IAG this week held its 2023 Annual General Meeting in Sydney.
Chair Tom Pockett told shareholders: “The last two years has seen a very challenging environment for Australia and New Zealand and of course, our company.”
Mr Pockett said this period included “the highest levels of peril events in Australia and New Zealand since the NZ earthquakes in 2010 and 2011” and that the company dealt with over 377,000 claims related to these events over this period.
“This combined with the inflationary effects of the world coming out of COVID, which has increased our costs of servicing claims,’’ he said. “Together with higher re-insurance costs, this has led to a very challenging period for IAG and insurance companies globally.”
At the meeting, Mr Pockett also spoke about IAG’s company-wide approach to sustainability and focus on climate and disaster resilience. “One of the most important roles we can play is sharing our data and expertise to help governments invest in mitigation measures that will help reduce the impact of these events,” he said.
IAG Managing Director and Chief Executive Officer Nick Hawkins said the company continued to be guided by its purpose – “to make your world a safer place – and by our strategy of creating a stronger and more resilient IAG.’’
In his address to shareholders, Mr Hawkins also commented on the company’s FY24 outlook saying: “We expect to achieve ‘low double digit’ gross written premium growth and our reported insurance margin guidance is in the range of 13.5% to 15.5%.’’
Mr Hawkins said the company had experienced a relatively benign start to FY24 from a natural perils perspective, noting that to the end of September, natural perils costs had been approximately $120 million, which included $47 million in additional claims from events in FY23, primarily from the Hunter Hailstorm. “We have assumed in our forecasts that FY24 natural perils will be in line with our original forecast,’’ Mr Hawkins said.
He also said Inflationary trends continued to be elevated across the business, particularly within the company’s Motor claims costs and that “this is expected to result in some prior period development in our first half result as we finalise the settlement of short-tail claims for amounts more than we expected at 30 June.”
“Combined with additional reinsurance reinstatement costs of around $70 million following the New Zealand events earlier this year, it is likely that our first half underlying margin will be around the lower end of our guidance range. We expect a stronger second half as we benefit from the earn-through of pricing.”
Mr Hawkins also spoke about the company’s focus on climate, stating that climate change is driving an increase in the severity and frequency of natural disasters “at a level we have not seen before”.
In response, he said “we continue to invest in improving our understanding of the changing climate, and its impact.’’
“We have our own specialist in-house natural perils team, including meteorologists as well as flood and cyclone experts and atmospheric scientists. And we have an enterprise-wide Climate & Disaster Resilience Action Plan that responds to material risks and opportunities. Within our businesses, we have taken steps to manage our carbon footprint and have made a commitment to achieve Net Zero emissions across our value chain by 2050.”
A recording of the IAG 2022 AGM is available to view here: Annual meetings | IAG Limited