SUMMARY OF PERFORMANCE

NEW ZEALAND OPERATIONS

Nick Hawkins

Nick Hawkins
CEO, IAG New Zealand

Our New Zealand business delivered an insurance margin in line with the record performance achieved in the previous year.

IAG New Zealand improved performance across all key financial indicators, reflecting an emphasis on cost reduction and fewer claims.

High customer retention and satisfaction levels also helped the business to maintain momentum during the year, despite the challenge of responding to a major snowstorm in Canterbury and North Otago, and significantly heightened competition from both domestic and offshore players over the period.

We maintained our position as the country’s leading insurer, with 36% of the general insurance market. Since we completed the acquisition of Mike Henry Travel Insurance in June 2006, we are now also the leading underwriter and distributor of travel insurance products across the country.

In May 2006, we acquired 51% of the mechanical warranty company DriveRight, which complements our existing motor business distributed through Swann Insurance and Janssens.

We introduced new, user-friendly contract wordings for our commercial products in motor vehicle, liability and property lines – a market first in New Zealand. Sustained improvement in customer claims satisfaction has contributed positively to the reputation of NZI and State. In recognition of this, NZI was awarded Underwriter of the Year by the Insurance Brokers Association of New Zealand in September 2005.

OUR PEOPLE
During the year, a number of programs were implemented to provide a more flexible and safe work environment and to reward strong performance. These have been embraced by our people, reflected in a recent survey which showed a 4% improvement in engagement levels.

Over the past year, more than 250 of our people participated in community volunteering programs. We also supported more than 400 employees who are in the process of attaining qualifications through the Australian and New Zealand Institute of Insurance and Finance.

We believe strongly in contributing to the development of our industry, which is why we have also supported the professional education of many of our brokers through the Insurance Brokers Association of New Zealand.

LOOKING FORWARD
Competition in the New Zealand insurance market is expected to remain vigorous, while the national economy is showing some signs of slowing and labour markets are tightening.

We believe distribution channels will better position us to execute our strategy in the current environment.

We will continue to focus on our three key business objectives: ensuring we have clear customer focus; excellence in underwriting, claims and process delivery; and ensuring our people are highly engaged.

EDUCATE DRIVERSHELPING TO EDUCATE DRIVERS ON THE DANGERS OF FATIGUE

Prevention is at the centre of IAG New Zealand’s approach to sustainability. It is about treating causes rather than effects, and one of the main causes of road incidents is driver fatigue.

To help prevent road incidents, State introduced a new initiative, Driver Reviver, which aims to educate New Zealand motorists about the dangers of driver fatigue.

Rest stops are situated on busy stretches of road over long weekends and holiday periods, encouraging drivers to stop, take a break and revive themselves with free refreshments.

Over the 2006 Easter weekend, Driver Reviver stops were set up at four locations across New Zealand, with more than 3,000 cars stopping on the Easter Monday holiday.

State’s Personal Sales Team Leader, David Gray, said the initiative was a great example of how we can help our community and help reduce driver fatigue road accidents.

“The reaction from those who stopped was overwhelming – they were really impressed that an insurance company would do such a thing,” David said.

“It was a terrific way to target dangerous traffic spots and times of day. It has already changed the attitude of some motorists, who said they now realised they must take a break.”

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Additional Links:

IAG Annual Report 2005
IAG Annual Report 2004
www.iag.com.au

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