Sustaining shareholder value
Progress against medium-term financial goals
Why a profitable insurance company is good for everyone
Proposed expert advisory committee
How IAG engages in dialogue
Employee involvement in various committees and organisations
Investing our professional experience and knowledge for community benefit
Aboriginal Employment Strategy Ltd (AES)
Working with indigenous school children

One reason we are taking steps to ensure the sustainability of our business is to meet the needs of our key stakeholders (customers, shareholders, employees and communities) for many years to come.

In order to achieve this longevity, we aim to engage in regular dialogue with our various stakeholder groups. It's about being socially responsible, but it's also good for business. Being in touch with stakeholders and anticipating their needs, puts us in good stead when it comes to developing new systems and processes, introducing new products and increasing employee engagement.

Managing the complex, and sometimes conflicting, needs of stakeholders is a defining attribute in sustainable leadership and one which we are working to foster among all our leaders.

Sustaining shareholder value

In the 2005 financial year, IAG achieved another year of record results in a complex operating environment. This result is a demonstration of our commitment to managing our business in a way that brings sustainable long-term benefits.

The Group achieved a net profit attributable to shareholders of $760 million, up from $665 million in the previous corresponding period. We've done this by adhering to tight underwriting disciplines and focusing on building stronger relationships through initiatives to better align our products, service and distribution networks with customers' needs, while reducing costs. Our performance has been boosted by strong investment returns.

FINANCIAL PERFORMANCE

Progress against medium-term financial goals

Why a profitable insurance company is good for everyone

The past year has been the third consecutive year in which insurers, including IAG, have performed strongly. For the previous 10 years, insurers recorded significant underwriting losses.

This return to profitability for insurance companies has enabled us to reclaim stability and security for our customers, shareholders, the community and the people who work in our industry.

Meanwhile, insurance premiums in many classes of insurance have become more affordable for customers. As shown in the graph below, at April 2005, the average annual premium for NRMA motor insurance in NSW equated to 56% of average weekly earnings, compared with an average of 61% over the past six years.

Engaging our stakeholders

Proposed expert advisory committee

We acknowledge that, in addition to the various consultative and appeal mechanisms we already have in place in various states, IAG has a need for a national community advisory group - an expert advisory committee. The proposed expert advisory committe will be given the task of looking out for the interests of our stakeholders and providing the IAG Board and Executive team with detached but expert advice.

They will not consider individual cases but may be asked to consider whether the experience of individuals is significant in terms of systemic service delivery. Ethics, equity, accessibility, privacy and transparency will be the critical elements. We are working to have this expert advisory group operational before the end of the 2005 calendar year.

How IAG engages in dialogue

2004 Sustainability Report: In November 2004, we published our first Sustainability Report, outlining the philosophy behind our drive for sustainability, the practical steps we have taken towards sustainability and ours plans and goals for the future. Four thousand copies of the report were printed and distributed to IAG customers, shareholders, employees, the media and the government and is available online at http://www.iag.com.au/sustainable/reports/2004/index.shtml.

Sustainability employee focus groups: In July 2004, we conducted focus groups with a cross-section of our people to assess their understanding of what sustainability means to IAG. The outcomes were used to guide our internal sustainability employee communication strategy.

In July 2005, sustainability focus groups were convened again with employees and Sustainability Champions. The feedback from the focus groups was used to guide the content of the 2005 Sustainability Report and how sustainability is communicated internally.

We also plan to hold one-on-one discussions with a section of managers to investigate what managers see as their role in helping employees understand sustainability and translating it in ways that make sense for their teams.

Case study: Face-to-face customer sessions

Employee involvement in various committees and organisations

Our people participate in public debate on areas of relevance to IAG. Our managers regularly speak at various conferences, seminars and public hearings of bearing. Recent participation has included: Environment Business Australia, Sydney Futures Forum, Australian Shareholders Association, Insurance Council of Australia Forums and the Australian Corporate Citizenship Alliance.

We also have representatives on a number of industry associations including the Insurance Council of Australia, the International Actuarial Association and the Motor Accidents Council.

In 2004, IAG was elected to the Steering Committee of the United Nations Environment Programme Finance Initiative, aimed at promoting environmental and social issues in the finance sector.

In October 2004, we also became a member of the World Business Council for Sustainable Development.

Individuals within IAG are also encouraged to take membership with various organisations. Some of these include the New South Wales Department of Planning, Infrastructure and Natural Resources Metropolitan Strategy Reference Panel, the Sydney Institute, the Business Council of Australia and the National Centre for Citizenship and Volunteer Management.

IAG senior management representation on business organisations and industry groups

Investing our professional experience and knowledge for community benefit

We contribute the capacity, skill, knowledge and experience of our people to the benefit of local and regional communities.

We have an extensive bank of professional capacities to draw on to help build and maintain sustainability in local communities, and not-for-profit and community service organisations.

Two examples include:
Aboriginal Employment Strategy Ltd (AES)
Working with indigenous school children

Aboriginal Employment Strategy Ltd (AES)

Through NRMA Insurance, we have enjoyed a community partnership with AES for a number of years. AES provides an employment service for local indigenous communities and businesses in the New South Wales towns of Moree, Dubbo and Tamworth.

With a track record of placing around 120 indigenous people in jobs in each centre each year, AES is seeking to replicate its operations in other areas. We offered the support of our Government Relations & Policy unit in discussions with the Federal Government about the funding to do this.

We played a role that included involvement in a working party established by the then Deputy Prime Minister, John Anderson and the Minister for Employment and Workforce Relations, Kevin Andrews.

The task of this group, which included the Chair and CEO of AES and senior officials from the Department of Employment and Workforce Relations, was to work through the issues related to funding and come up with solutions. After some months of discussions, the outcome was a new contract that potentially provides AES with $17 million over four years, to maintain existing services and open new operations. The first phase of the expansion programme will see three new operations in the current financial year. The AES management team acknowledged that the involvement of IAG helped to put this agreement in place. The $17 million commitment from the Commonwealth was announced in the in the 2005-2006 Federal Budget.

Barbara, Head of Government Relations & Policy at IAG, says, "It was great to be part of this group, where AES, government, and the corporate sector - represented by IAG - worked to get a solution that was about the sustainability of AES - this was not about a quick fix."

Working with indigenous school children

Actuaries from our Enterprise Risk & Group Actuary division have come together to tutor students at Alexandria Park High School near Redfern in Sydney.

This started as a mathematics tutorial exercise but has developed into a general tutoring session with staff volunteering and rostering themselves on a weekly basis.

Phil, a Research Manager at IAG, explains, "The philosophy of the tutoring programme is very simple - a desire on our part to share the benefits of a good education with kids who have not been lucky enough to get the same opportunities.

"We benefit from being able to help the community in a practical way that relates to our skills, and the kids benefit through someone volunteering their time to sit down and help them with their homework. The kids clearly learn a lot and we have a bit of fun at the same time!"