have not been restated to incorporate the definition from FY21.