Well, good morning, everyone. Welcome to the 2023 annual general meeting of Insurance Australia Group. It is good to welcome those of you who are here in person, and also those of you who are joining us online via the webcast and listening on the phone. My name is Tom Pockett. I am Chair of IAG. I am looking forward to engaging with you during the course of today's AGM. We have chosen to hold today's AGM as a hybrid meeting, as we feel this gives you, our shareholders, the most flexibility and opportunity to engage with your board in this important forum.
The group company secretary has informed me that a quorum is present, so I declare our 2023 AGM open. A notice of meeting has been published on the ASX and sent to shareholders, and I'll take the notice as read.
In keeping with our commitments that we made in our Stretch Reconciliation Action Plan, we are delighted to welcome Auntie Norma Ingram, to officially welcome us to her land, the Gadigal Country. Norma is a Wiradjuri woman from Cowra, who has spent most of her life in Redfern. Norma was the first Aboriginal person to graduate from Harvard University in Cambridge, USA. She has held many different positions over time in Aboriginal organizations, as well as the public and private sectors. After graduating from Harvard University, she secured a tenured position at UTS.
She has also worked at Qantas and the New South Wales Premier's Department. Norma is currently on the board of the Wyanga Aboriginal Elders Program in Redfern and has served as a board member of the New South Wales Aboriginal Housing Office. I am very pleased to welcome Auntie Norma.
Thank you. Gadiedimara! You do. Auntie Norma Ingram, Galari, Bila, Wiradjuri, you know. Good morning, everyone. I hope you are all well this morning. Thank you very much for that introduction. I am Wiradjuri, as we just talked about, from a little town called Cowra.
It's a big town now, that's right, on the Lachlan River or the Galari River, and I was born and raised on the Aboriginal reserve there, the youngest of 11 children. Unfortunately, there are only two of us left now my sister and I. But we carry the traditions of our ancestors, of our elders, through. My parents were fighters. My parents were fighting for Aboriginal citizenships in 1938. I'm the descendant of a warrior called Windradyne.
So we have been fighting for rights for our people for a long, long time, and we will continue to do that fight. My mother moved down to Redfern when I was young, so I've lived on Gadigal Country for most of my life, but I am Wiradjuri, and I want to acknowledge that we're on the traditional land of the Gadigal people, of the Eora Nation. The Eora Nation is bounded by three rivers: the Hawkesbury River to the north, the Nepean River this side of the Blue Mountains, and the Georges River.
And within those boundaries, there are 29 small clan groups. The Gadigal were here watching those tall ships coming from England. They are sunrise. That's really important to us. They are sunrise people, saltwater, and their totem is the gurrul, or the whale.
It is an absolute pleasure for me to be here today to be able to welcome you to country. So what we do, we use our clap sticks, and these are mine, and they've got on them a goanna, which is my totem. So what will happen, when we want to go into somebody else's country... So there are 200, over 200 different Aboriginal nations or countries or language groups right across this country. So we just don't walk into somebody else's country.
We ask permission using the clap sticks. And when we go in, we have to have a reason or a purpose to be able to do that. So, we have a message stick, and we'll have something written on that message stick to say, "Can we please have permission to come onto your country? And these are the reasons why." So, this tradition has been practiced for over 65,000 years. We continue to do that. I'm so proud as an Aboriginal elder, and our elders are respectfully referred to as aunt or uncle in our Aboriginal cultural tradition.
And when I say hello to you, I say, "Yama". So, this is really, really important because we have a lot of people out there where perhaps they're on the street, perhaps they're at home alone, and perhaps they just have not had anybody to say hello to them, acknowledge them. So, I'd like you to look at the person next to you, behind you, somewhere else, and acknowledge them and say, "Yama".
Yama.
That's my Aboriginal Wiradjuri word to say: I see you, you are special, you are important. So when we do, as Aboriginal elders, so we do welcome to Country. When we do welcome to Country, I welcome you to Mother Earth, most certainly, but I also welcome you to my culture, I welcome you to my people, to our heart, our soul, and our spirit. So as an Aboriginal elder, that does open me up and make me somewhat vulnerable.
So, I have to trust that you will... Maybe not believe in it as much as I do, but that you will respect and acknowledge that we have a culture that's gone here for over 65,000 years. At the moment, my friends, we are 3% of the Australian population.
So that means there's 97% of all other Australians, other people have come here to call this land theirs. And so, we—I certainly, I want to walk with Australian people, with, all of us Australians. I want to walk with you because we can't do it alone with our 3%. But I'm telling you, my friends, you can't do it without us, the First Nations people, who've been here for 65,000 years, who have the culture, who have the knowledge, who have the spirit that we are so generously sharing with the rest of the Australian public.
So, our elders, I absolutely have to acknowledge our elders, but I also acknowledge elders from other cultures as well. I think we are so special in that we carry the knowledge; we carry the experience. I have so many people in my community that say, "Auntie Norma, what do you think about this? Auntie Norma, can you help us with this?" And we are so ready there to work with our younger generation, to work with our communities, to pass on any lived experience, information, knowledge that we have held in our lifetime, that's been passed on by our elders and passed on by our spiritual ancestors.
And I know my spiritual ancestors are here with me, and that's what Welcome to Country is all about. It's about making sure that you are protected, you and your family, on this ancient, ancient land. I just want to acknowledge that you're doing your AGM this morning. I know that you all do really, really hard work.
I know what you do is really important to so many people right across the country, that you do, because people need to be, people must be protected. So, this is what you do. And so, make good decisions. Have really good, pure thoughts about the decision when you make those decisions, because it is for other people, not just for ourselves, that you make these decisions. So, make good decisions, and good luck. Have a great day in your AGM. So, thank you, everyone. Welcome to Gadigal Country. Thank you.
Thank you, Auntie Norma. They were wonderful words. Thank you very much. I would now like to introduce the IAG Board of Directors to you. On the stage with me from my far left are George Sartorel, Simon Allen, Helen Nugent, and George Savvides. Closest to me is Peter Horton, the Group Company Secretary and General Counsel, and on my right, starting closest to me, is Nick Hawkins, our Group CEO and Managing Director; David Armstrong, Chair of the Audit Committee; Wendy Thorpe, John Nicholson, and Michelle Tredenick, who chairs our Risk Committee, and Scott Pickering.
You will hear from each of Simon and-- Simon, John, and Wendy later in the meeting, as they are standing for re-election today. Also in attendance are Mr. Brendan Twining, who is the Lead Audit Partner from KPMG, personnel from our share registry, Computershare, our external legal advisors, Herbert Smith Freehills, and representatives of IAG's leadership team.
We also have with us at the lectern on my far left, our Group Company Secretary, Jane Bowd, who will run us through the process matters for today's hybrid meeting, and who will also read the questions submitted by shareholders online during the meeting. I now declare the poll open on all resolutions, and I now ask Jane to briefly address matters of process for the meeting. So Jane, over to you.
Thank you, Tom. Before I talk through how we will manage voting and questions during the meeting, I'd like to highlight some safety and housekeeping matters for those in the room. In case of an emergency, you'll hear a beep, beep, beep alert alarm. Please await instructions and be ready to evacuate the building. If we do need to evacuate, you'll hear a whoop, whoop, whoop evacuate alarm. Please leave through the fire exit at the back or on either side of the stage. We will have fire wardens guiding us, should this occur.
Could I please ask you now to switch off your mobile phones to silent if you have not already done so? I also remind you that recording or photography are not permitted during this meeting. A full video webcast will be available on IAG's website shortly after the meeting.
The amenities, should you need them, are located outside this room to the left of the foyer. For those of you in the room, you should have registered with Computershare when you arrived, which will enable you to vote and ask questions. If you have not registered, please just step outside to the registration desk now. In terms of the voting today, all items are being voted on by poll. Once the poll has closed and votes are compiled, a report on the final AGM results will be announced to the ASX and made available on IAG's website.
That said, the Chair has received the results of the direct and proxy voting instructions for each item of business and he's accepted the recommended results. These results will be displayed on the screen as we deal with each resolution.
For those shareholders who have joined us online, and there are many of you, when you first log into the online platform, you'll see the live stream appears in the center of the screen. In the top right-hand corner, you'll see four icons. You can toggle between these at any time during the meeting. When you select the Vote, Q&A, or Documents icon, the relevant content will appear on the right side of your screen, and the live stream and slides move to the left.
If at any time you have difficulties with the online platform, including voting or asking questions, please contact Computershare on +61 3 9415 4024. All shareholders in the room and online can now cast their votes on the resolution included in the notice of meeting and can do so until the polls are closed.
For those in the room, vote on your mobile device or Computershare iPad by scanning the QR code on your attendance card. To cast your vote, select one of the options beside each resolution. A green tick will show above each resolution you have voted on. There is no need to hit a Submit or Enter button. You can change your vote at any time until the poll is closed. If you have any issue voting during the meeting, please just raise your hand, and one of our Computershare attendees will come to you.
For those online, when you select the Vote icon at the top, you'll see what is on the screen in front of you now. You'll see each of the resolutions that you can cast a vote on. To cast your vote, simply select For, Against, or Abstain.
Again, there is no need for you to hit a Submit or Enter button, as the vote is automatically recorded. You'll see again, a green tick on your screen beside each resolution you have voted on. You can change your vote until the polls are closed. Shareholders who have joined us by phone are not able to vote in the meeting. However, all shareholders did have the opportunity to direct vote in advance. All shareholders present in the room, online, or by phone will have the opportunity to ask questions in respect to the items of business for this meeting.
Questions will be addressed in the following sequence throughout the whole meeting: firstly, questions we received in advance. Then followed by questions from the floor, and again, questions online. And then finally, any questions via the phone.
Where we have received similar or overlapping questions online, the same topic, the broadest one, will be put forward for response. In terms of the questions we received in advance of today, thank you to those shareholders who submitted them. Our management team have already responded to some of you, and we've otherwise sought to address the more commonly asked question in the chair and CEO's speeches. If there are any that have not been addressed in these ways, we will, during the course of the meeting today, address them at the relevant item of business.
For those shareholders in the room, if you'd like to ask a question, there are four microphones, one in each of the aisles, and we do have a roving microphone at the back should anyone not be mobile, and just raise your hand if you need the microphone to come to you. When you attend at the microphone, please have your voting card with you so the Computershare representative can verify that you are a shareholder. For those shareholders who are not able to easily move, as I've said, just raise your hand and we'll bring the microphone to you.
I would like to remind shareholders to limit your question to matters related to the items of business being considered by the meeting at that time. For those attending online, you'll need to select the Q&A icon at the top right.
That will display the screen that you can now see in front of you. You need to select the topic your question relates to, then type your question into the box at the bottom and select Send. You are able to submit questions on any item of business at any time during the meeting. However, we will address them when we get to that item of business. For those shareholders joining us over the phone, if you'd like to ask a question, please join the question queue by pressing star one on your phone.
Please do this at the time that the relevant item of business is being addressed. When you join the question queue, you'll be placed on mute, but you'll still be able to hear the meeting. When it is your turn to ask a question, you'll be announced by the operator.
Once your question has been responded to, you'll leave the question queue and go back to the meeting. If you need to leave the question queue, for example, if someone else has already asked your question, just press star two. To rejoin the queue at any time, again, press star one. Finally, if you are attending in person here in the room, and if you have a question that relates to a policy or claim, please just step outside into the foyer after the meeting and see one of our IAG people at one of the registration desks. With that, I now hand back to you, Tom.
Thank you, Jane. Excellent job.
Thank you, Tom.
About this time last year, I think we had a fire alarm, so we have our fingers crossed that we won't get one this year... [crosstalk]
We did. We heard the...
For those of you who were here last
Beep, beep, beep, Tom.
Beep, beep, beep. Yes, remember those. Before we move to the business of this year's meeting, I would like to take a few minutes to reflect on some events that have shaped the year for IAG. The last two years have seen a very challenging environment for Australia and New Zealand and, of course, our company. This period included the highest level of peril events in Australia and New Zealand since the New Zealand earthquakes in 2010 and 2011. The company dealt with over 377,000 claims related to these events over this period.
This combined with the inflationary effects, effects of the world coming out of COVID, which has increased our costs of servicing claims. Together with higher reinsurance costs, this has led to a very challenging period for IAG and insurance companies globally.
As you will all recall, the financial year began with severe weather and floods across New South Wales, leading to a high number of claims, mostly for storm damage to homes, property, and vehicles. Then New Zealand suffered the devastating impacts of the North Island floods and Cyclone Gabrielle, all within the space of three weeks in early 2023. These New Zealand events are the second and third largest events to ever occur in New Zealand and resulted in 50,000 claims.
We pride ourselves on our ability to support our customers at their time of need, and this was the case in these extreme events, as well also for the many other everyday events, the everyday claims we get. The board and I are sincerely thankful to our teams, especially our frontline team, our frontline teams who managed through this complexity and who continue to serve IAG customers.
Our financial performance over the year was solid, given these challenges. Gross written premium increased by 10.6% to AUD 14.7 billion. Net profit after tax was up almost 140% to AUD 832 million. The high net profit reflected an increase in insurance profit, improved returns on shareholders' funds, investment portfolio, and the benefit of the post-tax AUD 392 million reduction in the business interruption provision this year. Over the year, the company's total shareholder return, which comprises share price growth and dividends, was 33%.
IAG's capital position remains strong, which enabled the board to increase the final dividend to AUD 0.09 per share, franked to 30%, and this resulted in a full-year dividend of AUD 0.15 per share, up 36% from FY 2022, and a payout ratio of 83% of net profit after tax. This was slightly above the maximum of IAG's stated dividend policy. The company's performance for FY 2023 reflects the focus that Nick and his leadership team continue to apply to our strategy to create a stronger and more resilient IAG. Nick will talk to the outcomes achieved for our stakeholders shortly.
As a board, we regularly review IAG's progress against our strategic priorities to grow with our customers, build better businesses, and create value through digital and manage our risks. I am pleased to report that despite the operating complexity, IAG made good progress towards achieving its strategy this year.
We have a company-wide approach to sustainability, which connects our people to our purpose and keeps pace with the evolving expectations of our customers, communities, and stakeholders. We focus on climate and disaster resilience because the increased frequency and severity of extreme weather events has a direct impact on our business and our customers, as we have seen recently. One of the most important roles we can play is sharing our data and expertise to help governments invest in mitigation measures that will help reduce the impact of these events.
We manage our climate-related risks and opportunities through IAG's Climate and Disaster Resilience Action Plan, which sets out a target of achieving net zero emissions by 2050. In October 2022, we revised our science-based targets for Scope one and Scope two emissions and set out a transition plan to support our work to achieve our net zero commitment.
The plan sets out steps to reduce Scope one and Scope two emissions, as well as the work required to understand and measure Scope three emissions in our supply chain, underwriting, and investments. As well as protecting our customers and the community, our ESG focus extends to diversity employment targets for our people and the way we manage our supply chain. We have targets to have women constitute 50% of our senior management roles and Indigenous employees to be 3% of our Australian workforce. This year's results were 45% and 1.2%, respectively.
We published our third modern slavery statement in December 2022 and launched modern slavery training modules to support its application across our business. Management of ESG issues is governed by a board-approved social and environmental framework, which was updated this year to strengthen ESG governance. To improve the measurement and visibility of ESG, we have introduced a 5% sustainability metric in the FY 2024 group balanced scorecard. This year, the board approved a refresh of our responsible investment policy.
We now aim to remove from our investment portfolio companies that derive more than 10% of their revenue from fossil fuel production or extraction. These expanded fossil fuel prohibitions were fully implemented by 30 June 2023. We also have commitments around responsible underwriting to reduce our exposure to entities, predominantly in the business of fossil fuel production or extraction.
As at 30 June, these entities contributed only AUD 250,000 in gross written premium, and we remain committed to phasing out these by 30 June 2024. You'll have seen in the annual report that we further strengthened our Board in July this year with the appointment of Wendy Thorpe as Non-Executive Director. Wendy provides us with additional skills in insurance and other financial services, technology, and transformational change. You'll have the opportunity to hear from Wendy soon when she speaks to the resolution on her election.
Similarly, our Director, Simon Allen and John Nicholson, will also address the meeting after retiring by normal rotation in accordance with our constitution and offering themselves for re-election. In regard to Board diversity, this year we uplifted our gender diversity target to have a 40% to 60% of either gender on the Board.
Our previous target was to have no less than 30% of each gender. The percentage of women on our board currently sits at 27%, up from last year's 20%. While this is good, we remain actively focused on recruiting more female directors as we work to achieve our revised gender diversity target… I also flag that there is a separate item on today's agenda to consider the remuneration report, and I will talk in more detail about our remuneration practices approach when we reach resolution four. In closing, I thank you, our investors, for your ongoing support.
Your company continues to demonstrate a solid performance as management simplifies the business, focuses on strategy, and successfully addresses external challenges. Ladies and gentlemen, thank you for your attention. I will now invite Nick to address the meeting, our CEO. Thank you, Nick.
Thanks, Tom, and of course, good morning, ladies and gentlemen. It's great to be here today to have an opportunity to talk about what our company's achieved over the last 12 months. To begin with, I want to acknowledge the traditional owners of the land to which we meet, the Gadigal people of the Eora Nation, and I also pay my respects to elders past, present, and emerging. My discussion today is really gonna be framed around our purpose and the way we create value for all of our stakeholders, and of course, all of you in the room are super important as our shareholders, one of those stakeholders.
We continue to be guided by our purpose, which is all about how we make your world a safer place, and by our strategy of creating a stronger and a more resilient IAG. We want to make your world a safer place for the 30 million people that live in Australia and New Zealand, where we operate our business.
We deliver on our strategy and our purpose through four strategic pillars. They are around growing with our customers, and we have an ambition to add 1 million additional customers to our business over the next couple of years. We want to make sure we're building out better businesses with ambitions to improve the way we run our business, to make sure we really are leveraging our scale to support reducing our expenses as a portion of premium.
We need to make sure we're creating value through digital, through delivery of technology, to create better outcomes for all of our stakeholders. And of course, importantly, we need to manage our risks with our own risk maturity improving across our company.
Financially, we have goals of delivering a 15% insurance margin and a 13% to 14% return on equity on a sort of through the cycle basis, and we're well set up against that. For the past three years, our focus has been all about simplifying and driving performance in our core insurance business. We continue to see progress against all four of the strategic pillars I just highlighted, and these are highlighted on the slide behind me. I just want to call out a couple of things.
We've added approximately 132,000 new customers to our company over the last 12 months, and that brings to around 210,000 additional customers, particularly within our direct business here in Australia, that we've added to our company since we set this ambition of 1 million new customers.
We have seen a material improvement in our Intermediated Insurance Australia business after we set that up as a separate division with an experienced leadership team in place. In the last financial year, we delivered a profit of AUD 209 million in that business, and we're well on the way to delivering at least an AUD 250 million result out of that business in FY 2024. We have been disciplined in controlling our own operating expenses, which of course, is one way we can help limit premium increases that we're having to pass on to our customers.
We are rolling out a common pricing and policy administration system for all of our personal lines businesses right across Australia and New Zealand. What that does is moving us closer to fixing 25 years of complexity that we have within our business from our history of acquisitions.
And finally, we've made significant progress around how we manage our risks that we take on within our company. So closing out our value creation model, a critical component of how we create value is our approach to sustainability. What I'll do today is just demonstrate how we've created value for our five key groups of stakeholders. And what I'll do is just talk through each of those groups separately.
So firstly, for customers, and Tom's mentioned this already, that we've, we've received over 377,000 claims as a result of some of the extreme weather events that we've had across Australia and New Zealand in the last two years.
Of course, our business exists to help people and businesses recover from the impact and cost of these unexpected events. You know, I'm immensely proud of the way we show up for our customers when those customers need us most. Our priority at IAG is always about how we're ensuring our customers are safe and how our customers are supported. We offer temporary accommodation, emergency financial support, access to free and confidential counseling by a team of psychologists experienced in providing post-support incident... post-incident support, sorry.
We have a 24/7 major event response team in place the whole time. We've got an all hands on deck approach to bring in additional people from right across our enterprise. We also have an ability to quickly scale up our claim service. We're adding people when we require it....
You know, I've seen firsthand our response in these big events. In the immediate aftermath of Southeast Queensland and Northern New South Wales floods in February and March last year, I visited Lismore and the Northern Rivers region in New South Wales. I've also spent time on the ground in New Zealand following the devastating Cyclone Gabrielle earlier this year.
And then just last week, I went back to the Northern Rivers to see how that community is faring now compared to 15, 16 months ago. Of course, I was moved by the resilience that I saw up there, even though the road to recovery continues, and of course, there are many challenges that that community has.
Our claims systems and processes have been tested during these very large events that we've been managing, and of course, unfortunately, some of the more complex claims are still being finalized, but we're working to ensure that happens as soon as possible. We have a long-term focus on helping our customers and communities improve resilience and reduce risk. We want to make sure we're sharing our knowledge and expertise so that we can reduce the impact of extreme weather events, and in turn, of course, the cost of insurance to those customers and communities.
We're an active participant in conversations with government about mitigation solutions, including building codes, land planning, and planned relocations. In that context, we welcome the Australian Federal Government's recent announcement of nearly AUD 400 million in funding for key disaster preparedness projects.
Of course, what these will do is help to protect people and communities from the impact of severe weather and natural perils. We're also a member of the Federal Government's Hazard Insurance Partnership, and this organization is working to identify opportunities for disaster risk reduction with an outcome of improved insurance affordability and availability for Australia. One result of this year's challenging operating environment has been significantly increased premiums.
However, of course, we've been mindful of the flow-on impact that's having to our customers, who are already experiencing tightening household budgets. To help counter some of the increased costs that affect premiums, we are working to improve our efficiency and increase the use of digital solutions within IAG.
For example, we've simplified a range of products we offer our customers and increased the ways we can engage—they can engage with us about their policies and when making a claim. We've expanded our MotorS erve and Repair hub sites, which means we can get customers' cars back on the road quicker. We're also progressing our artificial intelligence motor total loss assessment process right across IAG, and what that does is reduce claim cycle times down from weeks to days.
Despite the increase in premiums, we are heartened by ongoing high levels of customer retention and the growth that we're seeing within new customers. Of course, what this really is, is a tribute to the strength and stature of our brands and our customers' confidence in the value of what we do. Turning now to the value to—we've created for you, all of you, our shareholders.
The Australian, New Zealand, as Tom mentioned, the Australian and New Zealand economies have been pretty challenging the last 12 months. As insurers within that, we've had to manage the sudden emergence of inflation, which has immediately impacted the cost of claims. We've had a significant rise in natural perils costs as climate change compounds the impact of the three years of a La Niña weather cycle that we've just been through, and we've had a substantial and a sustained reduction in global reinsurance capacity.
Remember, reinsurance is insurance for insurance companies, which has materially impacted pricing in the Australian and New Zealand insurance industry. In this environment, though, we've achieved pretty strong results. Our top line, or gross written premium, grew by 10.6% last year. We've had strong contributions of growth from all three of our business units.
Our net profit after tax was AUD 832 million, and cash earnings increased by 112%. Both of these outcomes did, though, have the benefit from releases of some provisions. Our reported margins of 9.6% was impacted, as I mentioned, by the third year of a La Niña weather cycle and the second and third largest events in New Zealand's history earlier this year. In the underlying margins, we've also been impacted by the unexpected inflation, which hit us particularly hard in the first half of the financial year.
We did, though, achieve significant improvement in the second half as we started to realize premium increases that we applied in response to inflation and other costs, including reinsurance and increased estimates of perils.
Then just lastly, our final dividend of AUD 0.09 per share brought our total dividends for the year to AUD 0.23, which is... Sorry, to AUD 0.15, which is a 36% increase on dividends we paid from last year. Just in relation to our people. Our people are key to the way we can help our customers. Our people work tirelessly to support customers, particularly after extreme weather events, but also during other experiences of accident or loss.
To ensure that we can attract and retain the best people, we're investing in technical capability, leadership development, and ensuring we offer the right experience for people that join our company. We continue to prioritize the safety and well-being of our people, including offering support when our people need it. We're building a culture that will help us stand out in today's competitive employment market.
We assess our culture through annual surveys and in-depth listening, and I'm proud that our overall employee engagement score is similar to last year's, despite what's been a pretty tough 12 months operating environment. Moving to the community. Climate change continues to increase the frequency and severity of extreme weather. We see firsthand the impact this is having on our customers and the communities that we serve. Supporting communities to be more resilient to extreme weather does help reduce the impacts that physical climate risks have on them, and of course, and on our business.
We share our claims, data analysis, and extreme weather insights through targeted research and initiatives such as our Wild Weather Trackers in Australia and New Zealand. The trackers help people to understand their risk, suggest actions they can take to be better prepared, and of course, provide access to tools and resources to help them take action. Of course, we cannot deliver this change alone.
I'd like to acknowledge the deep community partnerships that we've established here at IAG. When it comes to the outcomes we've achieved, we achieved for the environment, of course, our focus here is all about climate. That's because changes in climate affect our customers and our company so much. Even though our businesses have managed the uncertainty of climate for more than 100 years, climate change is driving an increase in severity and frequency of natural disasters, and this change is happening at a level that we just haven't seen before.
In response, we continue to invest in improving our understanding of the changing climate and its impact on the communities. We have our own specialist in-house natural perils teams, including meteorologists, as well as flood and cyclone experts and atmospheric scientists. We have an enterprise-wide climate and disaster resilience action plan that responds to material risks and opportunities. Within our businesses, we've also taken steps to manage our carbon footprints and have made a commitment to achieve net zero emissions across our value chain by 2050.
Our confidence in the strength of our underlying business is reflected in our financial guidance that we've provided for FY24. We expect to, we expect to achieve low double-digit gross written premium growth, and our reported margin guidance is in the range of 13.5% to 15.5%.
Looking at our results to date, we're on track to deliver against this guidance. We have experienced a relatively benign start to FY 2024 from a natural perils perspective. To the end of September, our natural perils costs have been around AUD 120 million, which includes AUD 47 million in additional claims from events from FY 2023, primarily from the Hunter hailstorm that occurred late May. We have, though, assumed in our full year forecast, that our perils will be in line with our original expectations.
Inflationary trends continue to be elevated across our business, particularly within our motor claims costs. This is expected to result in some prior period development in our first half result as we finalize settlement of short tail claims for amounts slightly more than we expected at 30th of June.
Combined with the additional reinsurance reinstatement costs of around AUD 70 million following the New Zealand events earlier this year, it is likely our first half underlying margins will be around the lower end of our guidance range. However, we do expect a stronger second half as we benefit from the earn through of pricing flowing through to our results. So, to close, we are seeing positive financial signals. We have improved our underlying performance.
Retention rates across our business remain very strong, and we're growing customer numbers, and we've continued to invest in our business and importantly, and in our people. I'll now hand back to Tom for the formal business of the meeting.
Thank you, Nick. We will now turn to the formal items of business for this meeting. There are eight items of business before the company's AGM this morning, including seven resolutions. They are set out in the notice of meeting. Resolutions one to five and resolution seven are all supported by your board.
In terms of resolution six, which relates to the proposal to increase the NED fee pool cap, the board has abstained from providing its recommendation, which we have done so in order to manage conflicts and given that this resolution ultimately is connected to director remuneration. The first item of business is to receive and consider the financial report and the reports of the directors and the external auditor for the financial year ended 30 June 2023. There is no vote on this item.
These statements and reports are published in the 2023 annual report, which was lodged with ASX on the 21 August 2023. The purpose of this item is to provide an opportunity for shareholders to ask questions and make comments about these reports. Shareholders will also have the opportunity to ask questions of our auditor, KPMG, relevant to the conduct of the audit and the auditor's report. All questions to the auditor should be, in the first instance, addressed to me as Chair, and if appropriate, I will ask Brendan Twining to address the meeting.
Please bear in mind that we have a separate item of business on the remuneration report as part of resolution four, and we'll be taking questions on remuneration matters when we come to that item. I now invite comments or questions on the financial statements and reports and the management of IAG. I will start with the four questions we received in advance about the company's operations. Jane?
Thank you, Chair. We received two similar questions about IAG's share price. We've selected the broadest question to respond to, namely Jill Kostioulas, who asks: "What will you do to try and get the shares to a much higher price?
Thanks, Jane, and thanks, Jill, for your question. We appreciate people that write in early. It's very good. The company does not control our share price, unfortunately. It's influenced by a whole raft of factors. Nick has just spoken to us this morning about the work he and his team are doing to deliver on IAG's strategy and the success that they are already achieving. We believe that this work will support the company's performance and ultimately the share price.
It is pleasing to note that the IAG share price finished up almost 31% during the financial year, significantly outperforming the ASX 200 index, which was up around 10%. A pretty good outcome. Jane, question two.
Chair, the second question is from Vicky Mavromatis, who asks: "When will the dividend rate increase?
Thank you, Vicky. The company's got a very well, clearly defined dividend policy. We pay 60% to 80% of net profit after tax, any, adjusted for any business interruption release we make. And at this stage, there's no change to plan to change that policy. Because we believe it delivers a sound outcome for shareholders, and it balances our capital requirements and our dividend distribution policy. Jane?
Chair, we received two similar questions about insurance premiums and affordability from Raymond Saeed and Richard Gould. Both shareholders are concerned about, firstly, the amount of increase applied by NRMA Insurance to premiums and the expense and affordability of premiums, and secondly, the pricing that is offered to new and renewing customers.
Thank you for your comments, Richard and Raymond. Building on what Nick spoke to his, in his address, our, our premiums have increased as we've had to manage a few things. There's been the sudden emergence of inflation immediately impacting our claims costs, the significant increase in natural perils costs due to extreme weather events, and a substantial increase in global reinsurance pricing, which has materially impacted not only us, but the whole insurance industry.
I know that Nick and his team are sensitive to the impact that increased premiums have on our customers and are taking steps such as managing our own costs to help reduce these increases. In terms of the remainder of the question, I will ask Nick to comment on the last few minutes.
Thanks, Tom, and thanks for the question, Raymond and Richard. Just within the NRMA Insurance brand and business, we do provide discounts for customers based on both relationship and time of that relationship with us, as well as the number of policies that customer has with us, and we apply those discounts to customers based on a matrix. I'll just point out, we do occasionally, though, in the new business, when we're running campaigns, we do occasionally offer discounts. That's not a major theme of our business to new business, and discounts are applied to new customers.
Comparing them, though, and so it's hard to get like for like, because really, customers' circumstances are unique, and the risk profile around a customer and an asset or a business that we're insuring is unique to that particular pack pack. And so it's actually quite difficult to then make comparisons between between different groups of customers. And we like... We aim to reflect pricing for the risk that we're taking on.
Thanks, Nick. Jane, you have one more question.
Yes, Tom. So, Chair, we were asked by several shareholders in advance to explain why IAG has supported the Yes campaign for the Voice referendum and whether we provided any funding in support of these campaigns. And Chair, just flagging, this is the last question in advance, so any shareholder that has a question in the room, it might be a good time to make your way to one of the microphones.
Thank you.
Over to you, Chair.
I thank the shareholders for those questions. Look, IAG has a long-standing supporter, has been a long-standing supporter of Aboriginal and Torres Strait Islanders recognition and reconciliation. We produced our first Reconciliation Action Plan, called a RAP, about 10 years ago. We have publicly supported the Uluru Statement from the Heart since 2019 to give our First Nations people a voice on the decisions and actions that impact their communities.
We have committed to further improving our representation of First Nations peoples in our employee and governance structures, and to innovate and drive Indigenous procurement and social enterprise. We continue to strengthen our engagement with First Nations peoples, working in partnership with our Indigenous employees, business, and communities, with the aim to help advance, help advance opportunities for First Nations people.
Therefore, enshrining a Voice to Parliament in the constitution is something we support as a company. As you all know, changing Australia's constitution is a matter for all Australians to vote on. So, we encourage people to seek out information on both the yes and the no cases. We advise also that IAG has not provided funding or donated to the yes or no campaigns. That ends the question in advance, I think, Jane, and I'll now move to questions in the room. Microphone two.
Good morning, Chair.
Good morning.
I would like to introduce Miss Natasha Lee, a shareholder.
Thank you. Natasha Lee, shareholder.
Hi, Natasha. How are you?
I need an introduction. It's good to see you, Tom.
Good to see you again.
Thank you very much to you and the board for your results this year. I had a few questions that are focused on your investment returns. The amount of investment is sort of roughly sort of AUD 11 billion, but the amount which you've earned from that is roughly the same from year to year, which is a little bit disappointing. And similarly with your equity investments, the returns on those weren't so good.
Now, I understand that a lot of your investments are held in sort of cash and cash equivalents, which limits the opportunities. But given the interest rate rises, which we've had, I would have expected the returns to be a bit better. And also, you know, the small amount of equities you hold, the market has done very well recently. So...
No, that's a very great... We do hold two buckets.
Mm.
So, one, we can manage with equities and various other, investments, and the other is held for, capital purposes. So, Nick, do you want to comment on the...
Yeah, sure.
Shareholder funding thing? Yeah.
I mean, thanks, Natasha, for the... Thanks for the question. I mean, probably the thing, the sort of things are, one, we take a relatively conservative approach to investing our money, and there's sort of a relationship between type of things we invest in and the capital we need to have to support that. So, we come up with what we think makes sense. In relation to sort of customers' money that's sitting there as premiums or claims, we're very conservative, and as you pointed out...
Mm.
We invest in cash and fixed income government bonds. Within our shareholders' funds, we do have an element of equities and the like. I think what you'll see in relation to your question of rising interest rates and when will we see the return from that, we saw a little bit of that in FY 2023. We certainly expect, based upon the investment allocation we have, that we'll see a higher investment income and interest income in FY 2024, really driven by the point you've raised around higher interest rates delivering a higher return.
We should expect everything else being equal, a higher investment return in 2024 than 2023. With equities, we've got a very mainstream approach to how we invest in equities, and that's essentially what's happened within the market.
Right. Okay, thank you. I suppose what my second question in relation to the financial report, the previous online questions sort of stole half my thunder, was about setting of premiums. Now, from my knowledge of insurance industry, it's sort of in broad terms, predicated on the model that you have a number of good years and maybe have a bad year, a bit like the share market, in general. But, given, you know, the overused word of unprecedented disasters, which we've had, there's sort of been the compression.
We've had, like, 100-year flood events happening every year in some instances, or a much shorter timeframe, which must make the management and setting up the premiums extremely difficult. I suppose there's the risk of either overshooting or undershooting on there. How are you managing that without an overly technical mathematical explanation?
No, don't worry, I won't give you one of those. Yeah, look, it's a very complex question. We had, you know, coming out of COVID, the level of inflation right across, which everyone's seen, going through all sorts of sectors. Then, because of the large perils events, the insurance industry, the reinsurance industry, repriced...
Mm-hmm
How they were giving us reinsurance. So that went up. So these drivers have been pretty dramatic, and they happened very quickly. The rate of inflation came through after COVID very, very quick. Labor, shortage of materials, you name it, it caused a problem. So the team has done a pretty good job in reacting in terms of pricing for that. We're very conscious of not overshooting the mark and getting, making premiums too expensive. The, the we are very conscious they've gone up. We've got to balance that with making sure that over time, we get reasonable returns for shareholders, and so it's that balance.
Mm.
That we spend a lot of time trying to make sure that's right. Do you want to add anything to that or we're-
Perfect.
Okay, cool. Hopefully, that answers your question, Natasha.
Yeah, yeah, we can talk about that later. Thank you.
Please. Yeah, look forward to it.
We'll get the chairman on the pricing team shortly.
Oh, no, too complex for me. Number three.
I would like to introduce Mr. Gregory Simoni.
Morning, Gregory.
Observation...
How are you?
Good day. Observation and point of mind, if I may, through you.
Please.
For the upcoming day, 469 years, nine months, and nine days since the incorporation of the Merchant Adventurers of England and the sixth European age of the world, to IAG's profit numbers, stated so comprehensively on page 83 of the annual report, AUD 925 million for 2023. The point that Mr. Hawkins has made wasn't really willing to unpack the matrix.
In noting that matrix, the connection to the umbrella of companies that Insurance Australia inhabits, to the annual reports, and as we began 20-odd years back, we used the word surplus, now we use the, the word profit.
And now the newer word, which presumably you'll use the next meeting, net income of an umbrella, of the umbrella of companies that would include Bank of America, American Express Company, Coca-Cola Company, Apple, Amazon, Kraft Heinz, McLane Company, Clayton Homes, BNSF Railway, Johns Manville, General Re, and Dairy Queen, all in their multiples of billions. What are we seeing, hearing, touching? Not quite tasting. Ladies' Deposit Company cubed?
Thank you, Gregory. I'm not too sure what to make of that question. So but thank you for your input. I think it was about the complexity of insurance. Insurance is very complex. It'll continue to be complex. It's a global business that has impacts, impacts, global impacts, impact us here in Australia. We, we, we don't have any of those companies you mentioned, so I'm not too sure how they fit into the mix. But, thank you for your question. So, any other questions on the floor? Number four.
Chair, I would like to introduce Byron Gates.
Ah, good morning, Mr. Chairman.
Good morning.
I've got two questions. First of all, on page 104, you mentioned about the cybersecurity upgrades. Could you expand on what you are doing and also the combat, cyberattacks?
Thanks...
I'll ask a second question after this one.
Okay, thank you. I think it was a technology upgrade you're referring to, I think, Byron, was it?
I think it is, yes.
Yeah.
Around cyber.
Oh, cyber. So it's all cyber. Okay. Yes, cyber is a big risk that we have a significant focus on, as you could well imagine. I would say the last four to five years, we have made quite significant investments in our technology infrastructure defending IAG's business. We have also added specialist people who manage the cyber risks for us into our team.
Right.
As a board, we have asked external experts to come in, and we do regularly look at our cyber network and our cyber defenses, and we test them. We actually get people to try and break into our system so that we can learn what are the types of things that we need to protect. So this will continue to be a problem, as everyone here would understand. Cyber risk is just a growing issue, but...
Mm-hmm.
We spent a lot of time on it, and we attempt to minimize the risk as much as we can.
Okay, fine. The second question... Where are we? Page 46, the natural perils cost by events. I noticed that there are no mention of the bushfires. Could you give me an update of how much it cost for the bushfires, recoveries at all?
Yeah. Nick, yeah.
Hi, Byron. The bushfires were sort of, you know, over that period, November, December...
Yeah
2019, January, February 2020. So, they're in sort of the, the previous financial years.
Yeah.
I mean, the gross costs of those bushfires to IAG would have been in excess of AUD 1 billion. So very, very significant. You know, we had reinsurance that protected us, that reduced that exposure, but they were very significant events for us. You know, we've spent a lot of time working with our customers to recover against them.
Okay.
Thank you, Byron.
Thank you.
Thank you. Number two.
Chair, I would like to introduce to you Mr. Nagy, a shareholder.
Thank you.
Hi, Mr. Nagy.
Good morning to all of you.
Good morning.
Directors, shareholders, and of course, you, the chairman. My question concerns accountability. And again, I may be on the wrong track here, but I just, I just saw the first annual report of IAG this morning when I walked in. I tried to get an annual report back in August or wherever it was, and I don't know what happened, but I know it wasn't in Australia. I'm not sure if it was the Philippines, Malaysia, or wherever. And every time I kept asking for an annual report, they kept telling me about the dividend rate.
I tried to tell them kindly, and I mean kindly, I wasn't interested in that at the moment. That's the first point I want to ask you: what happened there? And is this has just been released since the ASIC in 30 August 2023. Is that right?
That's correct.
Why couldn't I have gotten my annual report before? Last year, I did get one in the mail. Why not this year? That's my first question.
Okay, um...
All right, go ahead.
Oh, okay. Mr. Nagy, I apologize for you not getting one. I don't quite know what went wrong, but we will follow that up, Jane.
Absolutely, chairman.
We will just make sure that everything's right for you to get an annual report next year without all that hassle you had to go through.
Yeah.
I apologize.
As you know, I am fair in my criticism to you, and I admit last year, the year before, you've done well. And this year, I say the same thing, given the external events that have happened. I'm. I didn't look into all of this, but one of the things I did notice is, in one of your pages, you have pictures of the executives. I looked at the details of them, and all of them are under four years, four years in IAG. So I'm asking you, what has happened for that to happen?
Oh, right. No, that's not quite right. Nick's been, Nick's... Sorry. Sorry. Nick's been with us for, like, 20 years. Other executives have been with us for significant amounts of time. With all executive teams, they get refreshed. I can't remember how long the various executives have been with us, but they've been with us for quite a long time. The average would not be four years, it'd be a lot bigger. We've got a very experienced team.
The executives we've brought in, that would be newer, if you like, to the organization, were brought in because of the skills that they bring and the knowledge that they bring to insurance. All the executives that we've brought in have multiple years of experience. In fact, some of them have their whole life in insurance, so we were lucky to attract them into IAG.
Okay. My final comment concerns a note, rather a mention by Nick about share, people being unhappy or happy, rather. I come from Lismore, Goonellabah, and people are still unhappy. Now, I'm not sure if that's insurance related or if that's government related. I would like to comment on that, if you could, please.
Yeah, Lismore is a very complex situation. Nick, you were just up there. Do you want to comment on what you saw at Lismore?
Yeah. Thanks, Mr. Nagy. I mean, there's been some tough environments and tough communities that have had difficult circumstances, communities have been managing for a couple of years, both Australia and New Zealand. And yes, we know that, you know, industry in the whole, and IAG in the whole, has done a good job, but we know that there are some things that we need to do better, and we'll be working on that. So we're not-- we're certainly not saying that we've got everything perfect. What we're saying is that, you know, we've really committed the resources of our enterprise to look after our customers.
And I think, you know, what we've done is a good job, but of course, we'll find some examples where that hasn't been perfect. We definitely want to be better and make sure we learn from some of these events to improve the way we can look after our customers going forward. And I get in Lismore, that's a, that's an insurance comment, but of course, there are broader government and other issues as well. But, you know, we've got to own the insurance space, and we definitely want to learn and be better about how we look after our customers.
Thanks, Nick. Thanks, Mr. Nagy. Yep, number two.
Chair, I would like to introduce Sue Howes from Australian Shareholders' Association.
Hi, Sue.
Hello. Good morning.
Good morning.
This morning, I'm representing 227 retail shareholders and proxies worth just under AUD 6.8 million. My questions, Mr. Chairman, are inflationary pressures and natural peril claims have increased costs for general insurances. These have been passed on to consumers through significant premium increases. The reinsurance market has also restricted availability and increased pricing. Could the board provide its views on the likely future direction of premiums and profitability in the industry for the next few years, please?
I thought you were going to ask me about the future of inflation and where that's going. I wouldn't melt into that one. Yeah, look, we do manage our insurance business through the cycles, and we do have long-term return on equity targets, which we try and achieve, which is sort of within the 11% to 15% range of ROE. So, when events like this happen, we have to readjust those financial structures, as we, as we've talked about, to, over time, achieve a good return for shareholders.
So that's what we're doing right now. Whether these structural shifts will remain, I don't know. But we are onto that, and we are ensuring that we don't increase prices too far but still get a return to shareholders. It's that, it's that balance, so.
Thank you. My second question is: you've indicated in your discussions with us a renewal program for the board. Could you outline the skill sets the board is looking to bring onto the board, the likely timing of board changes, and your views on board diversity? You've already given us...
Yes.
Your views on board size, please?
Yes, on size, we have a big board, and probably over time, we'll probably reduce that number as normal people rotate off the board. In terms of skills, we're a complex company, so we have to have people on our board that have very good experience in a range of things. So if I put them into buckets, the first one is we need people that have deep insurance experience, and direct insurance experience is important. The pool of those people is quite small, but we're lucky to have some very talented ex-executives on our board. So that's the first rule, and that's pretty important.
So then we have the other skills that we need, and these are what I'd call broader commercial experience skills. So we need people who understand strategy, understand large corporations, have had experience in listed environments and understand what the obligations are.
Managing complexity, managing large-scale change systems, IT systems, that type of experience, so that these always come up in big corporations, so that the board can be aware of how management is going in terms of the performance of those. So that would be the type of skill set. The real specialist one is insurance skills. Yeah.
Thank you.
Thank you, Sue. I don't think we have any more questions from the floor, so any questions online, Jane, or?
Chair, yes, we do. We've actually got six questions online currently.
Okay.
Starting with the first from Mr. Stephen Mayne. He asks: Could the CEO or our resident executive expert, if they are there, comment on our approach to flood mapping? Do we rely on councils, state governments, and water authorities to accurately map potentially flooding, or do we do our own modeling work when pricing policies? Next part of the question: How important is the work of the Insurance Council of Australia in this regard, and which states are getting it right in terms of reforming Australia's flood mapping system as the climate changes?
Thanks, Jane. I think that's a question for you, Nick.
Thanks, Tom, and, thank you for the question, Steven. So to break that down, so we, we have our own view within IAG of flood risk across Australia. The process of us having our view is through a lot of discussion, engagement, and knowledge sharing between us and local councils, state governments, and other authorities.
So to Steven's question, it's a blend. But we, we end up, and so shareholders should know, that we have a proprietary understanding, call it that, of flood risk across Australia that we have gained through our knowledge, our experience, together with working with local councils, state governments, other industry bodies. So the answer to that is it's, it's a blend. And so we're able to, to have an understanding and appropriately price for the risk that we're taking on.
That's really important, I think, for shareholders to understand in the running of IAG. You know, the insu... This is-- there's got to be a coalition of the willing here on this topic, because the more our country can understand this, the more our country can understand how we can impact it, importantly, around things like mitigation and investing in things to change something or making sure we don't make more bad zoning decisions.
We've already built cities, countries, towns, areas, communities in areas we probably, with hindsight, shouldn't have. We know that. They're the ones that flood. We don't want to make any more mistakes. What we do want to strengthen what we've got, so we can reduce the risk.
And so that's, it's got to be a coalition of the willing, and Insurance Council of Australia, I think, plays a pretty important role of bringing industry together with other affected parties. And then just last part of the question was sort of who's doing that well? I mean, I see a lot of activity on this topic now, particularly up and down the east coast of Australia. So Queensland, New South Wales, Victorian governments, I think, are working well and being coordinated nationally to really focus on this topic.
Essentially, and the theme's got to be: how do we make sure we don't make any more mistakes as a country? Because we have in the past. And then secondly, where we have got higher risk flood areas, how can we strengthen the resilience? And that's generally around mitigation and investment. And there's a real theme and a real focus by many parts of our government to improve that. Tom?
Thank you. And just for the shareholders to note, Nick spends quite a bit of time with industry bodies and government, giving them the knowledge and advice we've got from IAG to try and make resilience better. So... Jane?
Chair, the second question is also from Mr. Stephen Mayne. He says: For the past 24 years, IAG has managed a joint venture with the RACV in the New South Wales and Victorian markets called Insurance Manufacturers Australia, IMA. We are the senior partner with a 70% stake. Given RACV is a neutral, more focused on building resorts, should we not just take them out of the general insurance market?
Have we ever offered to do that, and what is the situation with preemptive rights? If someone makes a bid for IAG, does RACV have the right to buy out our 70% stake in IMA? And if so, how is the price of this preemptive entitlement calculated? Also, what is the book value of our 70% stake in IMA?
I might start, Nick, and then I'll hand to you. So, the RACV arrangements, I can't remember the year when they were put established, but it was when a long time ago. The RACV is a very good joint venture, and this is obviously the NRMA of Victoria. We've got a very strong relationship with the RACV team and board of directors, and the board works extremely well, and we find there are great advantages of leveraging the RACV business into our insurance business and vice versa.
So this works well, so there's no intention to do anything with that business. In terms of the arrangements of what's it called? Pre-emptive rights. There is a pre-emptive right that was disclosed to the market when we when entered those arrangements.
The pre-emptive right says that if someone takes over IG, RACV can have an, has, has a right to make a counteroffer effectively, but that would have to be at the same value that everyone made offers at for publicly for IAG. So, that does exist. I don't think there's much to add to there. And the last part of that question was,
Book value.
Book value. I don't know that offhand, but you think.
I mean, this is a key part of our enterprise, the IMA joint venture and our relationship with RACV. So I just can't say sort of strongly enough, Stephen, that this is sort of core to how we run our company and the relationship that we have in this joint venture and the way we run our New South Wales and Victorian businesses sort of together with two brands, NRMA and RACV.
The last part of the question was around book value. The book value, the sort of the net assets of this joint venture is about AUD 1.3 to 1.4 billion, and so I think the question is what's the value to us? It's probably then 70% of that. That's the accounting book value. It's definitely not the enterprise value of that, which is significantly more than that number.
Okay. Thanks, Steve. Thanks, Jane.
Chair, the third question, it's a long question, Chair. It's from Jillian King. Ultimately, the question gets to the acceleration of our climate-related targets and ambitions, but I'll just start with the commentary. So, Ms. King says: "I've been pleased to see IAG's climate-related work in recent years .
I was particularly pleased to see that IAG's FY23 group climate report says, quote, 'We have a target to reduce the emissions within our investment portfolio, consistent with an objective of 1.5 degrees Celsius of warming, and also the upgrading of IAG's responsible investment policy to reduce fossil fuel investments.' The report also includes IAG's targets to reduce Scope 1 and Scope 2 greenhouse gas emissions by at least 25% reduction on 2020 levels by 2023, and a 50% reduction by 2030.
However, we're already feeling the effects of climate change. This is reflected in IAG's reports and that we're observing warming accelerating. For example, 2023 is on track to be the warmest year globally, at currently 1.4 degrees warmer than pre-industrial times, and one in three days in 2023 being over 1.5 degrees warmer. And September beat the previous September record by 0.5 degrees, with many areas of Australia being three to five degrees warmer. The urgency for action is clear, and IAG's targets now seem woefully slow." Getting to the question, Chair: "Getting...
Given that, and IAG's commitment to reduce emissions in its investment portfolio to be consistent with limiting warming to 1.5 degrees, will IAG revise its targets and actions in the coming year to accelerate its moves to stop contributing to damage to our climate and the stresses it causes to our customers and our business?
Thank you, Jane. It's one hell of a question. I think it's mainly a comment. The comment I'll just note. We spent a lot of time in looking at the targets that I went through in my report to shareholders. At this stage, we don't have any change, any focus on any desire to change those targets. It's 10% of fossil fuel extraction. And why it's at 10%, this is on our investment portfolio, is that we need to allow companies to transition off fossil fuels and onto alternatives. And that is critical. So, forcing fossil fuels out of a large investment portfolio will probably be detrimental to shareholders.
Managing it sensibly over the next, whatever, three to five years is probably the most logical way to go. So that's the basis. So at this stage, no change, Jane. So yeah.
Thank you, Chair.
Is there another question?
There is a further question. The next question is from Mr. Stephen Mayne, again. He says... "Our biggest insurance rival, Suncorp, did well securing AUD 444 million from listed company AMA for its Smart car repair business in 2019. AMA is now under severe pressure with a market cap of AUD 65 million and a share price of just AUD 0.037.
What is our relationship with AMA, and have we looked at making a takeover bid to become Australia's biggest car repair business to better control costs in our supply chain for car accident claims? Also, how do we currently source panel beater services across Australia, and how important is our current in-house capacity?
On AMA, obviously, we won't make any comments on, AMA, financial position at all. We use AMA, I believe, Nick, in our repair processes. And the capacity question, I didn't know what that was quite getting at. How important is our in-house capacity? I assume that's referring to Repairh ub?
Correct. Sure, yeah.
Which is a developing extremely good business in how we manage repairs right through IAG. So, it's growing in capacity, I think is the right way to put it. Yeah.
About 15%.
About 15%. Thanks, Nick. Okay, thanks, Jane.
Chair, next question. Also from Mr. Stephen Mayne. He says, "Retail shareholder voting turnout at AGMs has fallen to less than 5%, as we feel powerless in the face of institutional voting. What is the point of voting? When disclosing the outcome of voting on all resolutions today, including this item, could you please advise the ASX how many shareholders voted for and against each item, similar to what happens with the scheme of arrangement.
This will provide a better gauge of retail shareholder sentiment on all resolutions," and Stephen notes, "This was a voluntary disclosure initiative adopted by the likes of Metcash, Altium, Dexus, Webjet, Tabcorp, and Myer over the past two years.
Thanks, Stephen. Thanks, Jane. Look, at this stage, there's no requirement to show number of shareholdings, so we're comfortable with our level of disclosure. Just from my point of view, all retail shareholder votes are very, very important, so including mine. So thank you.
Thank you, Chair. We do have further questions coming in, Chair. We've got about eight so far, so I'll keep moving through those.
Yeah.
Next question is from Mr. Stephen Mayne. He says, "In 2019, Treasury Wine Estates voluntarily moved to annual elections for directors in line with what Stephen calls out as best practice that occurs in both the US and the UK Dual-listed companies like News Corp and Rio Tinto all do this, which is due to the laws in the US and the UK, and BHP has continued to do so even after its UK DLC ended in 2021.
Can the Chair and candidate, John Nicholson, comment on whether our company will investigate following what Treasury has done and move to annual elections of directors at the 2024 AGM? Stephen notes, Chair, that IAG's best practice on issues like AGM transcripts and webcasts, so why not follow best practice on annual director elections as well?
Thanks, Jane. The corporate law requirements require each director on our board to get reelected every three years. That's what we comply with. I don't believe annual elections of directors adds much value. We're not required to do it, so at this stage, the position of the company is that we'll continue to comply with the law and do them every three years. There's no need for you to comment, John.
Chair, next question. This question is asked by Christopher Lamb on behalf of a corporate holding. The question is: "By removing from our investment portfolio companies that derive more than 10% of their revenue from fossil fuels, what really are you trying to achieve? Is it not detrimental to our earnings, given the robust profits that such companies are currently generating? Can you please quantify the impact on our investment income?
I think I sort of answered that question. I can't quantify the investment, the impact on the investment income, off the top of my head. But it's important that companies like IAG help corporates move towards alternative energy sources, and that's the way we've structured our investment portfolio with that 10% limit.
So I think we're pretty comfortable with that, Jane. Others have different views, that we should be less extreme or more extreme. We heard from one lady today want us to be more extreme. This gentleman's asking us to be less extreme, but I think we're in the middle. So, anyway, I think his name was Chris. Thanks, Chris, for your question.
Yes, Chris. Chair, just confirming that we do not have any more questions online, and there are no telephone questions.
Great. Okay, there's no questions remaining in the room, so thank you everyone for your comments and questions in relation to the financial statements and the reports. The next item of business is the re-election of Simon Allen and John Nicholson and the election of Wendy Thorpe. Separate resolutions will be put for each director. Just before we commence this item, I will give some context around director succession planning. The board has an active succession plan in place, which I've commented on before.
The primary objective of this plan is we continue to have the right board experience to support our strategy, including sufficient insurance expertise to achieve, and achieving greater female membership on the board. In accordance with the company's constitution, Simon and John are retiring at this meeting by rotation and are offering themselves for re-election.
Wendy, who was appointed to the board in July this year, is offering herself for election for the first time. We have received several questions in advance for our directors standing for election, which ask them to talk, amongst other things, their community involvement and their expertise in terms of climate change, including fire and flood. These questions have been raised by Ms. Amanda Field, and I thank her for her questions. I ask each Simon and John and Wendy to talk to this as appropriate in their speeches shortly. Now to each of the resolutions.
Resolution one is in respect of the re-election of Simon Allen. Simon is retiring from the board under the company's constitution and being eligible, offers himself for re-election. The board, other than Simon, who has abstained, recommends that you vote in favor for, of Simon's re-election to the board. Before turning to questions, I invite Simon to say a few words in relation to his re-election. Thank you, Simon.
Thank you, Chair.
Long way.
Good morning, ladies and gentlemen. It is my honor to be here before you today for re-election to the board of IAG. I joined the IAG board in November 2019, and currently serve as a member of two board committees, the People and Remuneration Committee and the Risk Committee. I've also been on the board of IAG New Zealand since September 2015, and was appointed as its board Chair in November 2019. I believe my New Zealand directorship provides the IAG board with important group level board oversight of, and connection to our New Zealand operations.
I have over 35 years commercial experience in the New Zealand and Australian capital markets. Many of my roles during my career have been inaugural, calling on me to bring both strategic and governance acumen to bear in founding organizations.
This included founding the investment arm of Barclays Bank in New Zealand, BZW, which was later acquired by ABN AMRO. I was the Chief Executive of BZW and ABN AMRO in New Zealand for 21 years. I'm currently a director of Ampol in Australia and chairman of Z Energy in New Zealand. I also serve on the New Zealand Antarctic Heritage Trust. Our legislative and regulatory markets in Australia and New Zealand continue to be complex and rigorous.
I believe that my background and experience, including as the inaugural chair of NZX Limited and of the Financial Markets Authority in New Zealand, positions me well to continue overseeing IAG's legislative and regulatory affairs and our governance, and I believe my participation in IAG's risk committee is of value in this regard. In advance of today's meeting, a shareholder asked directors up for re-election to explain, one, their involvement with community.
Two, their experience with fire and flood, and their personal position on the referendum, three, and four, climate change. Our board chair has already spoken about IAG's position on the referendum, so I'll direct my comments to the remaining issues. On the subject of climate change, it is clear that this is a significant issue for everyone, not just those who work in insurance.
However, as a director of Australia and New Zealand's leading general insurer, I do feel that my directorship in both countries has given me deep experience in managing the impact of, and endeavoring to mitigate against extreme weather events. I am proud that IAG is well placed to use its knowledge and experience to assist customers and communities build their resilience to extreme weather events and to mitigate the effects of climate change.
Because I'm from New Zealand, my immediate extreme weather experience has been less about fire, because we have different natural perils. Since 2010, New Zealand has had the largest four insured extreme events. Two were earthquakes and two were weather events just this year, 17 days apart. As Chair of the IAG New Zealand Board, I have ensured a significant focus on preparing for such events and the management of them when they've occurred in New Zealand and also Australia.
I am proud that at all times, customers are the center of our focus. I believe my extensive financial services and governance expertise, along with my appreciation for the duties of listed directors and my now deep general insurance experience in both Australia and New Zealand, enable me to contribute significantly to the IAG Board. If I'm re-elected, I'll remain fully committed to working to create sustainable, long-term value for you, our shareholders. Thank you in anticipation of your support.
Thank you, Simon. I now invite questions on resolution one, starting with any questions in the room. Oh, number two.
Chair, I would like to reintroduce Miss Natasha Lee.
Thank you, Chair. Not specifically a question for Simon. It's, I've noted your comments about gender diversity and succession planning earlier, Tom, but it is a bit disappointing that the 40% target for female representation, understanding the need to balance finding appropriately skilled people, has fallen below that target. I just want to reiterate the need to be very mindful of that and work actively to achieve that. Also, there seems to be some other forms of diversity on the board, although we have to make assumptions.
It would be nice in the annual report, as some companies do, is actually to disclose not just the senior management, but actually at the board level, you know, gender, ethnic diversity, LGBTI, disabilities, as well as Indigenous makeup of the board, so that the shareholders get a feeling that the board is representative of the community in general.
Hmm. Board diversity. Yeah, thank you, Natasha.
So yeah, it's mainly the reporting of the disclosure, so...
Yeah.
I think that focuses the board's mind if you have to report it.
Okay, thank you.
Thank you.
Thanks, Natasha. We'll take that as a comment and think about it for the next year's report on the diversity. On the percentage of females on the board, I agree, we need to accelerate that as soon as we can. We are, and will be over the next, you know, 12 to 24 months, actively looking. Yeah. Any questions online or?
No questions online or by phone, Chair.
Okay. Thank you. That concludes the discussion on resolution one. The direct votes and proxies received for this resolution are now shown on the screen, and based on those numbers, the resolution appears to have been carried, and Simon has been reelected to the board. Congratulations, Simon.
Thank you.
I would like to remind shareholders who have not yet cast their vote, votes to do so now, and voting on this and all other items is open. The next resolution is in respect of John... re-election of John Nicholson. John is retiring from the board under the company's constitution, and being eligible, offers himself for re-election. The board, other than John, who has abstained, recommends that you vote in favor, sorry, apologies, in favor of John's re-election to the board. Before turning to questions, I invite John to say a few words in relation to his re-election. Thank you, John.
Thank you, Tom. Before I start, join you and Nick in expressing our respect and regard for the traditional custodians of this land. Good morning, ladies and gentlemen. My name is John Nicholson. I've been a member of your board since 2015, and it's been an honor and a privilege to serve on it, and I've been a customer of a customer, a customer of the company much longer than that, nearly all my adult life, and I'm a great believer in the company. This is the third time I'll be seeking re-election, so probably the last, and I'm seeking your support.
I serve on three board committees: the People and Remuneration Committee, the Nominations Committee, and the Risk Committee. I chaired the People and Remuneration Committee from early 2018 until early 2021.
I moved to chairing the Risk Committee, and I've chaired that until quite recently, August this year, when the chairmanship passed to Michelle Tredenick. My time as chair of the Risk Committee has focused on significant uplift in the risk capabilities of the company, particularly operational risk, and as one of our shareholders mentioned earlier, particularly cyber risk and our response to the cyber threats we face.
Before joining the IAG board, I had a long career in financial services, including as the Chief Strategy Officer at Westpac and as the leader of the Asia Pacific Financial Services practice at Boston Consulting Group. Earlier in my career, I worked in the Australian government, including as Senior Private Secretary to the Australian Prime Minister, then Bob Hawke.
Outside of IAG, I hold non-executive roles on the boards of Quintessence Labs, the Westpac Scholars Trust, and the Cape York Partnerships. If reelected, I will continue to work diligently for the success of the company and work hard to ensure that it's governed and managed to the highest standard. I would like to respond briefly to the shareholder questions that Tom alluded to, submitted in advance relating to my involvement in community, experience of fire and flood, and my personal position on climate change.
My community involvement centers largely around work with Indigenous communities in Cape York, and in Far North Queensland, which includes some of the most remote and disadvantaged communities in our country, and also some communities that have made extraordinary strides in the last decade.
With the Social Change Fellows program at the Westpac Scholars Trust, which supports leaders who have committed their lives to making Australia a more caring and much more inclusive society. On fire and flood, I have little personal experience. Like most Australians or many Australians, I have been caught in bushfire situations, once as a teenager, driving through the Snowy Mountains with my brother, and once trying to reach my young family trapped at Bawley Point.
I would not, however, for a moment suggest that experience is in any way comparable to the experience of those who faced the terrifying fires and floods of recent years and the devastation they've brought. During my time on the board, I have helped oversee IAG's response to significant natural disasters in Australia and in New Zealand, including some of the largest earthquakes, bushfires, and floods ever experienced in our two countries.
Like all IAG directors, I'm acutely aware of the destruction, pain, and hardship that many Australians and New Zealanders have suffered in their wake. On climate change, I have a simple view: It's a fact, and it's on us. As a company, it is both the largest strategic issue we face and a very current business challenge. We are already seeing significant increases to our expected natural perils costs each year to meet the impact of climate change, and the issue has been a constant focus in the Risk Committee and the board as a whole.
The company, as shareholders know, has been a long-term advocate for much greater investment in community resilience and flood and fire mitigation measures in order to reduce the impact of climate-induced disasters. I hope that addresses the questions that were submitted by the shareholder.
If reelected, this will be my final term as a director of the company, and it has been and it will be a privilege. As a matter of transparency, while I will be available to share to serve a full term, my actual tenure will be guided by the ongoing board renewal process, which is currently focused on expanding both the depth and breadth of insurance expertise on the board and restoring gender balance. Ladies and gentlemen, thank you for listening. I look forward to your continued support. Thank you.
Thank you, John. I now invite questions on resolution two. Are there any questions in the room?
Oh.
Oh, oh, number three.
Chair, I would like to reintroduce Mr. Gregory Simoni.
Thank you, Gregory.
Good day again. Observation and question, if I may, through you. For the upcoming day, 337 years and five months since the publication of Philosophiae Naturalis Principia Mathematica, and 22,024 years, seven months, and 14 days from the birth of Rome. Through Mr. Nicholson's lived experience in the Hawke Government, and that quote, that inaugural, well-remembered quote, after winning the America's Cup, "For all the bosses of Australia, if they don't let their workers off, they might as well be considered bums." So knowing Mr. Hawke through your lived experience in the Hawke Government, what was it...
Was that Mr. Hawke's spontaneous instinct of goodwill towards the Australian people, or was that a faceless, unelected, process-driven, "We know what's permanently best for Australian shareholders," treasury official in his ear when he was saying that? Thank you.
I don't know how you're going to answer that question, John, but I'll say good luck.
Well, Newton's Principia, it's one of my favorite works, I'll say that. Bob Hawke had a deep understanding of the Australian people and a deep understanding of how they felt about things. That's one of the things that really distinguished him as a prime minister. So yep, it would have been totally instinctive, many would have thought completely inappropriate, and one of the things I think that made him so popular with the Australian people.
Thank you, John. Okay, any other questions from the floor, online or from the phone?
Nothing online or by phone, Chair.
Great, thank you, Jane. That concludes the discussion of resolution two. Direct votes and proxies received for this resolution are now shown on the screen. Based on those voting numbers, the resolution appears to have been carried, and John has been reelected to the board. Congratulations, John. We will now move to the next item of business. Resolution three is the election of Wendy Thorpe, who was appointed to the board on 1 July 2023. Wendy brings additional insurance, financial services, technology, and transformational change skills to the board, supplementing those of existing directors.
Wendy's executive career has been focused in financial services, including key leadership roles in technology and operations at AXA, ANZ, and AMP. The board, other than Wendy, who has abstained, recommends that you vote in favor of Wendy's election to the board. Before turning to questions, I invite Wendy to say a few words in relation to her election. Wendy.
Thank you, Chair, and good morning, ladies and gentlemen. I joined the board of IAG in July this year, and I'm a member of both the Audit Committee and the People and Remuneration Committee. This is my first time standing for election at IAG's Annual General Meeting, and I welcome the opportunity to introduce myself to you and to provide an overview of my background and experience. My executive career expands over 30 years, centered on financial services, with a strong focus on insurance, funds management, wealth management, and banking.
I held roles as Chief Information Officer and Chief Operations Officer for Australia at AXA, one of the world's largest insurance companies, and as Group Executive Operations at AMP, after the AXA Australian and New Zealand businesses were sold to AMP in 2011.
Turning to my non-executive director roles, I was formerly a director of Tower, a New Zealand-based general insurer, for five years until March this year, and chaired the Tower Risk Committee for the latter part of my tenure. Currently, I'm chair of Epworth Healthcare, Victoria's largest not-for-profit private hospital group, and chair of Online Education Services, which partners with universities to provide online undergraduate and postgraduate courses.
I'm also a non-executive director of Heritage and People's Choice, Australia's largest mutual bank, a non-executive director of auDA, which administers the internet's .au country code on behalf of all Australians, and a non-executive director of Data Action, a provider of banking, software, and services. I'm a graduate member of the Australian Institute of Company Directors, a fellow of FINSIA, and a member of Chief Executive Women.
I'm also pleased to address the shareholder request for details about my involvement with community, my experience with fire and flood, and my personal position on climate change. As has been noted, our chair has addressed the referendum already. When it comes to community, at all times in my board roles, I've sought to incorporate positions with not-for-profit organizations, which make a significant difference to the communities they serve by providing access to education, health, and technology.
As for fire and flood, I live in the Dandenong Ranges, just outside of Melbourne... the community that I'm part of comes together to prepare and plan for the bushfire season, and importantly, to support each other when disaster strikes.
We have been at the frontline of bushfires, and two years ago, we were at the epicenter of a major storm which resulted in neighbors being rescued by neighbors, and several properties in our street becoming uninhabitable. There, I experienced firsthand the vital role played by insurance, as well as the extraordinary community spirit and practical support that got us all through.
More broadly, in my five years on the board of Tower in New Zealand, I was also proud to be part of an industry with people who rallied quickly many times to support customers in New Zealand and in the Pacific through hurricanes and flood. I acknowledge the reality of climate change and appreciate the work that IAG does to understand what is happening, and share this knowledge with key stakeholders to assist them in planning and decision-making for the future.
In my interactions with IAG's board and management team, I have been impressed by the balanced consideration given to shareholder expectations, customer experience, employees, and sustainability in all its forms. The pride in being the company that is the first into the many disaster situations that we have all seen to support customers, and then being the last to leave, is very meaningful to me.
I believe that my deep financial services experience, together with my domain experience in technology and operations at a senior executive level, enables me to make a valuable contribution to the board of IAG, and accordingly, I seek your support for my election. Thank you very much.
Great. Thank you, Wendy. I now invite questions on resolution three, starting with questions in the room, if there are any. No? Any online or on the phone?
No online, no online, Chair, and none on the phone either.
Okay, great. That concludes the discussion on resolution three. The direct votes and proxies received in respect of this resolution are now shown on the presentation slide on the screen. Based on those voting numbers, the resolution appears to have been carried, and Wendy has been elected to the board. Congratulations, Wendy.
Thank you.
We'll now move to the next item of business. The next resolution is the adoption of the company's remuneration report for the financial year ended 30 June 2023. The remuneration report is set out on pages 54 to 79 of the company's 2023 annual report, and provides disclosures relating to director and executive remuneration. Before I invite questions on this item, I would like to make some introductory remarks. This year, through our People and Remuneration Committee, we completed the review of IAG's remuneration framework.
Our objective is to ensure the framework continues to support our strategy while meeting the new APRA Prudential Regulation CPS 511, and to respond to feedback we received back from investors last year. The changes will also ensure the framework remains fit for purpose, market competitive, and supports us in delivering IAG's strategy and aligns with shareholder outcomes.
The key changes include: introducing a non-financial measure of customer experience to that long-term incentive plan, and giving it the same weighting as the existing measures of return on equity and total shareholder return that we have. Extending maximum long-term incentive deferral from four years to six years for the Group CEO, and from four years to five years for other key executive, key management personnel.
Putting a material weight on non-financial performance for the group balanced scorecard will be the primary determinant of the short-term incentive pool, and introducing clawback for all performance-based variable remuneration for executive key management personnel. In regard to the FY 2023 remuneration outcomes, a point to note is the board does benchmark salaries regularly to ensure that they are commensurate with market practice, so we can attract and retain key talent we need to run IAG.
In the last 12 months, we undertook that benchmarking and there were no fixed pay increases for the Group CEO or any other executive key management personnel. For FY 2023, short-term incentive outcomes for executive key management personnel ranged from 38% to 42% of maximum opportunity, with the CEO receiving 40% of his maximum opportunity. The LTI awards that were eligible to vest did not vest this year.
Lastly, I note that we received a question in advance from Vanessa Cale, asking to explain why, in these hard times, can we justify allocations and increases to an already inflated salary, referring to the executive group. Thank you, Vanessa. I think I've addressed that question. We basically benchmark to the market and make sure that our packages are competitive to attract and retain individuals. So I'll now invite questions on resolution four, if there's any in the room. Doesn't look like it. Online or phone, Jane?
Chair, we have one question online. The question is from Brian Taylor, who's for our corporate shareholder. He asks: With all the problems and costs everyone else is bearing, as you flagged earlier, how can you justify the remuneration increases that you pay yourself and other directors?
Okay. Well, we haven't given directors any remuneration increase. And I think the last time we had a director fee increase was in 2016?
2016 for the board and 15 for committees.
So it's been a while. The board fee levels are based on a market benchmark as well. We check what other directors are being paid in the market, and we benchmark that against our fees, exactly the same we do as for the executives in the company. So I think that's...
Just confirming.
Answers that question, Jane?
Sorry, Chair. Just confirming, no further questions online and no telephone questions.
Thank you. That's all the questions in relation to the adoption of the remuneration report. Concludes our discussion on resolution four. The direct votes and proxies received for this resolution are now shown on the screen, and based on these results, I am pleased to see the support we have received for our 2023 remuneration report. The next item of business relates to the allocation of deferred award rights and executive performance rights to the Group CEO and Managing Director, Nick Hawkins, under our short-term and long-term incentive plans.
These are allocated in accordance with Nick's employment contract and are subject to performance hurdles in the future that are aligned to the creation of long-term shareholder value. There is a detailed explanation of the long- and short-term rewards in the notice of meeting and the annual report. The board, with Nick abstaining, recommends that you vote in favor of this resolution. I now invite any discussion on this resolution. Any comments online or on the phone, Jane?
Chair, we've received one question online which is from Mr. Stephen Mayne again. There are two aspects to this question, Chair. The first is: Could CEO Nick Hawkins summarize his past LTI grants as to whether they have vested or lapsed? The second aspect is: Also, has Nick ever sold any ordinary shares in the company or bought any on market without relying on an incentive scheme to build his equity position in the company?
And then a comment from Stephen is: Please do not say, "Look it up in the annual report and through ASX announcements." That is complicated, and the CEO could factually summarize the situation in 60 seconds. Chair.
Okay, Nick, I'll time you 60 seconds.
Thank you, Steven, for that question. I mean, I've been in the company for 22 years, and so I've received long-term incentives that have vested into ordinary shares over that period. I have also participated in various share offerings where I've purchased IAG shares in addition to those that have vested from executive options, essentially.
So, my answer to that is, my current shareholding is a blend of both executive options that are vested, as well as shares that I've purchased separately to end up with my shareholding. In the, you know, 23 years that I've been in our company, in that time, 22 years, I have sold IAG shares. But I'll just point out that since I've been Chief Executive of IAG, I haven't sold any shares at all.
Thanks, Nick. And just to mention, Nick complies, has complied with minimum shareholding requirements for his executive role, and he's very close to achieving his requirements in the new role as CEO, or newer role as CEO. Thanks, Jane. Is there any other questions online?
No further questions online...
Okay.
and none via the phone, Chair.
Thank you. We received one from Kevin O'Brien. This is a general question. CEOs are paid an extravagant amount of money to manage an increase in value of the company. As such, there is no substantial reason for an inducement. It's about Nick.
The, Nick's salary is benchmarked again. We, we compare salaries to the market, and we structure the CEO's remuneration in a competitive fashion, to retain Nick as CEO and to motivate him. I think, it's something like 70 or 75% of Nick's package is based on performance. So there's a lot of money tied up in Nick, helping shareholders achieve good, shareholder outcomes. Thanks, Jane. That's...
No further questions, Chair.
Any questions from the floor? Doesn't look like it online or the phone, Jane.
No further questions, Chair.
Thank you. Thank all those comments and questions. That concludes the discussion of resolution five. The direct votes and proxies received for this resolution are now shown on the presentation slide on the screen. Based on the voting numbers, the resolution appears to have been carried. We'll now move to the next item of business, which is resolution six.
Under the ASX listing rules and IAG constitution, the total aggregate remuneration amount paid to be paid to non-executive directors must not be increased without approval of shareholders. Resolution six seeks your approval to increase the fee pool cap by AUD 500,000 to 4 million, with the effect from 1 July 2023. The last increase in the fee pool cap was in 2013. Increasing the fee pool cap allows for succession planning and any future increases in net fees.
Please note, this is not an approval to increase directors' fees, directors' fees paid to directors. As I flagged earlier, this resolution is for shareholder approval, with the board not providing a recommendation, given it's ultimately connected to director remuneration. I now invite any questions on resolution six.
Chair, in terms of questions in advance, we received one question in advance. This question is from Peter Abbott, who says: "Why do directors get paid such a large remuneration and shareholders get crumbs, while the wealthy get fat on our shares?
Okay. I think I've addressed that question in the benchmarking comments, so I think I'll, I'll park that one. So, but thanks for your question anyway, Peter. Okay, moving on. No other questions, Jane?
No, I don't believe there's any questions in the room, Chair.
No. Okay.
Just confirming that we have no further questions online and no telephone questions, Chair.
Great. Thanks for the questions. That concludes the discussion on resolution six. Director votes and proxies received for this resolution are now shown on the screen. Based on those voting numbers, the resolution appears to have been carried. I would like to remind shareholders who have not yet cast their votes on this and all other resolutions, to do so now, as the poll will close shortly. We will now move to the next and last item of business.
Resolution seven seeks the approval to renew the proportional takeover provisions for a further three years, as set out in Article Six of IAG's Constitution. Article Six of the Company's Constitution prohibits the transfer of shares under a proportional takeover bid, unless a proportional takeover bid resolution is passed by shareholders in a general meeting approving the offer.
Under the Corporations Act and Article Six, these provisions must be renewed every three years, or they cease to have effect. They were last renewed by shareholders at our 2020 AGM. If renewed today, the provisions will operate for a further three years. Without these provisions, a bid may enable control of the company to pass without all shareholders having a chance to sell all their shares to the bidder.
Shareholders, therefore, may be exposed to the risk of, A, being left as a minority in the company, and B, a bidder taking control of the company without paying adequate premium for gaining control. I appreciate this is quite a technical legal process to explain, and there is more detail in the notice of meeting. Are there now any questions on resolution seven? That doesn't surprise me.
Chair, I think we don't have any questions in the room, and just confirming there are no online questions or phone questions.
Thank you. Okay, that concludes discussion, and the director votes and proxies received for this resolution are now shown on the presentation slide on your screen, and based on these preliminary results, the resolution appears to have been carried.
Again, I would like, like to remind shareholders who have not yet cast their votes on this and all other resolutions, to do so, as the poll is about to close. We'll just pause for a few moments while shareholders in the room, if there's anyone that hasn't cast their vote, please do so. So this now completes all items of business for the 2023 AGM, and as such, I now declare the poll closed.
As I said earlier, the financial result of the poll will be provided to the ASX today, and will be placed on the company website, along with the webcast of the meeting. On behalf of your board of directors, thank you to everyone who attended in person, those who joined us online, and those by phone. I now declare this meeting closed. For those attending in person, the board look forward to mingling with you over some light refreshments in the Smith Room, which is located to the left of the main foyer, after you leave this room. Thank you all for your attendance. Thank you very much.