Good morning, everyone, and welcome to the 2025 Annual General Meeting of Insurance Australia Group Limited. I am Tom Pockett, the Chair of IAG. The Group Company Secretary has informed me that we have a quorum, so I formally open our 2025 AGM. The notice of meeting was published on the ASX and sent to shareholders. It sets out the items of business we will be considering at today's meeting, and I will take this notice as read. In keeping with the commitments that we made in our stretch reconciliation plan, we are delighted to welcome Aunty Norma to officially welcome us to her land, the Gadigal Country. Aunty Norma.
[Foreign language], everybody. It's lovely to be back here again, Mr. Chair, to provide an Aboriginal Welcome to Country to IAG . I was here last year, and it's just great to come back again. I'm actually Wiradjuri, which is Midwest, New South Wales, Lachlan River, freshwater, born and raised on the Aboriginal Reserve. I'm the youngest of 11 children. However, I have lived on Gadigal Country most of my life. Where we are now, we are on Gadigal Country, one of 29 small clan groups of what we recognize as the Eora Nation. Across Australia, we have over 200 different Aboriginal Nations or language groups. We don't call ourselves tribes. We are Aboriginal Nations. I mean, it's recognized in Europe that they are country, not tribe. If we can kind of think about it that way.
Eora Nation is bounded by the Hawkesbury River to the north, then the Nepean, and then the Georges River. You can imagine the beauty of all of that the Gadigal and Eora Country takes in the environment. When we do a Welcome to Country, when we welcome you here to Country, for me as an Aboriginal Elder, it really opens up and quite frankly makes me a little bit vulnerable. If you see the Gadigal saltwater, we have the oceans to our east. Their totem is the gurrwil or the whale, as you know it, and they are sunrise people. When we talk about this, whether it's freshwater or saltwater, this is how we identify ourselves. Across this country, sunrise people, Western Australia, they're the sundown people. We identify ourselves by the land, Mother Earth.
I always talk about Mother Earth's children, certainly us as human beings, but Mother Earth's children are also our plants, our animals, and all of those can be incorporated in our totems as well. My totem is the goanna, the sand goanna, all of that sand, that beautiful land, West New South Wales. When we do an acknowledgement or Welcome to Country, this is about acknowledging Mother Earth. It's about acknowledging Aboriginal culture. It's about acknowledging people. It's about acknowledging that we have been here for over 65,000 years. We continue to tell those stories. We continue to acknowledge Mother Earth through our songs and our dances. Our stories, our storylines connect us right across the country, our art. For example, if you go to any of the art gallery, New South Wales Art Gallery, and you see Aboriginal art, and you'll say, yes, I know that.
If you're out in the community, yes, we know that that is actually Aboriginal art. It's what that art is, what the dances are, what the songs are. They're telling stories. We've been telling those stories for 65,000 years. That's identified European counts, Western systems, counting system. You'll know, you'll see these are our stories that we share with everybody, that we share with our other Australian brothers and sisters, that we share with the people who've come to Australia just quite recently as visitors, as guests, but certainly as people who now call themselves Australians. I want to welcome you all to Gadigal Country. You could just imagine when the Gadigal people were sitting on the shores there in Sydney Harbour, when the English came in in those tall ships. That connection happened then. I mentioned about the Reconciliation Action Plan, the stretch. That's about us all working together.
It's not just about Aboriginal people doing the work. It's not about non-Aboriginal people in our workplace doing the work. We have to sit down together as a family and do this work together so that we all talk about it and we all agree this is the way forward for our organization, acknowledging and continue to acknowledge Aboriginal culture and Aboriginal people. I commend you on having a RAP, a Reconciliation Action Plan, and that work continues and the work that you do continues. We also have to acknowledge, or I have to acknowledge, our elders. When I do that, it's not just about Aboriginal elders, it's about all elders who hold a very special place in our communities. Elders are respectfully acknowledged in Aboriginal culture as aunt or uncle. This is why I get called Aunty Norma.
Wherever I go, right across this country, I'm acknowledged and recognized as that. That's just a little, just a little bit about Aboriginal culture, because you can't do a RAP without knowing something about Aboriginal culture and why it's important to do that, why it's important to continue, why it's important for us to work together as Australians moving forward. We are only 3% of the Australian population, my friends. That means there's 97% of everybody else who call themselves Australians who ticked off that box in the Australian census. Yeah, 97%. We need to work together. We need you, but you also need us. Even though we're 3% of the Australian population, you need us. It's like it's a family. It's like IAG is a family. Wherever I go to do Welcome to Country, all of those organizations are families.
The kinship system is very important in Aboriginal culture. It's one of the bases of who we are as Aboriginal people. I acknowledge you all. I acknowledge Mother Earth. I acknowledge the Gadigal peoples and their traditional custodians of this land where this meeting is being held. Continue the work that you're doing. Do you make money, you fellas? Do you make money? If you do, continue to do that. Continue to share that as well. Just acknowledging country, acknowledging all of you. Enjoy your day. Thank you.
Thank you, Aunty Norma. Just a reminder, no phones in here, please. If you have a phone, turn it off. If you need to make a call, can you please leave the forum and do it outside? Thank you. I would now like to introduce the IAG Board of Directors to you. On the stage with me, starting from my far left, is Michelle Tredenick, George Sartorel, Helen Nugent, and Penny McRae, our Company Secretary. On my right, starting closest to me, is Nick Hawkins, our Managing Director and Chief Executive Officer, JoAnne Stevenson, George Savvides, Wendy Thorpe, Simon Allen. We have an empty chair. Unfortunately, Scott Pickering, our other Director, is very unwell today, and so he is unable to join us this morning. Brendan Twining, who is the lead audit partner from KPMG, and representatives of IAG Leadership Team.
Finally, at the lectern on my far left, Kylie Smith, EGM Corporate Affairs and Sustainability, who will read the questions submitted online during the meeting of shareholders. I now declare the poll open on all resolutions. This means you can submit your votes now. Before we begin, Penny, our Group Company Secretary, will briefly give you directions on a few procedural matters. Thank you, Penny.
Thank you, Tom. Today, we have shareholders joining us in the room, online, and by phone. Welcome everyone. To ensure an orderly meeting today, I will highlight a few safety and housekeeping matters. For those of us in the room, in case of an emergency, please follow the instructions from the fire wardens. In the unlikely event we do need to evacuate, you can leave via the fire exits at the back or on either side of the stage. Please do switch your phones to silent mode. Photos and recording are not permitted today, as a full webcast of today's meeting will be published on IAG's website following the meeting. Today, voting on all items will be conducted by a poll. The Chair, Tom, has received the results of direct and proxy voting for each of our items of business today.
These voting results will be displayed on the screen at the start of the discussion of our items of business and then as we deal with each individual resolution. Once our AGM has finished today, the final results will be announced on the ASX, the Australian Stock Exchange, and will also be available on IAG's website. Thank you. Excuse me, sorry. Would you mind hanging up? Thank you. When you arrived in person at the meeting today, you should have registered with Computershare. If you are eligible to vote and ask questions, you'll have been given a white card. Shareholders who are in the room can vote either using your mobile device by scanning your QR code on that card. Alternatively, simply turn the card over and on the reverse, you can vote on each of our resolutions.
If you have any issues today with voting or any problems, just raise your hand and a member of Computershare, our share registrar, will come and help you. For those shareholders who have joined online, welcome. We've published an online meeting guide as part of the notice of meeting, and a copy is also available on IAG's website. If at any stage you have difficulties with the online platform, please contact Computershare on the number shown on the online platform, and they will help you. To vote online, simply select the vote icon at the top of the screen and then either vote for, against, or abstain on each resolution. For shareholders who have joined us by phone, you will need to log on to the online platform to vote today. That was voting. Moving on to questions.
At today's meeting, we will respond to questions that relate to the items of business. If you're attending in person and have a question that relates to an insurance policy or a claim, please speak to a member of our team at the desks in the foyer. All shareholders, whether you're in the room, online, or on the phone, you will have the opportunity to ask questions in respect of the items of business at the meeting. We'll address questions in the following order. First, questions in the room, then we'll go to online, and then we'll go to the phones. If shareholders in the room have a question, there are four microphones, three here down the front, and there is a roving microphone at the back. Please either make your way down the front to the microphones and show your white shareholder card to the Computershare representative.
If you have limited mobility, just raise your hand and the roving mic will be brought to you. If there are questions that cannot be answered in the meeting, we will ensure that they are dealt with. You'll be asked to provide your contact details, and an Insurance Australia Group representative will contact you. Tom, as Chair, and I will ensure you receive a response. For those of you attending online, you just need to click the Q&A icon and simply follow the instructions. For those on the phone, if you would like to ask a question, you need to join the question queue by pressing star one on your phone when the relevant item of business is being discussed.
When it's your turn to ask a question, you'll be announced by the operator, and once your question has been asked and responded to, you'll leave the question queue and go back to the meeting. If you've got further questions, to rejoin the queue at any time, follow the same process. With that, I hand back to Tom. Thank you.
Thanks, Penny. I'll now make some comments about your company. This year, our company has taken further steps to improve the way we support our customers and communities and embrace new opportunities that will deliver growth. We've maintained our focus on meeting the needs of our existing 8.3 million customers, including by paying claims totaling $10.2 billion. For retail customers in Australia, this is a settlement rate of around 98%. We're working on faster, more empathetic, and more personal services to help customers recover from adversity. This includes a strengthened claims response and improved customer communication, as well as building on improvements to our claims processes already delivered following the 2022 floods and the parliamentary inquiry which followed.
We have enhanced our catastrophe management plan, including a 24/7 Major Event Command Center at our Hurstville office in Sydney, and disaster fact sheets to help inform customers before and during a major event. Customer experience measures are high in both Australia and New Zealand, and renewal rates remain strong, reflecting the confidence our customers have in our brands and the quality of our services. We achieved these results as we marked a significant milestone in May this year with NRMA Insurance celebrating 100 years of helping Australia. Our customer outcomes reflect our people's enthusiasm and efforts to deliver on our purpose and strategy. It is therefore pleasing that our annual cultural survey of employees shows high levels of engagement with the company and with their work.
We also continue to deliver on our purpose to make your world a safer place by building individual, community, and national preparedness and resilience. Just this month, NRMA Insurance launched a Help Fund, a multi-million dollar initiative that aims to support climate resilience in Australia. In its first year, the fund will provide $1 million across three key pillars: supporting climate tech innovation, offering targeted client resilience training to provide industry leaders with knowledge and tools to lead for a better tomorrow, and backing community-led resilience. Compared to previous years that have been characterized by increasing catastrophic events beyond our expectations, this year's events were more in line with our expectations. Despite this, we know that climate change continues to drive an increase in the frequency and impact of major disasters. We therefore consider that medium term and adopt a prudent approach to reserving for extreme weather events.
While the impacts of inflation on premiums are abating, there is significant political and social interest in ensuring the availability of insurance and tackling rising costs. This is particularly the case where communities face acute flood risks. As an industry, we are actively engaged in exploring potential solutions that can be delivered in collaboration with government and other stakeholders. These solutions can minimize the impact of major weather events. They include better land use planning in flood-prone areas, as well as enhanced building standards that help minimize the impact of events. Such measures will help ensure Australia and New Zealand remain insurable. We also continue to advocate for state taxes on your insurance policies to be removed, as these add directly to the cost of your insurance. Five years ago, we set a strategy to create a stronger, more resilient IAG .
Since then, we have invested significantly for growth. We have made good progress on the Retail Enterprise Platform that supports our expanding direct business in Australia and New Zealand, as well as the growth aspirations for our direct and partner brands in these countries. We have improved performance and margin in our intermediated business in Australia during the year and have embarked on a significant technology transformation called the Commercial Enterprise Platform, which will deliver improved business efficiency and uplift in customer experience and also support business growth. During the year, we embarked on two significant transactions that we believe will deliver considerable growth for our company. Last November, we announced an $855 million, 25-year exclusive strategic alliance with the Royal Automobile Club of Queensland to provide general insurance products and services for the club's 1.7 million members.
This transaction was completed on 1 September 2025, and we were pleased to welcome some 840 new colleagues into IAG on that day. In May, we announced a $1.3 billion strategic alliance with the Royal Automobile Club of Western Australia to provide general insurance products and services for its 1.3 million members. This is still subject to regulatory approval. These alliances build on our successful track record of partnering with leading member-based motoring organizations which share our purpose and values. In both cases, the associations and their members will benefit from our financial stability, advanced technology platforms, global reinsurance arrangements, and customer-centric claims processes. Regarding sustainability, our climate ambition is to focus on empowering better choices for a safer place. This has three key pillars: innovate, educate, and collaborate.
We also refreshed our approach to climate scenario planning analysis to identify our most material risks and opportunities under escalating global warming scenarios. The process and outcomes are described in more detail in our sustainability report. We have a gender representation target of 40% to 60% at each level of senior management, which we define as CEO and three levels below. At 30 June, female representation was 37.5% in our group leadership team, 34.6% in our executive general managers, and 47.3% in their direct reports. We continue to focus on programs that will enable us to achieve our targets. The board has a gender diversity target to have 40% women, 40% men, and 20% of any gender represented on the board. Currently, we have 40% representation of women on the board. Three of our board committees are also chaired by women.
FY2025 included the final year of our three-year reconciliation plan, and I am pleased to report that we completed 95% of the plan's deliverables. The next iteration of our plan, 2026 to 2028, includes a commitment to spend $10 million with Indigenous suppliers over the next three years. Now, to take a look at our financial results, our FY2025 results reflected our strong performance. Our reported Gross Written Premium increased by 4.3% to $17.1 billion. Our insurance profit was $1.7 billion, which equates to a reported Insurance Margin of 17.5%. The underlying Insurance Margin of 15.5% was 100 basis points higher than FY2024. We achieved a profit after tax of almost $1.4 billion. As I noted last year, it is critical that we maintain our financial strength so we continue to attract the investor and reinsurance capital we need to provide products and services to our customers.
Shareholders benefited from the company's strong financial performance with a final dividend of $0.19 per share franked to 40%, and the full year dividend of $0.31 per share equates to a payout ratio of 65% of reported net profit after tax. That excluded the after-tax impact from releases of the Business Interruption Claim provision. It is pleasing to see recognition of the company's strategy and performance with our Total Shareholder Return growth of 125% over the last three years compared to 46% of the broader index. We benefit from having a board with a mix of relevant business, executive, and professional experience. Shortly, you will have the opportunity to hear from the newest member of our board, JoAnne Stevenson. JoAnne joined us as an Independent Non-Executive Director in May this year and is standing for election at this meeting.
She brings additional insurance and other financial services, risk management, and transformational change skills, which supplement those of our existing directors. The items put before this meeting include a resolution seeking approval to increase the Independent Non-Executive Director fee pool, the cap, by $700,000 to $4.7 million with effect from 1st July . The primary driver of the proposed increase is to meet the new APRA requirements of boards that have regulated subsidiaries that they must have independent and non-executive directors on those boards. It is also designed to help enable IAG to attract and retain high quality and suitably qualified independent Non-Executive irectors and manage an orderly renewal of the IAG and subsidiary boards. We are therefore pleased to see that shareholders understood this reasoning and supported the increase.
On a very sad note today, I pay tribute to our former director, David Armstrong, who retired from the board on September 12 due to illness and passed away shortly after. David joined our board in September 2021 and was Chair of the Board Audit Committee until he retired. He was also a member of the Board Risk Committee. David's wisdom, curiosity, and intelligence contributed greatly to our company. In addition to applying his audit and assurance experience, David willingly shared his knowledge and understanding of financial services regulation and contributed to our understanding of a changing reporting environment. He will be sadly missed by everyone at IAG . On behalf of the company, we continue to extend our deepest condolences to his family.
I make one final personal comment about our board. You will see that I am standing for re-election at this meeting, and I will speak to support that resolution later. While I am seeking re-election, I confirm that this is the final time I will do so, and I'll be happy to take questions when we get to that resolution. In closing, I thank shareholders for your support of our efforts to make your world a safer place. I also thank our Managing Director and CEO, Nick Hawkins, his leadership team, and everyone at IAG for all that you have achieved on behalf of our shareholders. I look forward to your ongoing support. We continue to invest in growth and improving our customers' experience. I will now invite Nick to provide more details about IAG's achievements. Nick.
Thanks, Tom, and good morning, ladies and gentlemen. I also acknowledge the traditional owners of lands on which we meet, the Gadigal people of the Eora Nation. I pay my respects to elders past, present, and emerging. Of course, I'm very pleased to have the opportunity to talk about how our business is performing, particularly what's ahead of us. What I see is a really exciting opportunity for your company. Let's look at where we're at with our strategy and the outcomes. In summary, we're successfully pursuing the strategy that we set out five years ago to create a stronger and a more resilient IAG. We're delivering for our customers and our communities, as Tom said, paying out more than $10 billion in claims and retaining very strong customer engagement scores and retention metrics. We've delivered strong financial outcomes which have met or exceeded our expectations, and we've delivered scalable technology platforms for our retail businesses.
We've set our business up for growth with over 66,000 net new customers in our retail business last year. We've undertaken two significant acquisitions, RACQ and RACWA . The RAC acquisition completed on 1st September, and we're excited about providing general insurance products and services to RACQ 's 1.7 million members, and in fact, all Queenslanders. I'll build on this high-level overview with more details about what we're doing to continue to deliver strong outcomes for all of our key stakeholders. I'll start with all of you, our shareholders. I've listed on here the key FY2025 achievements on the slide, but I want to speak today more about the future. Our objective is to continue to deliver strong returns for our shareholders, including through improved share price, increasing dividends, and strong financial results.
We will maintain our focus on being strongly capitalized because we want to make sure we are always there for our customers when our customers need us. Our strong capital position also supports our growth agenda, and we're funding the capital required for the RACQ and RAC alliances from organic capital generation. We'll also continue to embrace innovative capital solutions that protect our balance sheet. A good example of this is the additional reinsurance protection that has now been in place for a year. This allows us to mitigate Natural Perils' volatility for five years and provides adverse protection against our long-tail reserves. This cover benefits you, our shareholders, and our customers by providing greater certainty over the cost of Natural Perils' cover, stabilized earnings, and reduced capital requirements.
In FY2025, we improved our return on equity to 19.4%, although that was assisted by lower perils and some reserve releases. We maintained our target to deliver a 15% reported margin and return on equity of 15% on a through-the-cycle basis. Moving now to our customers, we continue to focus on improved customer service, new products, and community initiatives. A key enabler for delivering these outcomes is our investment in our Retail Enterprise Platform. This single digital platform has reshaped how we serve our millions of retail customers. It's simplifying how we operate and enabling us to deliver better experiences for customers and to move and grow faster. That means we can deliver superior experiences and better meet their needs. We're now embarking on a Commercial Enterprise Platform that will deliver similar transformation for our intermediated businesses.
Even though inflationary pressures on supply chain and claims are easing, we know that many of our customers are still experiencing financial stress. To minimize the impact of those premium increases, we are focused on disciplined cost management, technology investments, and service improvements. We will continue to promote opportunities for customers to receive pricing benefits when they take action to reduce risk and pass on pricing benefits to communities where investment in mitigation has, in fact, reduced risk. We're heading to FY2026 with customer experience measures remaining high, both in Australia and New Zealand, and renewal rates showing signs of improving from already high levels. Importantly, there's some real growth momentum in our retail businesses. Moving to our people, here we're building a high-performing workplace by strengthening our culture, fostering a safe, inclusive, and supportive workplace.
Through our IAG Academy, we're developing the future-ready skills our people need to meet customer needs and expectations. We're transforming our workforce for the future using a jobs and skills framework and AI-assisted tools that support development, task efficiency, and innovation. We have an inclusive innovation program to equip our people to deliver value through digital and operate with an innovative mindset to help us grow with our customers. We're working to inspire sustainable action. We want to empower our people to create sustainable value, proactively building our reputation, and of course, managing our risks. This objective includes commitment to gender equity and pay parity, Indigenous engagement, and accessibility and inclusion. As the largest general insurer in Australia and New Zealand, we feel we have a responsibility to help communities meet the challenges of a changing climate.
To help communities which are at greater risk, we're working alongside businesses, governments, communities, and individuals to deliver on our purpose to make your world a safer place. We're working with others in the industry to advocate for a systems-wide approach and delivery of practical long-term solutions. These include things like investing in flood mitigation, better land use planning, building more resilient homes, more community education, and addressing taxes and reducing the burden of some of the regulation that we face. We're also using our skills, knowledge, and experience to support initiatives and organizations that enhance preparedness, recovery, and community and financial resilience. As one example, we partner with the Australian Red Cross to run emergency-ready workshops to help people prepare for extreme weather events. These benefit everyone in the community.
We're lucky enough to have some of the Red Cross team here today in the Smith Room where lunch is being served after the meeting. If you haven't already talked to this team, I strongly recommend a visit so you can ensure you and your families are as safe as possible. Moving to the environment, here, by way of example, our focus includes supporting sustainable practices in the repair industry. In Australia, we have a pilot program to enhance the use of recycled automotive components by repurposing parts from written-off vehicles in collaboration with automotive dismantlers and selected partner repairers. The program is designed to reduce carbon emissions, supporting sustainable repair practices and extend the lifecycle of vehicle components, ultimately, of course, minimizing the environmental impact across our supply chain. In New Zealand, we are focusing on how we can encourage repair over replacement in our motor supply chain.
We're also piloting a parts harvesting initiative in Auckland, salvaging suitable parts from total loss motor vehicles for reuse in repairs. We continue to transition our tool of trade fleet to low-emissions vehicles, and we're at 100% within our New Zealand business and just under 50% in Australia. In New Zealand, our AMI MotorH ub courtesy car fleet now includes EVs, so customers have an opportunity to trial an EV as part of their claims experience with us. With regard to responsible investment, we're driving down the carbon footprint and intensity of our Australian and global listed equity investment mandates. Of course, we're continuing with our partnership with the Aboriginal Carbon Foundation, which supports the development of First Nations-led carbon farming and cultural fire management projects. These deliver environmental, social, and economic benefits to Indigenous communities right across Australia.
Having discussed our financial results and outcomes for our stakeholders, I just want to provide some comments in relation to our FY2026 financial guidance. We initially issued statements around premium growth and profitability to the investment market in August as part of our results presentations. I'm pleased that for the first quarter of this financial year, the underlying businesses continue to provide positive momentum from FY2025 and is tracking in line with our expectations. Australia and New Zealand commercial and retail insurance markets, of course, are competitive, but our retention rates remain strong, and we continue to see positive customer growth. Profitability has been strong as we have benefited from relatively benign first quarter Natural Perils experience. However, of course, we're mindful that these conditions can change and have not adjusted our pre-RACQ perils expectations for the current financial year.
We've also had the benefit of strong investment markets, with our high-quality fixed income portfolio providing positive active returns with no signs of any underlying stress in any of our investment classes. On 1st September, we announced the completion of the acquisition of RACQ 's insurance underwriting business and commenced a long-term strategic alliance with RACQ . This marks a key step in the ongoing delivery of trusted, locally serviced general insurance products for Queenslanders. Today, we are upgrading our FY2026 guidance to include that transaction. We now expect our premium growth to increase from low to mid-single digit to around 10%, reflecting the acquisition of RACQ for the 10 months of the current financial year.
Additionally, the reported insurance profit guidance has increased by $100 million from a range of $1.45 billion- $1.65 billion to a range of $1.55 billion- $1.75 billion, which includes an increase in perils expectations, reflecting the addition of the RACQ portfolio. Of course, all of this equates to a reported margin of 14%- 16%, which has been maintained. I'll finish with this slide, which I showed at last year's Annual General Meeting. It captures the material changes we have made in the way we operate IAG and how we've structured the organization around our retail and our intermediated businesses. We own or partner with some of the best retail insurance brands in the world, and these businesses are well positioned for growth.
We have modern, leading, scalable technology that supports our brands and our partner brands with insurance products that meet customer and member needs. We're now investing in our commercial businesses so they can build on the underwriting and claims improvements they've delivered and continue to improve the financial contribution those businesses make to IAG . Our technology investments put us in a better position to partner with other organizations, and this was a significant factor in announcing the two strategic alliances with motor clubs. While we have completed the acquisition of RACQ 's insurance business, the transaction with RAC of Western Australia is still awaiting ACCC approval. Together, in combination with RACQ and RAC , we'll be supporting over 10 million Australian and New Zealanders and writing over $21 billion in annual premiums.
We will continue to work to deliver sustainable shareholder returns, which will be characterized by a stable margin with low volatility, capital efficiency, and improving ROE with organic capital generation to fund our growth. I'd like to thank the 13,000 strong team at IAG for their ongoing commitment to our customers and the communities in which we operate. I'll now hand back to Tom for the formal items of the business at this meeting. Thank you.
Thank you, Nick. Turning now to the resolutions for today's meeting, as set out in the notice of meeting. The first item of business is a non-voting item to consider the financial statements for the group. Resolutions 2A and E relate to the re-election and election of non-executive directors who we will hear from during the meeting. Resolutions 3, 4, and 5 relate to remuneration.
We released the proxy results for all the resolutions ahead of the meeting, and these are now shown on the screen. As you can see, all resolutions have solid support. We will now discuss the resolutions in detail. The first item of business is to receive and consider the financial report, director's report, and auditor's report for the company for the financial year ended 30th June 2025. There is no vote on this item. These statements and reports are published in the 2025 annual report, which was lodged with the ASX on 13 August 2025. The purpose of this item is to provide an opportunity for shareholders to ask questions and make comments about these reports, as well as the general business of the company. Shareholders also have the opportunity to ask questions of our auditor, KPMG, relating to the conduct of the audit and the auditor's report.
All questions to the auditor should be addressed to me as Chair, and if appropriate, I will ask our lead partner, Brendan Twining, to address the meeting. If your question relates to another item of business at today's meeting, please ask your question when we come to that item. I now invite comments or questions on the financial statements and reports and the management of IAG . If any shareholders in the room have a question on this item, please make your way to the microphones or raise your hand for the roving microphone. Have two? Yeah.
Good morning, Chair. I would like to introduce Sue House from the Australian Shareholders Association.
Okay. Morning, Sue.
Morning. This morning, I'm representing 181 retail shareholders through proxies at the ASA, totaling $7.6 million. Mr. Chairman, in light of the progress made with the IT upgrades and the recent acquisitions, could you comment on the likely contribution these will make to the bottom line over the next few years?
Yes, Nick, I'll hand up to you.
Thank you, Chair. Hi, Sue. What we said when the sort of the combined, we're trying to, the financial setting of your company is to make sort of roughly a 15% margin and a 15% return on equity. The combination, you know, and we continue to invest in our business, your business, to deliver those returns because, you know, the world continues to move on. In relation to the acquisitions that we've made with RACQ and then in Western Australia, what we said sort of the combined, we expect those two businesses to contribute around about a $300 million additional insurance result, about $150 million for each of those businesses. In fact, what we've done today with financial guidance, we've increased that by about $100 million, which really reflects the first 10 months of that first acquisition of RACQ .
There's nothing in those financials that I talked about before about Western Australia because we're still waiting for ACCC approval. You can see we're on the way to delivering against that $300 million with this first acquisition.
The IT program?
I think with technology, that's going to be a constant theme of IAG , and in fact, I'm sure all companies that you're investing in. We're going to continue, we're going to have to, we're going to continue to make significant investments in technology, and we've done a lot of that with our retail business, and what that does is obviously set ourselves up well. I think that's going to be a theme going forward, and you know, that will be a key enabler of the sort of growth prospects that we see of our company or your company over the next number of years.
Lovely. Thank you.
Thanks, Sue. Number three.
Chair, I'd like to introduce Mr. Simoni.
Good morning.
Good morning. How are you?
Observation and point, if I may, through yourself, Chair Pockett. I didn't hear in Mr. Hawkins' presentation that pages 106 and 107, the words, "This is as good as it gets." As IAG 's core business is the writing of insurance, what better way to further ensure insurance revenue on those two pages than offer products within proximity of latitude 23 degrees, 48 minutes, and 00 seconds south, and longitude 133 degrees, 44 minutes, and 15 seconds east? A place that will remain, say, the Opera House or the Sydney Harbour Bridge or any parliament in Australia might be leveled, but don't have the same guarantee as this place that has seen Australia's leaders guarantee it since the 9th of December 1966 to the world's only and current superpower. If not, why not?
Okay, you are going to have to help me with these specific location details. Could you tell me what the place is you are referring to?
Pine Gap.
Pine Gap. Oh, we don't insure anything out there.
Why not?
I don't know. No, we just don't insure. We just insure houses primarily, so our commercial.
Pine Gap.
Yeah. Nick, do we insure anything at Pine Gap?
I'm not sure.
Yeah.
No, it's in relation to the first part on the 105 or 106 is our.
106, 107.
106, 107 is our financial results summary for those in the room that haven't flicked through those pages. What we've said is we've set the company up for sort of a return profile of that 15% margin, 15% ROE, and we're growing. Your comment around, is this it? I mean, we don't think so. We see the prospects of your company being pretty strong. We've got some acquisitions as well as organic growth. We see sort of opportunities to grow and generate future earnings of IAG and are very confident around that.
Can you insure insurance revenue? What are those? What is in place? You're looking for more getting more writing of insurance rather than insuring insurance?
Yeah, we're in the business of taking risk, obviously. What we also do is we share some of that risk with our reinsurance partners. In a way, remember, reinsurance is, in fact, insurance for insurance companies. We are both growing at the front of the business by taking on more risk, and that's what ends up being what growth is. At the same time, we are continuing to work closely with our reinsurance partners, which is essentially insurance for insurance companies, as I said, where a portion of that we share with them. Getting that is in the capital management of IAG . We're constantly looking and thinking about the best way to do that. Thanks for the questions.
Thanks, Mr. Simoni. Number two.
Chair, I would like to introduce Joe Nagy, shareholder.
Thank you.
Hi, Joe.
Hi. My question concerns what you mentioned briefly. The deal is with RACQ and RACWA. What happens if those deals come off, don't come off? What will happen? How will you react?
RACQ is now completed. It's fine. The Western Australia one is in negotiations with the ACCC at the moment, and we'll just have to wait and see whether or not that is successful or not.
Okay, thank you.
Number one.
Chair, may I introduce Mr. Jones?
Firstly, apologies to the Board for arriving here late, but let's get on with it. I've been made aware that the state government is changing some of the planning rules in Sydney in regards to bushfires. Are you aware of this?
We will be aware of all the planning rules, zoning changes, yes.
Also for fire risk?
I mean, we will be aware of them.
Yeah, keep going.
Because a person I know who's in the planning sector has said that they're going to change it from a rules-based regulation at the moment to more of a thing where they do it out on an individual case. There is an independent member of state parliament now going to possibly bring a private member's bill in because they're not happy the way it is because, as I said and explained to me, it's going to put risk on our risk business.
Right.
That's what I'm a bit agitated about and concerned.
Right.
I hope the Insurance Council, who's the peak body, representative body of the insurance industry, can just get something in there. I'm sorry I'm late, Chair, because I could have spoken to you individually instead of speaking publicly.
No worries. Look, I can't comment specifically on that piece of legislation. In terms of zoning, which all that relates to, we spend an enormous amount of time with each, the whole team here at IAG spent an enormous amount of time working with local, state, and federal governments on zoning for a whole raft of reasons, such as bushfires, floods, et cetera. Sometimes we're successful and sometimes we are not. I'll ask, we have the CEO of the direct business here, and after this meeting, I'll ask her if she knows about the insurance. Yeah, she's just down here. Thanks, Julie. Now, number two. Yeah.
Chair, I would like to introduce Mr. David Kingston of Ocean Capital.
Still a bit low. Maybe leave it. Great. Thank you.
Hi, David.
Good morning, everyone. My issues really pertain to the long-term outlook for Insurance Australia Group from a shareholder value perspective. You've had a cracking couple of years, so well done on that. Thanks for being transparent that clearly 2025 is not repeatable. There are a few one-off issues in there, but you've been very transparent in providing a clear outlook for 2026, which is great because you can't replicate 2025 with the substantial one-off release from business interruption and also the abnormally good result on Natural Perils cost. I think what you're saying for 2026 is pretty fair. Low mid-single-digit growth in Gross Written Premium now moving up to 10% today with the acquisitions. Nice to hear today. The insurance profit of $1.45 billion-$1.65 billion has been upgraded by $100 million. The margin remains the same because the revenue is higher, so the margin's the same.
It's great that you've been forthright about the return on equity target through the cycle of 15%. All looks very reasonable. I suppose I'm really wanting to get to the, and I think shareholders are interested in the medium to longer-term outlook. We all accept insurance is cyclical. I do think the 2025 annual report on page 18 will excite investors Total Shareholder Return of 30.7% in FY2025 and 29.4% in FY2024. They're the Total Shareholder Returns only tech stocks have been delivering. While technically correct, Chair, in my Total Shareholder Returns are somewhat misleading as the stock was coming off very poor earnings in 2020 to 2023 years. Also, it's fair to say the share price has fallen in the last couple of months. Currently, the Total Shareholder Return for FY2026 is negative.
To get a real guide on IAG performance and prospects, I go to the 10-year charts on page 21 of the annual report. It's very comforting to see historical Gross Written Premium growth. Growth premiums show solid annual growth in each of the 10 years. It's concerning to see how the earnings were smacked to a poor level in each of the four years from 2020 to 2023. Over the 10 years also, when we Total Shareholder Return, which is a very important thing for shareholders, the IAG share price has risen in the 10 years from the high fives to currently the high sevens, albeit it's gone up this morning, Chair, with Nick's announcement. It's up at $8 now. The capital gain over the last 10 years is around about 3% per annum. Adding the coupon gives a high single-digit TSR .
David, I'm going to have to ask you to get to your question.
I am.
There's a lot of facts and figures, and I think you're going to leave everyone in your wake.
Chair, my first question, but then I have a second question, which I can do later if you like. My first question, Chair, is I accept insurance as a cyclical business, but four years consecutively at a poor level is unacceptable. Can someone please provide shareholders with a summary of why the four years of bad results occurred in 2020 to 2023, and is it likely that there will be another period of four consecutive years of poor return, or is that period just a one-off? That's my first question, Chair. I'm happy to leave that and come back with my second.
You might as well give me your second.
There's a bit of preamble, Chair, because you have to give context to questions, otherwise they're meaningless.
Okay, I'll just deal with your first one.
Okay.
Those years you're referring to were the worst natural peril years Australia has experienced. Every year, we have an estimate of what those perils' costs will be. Every year, because of the severity of the Natural Perils in Australia, the Natural Perils exceeded that cost. Over the last five years, combined with inflation, we've been repricing premiums to cover the increased risk of perils in Australia. I'll refer you back to my comments and Nick's comments about us working with governments to try and reduce the cost of Natural Perils in Australia. Will it ever be replicated again? I have no idea. Climate change is with us. We have a huge number of people that try to estimate what that cost will be every year going forward, and we price the products accordingly to that. We are in an environment of climate change.
respect that, but out of 10 years, you've had six very good years and four very bad years. It's noteworthy when shareholders look at long-term outcomes and risks.
Yeah.
My second issue, Chair, is the Warren Buffett deal. Ten years ago, Warren invested $500 million in IAG shares at $5.57 per share, which is $4.30 at the then current exchange rate of $0.67. Based on the current share price in U.S. dollar terms, Warren's investment is $5.11. His TSR, or capital growth, actually, has been a mere 2% per annum. However, the important issue is he also has a commercial deal, Chair, as we all know. There's a 20% Quota Share Arrangement. Part of that deal ceased in 2023. Part of it is ongoing, I think, until 2029. I'm just very interested in whether the board in hindsight thinks that's a good or a bad deal. Interestingly, Chair, the annual report talks about IAG being the biggest insurer in Australia. That's correct, but not correct on market cap.
Suncorp is smaller on GWP, but larger on market cap. I think that's largely to do, Chair, with the fact that IAG has carved out a number of part of its revenue with Quota Share Arrangements such as 20% with Warren. With hindsight, is that a good deal or a bad deal because you are giving away a fair bit of your revenue to Buffett's companies? I'm just not sure that's been a great deal, but I'd be interested in the board's view. Thank you.
Yes, Berkshire Hathaway are a very important part of our reinsurance business. The quota share allows greater stability in earnings, the way it's structured, for IAG investors going forward. That's the structure of it. In bad years, they do worse. In good years, they do better. It smooths out that process. Investors certainly like it. Nick, do you want to add anything to that?
I mean, just a few comments. There's sort of a package there. Firstly, on that volatility that we were talking about over 10 years, the first question, we have actually got quite a different reinsurance structure in today than what we used to. We had between 2020 and 2023. That's part of the reason we did it. We now have a five-year very large reinsurance protection, which actually materially changes that volatility. We've, with management and the board, taken steps to take away some of that volatility. We can't avoid all of it because that's the nature of what we do. We take your risk. That's our business model. We've definitely improved that volatility rather than having the roller coaster you were describing. With Berkshire , they took that volatility, remember, in the 2020 to 2023 years.
Their results for those years also weren't great because they sat behind and took 20% of the good and the bad of that. We see them as a very important strategic partner, and we like the idea as a concept for your company of what we call capital light. We're not the same balance sheet structure as some of the other competitors in Australia. We are a lighter equity capital model where we are sharing more with reinsurance partners. What we get out of that, though, is what they pay us, and shareholders get the benefit of that, sort of a fee-for-service almost for a portion of the business. That has a lot lower volatility. Some of the results that we're now seeing in IAG is reflective of the way we've shifted the earnings profile.
The last point around comparison to some of our competitors, that market cap comment is really driven by different structured balance sheets. You get different outcomes because of that.
End of the day, though, you've got $18 billion of Gross Written Premium, and you've got net earned premium, I think, a touch under $10 billion. You are giving away a lot of the hard work at the revenue line to other parties.
Yeah, there's, but shareholders are receiving a fee for that. It's not sort of transfer at no income to Insurance Australia Group. There's a fee that we're receiving because of that. The economics of that work for shareholders.
Finally, Chair, three very simple issues. The final 25-year dividend was only franked to 40%. Do you expect enough tax to be paid in future to fully frank dividends? Do you consider the potential green seal exposures are still impacting on the IAG share price? What is the impact of lower interest rates, which are moving lower, probably go further lower on the FY2026 outlook? Thank you.
Right. What was the first question? The first question was the...
40% franking.
Oh, the 40% franking. That's basically because of our mix of tax paid between Australia and New Zealand. Hence, we don't pay all our tax in Australia. Sorry, the second one was...
Green sell.
Green sell. In terms of impact on share price, I'm not going to comment on that. The process of that is just going on and will be resolved sometime in the future. The third one...
Interest rates.
If interest rates come down, there will be some impact on our shareholders' earnings going forward. I mean, that's just logical. Thank you. go through.
I'd like to introduce Mr. Simoni again.
Oh.
Good morning again. Observations and questions, if I may, through again yourself, Chair, Mr. Pockett. On pages 106 and 107, as we spoke before about with regards to ensuring insurance revenue, but this time we're looking at the whole annual and the activities of IAG . So bearing that in mind and the events from July 2016 to the 8th of March 2021 with regards to Greensill Group Capital, pages 398 to 414 of the Misconduct and Banking Superannuation and Financial Services Industry Royal Commission and Swan Insurance, Add-on Insurance. You have the Security Industry Regulatory Agency, SIRA, on the 13th of February 2023. You have ASIC versus Insurance Australia Group on the 3rd of July 2023 with the $40 million against you plus the legal costs. You have this current class action with Slater and Gordon 2018 to 2024.
Tying that all together and looking at the Constitution, the amended Constitution in 2020, where it spells out what a director is. It's an office and a place of profit. When looking at those events and looking at what was, whether you consider it, but I consider it, the first kind of excellent reputation for IAG was the 2012 Lloyds of London centure, where it talked about IAG 's failure to, because you were getting out of Britain or England, where you failed with market requirements. I note in the beginning of the presentation how you're satisfying capital APRA requirements by building up your capital. Lloyds of London also talked about the record keeping, which would refer to all those situations that I referred to.
With the intent, where an employee isn't mentioned in the Constitution, what would be the intent of employees if it is that these events have occurred? You're going to be challenging the Slater and Gordon one, but your employees are considering as a pyramid of points, which one to tick off first as a place of profit rather than, say, what you're putting out as a marketing ploy as IAG , the help company, which isn't help isn't mentioned anywhere as a word in the Constitution. Like all constitutions, it's backed up in the corporations, the six volumes of the Corporations Act, where help is only mentioned in the helping directors help an administrator or liquidator to wind up a company. What's the balance here?
In two to four years' time, are we going to be at an AGM and we're going to be talking about how the intended conduct of employees has caused another Greensill or another Lloyds of London centure? How can you guarantee that that's not going to occur in two to four years' time? Thank you.
Thank you, Mr. Simoni. Those matters you referred to are all historical matters that IAG and the management team have dealt with. Where we got things wrong, which had no intent, it was just mistakes in the process, we immediately found those things and we corrected any overpayments made to policyholders, and we did that very quickly. They're pretty much all dealt with. We have spent the last five years significantly improving all our risk management processes and our systems and our control environment to ensure those mistakes don't happen in the future. Anything to add? No. Okay. Great. Number three. Number two, sorry.
Chair, I would like to reintroduce Mr. Joe Nagy.
Thanks. This may be an error, and if it is, I apologize for raising it with you, but I just want to make sure it's right. On page 15, sorry, on page eight, you say that IAG w as formed in 1865, 160 years. That's 1865. That has to be wrong or am I right?
I don't know. Anyone go here? Are you referring to the comment about why? Sorry, why are you questioning that?
I'm just asking, I don't, I believe it's an error, but I just want to check with you that it's an error.
I'm quickly trying to look at the page. I know our NZI business in New Zealand is around about 160 odd years. I think that's probably what we're referring to, that we have had businesses in Australia and New Zealand that go back over 150 years. I think NZI is the oldest one that we own, 165. NRMA, we're celebrating 100 years this year.
Okay. All right. Finally, next question I want to ask, how do you claim this? That you claim that you're the ninth strongest brand in Australia and the fourth strongest insurance brand globally. I'd like to hear how you can justify those claims. Thank you.
Okay, I think they're done by independent reviews.
I think we're probably understating it. I think I said some of the leading, I mean, I talk to a lot of other insurance. There's lots of survey companies and no doubt that's where they've come from. We can certainly share that because there's often processes that sit behind these. What I said in my opening address, and we should be really proud of this, I hear this all the time when I speak to my peers from other insurance companies around the world, that we are very lucky with the brands that we have. These are very, very strong brands that are part of this IAG that we've had for some time. Some of them are 165 years, some of them are 100 with the NRMA. We're very lucky to have them, and that is a key feature of the strength of our business.
Number three.
Chair, I'd like to introduce Mr. Brian Upton.
I didn't think I was going to be so quick. I think I might need this down a bit lower.
Good morning, Brian.
Finally got up over here. Just to hear something I haven't heard mentioned this morning is what your policy or attitude to AI in the company is. Are you using it to replace staff? If so, when I look at the number of directors you have here, I think it might be an idea to start there.
Many people have suggested boards be replaced by AI. Make it a lot easier. In relation to AI, yes, IAG is utilizing the technology. We're doing it in a very controlled way. We're focusing on particularly the front end of our business in relation to people coming in for policies and for claims processes and making them more efficient. I'll let the expert here on my right answer.
I mean, it's sort of coming out. IAG is similar to probably what you're experiencing in your lives too. AI is coming at us from everywhere. It's hard not to engage and utilize because it's sort of in front of us, isn't it, the whole time? Someone's asking us to predict something every time we pick up our phone now. The way we are approaching it is that we are sort of leaning into it. What we see is opportunities to, as Tom mentioned, sort of improve that customer experience they're having with our company and also, importantly, the experience of our own people. There are systems and processes within IAG, no doubt in many other companies too, that are really taking our people away from their main objective of looking after and serving our customers. Some of those can be sometimes tedious. I think technology is our friend there.
What technology can do is obviously free our people up, all of us, from some of the tasks that potentially aren't as engaging with customers to really allow more time for that customer experience. As Tom mentioned, we've deployed quite a lot of it at the front of the business to really help our people the way they're engaging with our customers and to make sure they're really serving the customer fully focused. Some of the activities they're also doing, we can take that away. I certainly see the opportunity to continue with that, continue to invest in technology, and AI is part of that, to really continue to improve that experience. That's going to be the theme of IAG. That's going to be the theme of many companies.
As Tom meant, just last comment, we're going to have to make sure we govern that in a way that we are understanding how that's flowing through our enterprise and the implications that's having on our customers and our people.
Will it mean in the long run that you will be putting people off? You will need to be retraining a lot of people, won't you? You'll be needing to retrain people as well.
Yeah. I mean, that's that. I mean, a few comments. One, we are growing at IAG . We're growing our business organically, as in we've got more customers with our existing brands. We're also growing by the acquisitions we've made. It was about 850 people from RACQ that joined us on 1st September. We're hoping through the process with RACWA that early next year we have another 600 or 700 people. We're growing the number of people in our company anyway. On that question of training, yeah, we are. Training's a huge thing for us. We call it the IAG Academy. I mentioned it in my opening address. We're seeing a huge appetite. The board and the management team are very focused on ensuring we are providing the right forum to effectively help our people continue to skill up.
All of us need to be doing this. We have it through the IAG Academy. What we're seeing is year on year on year, more and more utilization of the resources of that academy as people are investing in themselves to make sure that the skills that our people are holding are relevant for where the future's going.
One last little bit. I think most people are concerned about maybe how reliable AI is, and also it needs a lot of checking, as I think a lot of you realize too. This has to be taken into account, I'm sure.
Absolutely. Yeah.
That is a huge part of it.
Yeah. There's a lot of hype about AI at the moment, and the practical realities are probably a bit behind that. The governance of what AI produces and what it's produced it from is a significant piece of the puzzle.
Yeah, that's what I was getting at. It takes time.
Yep, it does. Thank you. Number two. Yep.
Chair, I would like to introduce Ms. Natasha Lee, shareholder.
Hi, Natasha.
Thank you, Tom, Mr. Chairman. Firstly, I'd like to congratulate the board on their results, noting that we didn't have any severe or catastrophic climate events, so that helped the results. I suppose following on, part of my thunder was taken out by the last question. You are using AI in recruitment as well as the investment in technology and the like. You talked about the governance of it. I suppose I just want to reinforce the issue that it is fairly well documented that AI has a range of biases, which could include when you're looking at job applications, biases against postcode, whether you went to a private school, which university you went to, all those sorts of things, which might not necessarily be apparent.
I think that we just need assurance that there is some proper oversight to ensure that these sort of biases don't creep into the job selection. I know that humans have biases too, which is also well documented, but.
Probably more.
Maybe more, but it just needs a proper oversight. As far as the claims processing, the question on, or the part of the question on that is you said that the claims finalization times have been improved. I suppose, have you got quantification of that? What sort of return and payback analysis was undertaken in regards to the investment? I've got another question, but I'll let you answer those ones, please.
On claims, we have a raft of metrics on performance and time it takes to settle a claim, etc., etc., and they're presented to the board on a very regular basis in the executives' presentations to us. We keep track of it, but Nick and the management team, it's one of the key things they do. On your AI for.
Recruitment .
Yeah, that is, it's one of the key things here that we don't build biases into the technology no matter what we do. Sometimes the way we ask questions, we create a bias and we don't even know we're doing it. That governance process is absolutely critical. What was your third one? Your third one was the.
What sort of returns and payback on the technology.
We started these IT projects, particularly in our direct business, quite a while ago. We've had business cases, we've had reports back to the board. At the end, we do a wash-up, which looks at the cost of the whole program, where the benefits of that program will be, and we embed it in all the future budgets going forward as to where those benefits will come out. They will come out in the result. That's how we look at it.
Right. I'll just make another comment and question. Just for transparency, I am involved in Lucy's Project, which is a domestic violence charity. I note that your One Stop, One Story Hub is to enable frontline workers to better connect customers experiencing domestic and family violence and financial hardship with a range of services. In relation to Lucy's Project, Lucy's Project is about ensuring that pets are integrated into decisions because quite often they're an integral part of the family. I just want to make sure that you're aware and integrate into your policies and processes that you don't overlook the importance of pets in the process.
I'm sure Nick will take it. I think, do you want to comment on our processes?
As a cat lover, it's very important.
Yes, we are. It's a good example. I mentioned in the opening address what we're doing with Red Cross and the Emergency Ready Program. One of the challenges that often happens in these Natural Perils is how people, and a lot of stress, is how they're managing their pet in some sort of relocation or emergency situation and temporary accommodation. All of that can create a lot. That's a very stressful moment anyway. If there's an additional stress of how we're going to house the pet and some of the challenges around that sometimes, it adds to it. Yes, I would say that we're very in tune with that. Maybe separately, we might just make sure we're connecting on the specific project that you're talking about. Julie here, Julie Batch, who runs our Retail business, is probably our best point of connection.
Yes, we acknowledge the importance that customers have lives and lives include pets, and they're an important element of our wellbeing.
Yes, that's great. The charity is called Lucy's Project. It's not a specific project as such. I suppose we need to get away from the assumption of the nuclear family and just have awareness of blended and families of all sorts of shapes and sizes, which.
Of course, they are.
Includes our fur babies.
Right. Thank you.
Thank you.
Thank you. I might go to online and on the phone.
Yes, Chair, I can see that there are two questions from shareholder Ms. Gillian King. Her first one is, thank you for your national leadership on climate change and sustainability, as outlined by the Chair and CEO in this meeting and exemplified by the Chair's being keynote speaker at the Australian Institute of Company Directors' Climate Governance Forum 2025, where he urged directors to bring the same discipline to climate disclosures as financial accounts. Thank you for comprehensive and transparent reporting. It is most useful and interesting and another area where IAG is leading. It is pleasing to see that the skills matrix in the corporate governance statement this year shows substantial improvement in director skills from one year to the next.
I note particularly the improvement in skills in environment and social and digital technology and cyber categories, and yet those categories are still the board's weakest areas. Would you please outline how you are improving board skills in both of those areas?
Boards have, I might just talk about the board processes. All of the people that sit on your board also sit on other boards. All boards, including our board, have a series of education sessions throughout each year, of which particular topics could be on those too, or it could be on climate, or it could be on others, where the board will be educated and will have deep dives and will have external people coming in and advising and educating the board on particular aspects. I mentioned that these directors go on to all other boards, that all the other boards have the same level of education. It's also an onus on each of the directors here.
Like I did in climate, I wasn't a climate person, but I went down the hole and I found out a lot about climate and all the issues that are facing it on self-education and self-learning. That's an expectation of our directors as well. I think that covers it. Thanks, Carla.
Thank you. Our second question is also from Ms. Gillian King. She says, thank you for reporting the efforts IAG is making to reducing emissions from and improving sustainability in the automotive claims supply chain. What is IAG doing to reduce emissions and improve sustainability in the buildings claims supply chain? I was staggered at how damage to buildings from the January 2020 hailstorm was handled. As extreme weather increases and worsens as climate change progresses, building and contents claims will increase.
Yeah, that's a very good question. That goes to sort of our Scope 3, as they're called, focus on how we're going to deal with climate in that supply chain. We're still working through some of those components, and we intend to bring back probably next year a view on how we're going to deal with those Scope 3. It's really our supply chain and what we can actually control, what we can influence, and what we can't control. That will cover both motor and building. Nick, do you want to add anything to that or?
It's probably just the comment I'd add to that, because the insurance industry and the sort of supply chain of buildings is a lot smaller than the equivalent in motor repair. We spend quite a lot of time on building standards and to which standard we're building to in Australia. We're trying to influence and impact strength, resilience, and sustainability of the building stock of Australia through that. What sort of standard of tile do we need in a house in Australia if we're going to expect more hailstorms? How do we make sure that we're not breaking them the whole time from hailstorms, as an example? We're trying to impact resilience and sustainability of the industry through initiatives like that, as an example.
Thanks, Nick.
I don't have any questions online or on the phone for this item.
Right. Thanks, Carla. Any more? Yep. One more. Number two. Yep.
Chair, I would like to introduce Mr. Lawrence Smith, shareholder.
Thank you very much for the support you give to our community. I was recently at a function or it was a workshop, and it was about ransomware and data breach. I think what would be surprising to people was that there were about 2,000 data breaches this year. Of that, 38.8% of ransoms were paid. Of that, if they paid it, they got their data back. For the companies that didn't pay that ransom, e.g., Qantas, there were 39 companies that were under that pump. I would speculate that Qantas probably didn't pay the ransom. The ransom would be between $1 million and $1.5 million. It's a factor in running a business. You handle very important data for the public. If you get it wrong, it damages your business reputation, as is what's happened to Qantas.
I just put it to you, have you factored in and have policies and strong guidelines and stress testing about data breaches?
Yeah. Cyber risk is a big issue for all boards. We spend a lot of time as a board getting reports at every board meeting about how our cyber defenses are holding up because they're attacked continuously by the big banks. We also educate our teams about how not to fall into cyber issues. The other component is we have a raft of, if touch wood, this never happens to us, if we get one, we have a whole raft of processes and policies around how best to deal with it. Paying ransoms is a very tricky area. There's no right or wrong answer here. It depends how much you would trust a crook.
What I've been told is they're honest, though.
Yes, that's what I've got. Of course, we all believe that. It's a vex question. Yes, we spend a lot of time. We've actually got a whole team of people that just worry about cyber 24 hours a day.
It also opens up a business opportunity for an insurance side.
Cyber risk, yes, we do have some cyber insurance, yes.
Thank you very much.
Thank you. Thanks, Lawrence. I think we are out of questions. Okay. Great. Thank you for your comments and questions in relation to the financial statements and reports. The next five items of business deal with the reelection of myself, Helen Nugent, Scott Pickering, and George Savvides, as well as JoAnne Stevenson. Separate resolutions will be put for each director's reelection and election. We will deal with my reelection first, and I will ask Wendy Thorpe to chair that aspect of the meeting. We will then deal with the reelection of Helen, Scott, George, and the election of JoAnne together. You will hear from each of us before we take comments and questions. Wendy will now chair the portion of the meeting related to my election. Wendy.
Good morning, and thank you, Tom. I will now ask you to address the meeting in connection with your own reelection.
That was a good question. I'll stay here. Right. Thank you, Wendy. Ladies and gentlemen, I was appointed to the IAG board at the 2015 Annual General Meeting and remember feeling extremely honored and proud to have been asked to join the board of IAG . These feelings have not changed, and it is a real privilege to work with the board and management to further IAG's purpose to make your world a safer place. I was appointed Chair on October 22, 2021, and since that date, I have had the pleasure of working with Nick and the leadership team to evolve IAG into a strongly performing company. We have had some challenges during that time, including years of record peril events. However, it is pleasing to see the company's performance transformed. Today, we have a strong capital position, solid earnings, and recognition by our investors of the strength of our strategy and performance.
As I mentioned, a Total Shareholder Return of over 125% over the last three years. Today will be the last time I seek reelection to the board. Should I be reelected today, I look forward to continuing to forge ahead with the role that IAG has established in giving confidence to the community that they will be supported and protected in times of crisis and continue to deliver on our strategy. Thank you for your time today, and I look forward to meeting you after the AGM.
Thank you, Tom. We'll now move to questions relating to Tom's reelection. If you do have a question relating to Tom's reelection, please make your way to a microphone or put up your hand. The board, with Tom abstaining, recommends that you vote in favor of his reelection to the board. I'd like to start with any questions in the room, please. Thank you. Number two.
Thank you. I would like to reintroduce Ms. Natasha Lee.
Thank you. Welcome, Ms. Lee.
Thank you. Yes. I just want to say, look, I've known Tom for a while, and we have interesting conversations at these meetings, and I'm happy to strongly recommend his reelection. It probably was a bit unusual, and I know that it's probably a bit out of your control to have five directors up for reelection, which is like half the board. I know that there's probably other factors involved, but I just made the comment that it potentially puts the company in a difficult sort of position with having so many directors up at the same time.
Thank you. I think it is a timing issue, and certainly, the Board does turn its mind to succession on an ongoing basis.
Okay, thank you.
Thank you. Number three.
I'd like to reintroduce Mr. Simoni.
Mr. Simoni?
Good morning again. Observation and question, if I may, through yourself, Deputy Chair Thorpe. Under the 2020 amended Constitution, a director is an office and a place of profit. We've heard about domestic violence, climate change, environment. None of this is mentioned in the Constitution. You can add to that how the directors, your intention, what are the intentions of Mr. Pockett when he oversees or advises on decisions, including exhibiting empathy, remorse, honesty, integrity, emotional depth? When you look at a hierarchy of things, are these at the forefront or is it profit first?
I would say to you that all the qualities you described, I see in Tom Pockett all the time.
I'm not sure whether you're referring to the company or me, but both the company and I have those qualities, especially our frontline teams who have all sorts of difficult situations. When people phone in, it's always something has gone wrong. They've had a car accident, the house has burned down. The empathy and emotional support that our frontline teams give is very good.
Thank you, Tom. Thank you. Number two.
Thank you. I'd like to reintroduce Mr. Joe Nagy, who has another question.
Thank you. Mr. Nagy.
Thank you. My question, and I should say my criticism of the people standing, is that they have not done enough to increase shareholder returns. At the same time, they're doing a hell of a job increasing executive management salaries. I think that's great, but I am disappointed as a shareholder that I don't see enough attention being paid to that. I'll talk about this later in that item number four, wherever it is that comes up. That's right. Item number three. Thank you very much.
Thank you. I'll just take those as a comment for now. If you have further questions when we get to the remuneration report, I'm sure we'd be happy to take those then.
Thank you, Chair. Mr. David Kingston has another question. Mr. Kingston.
Thank you. Just briefly, Chair, you've done a great job. So well done. Obviously, a very decent person. I was just a little bit surprised. You repeated the earlier comment you made in the opening address that the TSR over the last three years is 125%. That's correct, but I think in my view, it's selective. The TSR over the 10-year period is closer to 8%. I think it's been highly selective. Thank you. You've done a good job. Well done.
Noted.
Thank you.
Chair, there are no further questions online or on the phone.
Great. Thank you. Are there any further questions in the room? No, thank you. The direct votes and proxies received in respect to this resolution ahead of the meeting are now on the slide on the screen. The results are strongly in favor of Tom Pockett's reelection to the board. I'll hand back to him to chair the rest of the meeting. Congratulations, Tom. Thank you.
Thank you, Wendy. You will now hear from Helen, Scott, which will actually be Penny because Scott is sick, George, and JoAnne. Then we'll move to questions for their reelection. Helen.
Thank you, Tom. Good morning, ladies and gentlemen. It is an absolute privilege to offer myself for reelection as a Non-Executive Director of IAG . This is an organization about which I care deeply. Why? Because it matters that Australians are able to insure their house or their car. It provides them with peace of mind and reduces the risk they face in terms of increasingly volatile weather events. It matters to the community as they deal with floods, storms, and wildfires. It matters to families because it allows them to recover if they are faced with an unwanted home invasion. I also care about ensuring that value is added for you, our shareholders, who provide us with the capital that allows us to deal with the aggregated risk in an increasingly volatile external environment. Our shareholders need to earn an appropriate return on their capital over the cycle.
I care about our hardworking staff who deliver for our customers in their hour of need. What do I offer as a Non-Executive Director that helps us deliver for customers, shareholders, and our staff? There are six points I'd like to put forward for your consideration. First, I am relentlessly focused on the customer's experience. That is the primary lens through which I have looked at things, not just as a former partner at McKinsey and Company, but also as an experienced company director, including in consumer goods companies. Second, I share IAG 's commitment to helping communities. My understanding comes from my deep involvement over a prolonged period of time with disability, medical research, the arts, and education. My contribution in these areas has been recognized with my being made a Companion of the Order of Australia.
For the past several years, my reach has been broadened through my involvement as Chairman of the Order of Australia Association Foundation. It also means that I have worked extensively with governments, which is increasingly important to maintaining IAG 's social license to operate. Third, I deeply understand what the major challenges are that IAG faces, particularly extreme weather events, as well as the impact of AI, which was mentioned during questions. My role as Chairman of Ausgrid allows me to see the impact of extreme weather events in another context. Being on the global advisory board of the 30,000 people strong digital transformation company UST allows me to understand the rapidity with which AI is transforming companies. Fourth, I have a deep and longstanding experience of helping with successful mergers.
As a Director of Strategy at Westpac, I was intimately involved as an executive in three major retail bank mergers. Similarly, as a Non-Executive Director of Macquarie Group previously, I had governance oversight of multiple successful mergers, including that of Bankers Trust. Fifth, I have a long history of involvement in the insurance and financial services sector. This includes having been Chairman of Swiss Re Australia, Veda Group, now Equifax, and Funds SA, as well as having been a Non-Executive Director of Macquarie Group and Mercantile Mutual, which is now ING. Prior to becoming a Non-Executive Director, I was Director of Strategy at Westpac Banking Corporation. This background helps me oversee Insurance Australia Group's diverse set of risks, which is critical to providing sustainable returns to shareholders. Sixth, I have a commitment to strong corporate governance. I will always act in IAG 's interests, including respecting tenure limits.
This will also be for me the last time I will be seeking election to the IAG board. I have the time, the energy, and the commitment to dedicate to your work. I have attended all IAG board and all committee meetings, regardless of whether or not I was a member of that committee. I thank you in advance for your support. I hope after the AGM, I'll be able to meet a number of you at the informal gathering that we have. Thank you very much.
Thank you, Helen. Now Penny will read out Scott's speech, as I referred to.
Thank you, Tom. This is Scott's reelection speech, and he's sorry that he can't be here today. Ladies and gentlemen, I, Scott, was appointed to the IAG board in November 2021, and it is a privilege to stand for reelection at this year's annual general meeting. I currently serve as a member of the IAG board and the IAG board Audit Committee. By way of background, I bring more than 35 years of global executive experience in the insurance sector. I have held regional and country CEO-level roles at Willis Towers Watson, RSA Insurance, ACE, now Chubb, and Cigna, working across Central and Eastern Europe, the Middle East, Africa, Japan, Southeast Asia, South Africa, and Australasia. I, Scott, also served as CEO of the Accident Compensation Corporation, New Zealand's state-owned entity responsible for comprehensive no-fault personal injury insurance.
In my current governance roles, I am Chair of CGU Insurance Australia, and I'm a Non-Executive Director of IAG in New Zealand. Beyond IAG, I, Scott, chair Fidelity Life Insurance and Evolution Healthcare, and I also serve as a Non-Executive Director of Kiwi Group Capital and Bowls New Zealand, Aotearoa. I am also an external advisor to Bain & Co. My previous directorships include Kiwibank and Chubb Insurance in Australia and in New Zealand. I am a member of the Australian and New Zealand Institute of Insurance and Finance, and I confirm that my external appointments do not present any conflict with my obligations to IAG. I also confirm I have appropriate time to dedicate to the IAG board.
Since joining the board, I've been consistently impressed by the commitment of my fellow directors and the management team at IAG in furthering their purpose of making the world a safer place. This commitment has been most evident in the way the company has mobilized to support communities impacted by severe weather events, particularly those in recent years. A tangible example of this is our investment in the Major Event Command Center in Hurstville, which I had the opportunity to visit with my fellow directors earlier this year. I believe my depth of insurance and leadership experience, combined with my ongoing governance roles, enables me to make a strong contribution to IAG's board and to the company's future success. On that basis, I, Scott, respectfully seek your support for my reelection. Thank you.
Thank you, Penny. George.
Thank you, Tom. Good morning, ladies and gentlemen. I joined the IAG board in June 2019, so this is the second time that I'm standing for reelection. I served the IAG board as a member of three committees: the Board Nomination Committee, the Board Risk Committee, and the Board People and Rem Committee, which I chaired between 2021 and 2024. In September this year, I was appointed Chair of RACQ Insurance, a subsidiary of IAG, charged with the responsibility of oversighting the integration of RACQ into IAG. In terms of my background, I was CEO of Sigma Company, now Sigma Healthcare, between 1996 and 2000, and the CEO of Medibank Private between 2002 and 2016. From this, I bring 20 years of experience as a CEO in an ASX context, including 14 years as a CEO in the insurance sector.
Following my executive career, I've spent 10 years as a non-executive board member. This has included my appointments to the board of SBS in 2017, where I joined as Deputy Chair, and later in 2020, I took on the Chairmanship of SBS and retired after nine years in July this year. Apart from IAG, I have two other current commercial boards. I chair the board of I-Med Radiology, having joined that board in September 2022. I'm also the non-executive board member of Build xact, a SaaS software company based here in Australia. I also chair an education resources, not-for-profit charity, Faith Values. I hold an industrial engineering degree from University of New South Wales and an MBA from UTS. I'm a Fellow of the Australian Institute of Company Directors.
I believe I bring to the IAG board a strong understanding of the insurance sector, especially in the key areas of brand, customer acquisition, retention, and claims management, complemented by 20 years of CEO experience. I have the capacity and time to fulfill the obligations of a director of IAG. I consider it a privilege to be asked to serve on the IAG board, and I thank you in advance for your support for my reelection. Thank you.
Thanks, George. JoAnne.
Thank you, Chairman. Good morning, ladies and gentlemen. I'm delighted to have the opportunity this morning to speak with you about my election to the IAG board. I was appointed to the board in May this year and serve as a member of the Risk Committee and now as Chair of the Audit Committee. I'm excited to work with this diverse and experienced group of people to further the purpose of IAG to make this world a safer place for our customers and indeed for the broader community that we serve. Just a little about me, as it is my first time speaking with you as shareholders regarding my election to the I board. I'm a chartered accountant, and after spending my executive career with KPMG, I've worked as a non-executive director for the past 13 years.
During that time, I have experience in a number of areas which are relevant and align with the Insurance Australia Group business, including financial services through both an insurance focus and also investment focus. Through Challenger and Helia in different parts of the insurance sector, and now Qualitas, who is a real estate credit manager. I also bring a very strong customer focus, including vulnerable customers through Estia, which is an aged residential care provider, Lifestyle Communities, a provider of affordable housing to seniors, and previously through my role at MIA, a trusted retailer serving Australian communities in both our cities and regions. My educational foundation is in commerce and law. As I said, my executive career was as a chartered accountant, working for the majority of my career in the insolvency and advisory divisions of KPMG in both Australia and in the U.K.
I bring deep experience as a Chair of Audit Committees in most of my listed appointments and had the privilege of working closely with David Armstrong after joining the board through the recent financial year-end as a member of IAG 's Audit Committee. With your support, I believe I can make a strong contribution to both the IAG business and the board and management in fulfilling the promise of being there for our customers during times of crisis. Thank you.
Thanks, JoAnne. We'll work through each resolution. Resolutions 2B to 2E relate to the reelection of Helen , Scott , George , and the election of JoAnne Stevenson. The board, with the relevant director abstaining, recommends that you vote in favor for each of these resolutions. I will now move to questions in the room. Two.
Chair, Mr. David Kingston has another question.
Okay. Thank you, Chair. Obviously, every director's got excellent experience, and I don't want to single people out, but I will. George, you're on the board of Ryman, which is Ryman Healthcare, which is a leading healthcare company in New Zealand. You stepped down in 2023. Its performance has been terrible. Its share price fell from about $13, $14 down to $2. It had an emergency rights issue. I'd just be interested in, is that relevant to your continuation here, George? Because that's certainly that period where you weren't alone, almost the entire board stepped down. Time management changed. It really was a debacle. If I may move on to the other one, Chair, JoAnne, again, none of us get it all right.
I'll just take one question at a time.
Yep, sure.
This is an IAG board meeting. What's happened in a company that George has now left is probably not particularly relevant for the AGM. George is an excellent Director, and he continues to provide great insight and guidance to the board. I don't want to go down on what happened with another company. Please go to your next question.
That's fine, Chair, but there's not much point in talking about CVs if people aren't prepared to engage on the merit of their CV. If you don't want to engage, fine. I'll make a comment on JoAnne. Clearly, the MIA company has had a massively chequered history. More recently, Lifestyle, its stock price has fallen 75%, JoAnne. It's had some massive compliance issues, massive legal issues. Chair, if you don't want to engage, that's your prerogative. In my view, it's a little bit hypocritical if people are going to put forward their CVs, talk about their background, and yet where some of those issues are somewhat chequered, not prepared to talk about them. I totally respect that no one gets it all right. If you've been on six or eight boards, one of them is probably going to have had some real problems.
In my view, it's a little bit hypocritical not to discuss them. That's your prerogative. Thank you.
Thank you. Number three.
Chair, I'd like to reintroduce Mr. Simoni.
Good morning again. Under the 2020 amended Constitution, a director is an office and a place of profit. As in general, when you're looking at the people here seeking election, what is the balance? What is the hierarchy when the climate change, domestic violence, environment, etc.? Not qualities in general, as you pointed out when I spoke to your election, but the honesty and integrity and responsibility as when you're on the board, when a discussion comes up or an agenda item comes up, what takes place first? Is it we can add value, shareholder value first, and then we can look at domestic violence and climate change? It has to be shareholder value/profit first. Then we can take over, take care of all these other things, domestic violence and climate change.
Is that the prerogative of agenda items when they come up?
Okay. Maybe I'll take that. All those issues are important to IAG . Our culture is to look after our customers. How we make money is by looking after our customers, and the outcome of looking after your customers is you make money. We have an ethical framework in which we operate within IAG . We are very concerned about people that are in stress that call in for a raft of reasons, be it they've had personal circumstances or they've had some peril with a house, etc. Those processes to support those people are inbuilt into the front end of our business and flow all the way up to the board. Any other questions?
Chair, Ms. Natasha Lee has another question.
Thank you, Chair. It's not so much a question as such. I just want to congratulate you and the board. You have reasonable female diversity on the board, as well as other forms of diversity, particularly ethnic diversity. I just want to say it's good to see a reasonably representative board and keep up the good work of maintaining diversity throughout your tenure. Thank you.
Will do. Thanks, Natasha. Are there any questions online?
Chair, there are no further questions online or on the phone.
No other questions. Okay. The direct votes and proxies received in respect to these resolutions ahead of the meeting are now shown on the slide on the screen. The results are strongly in favor of the reelection of Helen, Scott, George, and JoAnne. Congratulations to all. Resolution three is the adoption of the company's remuneration report for the financial year, 30 June 2025. The 2025 remuneration report is set out on pages 77 to 102 of IAG's 2025 annual report and provides disclosures relating to directors and executive remuneration. Before I invite questions on this item, I will make some introductory remarks. There were no changes to IAG's remuneration framework in FY2025. In terms of FY2025 remuneration outcomes, for short-term incentives, the group balance scorecard, which includes both financial and non-financial elements, resulted in a score of 3.96 out of 5.
This resulted in the board approving an FY2025 executive STI pool at 83% of maximum opportunity. For long-term incentives, the FY2022 LTI awards with return on equity and Total Shareholder Return performance were assessed at the end of their four-year performance period. The FY2022 ROE performance hurdle was partially met, resulting in 45.6% vesting, and the FY2022 TSR performance hurdle was fully met, resulting in a total vesting of 72.8%. In terms of FY2026 remuneration, the board regularly reviews executive remuneration so that IAG can continue to attract, retain high-quality people and drive performance. This year's annual review of executive remuneration resulted in a fixed pay increase of 4% for the CEO and an averaged fixed pay increase of 4.8% for other executives. No material changes have been made to the executive remuneration for FY2026.
In FY2026, an independent review on the effectiveness of our remuneration framework will be commissioned in accordance with the APRA prudential standard, CPS 511. The board's people and remuneration committee will consider the outcomes of the review and any recommendations and bring them back to shareholders. I now invite questions on resolution three, the adoption of the remuneration report. I'll start with questions in the room. Oh, we have one. Yep. Number three.
Chair, Mr. Simoni.
Morning again. Your money has been made, and hence you can help. You're a help company, but only after money has been made. Money has been made. What is the logic or the reasoning when the money has been made and you can help when it comes to decisions at a very late notice and very fast decision-making, like sponsoring Sculptures by the Sea and not, say, other programs like domestic violence or climate change that you may have had on the books? What's the reasoning behind that decision? Thank you.
Mr. Simoni, we support a whole raft of community programs. We have money set aside for that, but we also have committed resources and money for all those support programs I've mentioned before. Anything online? No questions? Any other questions from the floor? Nope. That concludes the discussion of resolution three. The direct votes and proxies received for this resolution ahead of the meeting are now shown on the screen. Based on these results, I am pleased to see the support we have received for the 2025 remuneration report. Resolution four seeks approval for the allocation of deferred award rights and executive performance rights to the Managing Director and Chief Executive Officer, Nick Hawkins, under our short-term and long-term incentive plans. There is a detailed explanation of these allocations in the notice of meeting and the remuneration report. I'll move to questions in the room. Number two.
Chair, Mr. Joe Nagy has a question.
Yep.
I find it shameful in this report that you did not show totals of the salaries of these people. If you had, this is what the people would see. They would see that in 2024, total salaries for executive management was $13.8 million. All right? In 2025, the total salaries were $26.28 million. I find it very hard to see how you can justify, and I'm not against wage increases. If they work hard, they get it. I think that's a bit too much, especially when it comes at the expense of us shareholders, because every cent that goes to them is a cent that's not coming to us.
I think they're the executive salaries we're reading out. Yep. We pay market-based salaries, Joe, and the executives do work extremely hard. You can see over the last three to five years, they've been working exceptionally hard to produce the returns that we've got. Any questions online?
No further questions online or on the phone.
Okay.
What most of us failed to understand, this is economics. You are in a very specialized industry, very few, very low competition, just you and QI and maybe a couple of others. I'm not suggesting your executive's not worth it, but I say put that in context to why you've gained so much, because there isn't as much competition. It's as simple as that.
Thank you. Number three, yeah.
Chair, Mr. Simoni,
thank you once again. When it comes to the ASIC versus IAG on July 3, 2023, the $40 million judgment against plus the legal costs, does that come out of shareholder value or does it come out of Mr. Hawkins? Is that factored into Mr. Hawkins' remuneration package? Thank you.
It comes out of the performance of the company, which inadvertently flows through to the performance of the whole executive team, indirectly, I guess. Any questions online or anything? Okay. That concludes the discussion on resolution four. The direct votes and proxies received for this resolution ahead of the meeting are now shown on the screen. Based on these results, I am pleased to see the support we have received for the allocation of rights to Nick. Resolution five, six, approval to increase the independent non-executive director pool by the cap by $700,000 from $4 million to $4.7 million per annum with effect from July 1, 2025. Under the ASX listing rules and IAG's constitution, the total aggregate amount available to be paid to independent non-executive directors must not be increased without the approval of you, our shareholders. The primary driver of the proposed increase is to meet APRA requirements that boards of regulated subsidiaries have independent or non-executive directors. We previously had three APRA-regulated boards, and now we have five. Hopefully, that will increase to six if we obtain the RAC integration asset in Western Australia. The proposed increase is also designed
to help and enable IAG to attract and retain high-quality and suitably qualified independent Non-Executive Directors and manage an orderly renewal of the IAG and subsidiary boards. There is a detailed explanation of the reasons for the proposed increase in the notice of meeting. We have a question, I think, Carla?
Yes, we did. We received one question before the meeting, Chair, from shareholder Christine Kelly, who asked what was the basis of the 15% increase to the independent non-executive director fee pool decision?
The fee pool, as I said, was primarily driven by a regulatory change by our regulator, APRA, that requires us to have executive and non-executive directors on our board. Sorry, non-executive directors and independent directors on these new boards. That is a new cost the company didn't incur before, but we need to follow what the APRA rules say because they regulate us. In terms of increases in directors' fees, the increase in directors' fees was 4% for this year, which was slightly below the increase for salaries across the whole IAG organization. Thank you, Carla. Number three.
Thank you. Finally, on rewarding the directors with increased fee pool on their performance and guidance and advice, are we rewarding them on the basis of how rigorous double-entry book accounting occurs, the guidance on that within Insurance Australia Group? Or are we rewarding on how you in the decision-making that occurs in the role, you know, the empathy, the remorse, the honesty, and integrity, where things like the green seal and the dissenters that you have received don't occur? What's the reward for those things over, say, a razor edge on double book accounting and how we can just purely generate profit?
Yeah, I think I've answered that question before, Mr. Simoni. Thank you. Number two.
Chair, Ms. Sue House has another question.
Thank you. Mr. Chair, sorry. I know that we've voted at the ASA against this resolution, and I do understand the changes with the regulator and the subsidiary boards, but you also have a very large board at the moment, and you've just elected a new director onto that board. Could you talk about succession planning at board level and at the senior management level for the company and what the plans might be around that in the next few years, please?
On the board, the board has a succession planning process in, obviously for me, as I'm not standing for re-election again, but the board also has a succession planning in for the rest of the directors where actually, it's probably through luck more than good planning, we actually have a director resigning every year for the next five years. That will allow, just because their terms expire, that will allow the board to actually have quite a bit of flexibility in ensuring that we maintain our diversity mix, but also there may be opportunities to reduce the size of the board over that next five-year period. In terms of management succession planning, there are extensive management succession plannings in place, which the board reviews regularly.
Thank you.
With Nick. Thank you. Thanks, Sue. Number three.
Chair, Mr. Simoni.
Please don't ask the same question, Mr. Simoni.
If you don't make the money, is there a strategy to facilitate supporting domestic violence and et cetera and other climate change if you don't make the money? It's like if I go to council and they said, "Constitutionally, if you don't give us an issue of rates, roads, and rubbish, then go away." You're basically saying if we don't make the money first, then you have no strategy on climate or domestic violence or any of these social issues if you don't make the money first. Is that correct?
All those matters, as I mentioned, are an integral part of our business. It's not one or the other. Any other questions? Any questions online?
No questions online or on the phone.
Thank you. Thanks, Carla. That concludes the discussion on resolution five. The direct votes and proxies received for this resolution ahead of the meeting are now shown on the screen. Based on these results, I am pleased to see the support we have received for the increase in the non-executive director fee pool. That now brings us to the end of the formal items of business. I would like to remind shareholders who have not yet cast their votes on any resolutions to do so now as the poll is about to close. We will now pause for a minute while shareholders in the room and online cast their votes. For those shareholders in the room, Computershare will come around and collect your voting cards. Please wave your card to indicate you are ready. Now that voting has completed, I now declare the poll closed.
Thank you very much, ladies and gentlemen. The final voting results will be provided to the ASX today and will be placed on the company's website along with a webcast of today's meeting. On behalf of your board of directors, thank you to everyone who attended in-person today and to those who joined us online and by phone. I now declare this meeting closed. For those attending today, the board looks forward to joining you for lunch in the Smith Room, which is located to the left of the main foyer as you leave this room. Thank you very much.