Financial Report
RELATIONSHIP OF THE CONCISE FINANCIAL REPORT TO THE FULL FINANCIAL REPORT
The concise financial report is an extract from the full financial report for the year ended 30 June 2006. The financial statements and specific disclosures included in the concise financial report have been derived from the full financial report.
The concise financial report cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of Insurance Australia Group Limited and its subsidiaries as the full financial report. Further financial information can be obtained from the full financial report.
The full financial report and independent audit report will be sent to members on request, free of charge. Please call 1300 360 688 (free call) and a copy will be forwarded to you. Alternatively, you can access both the full financial report and the concise financial report via the internet at our Shareholders’ Centre on our website: www.iag.com.au.
The financial information for the 2006 and 2005 years has been prepared under Australian equivalents to International Financial Reporting Standards (“AIFRS”). All financial information prior to 2005 was prepared under previous Australian Accounting Standards.
FIVE YEAR FINANCIAL SUMMARY
for the year ended 30 June
| Insurance Australia Group Five Year Performance | 2006 $m |
2005 $m |
2004 $m |
2003 $m |
2002 $m |
|---|---|---|---|---|---|
| Gross written premium | 6,435 | 6,673 | 6,427 | 5,150 | 3,558 |
| Gross earned premium | 6,537 | 6,561 | 6,265 | 4,885 | 3,448 |
| Reinsurance expense | (405) | (417) | (402) | (249) | (253) |
| Net earned premium | 6,132 | 6,144 | 5,863 | 4,636 | 3,195 |
| Net claims expense | (3,900) | (4,090) | (3,815) | (3,363) | (2,425) |
| Underwriting expenses | (1,699) | (1,624) | (1,500) | (1,074) | (628) |
| Underwriting profit | 533 | 430 | 548 | 199 | 142 |
| Investment income on asset backing insurance liabilities | 310 | 516 | 244 | 372 | 136 |
| Insurance profit | 843 | 946 | 792 | 571 | 278 |
| Investment income from equity holders and external funds | 537 | 500 | 508 | (76) | (291) |
| Financial services revenue | – | – | 70 | 30 | 37 |
| Other operating revenue | 218 | 179 | 216 | 177 | 173 |
| Share of net profit of associate | 2 | – | – | – | – |
| Life insurance business expenses | – | – | (52) | (11) | – |
| Finance costs | (86) | (69) | (57) | (46) | (46) |
| Corporate and administration expenses | (265) | (258) | (268) | (267) | (242) |
| Amortisation of goodwill and intangibles | (14) | (13) | (118) | (81) | (43) |
| Non-recurring items2 | – | – | 61 | – | 33 |
| Profit / (loss) before income tax | 1,235 | 1,285 | 1,152 | 297 | (101) |
| Income tax (expense) / credit | (373) | (357) | (346) | (80) | 18 |
| Net profit / (loss) | 862 | 928 | 806 | 217 | (83) |
| Net (profit) / loss attributable to minority interests | (103) | (117) | (141) | (64) | 58 |
| Net profit / (loss) attributable to equity holders of Insurance Australia Group Limited | 759 | 811 | 665 | 153 | (25) |
| Ordinary equity holders’ equity ($ million) | 3,491 | 3,378 | 2,999 | 3,036 | 2,133 |
| Total assets ($ million) | 16,972 | 17,102 | 16,291 | 16,470 | 11,307 |
| Business volume (in thousands) | 13,891 | 14,204 | 14,052 | 13,334 | 8,671 |
| Premium growth | |||||
| – Gross written | (3.6%) | 3.8% | 24.8% | 44.7% | 11.3% |
| – Net earned | (0.2%) | 4.8% | 26.5% | 45.1% | 15.1% |
| Key ratios1 | |||||
| Loss ratio | 62.9% | 66.5% | 65.1% | 72.5% | 75.9% |
| Expense ratio | 28.0% | 26.3% | 25.6% | 23.2% | 19.7% |
| Combined ratio | 90.9% | 92.8% | 90.7% | 95.7% | 95.6% |
| Insurance margin3 | 14.1% | 15.5% | 13.5% | 12.3% | 8.7% |
| After tax return on ordinary equity4 | 22.1% | 24.5% | 21.1% | 5.1% | (1.2%) |
| Share information | |||||
| Dividends per ordinary share – fully franked (cents) | 42.00 | 26.50 | 22.00 | 11.50 | 10.50 |
| Basic earnings per ordinary share (cents) | 47.87 | 49.31 | 37.87 | 8.65 | (1.78) |
| Ordinary share price at 30 June ($) (ASX code: IAG) | 5.35 | 6.01 | 5.00 | 3.40 | 3.15 |
| 5.80% Reset preference share price at 30 June ($) (IAGPA) | 101.80 | 103.90 | 104.70 | 107.94 | 100.10 |
| 4.51% Reset preference share price at 30 June ($) (IAGPB) | 98.50 | 99.05 | 98.35 | 100.10 | n/a |
| Reset exchangeable securities price at 30 June ($) (IANG) | 100.00 | 99.00 | n/a | n/a | n/a |
| Issued ordinary share capital (million shares) | 1,595 | 1,594 | 1,591 | 1,683 | 1,301 |
| Issued reset preference share capital (million shares) | 6 | 6 | 6 | 6 | 4 |
| Market capitalisation (ordinary shares) at 30 June ($ million) | 8,533 | 9,582 | 7,954 | 5,722 | 4,100 |
| Net tangible asset backing per ordinary share ($) | 1.22 | 1.18 | 0.96 | 0.84 | 1.15 |
1 The key insurance ratios for 2005 and 2006 are based on a reclassification of the underwriting result. This involved the reclassification of the financial performance of the IAG Group’s captive insurer by allocating the result of the captive from reinsuring the IAG Group’s consolidated operations back to those businesses on a basis which reflects the profit or loss it earned from those businesses. The adjustments are summarised in the “Operating and financial review” section of the Directors’ Report.
2 This includes profit on disposal of NRMA Building Society Limited of $45 million and “Share the Future” litigation expenses of $12 million in 2002 and the profit on disposal of ClearView retirement services businesses of $61 million in 2004.
3 Insurance margin is a ratio of insurance profit over net earned premium.
4 Net profit / (loss) attributable to ordinary equity holders to average ordinary equity holders’ equity.
IAG Annual Report 2005
IAG Annual Report 2004
www.iag.com.au
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