Purpose and Strategy
IAG’s purpose means that whether you are a customer, partner, employee, shareholder or part of the communities IAG serves, IAG exists to ‘make your world a safer place’. IAG believes its purpose will enable it to become a more sustainable business over the long term and deliver stronger and more consistent returns for its shareholders.
MAKING CUSTOMERS FEEL SAFER ON THE ROAD, IN THEIR HOMES AND AT WORK
IAG is focused on building a lean, efficient and modular insurance operation, through its simplification priority, while creating a customer-focused organisation with enhanced capabilities in data, digital, analytics and artificial intelligence, brand and innovation, and driving towards the creation of an agile organisation.
With simplification well-progressed, IAG is now increasing its focus on customer engagement and longer term growth. This includes extending its strategic partnerships to offer products and services that are adjacent to its insurance business, enabling IAG to make its customers and the community feel safer on the road, in their homes and at work. IAG is also leveraging its assets – including its data, customer reach and brands – to launch and scale new businesses in markets that complement these adjacent products and services.
The goals of IAG’s strategy are centred around building deeper engagement with its customers and growing the number of customers in the IAG network of brands. IAG seeks to create more value for its customers by making their world a safer place and to increase the lifetime value of its customer relationships.
IAG continues with its three key strategic priorities, supported by organisational capabilities, to deliver its strategy:
I. Customer – World-leading customer experiences:
- Create a delivery platform that transforms customer experiences;
- Better connect customers and automate processes, enabling IAG to reach more customers in a timely manner;
- Develop an innovation approach which provides the ability to think differently and deliver quickly;
- Embed cognitive capabilities and artificial intelligence that anticipate customers’ needs; and
- Use data to power decision-making, allowing IAG to better understand its customers.
II. Simplification – Simplified, modular and lower cost operating model:
- Reduce organisational complexity by consolidating technology platforms, harmonising products, simplifying processes and systems, and executing the technology strategy;
- Leverage operational partners to optimise the operating model and drive scale economies across the value chain; and
- Improve allocation and maximise utilisation of the preferred repairer network to reduce average claim size.
III. Agility – An agile organisation distinguished by innovation, speed and execution skills:
- Create a disciplined approach to IAG’s management and leadership, including building stronger role clarity and introducing agile ways of working;
- Build a talent pipeline based on the skills required to deliver IAG’s strategy and help IAG people transition to the future of work; and
- Be recognised as a purpose-led organisation that shapes its internal and external environment.
IAG targets a cash ROE of at least 1.5 times its weighted average cost of capital (WACC) on a through-the-cycle basis. This return is based on net profit after tax attributable to IAG shareholders, adjusted for amortisation and impairment of acquired identified intangibles and unusual items.
IAG’s current long-term cost of capital is approximately 8.5%, equating to a cash ROE target of approximately 12-13%.