Latest / Best of Business / Amanda Whiting: IAG chief executive on the company reporting a tenfold increase in insurance profit

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Amanda Whiting: IAG chief executive on the company reporting a tenfold increase in insurance profit · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk ZB Follow
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  Speaker 2: New Zealand's biggest insurance company, IAG has reported a half
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  Speaker 2: a billion dollar profit for the year. That's up nearly
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  Speaker 2: one thousand percent on last year. This is the company
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  Speaker 2: that owns State Ami ins Andy, various others as well.
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  Speaker 2: Amanda Whiting is the chief executive.
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  Speaker 3: Hey, Amanda, Hi here there are you going.
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  Speaker 2: I'm well, thank you. That's a big one, isn't.
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  Speaker 3: It the year?
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  Speaker 1: Yeah?
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  Speaker 3: Half a billion big year.
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  Speaker 2: Why do you say it's a big year.
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  Speaker 3: It's been a big year because we've been working through
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  Speaker 3: the tail end of our claims from the big Evan
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  Speaker 3: in twenty three. It's also been a big year because
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  Speaker 3: we've been focusing in on supporting customers. So we know
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  Speaker 3: as sort of experience and the cost of living challenges,
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  Speaker 3: so we've been doing a fit bit around that. We're
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  Speaker 3: making sure that we're bolstering our customer care team, making
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  Speaker 3: sure that we're supporting those customers who do need that
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  Speaker 3: support through things like deferring their payments or pausing their insurance,
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  Speaker 3: reviewing their cover, making sure they're not paying things that
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  Speaker 3: they don't need, looking at ways that we can support
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  Speaker 3: them around payment methods and making sure we're not charging
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  Speaker 3: them to that, and then also obviously making sure we're
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  Speaker 3: at claims time if it makes sense, then we're waiving excesses.
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  Speaker 3: You know, it's pretty important from a profit perspective that
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  Speaker 3: we run a sustainable business. We need to be here
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  Speaker 3: to pay claims. And if you compare this year to
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  Speaker 3: last year, sure there's a big difference, but actually if
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  Speaker 3: you'k over the last five years, it's it's about the same. Well,
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  Speaker 3: it is about the same underlying so.
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  Speaker 2: Well, because but you're talking about underlying, let's just look
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  Speaker 2: at the net profit right this year is five hundred million.
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  Speaker 2: Year before. Sure, yeah it was a low one. It
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  Speaker 2: was less than fifty year before two four two, two
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  Speaker 2: hundred and forty two million, year before three hundred and
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  Speaker 2: thirty four million, year before three hundred and fifty seven million.
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  Speaker 2: Five hundred million is much bigger than anything else.
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  Speaker 3: There, much bigger base to heather. So one of the
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  Speaker 3: things that I'd like to highlight is we cover over
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  Speaker 3: a billion dollars worth of assets currently. Over those years,
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  Speaker 3: it would have been a lot different and so you know,
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  Speaker 3: cover a trillion dollars worth of assets. You need to
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  Speaker 3: make sure that you are making money because we absolutely
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  Speaker 3: needed to make money to pay claims. And we can't
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  Speaker 3: predict what's going to happen, So something could happen today
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  Speaker 3: and we need money in the account to pay claims
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  Speaker 3: for customers receivening or tomorrow. And that's really important because
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  Speaker 3: it's such an important part of our economy. You know,
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  Speaker 3: we need to make sure that there are sustainable insurance
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  Speaker 3: companies out there that are able to pay claims.
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  Speaker 2: So this year, the retail customers pay premium increases of
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  Speaker 2: nineteen percent.
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  Speaker 1: Is that right? Yeah? That is right? Yep?
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  Speaker 2: Or was it the year before?
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  Speaker 3: I think it was slightly less for what I've been
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  Speaker 3: in the high high single digit.
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  Speaker 2: I think it was twelve. Well at least that that
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  Speaker 2: there was the gross the gross profit.
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  Speaker 3: Yeah, premium. Look at the thing and the if I talk.
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  Speaker 2: About Amanda and the year before, I just want to
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  Speaker 2: I just want to follow this through though. In the
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  Speaker 2: year before it was seven percent, So what's going on here?
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  Speaker 2: Like if we just look at the gross premium that
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  Speaker 2: you're charging fifteen percent this year down to seven percent
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  Speaker 2: two years ago. How has it more than doubled in
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  Speaker 2: two years. How's that justifiable?
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  Speaker 3: Oh, there's a lot of input cost here. Head. One
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  Speaker 3: of the biggest drivers of the cost is reinsurance, and
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  Speaker 3: we all know that reinsurance is actually the insurance that
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  Speaker 3: we buy to ensure that we're protecting against a big event.
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  Speaker 3: Over the last three years, my insurance has gone up
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  Speaker 3: sixty one percent and that has had a significant impact
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  Speaker 3: on premiums in New Zealand, and so again, we just
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  Speaker 3: need to make sure that we are charging the premium
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  Speaker 3: that's appropriate to make sure that we're a sustainable business.
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  Speaker 2: I mean, that would be okay, right, Amanda. I would
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  Speaker 2: be fine with that if you guys were ending up
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  Speaker 2: with a profit that looked a little bit lease than
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  Speaker 2: it is. But it looks like you're banking a lot
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  Speaker 2: of that stuff for yourselves. It's not just going out
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  Speaker 2: to the reinsurers.
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  Speaker 3: Yeah, look, I think it is. I mean, it's a
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  Speaker 3: pretty volatile industry to be in. You'll see this go
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  Speaker 3: up and down. You need to look at a multi
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  Speaker 3: year event like we seemed to look at that through
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  Speaker 3: the multi years, and you know, it might look on
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  Speaker 3: its own like it is a large profit but remember
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  Speaker 3: where anything could happen tomorrow, and we had two hundred
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  Speaker 3: claims out of an event last week. You can just
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  Speaker 3: have these events just pop up at any time, you know,
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  Speaker 3: I get that.
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  Speaker 2: Okay, So do you need to have a certain level
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  Speaker 2: of cash in the bank in order to feel yet comfortable?
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  Speaker 2: We can cover everything absolutely when we want to have
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  Speaker 2: the right level of capital. Look like it's a different
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  Speaker 2: you know, we structure our capital quite differently, and I
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  Speaker 2: am not the expert on that, but we need to
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  Speaker 2: make sure that we've got the right level of capital.
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  Speaker 2: What happens when, Amanda, when you guys have got enough
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  Speaker 2: money in the bank, do you start dropping the premiums
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  Speaker 2: right down to single figure increases again?
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  Speaker 3: Yeah, look what I am expecting to see this year, actually, Heather,
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  Speaker 3: it is a bit of relief. So we're looking at
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  Speaker 3: sort of being much more in line with inflation this
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  Speaker 3: year because we have secured our reinsurance, we're seeing some
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  Speaker 3: of the inflation come off, and we want to pass
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  Speaker 3: that back to customers. When the other thing that we
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  Speaker 3: do is we're focusing on our own expenses. Of course
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  Speaker 3: that's really important. We don't want to be charging customers
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  Speaker 3: more than they need to pay, So we've been doing
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  Speaker 3: a lot of work around reducing our own expenses so
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  Speaker 3: that we are not part of anything additional customers.
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  Speaker 2: All right, So what CPI at the moment, is it
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  Speaker 2: like about three and a half or thereabouts. Yep, about that,
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  Speaker 2: So that's what we should be looking forward to as
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  Speaker 2: a three and a half percent premium increase.
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  Speaker 3: Yeah, we're seeing We're absolutely seeing things stabilize. So I'm
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  Speaker 3: thinking that it's going to be more like that for
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  Speaker 3: our personal arned customers.
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  Speaker 2: Well, that just sounds fantastic. Amanda really appreciated. Amanda Whiting,
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  Speaker 2: Chief executive at IAG New Zealand.
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