GROUP OPERATING PERFORMANCE
HOW WE’VE PERFORMED
HIGHLIGHTS
| NET PROFIT AFTER TAX | INSURANCE MARGIN | TOTAL DIVIDENDS PER SHARE EXCLUDING SPECIAL DIVIDEND |
| $759m | 14.1% | 29.5c |
| Net profit after tax of $759 million was achieved. | Insurance margin of 14.1% was the Group’s second-highest insurance margin since listing^. | Dividends per share of 29.5 cents was achieved, compared with 26.5 cents in the previous year. |
| OPERATIONAL HIGHLIGHTS | ||
| 2005* | 2006 | |
|---|---|---|
| Gross written premium The total amount we received from customers for the payment of their insurance policies. |
$6,673m | $6,435m |
| Net earned premium The portion of premiums written which relate to the financial year, minus the reinsurance expense. |
$6,144m | $6,132m |
| Net claims expense The amount paid out in claims during the year, as well as an estimate of how much we need to pay on unsettled claims, plus claims handling costs such as legal and administrative expenses, less recoveries from reinsurers and other parties. |
($4,090m) | ($3,900m) |
| Underwriting expenses The costs associated with researching risk and determining appropriate premiums, underwriting, administering the policy information required to run the business, marketing, commissions, distribution, fire services levies and meeting the Group’s compliance requirements. |
($1,624m) | ($1,699m) |
| Underwriting result The profit or loss we make from our premium income before we consider related investment income. |
$430m | $533m |
| Investment returns from claims reserves The income received from investing reserves held to pay future claims, net of expenses. |
$516m | $310m |
| Insurance result The addition of our underwriting and investment returns from claims reserves. |
$946m | $843m |
| Investment income on shareholders’ funds The income received from investing our shareholders’ funds. |
$455m | $539m |
| Net profit attributable to shareholders The net result after allowing for income taxes and the share of profit owing to minority shareholders. |
$811m | $759m |
* The Group was required to adopt Australian equivalents of International Financial Reporting Standards (AIFRS) when preparing its financial report for the year ended 30 June 2006. For comparative purposes, results for the 2005 financial year have also been restated under AIFRS.
^ Insurance margin is reported differently in the statutory financial statements, due to the reclassification of the Group’s captive insurer’s results from the consolidated operations back to the businesses from which the captive earned profits.
| STRATEGY REMAINS ON TRACK | |
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| PERFORMED WELL AGAINST STRATEGIC FINANCIAL GOALS | |
| Goals | Progress |
|---|---|
| Top quartile shareholder return | Measured from 1 January 2002, IAG’s cumulative total shareholder return of 104.4% ranks it 25th of the companies in the S&P/ASX100 that operated throughout this period. |
| Return on equity of at least 1.5 times weighted average cost of capital | Return on equity exceeded goal. |
| Establish an Asian foothold | Acquired interests in Malaysia, Thailand and Singapore, and progressed a major transaction in China. |
| Maintain an 80:20 mix of short-tail: long-tail premiums | The Group’s mix of short-tail and long-tail premiums remained at 81:19. |
| Maintain an ‘AA’ category rating | Maintained very strong ‘AA’ insurer financial strength ratings from S&P for our key wholly owned licensed insurers. |
IAG Annual Report 2005
IAG Annual Report 2004
www.iag.com.au
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