IAG outlines its New Zealand strategy

Insurer plans to grow its already market-leading position.

Justin Loiseau

Justin Loiseau hails from the great united state of North Carolina, where he started his first business at the ripe age of five: melting crayons into candles. With the infamous Crayola Crash of 1994, Justin moved on to study economics and environmental studies as a Morehead-Cain Scholar at the University of North Carolina. He has worked in a variety of sectors across the globe, from management consulting to the United Nations, and once spent three months examining invasive snails in Vietnam. Justin discovered The Motley Fool in 2012 and it’s been love ever since. Creativity, contrarianism, kerfuffling… what more could one want? When he’s not playing the Fool, you can find Justin at the University of Auckland, where he is pursuing a Masters in Economics as a Rotary Ambassadorial Scholar. Justin finds biogas digesters fascinating and can unicycle a mile in seven minutes.

Published April 24, 2013 8:00 am AEST

Like it or not, Kiwis count to Australians. Insurance Australia Group (ASX: IAG) briefed investors today on how it plans to keep its market leading position in New Zealand for the foreseeable future.

New Zealand is currently responsible for 17% of IAG's gross written premium (the total revenues expected from the life of an insurance contract), and Managing Director and CEO Mike Wilkins only expects that number to increase.

"In New Zealand we are targeting GWP growth at least in line with the industry and an underlying margin of around 10% over the longer term, which represents a strong return on capital given the short-tail nature of the business," said Wilkins in a statement today.

Jacki Johnson, IAG's New Zealand CEO, noted that the country's insurance industry is currently undergoing some major reforms, and IAG has been with the government every step of the way to make sure its business remains "sound and efficient."

As New Zealand's industry changes, so has IAG's model. NZI, the company's intermediated business, is focusing on appropriate price and sustainable risk underwriting. At the same time, its two direct insurance businesses, State and AMI, are merging services to save IAG an expected NZ $30 million annually by April 2014.

If all goes as planned, IAG will remain the country's largest general insurance provider and, with any improvements, increase its 40% market share and NZ $2 billion premium base in the years to come.

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