Investors at IAG’s annual general meeting have overwhelmingly supported the company’s 2022 remuneration policy, which increased financial measures used for executive performance linked to bonuses.
In stark contrast to the 2021 AGM, where disgruntled investors demanded change to the way IAG remunerated its executives, just 3.4 per cent of investor votes rejected the 2022 policy.
“At the 2021 annual general meeting, shareholders delivered us a first ‘strike’ against our remuneration report, expressing dissatisfaction with our executive remuneration framework and outcomes, and the principles that guided our decision making,” said David Armstrong, Chairman of IAG’s 2022 AGM. “As a board, we reflected deeply on this feedback, and we have made changes to more closely align executive remuneration outcomes with shareholder outcomes.”
IAG previously reported gross written premium growth for the year of just under six per cent to $13.3 billion, with net profit after tax of $347 million, despite the insurer being exposed to a high number of extreme weather events, volatile investment markets, a higher inflationary environment, and the need to strengthen prior period reserves. Net profit included a $200 million pre-tax release from the business interruption provision.
Reported insurance profit was $586 million, which represented a reported insurance margin of 7.4 per cent after net natural peril costs of $1.1 billion. “This was $354 million above our original allowance and reflects a very difficult year for the communities that we support,” said Nick Hawkins, Managing Director and Chief Executive Officer of IAG. “The underlying insurance margin of 14.6 per cent better reflects the strength and performance of our business.
“Our FY2023 result will also benefit from the pre-tax $360 million reduction in the COVID-19 Business Interruption provision following a resolution of some of the legal issues.”
In anticipation of higher reinsurance costs from natural disasters, such as recent floods which impacted much of the east coast of Australia, Hawkins said IAG has increased premiums across home, motor, and commercial insurance classes. Despite the increased premiums, the company had “very strong” customer retention.
In response to questions about computer security following the Optus data breach, shareholders were told IAG had multiple layers of defence in place to help mitigate risk, but the insurer will conduct a review of processes.
Looking ahead, Hawkins said IAG’s priorities over the next four years are adding one million new customers by FY2026, moving to 80 per cent digital transactions by FY2026, significantly “turning around” IAG’s Intermediated Insurance Australia business to achieve $250 million insurance profit by FY2024, and creating $400 million of value through claims and supply chain initiatives.