Insurance Australia Group (IAG) has confirmed market speculation and today announced what it describes as an efficiency program expected to deliver $130 million in annual run-rate savings.
As part of the changes, some key IAG executives will be leaving the group, including former chief financial officer George Varnardos, while at the same time the big insurer will be exiting its interests in the United Kingdom.
The strategy was announced to the Australian Securities Exchange by chief executive Michael Wilkins, who said that it was clear from IAG’s recent financial performance that it needed to do better.
He said the aim was to create shareholder value by making IAG a more tightly managed portfolio of high performing, customer-focused and diverse general insurance businesses.
“We’ll do this by simplifying our operating structure, creating end-to-end businesses with the autonomy to manage their own brands, customer bases and markets,” Wilkins said.
He said the company would stay focused on the fundamentals for its business in Australia and New Zealand while continuing to selectively pursue growth opportunities, primarily in Asia.
Wilkins outlined the key elements of the plan as moving to a simpler model, restructuring its Australian operations and corporate office, continuing to pursue Asian growth opportunities, focusing on profitability and exiting businesses that do not fit. The plan includes a staged exit from the private motor and mass-market distribution operations of Hastings/Advantage and Equity Insurance Brokers in the UK as well as an exit from its Alba and Diagonal investments.
