Insurance Australia Group Limited (IAG) provided an update on its New Zealand business and outlined its strategy to maintain its leading position and deliver sustainable strong returns in that market.
At the briefing in Sydney, IAG Managing Director and Chief Executive Officer Mr Mike Wilkins said New Zealand remains an attractive market and is of growing importance to the Group, representing 17% of the Group’s gross written premium (GWP).
“IAG entered the New Zealand market with the acquisition of State Insurance in 2001, supplemented by the addition of the NZI intermediated business in 2003 and AMI in 2012. As a result, today we are the largest provider of general insurance in the country with an overall market share of nearly 40% and a premium base of around NZ$2 billion.
“In New Zealand we are targeting GWP growth at least in line with the industry and an underlying margin1 of around 10% over the longer term, which represents a strong return on capital given the short-tail nature of the business. We anticipate the underlying margin will be slightly higher in the short to medium term, consistent with the business’ recent performance,” Mr Wilkins said.
IAG’s Chief Executive Officer for New Zealand, Jacki Johnson, said the nation’s general insurance industry is mid-way through a significant period of change and that IAG is actively engaging with government on the proposed industry reforms to ensure that New Zealand retains a sound and efficient industry.
“IAG is proactively communicating with our home customers about the New Zealand-wide move to fixed sum insured home policies, from an unspecified replacement basis, in response to the requirements of reinsurers. Our need2know education campaign was launched in March 2013 and is attracting significant customer interest, with over 1,000 visits to our website each day.
“In our direct insurance business we have two leading brands, State and AMI, which allow us to offer a wide range of product and pricing options for customers. We continue to target at least NZ$30 million of annual synergies from the integration of the AMI business by April 2014.
“Our intermediated business, NZI, is simplifying the way it does business with its customers and is focused on appropriate price and sustainable risk underwriting. NZI was recently awarded ‘Intermediated Insurance Company of the Year’, a significant achievement given the challenges of the post-earthquake environment.
“We believe we have the appropriate strategies in place to ensure IAG sustains its market-leading position and strong profitability in New Zealand over the longer term,” Ms Johnson said.