Hey, good afternoon, everyone, and welcome to IAG's 2026 Investor Day. I'm joined here by our Chief Financial Officer, William McDonnell, our COO, Neil Morgan, CEOs of our divisions, Julie, Jarrod, and Phil, and other members of the executive team of IAG are all sitting in the front row here in Sussex Street. We're holding today's event on IAG Sydney's offices on the lands of the Gadigal people. We acknowledge the traditional owners of country throughout Australia, and we recognize their continuing connection to lands, waters, and the communities. I pay my respects to elders past, present, and emerging.
Many of you have been on the bus trip this morning attending the showcases at our research center and the major event command center, and I hope you enjoyed the insights and its kind of uniqueness bit of IAG that you've just seen. Just in terms of agenda, as you can see, we've got a full agenda this afternoon, but within it, we're gonna break for a couple of times for questions after a couple of the sessions, and Mark's gonna help out and moderate the questions during the afternoon. Let me start with sort of the Ambition 2030, and really around how we're gonna deliver that over the next four years.
As you know, across Australia and New Zealand, we've got a significant responsibility to provide insurance to the community when it needs it most. Our role, as you know, is to be customer obsessed, economic shock absorber. Supported by our scale, supported by our brands, and importantly by the platforms that we've built in support of that. By 2030, we'll be targeting over 11 million customers, over AUD 25 billion in premiums, customer engagement NPS of 55 as we continue to be the insurer of choice across Australia and New Zealand. Our ambition around growth is to grow at least in line with the market, and we'll seek opportunities to grow beyond that as they arise. For our communities, we'll continue to play a leading advocacy role in risk reduction.
As you know, this is already in our DNA here at IAG, and we're doing more of this over the next few years. Continue to have a significant voice on climate resilience, on under-insurance, and on building out a safer and a more sustainable future. We want our people to thrive in a high-performing culture. We're delivering on this ambition every day through our academy, the investments we're making around capability of our people, and building a future-ready workforce. Importantly for our shareholders, we'll deliver an ROE of 15% or above, high single-digit earnings per share growth, and top quartile shareholder returns. Really, these are the metrics that I've just stepped you through that are gonna define our success as we deliver Ambition 2030.
If we just start with sort of a bit of a recap over the last five years and what we've delivered against some of the things we set out five years ago. I mean our customer numbers are up 1 million, up to 9.6 million. If you sort of look behind that, the last five years, our Australian retail direct business has grown organically through the NRMA and the RACV brands. And that's been complemented, of course, by our recent acquisition of the RACQ business. We have, though, reshaped our partner businesses and our retail direct business in New Zealand. Sort of pleasingly, over the last 12 months, the New Zealand retail business has been growing, and Phil's gonna talk us through that shortly.
Our premiums are up something like 36% to just over AUD 17 billion, and with the addition of RACQ, more like 50% to AUD 18.5 billion for the current financial year. Our reported insurance profits are up 73% to over AUD 1.7 billion. Within that, our intermediated business, which we set a target of AUD 250 million, is delivering in excess of that, as you know. Our ROE is well above the original target we set of sort of 12%-13%, we've repurchased around 5% of our shares, we continue to look and be capital efficient. EPS is up 42% to around AUD 0.44 at an underlying level.
You know, these are big things, and they sort of reflect deliberate strategic choices, and really from your point of view, a management team that's really focused on delivery. You know, I'm really proud of the team that are sitting here in the, in the audience today and the delivery that has occurred by this team over that period. Of course, we welcome Phil Gibson. Sorry, wrong side. We welcome Phil Gibson into the team, as we take this forward and deliver Ambition 2030. Of course, our choices have really been what's helped us build out a stronger and a more resilient company. Some highlights in those choices we've made were our alliances with RACQ and then with RAC in W.A. Importantly, our ability to fund growth from organic capital generation and return some of that capital to shareholders over the period.
Completing the build of our retail technology platform has been a big thing. Accelerating the delivery of our commercial platform. These are the building blocks we've got at IAG that are gonna help us towards Ambition 2030. Pioneering long-term reinsurance protection. William's gonna talk more about that. What they, what all these things do, of course, is set us up well for delivery of our next phase of our strategy. I mean, the markets we operate in, of course, are growing. With general insurance premiums in Australia and New Zealand forecast to grow at around about 6% per annum through to 2030. I mean, my view is these forecasts are likely to be conservative in that growth. If you look back the last five years, our markets have grown closer to 10% per annum compounded over that period.
Of course, this is structural growth driven by population increases across our countries, rising asset values, increasing awareness of under-insurance, climate risk and its implications, and the growing sophistication of how retail and commercial customers think about the protection that we provide. I mean, I always say this, as an industry, we have demand greater than supply. It's helpful. Which is gonna help continue to fuel growth opportunity for our business. We're the market leader in both our countries with the brands, technology, distribution, and ambition to grow and protect more customers. As we look forward, what we've also done, we've sort of sharpened our strategic priorities. Purpose is unchanged: to make your world a safer place. We importantly act as a shock absorber at an individual, community, business, and country level. Our growth-orientated strategy is helping out more of Australia and New Zealand.
It's about leveraging the investments we've made to help more people and businesses across our two countries. This year, I've spent time in communities across Australia and New Zealand affected by bushfires, by hailstorms, floods, and every time I do one of these visits, it reinforces why our business exists. Frontline teams show up when it matters most, and the role they play in helping people rebuild is something, of course, that we are genuinely proud of, and those of you that have been on tour today saw some of that. Within our strategy, we have refreshed our strategic priorities, customer obsession from how we attract, serve, support customers, and how we grow our business with them, around insurance excellence, technology, pricing, underwriting, reinsurance, and claims, and really getting that all to work together as an insurance company.
We're calling this future-fit operations, and that's really around what how we harness innovation to continue to reimagine a scalable and resilient business over the next four years. Of course, importantly, we'll continue to hire and invest in the right people who bring our purpose to life every day. We've had a go here at sort of describing our winning formula, and that's really what makes our business different, but I think importantly also why that actually even matters. You know, sort of on one hand, insurance is a relatively simple business. Price risk, distribute products, manage claims, and we carefully look after our balance sheet. If you say that quickly, it doesn't seem that complicated. Actually, there's a lot in that in running an insurance company, and differentiators really are important.
Our customer data set at IAG is one of the most valuable in Australia and New Zealand. What that does, it enables us to expand and deepen our customer engagement, improve our retention, and really help fuel and drive our growth. We build a modern, scalable technology platform and have the flexibility to grow efficiently, onboard our partners, and deploy new capabilities at pace. Also sets us up well as AI integration becomes an everyday defining factor of our business. As we look around that wheel, when a customer makes a claim, we control much of the experience end to end through our integrated supply chain model, including some that we own. That's good for our customers, but it's also really good for our own economics of running IAG.
When a major weather event hits, we move fast, assess impact quickly, and we manage our response. I think many of you this morning saw firsthand how we coordinate those resources through our Major Event Command Centre. We're leading brands and trusted channels. Customer relationships are reinforced at every interaction across digital, across partner, and across our intermediary relationships. The depth of that trust shows up directly in our retention rates and in the claims experience that we're delivering for our customers. I think importantly, our diversified distribution model is sort of set up for growth and to absorb disruption. We operate I'll say this slowly. We operate across more channels through more brands to more customer segments than any other insurer in this market. That's got to be a source of competitive advantage.
The combination of our retail and our commercial businesses gives us diversification benefit that lowers our capital requirements and expands our options around growth. This is our winning formula: pricing risk, distributing products, managing claims. Doing this well, of course, and consistently at scale. That's how we've earned and maintained the trust of something like 10 million customers that we currently look after across Australia and New Zealand. I mean, as you can sort of see, growth is gonna be a major focus for us, let's spend a bit more time on our distribution model, which is a key advantage we have in our growth agenda. We serve the major customer segments in this market, club members, individuals, families, rural and regional customers, SME, commercial businesses in our targets.
We, we serve a lot, and we reach them through clubs, through digital, through bank partners, through brokers, and our own regional representation network. Our aim is to be relevant and visible to customers, so we're present wherever they choose to engage with us. We can also grow efficiently as customers' behavior and distribution channels continue to evolve. We've got some of the most trusted brands in both countries and a unified platform across the brands, which gives us the data and insights to tailor offers and remain relevant in the world of agentic commerce. In summary, broad distribution, leading brands, and a scalable technology core make us a business built for growth in a changing dynamic external environment. Of course, we're pursuing the ongoing transformation of IAG, and we're not done.
Neil and Julie and Jarrod and Phil are gonna cover this as they talk through their businesses and the changes that are occurring. I think you know that we've been really focused on laying the technology foundations in our core platform to make IAG's operations simplified, consolidated, and cloud-based. Our efforts are now more directed at the processes that will improve the customer experience, our claims and sales and service as we continue to transform our business for the future. Of course, AI is gonna be a huge part of our transformation opportunity going forward, and the way we're thinking about that is in three buckets. Internally, we call them deploy, shape, and compose. Deploy has put AI in the hands of everyone here at IAG, largely through our technology providers.
More than 60% of our people are regular users of AI through the Microsoft [Success Plus] and other providers who've embedded AI in their products that we use, and we're essentially democratizing AI for our people of IAG. Shape is where we're tailoring AI to our specific business problems and use cases. We now have more than 600 activators, and they've already published something like 90 AI agents that are improving workflows across areas like customer service, operations, and across some of our corporate functions. Lastly, compose, which we're building high value, more complex AI solutions at scale. Right now we have more than 2,000 of our people that are using composed AI in their everyday business or in our claims and our fraud and some of our service teams.
These are delivering transformational change in the way we are running and operating IAG. As the team steps you through what we're doing, you'll see some many examples of this transformation being brought to life. Let me just finish around some of the metrics that we're focused on and the metrics that we wanna be held to account on as we deliver Ambition 2030. We'll have grown our company to one that is over AUD 25 billion in premiums. We'll have achieved an insurance margin and an ROE in excess of 15%, and we will have delivered high single-digit EPS and a stable growing dividend for our shareholders. These are the metrics that will drive the enterprise value of IAG. I'll now hand over to Neil, who's gonna take us through more on the technology story. Neil.
Thanks, Nick. Good afternoon, all. I think Nick's already set the frame. We're performing well. We've built a set of assets that are genuinely hard to replicate. Small number of powerful brands, a club member culture at our core, and an integrated supply chain. Now, from an operational perspective, winning with those assets is all about creating speed, accuracy, and scale advantage. My role today is to talk to the enablers, what we've built behind the scenes to make this possible, particularly as emerging technology reshapes our industry. I've been obsessed by two things, and I continue to be obsessed by them. The first is consolidating and modernizing our core. When the core is fragmented, complexity quickly turns into cost, risk, and slow change. We've been really deliberate about simplification.
Fewer platforms, cleaner data, and delivery that's repeatable, faster, cheaper, safer on scalable platforms. The second obsession is to create the conditions where our customers and our people can fully benefit from emerging technology, including AI. We benchmark widely, we look globally. We're not approaching this as swapping humans for tokens. The aim here is about experience uplift, about speed and accuracy. Beyond the financials, you're gonna hear a lot of stats today, some from me, many from Julie, Jarrod, and Phil, and I think you'll feel the level of change that's materializing in our operations from that combination of a simple core and AI at scale. It's a real step change for us, and it's well underway. To go a bit deeper on consolidation and modernization, the work we've done has set us up extremely well for what's now possible.
In retail, we've shifted to a modernized cloud-based core. We've moved from eight personal lines pricing platforms to one, from 16 claims platforms to one. We've moved over 6 million policies to our strategic platforms, and we've got another 2 million that we'll be migrating in the next six months. It's a lot. We've actually moved 27 brands to our common core platform, the biggest platform transition in our history, and it shows in customer satisfaction, which of course is the key to retention and acquisition. Over the three-year migration period, the digital NPS has increased by almost 20% in New Zealand and over 30% in Australia, both up to 57 points.
Having gone live with our new CTP experience in New South Wales, we've seen an immediate 27% increase in the net promoter score to 66 points. Importantly, we're also seeing our investment mix shift from spending predominantly on that core transition to spending predominantly on growth and agility. Over the last 24 months, we've seen a 15% increase in policies purchased through our digital channels, now at 65%. Our NRMA and State and AMI mobile apps have been transformed, rating well over four stars. These scalable platforms were a key enabler in growing our business by AUD 1.4 billion of GWP through the RACQ acquisition. As the operating officer, simplification is what makes change repeatable. It reduces duplication and variation, and it lifts quality and control.
Moving to cloud-based services frees up time previously spent on maintenance, it reduces delivery timelines, and it materially reduces operational complexity. Customers feel these changes through their day-to-day experiences, of course, the bonus is that these investments have created new strategic options for us, winning partner agreements, supporting acquisition opportunities because the core is coherent and scalable. The re-platforming of our direct retail business has been delivered as committed. We're now focused on the seamless migration of our remaining CTP customers and enabling our partners in RACV and RACQ. Intermediated is on a similar transformation journey. It needs separate focus, the same story is repeating. In broker markets, time creates friction, and it creates cost. We now have our Commercial Enterprise Platform deployed and performing well. We've built multiple broker integration patterns, deployed Guidewire as our system of record, and delivered the finance integration.
We've commenced moving products and brands to that platform. From our initial releases, the level of impact we're seeing from the transformation is even more material than in retail. Our first product, Padlock, has more than doubled sales since the same period last year. In WFI, small business quotes have dropped from 24 hours to 15 minutes. We're now triaging 100% of intermediated motor claims via AI. Whilst we're on AI, continuing the theme, our use does extend right across the enterprise, as Nick referred to. At the highest level, we're organized around three opportunity areas. I'll just run through them. The first opportunity is to target specific areas of the value chain. The examples that I mentioned before, use of AI in our intermediated division to support quote ingestion and claims lodgement are good examples.
Likewise, in retail, the claims assessment phase in CTP has been a key value area to target. Second, there are opportunities wherever we can enable the scaled workforce, from front office to back office, by giving them consistent advanced tools to serve customers better. Third, empowered AI has been amazing to see come to life. We have use case deployments across the entire business through providing people with tools and skills. Our people are amazing at solving pain points, but also at creating new opportunities. In terms of the how, Nick described it earlier, but there's three models. Deploy, we're really focused on excelling at consuming capability that is embedded and continuously evolving in platforms like Microsoft, Google, Guidewire, Earnix, ServiceNow, and more. Our AI activators shape solutions. This is about rapid delivery of bespoke agents using our proprietary tooling, Genie.
Finally, we build deep industrialized models through the in-house engineering team. In terms of impact, you'll hear directly from Jarrod, Phil, and Julie shortly, but from an operations perspective, we've started to reap the rewards of having taken a really strategic and quite inclusive approach to AI deployment. We've gone from zero production GenAI use cases two years ago to 92 today. They are not pilots, they are in production. In just the last year, we've doubled the proportion of controls that are automated across the company, and in the technology division, this is now upwards of 70%. Test design cycles have dropped from weeks to days. Migration road maps have shortened by around 1/3 . We've unlocked data assets that have been built through 160 years of insurance operations.
Importantly, we now have a certified network of more than 600 AI activators right across the business. All of this is squarely in service of better experiences, greater speed, higher accuracy. Before I move on from AI, just a couple of comments on agentic in retail. There's rightly a lot of commentary about agentic commerce. For us, agentic is about faster, more accurate customer journeys, where multi-step work can be orchestrated within guardrails and controls, of course, and with human oversight as required. It's feasible precisely because our core is stable and it's scalable. Specifically on agentic commerce, to us, just like online and mobile apps, it's another channel to market. I think it's an attractive one because generative AI tools can synthesize full service information, not just compare pricing.
That plays to transparency of customer satisfaction, of coverage quality, and claims experience, the areas where leading brands win, as you'll hear from Julie and Phil . From here, the approach is pretty straightforward. Focus on the journeys that matter most, embed control, and connect agentic experiences tightly into the simplified core. Back to the big picture. Insurance modernization is hard. It's never really done, but we are well through the heavy lifting. We're looking ahead. There are a small number of focus areas that we know are absolutely key. At the enterprise and retail level, it's now about extracting the economic upside of our simplification. It only counts if it changes cost, quality, or control, and we have plenty of evidence that using AI on top of the simplified core is starting to drive those benefits.
Just in my world, we have less work on manual controls and compliance, more change, faster, at lower risk, lower cost, migration solutions that can better deal with data variability, improve security and platform resilience. These are all indicators of an ecosystem that's maturing, turning capability into performance. In the intermediated space, we're early in the brand and business onboarding process, but a lot of the hard work is done. Our technology ambition is really clear: to provide the fastest, most accurate experience in the market. The step change in SME quote times is exactly the kind of improvement that brokers notice. No doubt Jarrod will share more on it shortly. From here, the focus is on consistent ingestion of information, reduced handling, higher straight-through processing, and that is the winning formula in our commodity lines.
To close, 18 months ago at Investor Day, we promised that this would be the management team that leaned into the legacy platform challenge, that we wouldn't pass it on to future generations of leaders, customers, or investors. We've delivered the biggest change in IAG's core in over 40 years. We've made the investment, and as you'll hear from William, the mix is now shifting from consolidation and migration to spending on differentiating capability, rapid feature delivery, leading customer experiences. Along with creating market opportunities, modernization has also allowed us to offset increasing costs with lower run and delivery expense. The next phase is no easier, but it's different and it's full of opportunity. Through both the strategy and, to be honest, some fortunate timing, we feel very well-positioned.
We're seeing a step change in speed and accuracy, that gives us confidence to be more aggressive in our expectations. With that, thank you for your time. I'm gonna hand you over to Julie for a deeper dive into the retail business.
Thanks. Good afternoon, everyone, and thanks for joining us. I'm Julie Batch, the CEO of Retail Insurance Australia, and I'm really glad that you got to see a little bit of our operations today. We're a business that's built on customer trust with a deliberate strategy to grow responsibly, to underwrite with rigor, to lift customer outcomes, and to improve productivity through technology. Today, I'll share with you how we're creating value, how we're scaling with discipline, and why we're well-positioned to win through the rest of the decade. Retail Insurance Australia is an advantaged platform with trusted brands, strong distribution, and disciplined underwriting. Today, we serve around 6.7 million customers, and we write more than AUD 10 billion in premium. That scale matters.
It gives us the data, the reach, and the operating leverage to invest with confidence, and it keeps us close to customers through the moments that matter. We're a multi-brand, multi-channel business anchored by our direct flagship brand, NRMA Insurance, and our national digital innovator, ROLLiN'. Our partnerships with trusted motoring clubs, including RACV in Victoria, AANT in the Northern Territory, RACQ in Queensland, and subject to approval, RAC in W.A., and our banking distribution partners, including ANZ, Bendigo Bank, and People First Bank, that provide us with broad Australia-wide access to those who embed insurance in their home mortgage decisions. We manufacture the full suite of retail products, balancing volume and margin. And with the RACQ and RAC W.A. insurance acquisitions, we significantly improved geographic mix and diversification, lifting capital efficiency and allowing us to sharpen our competitive edge.
The result, market-leading margins above 15% and a customer satisfaction score of more than 55 across our touchpoints. If we step back for a moment and look at the last five years, the industry has shifted fast. Digital behaviors have changed and inflation has surged, and our response has been deliberate, disciplined, and calibrated to the conditions. Over the last five years, we've simplified and scaled our business. We've positioned NRMA Insurance nationally as a help company. We've acquired the insurance operations of RACQ and RAC W.A., funded entirely through organic earnings. We've standardized core platforms and built an early data advantage, including a single view of each customer and each insured asset across Australia. We've embedded AI across distribution, pricing, and claims, delivering AUD 300 million in claims and supply chain benefits on an annual run rate basis.
Today, we can move faster, we can price more precisely, and we can serve customers with less friction. Critically through this change, we've maintained our financial strength, positioning the business to convert capability into momentum. Turning to momentum. In New South Wales, A.C.T., and Victoria, the home and motor classes have grown strongly. These East Coast states and products are the core of the retail franchise through our flagship NRMA Insurance brand. Today, they represent 66% of retail and 34% of IAG's overall premium. Over the last five years, the market compound annual growth rate of these portfolios was 10.8%, reflecting the repricing that was necessary for inflation, supply chain shifts, and reinsurance uplifts. NRMA's insurance book, its equivalent book, grew 9.6% per annum to AUD 5.8 billion and delivered leading returns through these portfolios.
If we look at that growth rate over the last three years, that gap has narrowed. NRMA Insurance's CAGR is 12%, slightly below the market growth of 12.5%, with our home book performing particularly strongly. We're confident that this strength will continue because going forward, the acquisitions of RACQ and RAC W.A. provide us with better diversification. A better diversified, more capital efficient portfolio gives us headroom to grow. It allows us to balance risk across states and classes and provide new pathways to market for more of our products. Aligned to IAG's strategy, we're making consistent choices that create sustained value. We're growing responsibly, lifting customer outcomes, and improving performance through disciplined underwriting at scale. We're focused on building exceptional brands and partnerships that earn our customers' trust and expand our share of the household over time.
Brand strength drives preference and retention, and this is how we grow. We're leveraging Australian Made scale, backed by flexible underwriting and sophisticated pricing. Disciplined underwriting is the engine of our business. It protects margins and your returns. We're delivering an effortless experience, particularly in claims, by using advanced technology to improve our claims cost while keeping the experience simple for customers. This productivity uplift is long-term value creation. Our opportunity is to keep moving faster than anyone else. We're empowering our people with technology-enabled decisions, a growth mindset, and a productive operating model, allowing them to move faster. We believe the future is a game of speed to insight, speed to price, speed to settle, and speed to improve, and this will deliver cost efficiency over time. Turning to customer obsession. Customer obsession, it's our profit engine.
When customers trust us and the experience is simple and reliable, they stay longer, they buy more over time, and they're more likely to recommend us. The elements that underpin our customer obsession are firstly scale, which I've already talked to, and scale and trust, they're highly interlinked. NRMA Insurance is the most trusted Australian insurance brand four years in a row. Our motoring club partner brands are the number one insurer of choice in their home states. That trust gives us access to a large, high-quality customer base today, and that trust is also critical tomorrow in an agent-to-agent world. Scale creates efficiency advantages through data that powers our digital platforms. If you're one of the 65% of our customers who buy online, you'll get a quote today 50% quicker than the same time last year.
That efficiency improves customer experience and it lowers marginal costs. With better scale and efficiency comes pricing sophistication. We respond in real time to changes in risk, and we are much more targeted in our risk selection. With our 100 years of history, we understand the value of a customer across their lifetime. This is how we create high quality, long-term value and earnings. Those capabilities in turn flow directly into market leading insights. We capture touch points from all of our interactions, including more than 7.9 million voice calls per year. It is this vast deep knowledge that drives our customer experience, reinforcing trust and advocacy in our brands. These are the moments when our differentiation is earned. The result of this equation, it is higher quality growth.
We see this in renewal frequency, which has improved 3%, and targeted acquisition focused on the customers we wanna keep for the long term. Returns are reinvested back into the customer experience, strengthening brands, improving digital journeys, and lifting claims performance again and again. This foundation is what allows us to scale with confidence and deliver you consistent market-leading returns. Let me bring our strategy to life for a moment through our portfolio, because this is where insurance excellence shows up. We're shaping a portfolio that's resilient and connected. We price risk precisely, we serve customers consistently, and we put capital behind the best opportunities. Each product has a clear role to play. Motor is our historic foundation.
It's a scaled product where operational excellence matters, we're focused on trusted distribution and integrated supply chain and consistent claims execution because that's what sustains advocacy and margins over time. Here, our proof point is clear. We're at 61.5 points of customer satisfaction for our motor journeys. Home drives customer loyalty, you can see that translate directly into persistency with a 95% renewal rate. Customers trust our brands and service, we price and underwrite with discipline, we retain the right customers and we protect returns. This is where our capabilities in perils pricing and in our claims response are a durable advantage. CTP is our gateway to new customer growth, a powerful relationship builder, especially with younger drivers. It's a bridge to a broader NRMA Insurance relationship. Today's CTP customers, on average, hold 2.49 policies.
It also gives us vehicle visibility that deepens the motoring club insights that we already have. It only creates value if it's profitable, and in this class, our pricing excellence and capital management have delivered over the long term. Small business helps us expand from protecting customers' assets to their earnings, and we've seen consistent volume uplift. Today, we serve more than 120,000 small businesses across Australia, many of them also holding other personal products. Finally, our niche product helps us meet more customer needs and deepen relationships, expanding our role from protection to lifestyle. A multi-product portfolio lifts retention, it improves lifetime value, and it allows us to invest more confidently in service and in innovation because the economics compound. Critically now, with a broader, better balanced geographic spread, we can extend these products to more customers across Australia.
The future of our operation, it's grounded in technology. Taking all of that capability that we've built through the enterprise platform and using data-led technologies to accelerate outcomes for customers, lowering unit cost through automation and speed. We're already using AI extensively across our retail business, powered by that incredible scale of our data. It's improving the underwritten quality of our book. The fraud detection platform we've built has delivered a 125% improvement in prevented loss over five years. It's increasing our speed and productivity. Using deterministic AI, we've improved claim cycle times by 13%, and using AI agents in CTP, we've halved the decision time to the second liability decision. These faster decisions, they free up our people to spend more time helping customers return to health and work.
Our telematics capability has provided over 100 million km of driving information from both ROLLiN' and NRMA Insurance. This is informing us about road risks that support safer driving outcomes and creating a platform for more personalized engagement. Finally, our API connectivity, honed with our partners, sets us up for an agentic future, including agent-based distribution as that capability matures. We're building on the enterprise platform and industrializing AI across our organization, preparing our teams for the change that will come. Looking towards 2030. Our 2030 Ambition is grounded in scale, in value creation, and in disciplined underwriting. We're targeting 8 million customers driven by organic growth and the inclusion of RACQ and W.A. This will deliver AUD 15 billion of premium for IAG.
Through AI and automation, we will lift our claims saving run rate by AUD 500 million per annum, giving us confidence to deliver a consistent 15% margin over time. Experience leadership and data-driven scale are our competitive moats, lifting retention, lowering acquisition costs, and improving risk outcomes. As Australia's largest retail insurer, we have the scale to lead, the discipline to perform, and the capability to transform. With that, I would like to hand you across to Phil Gibson. It is the first time you are going to hear from him, so he is going to tell you a little bit about himself and a little bit more about New Zealand Retail.
Thank you, Julie. [Non-English content] , everyone. I'm Phil Gibson. I'm thrilled to be here representing the New Zealand business. Over the last 11 weeks, I've been immersing myself in the country, the culture, and the business, meeting with partners, customers, stakeholders, and regulators. This has reinforced the reasons I'm excited to be here. I see a strong business with solid fundamentals, good alignment across the team of values and objectives, and significant upside from which we can grow. I come with deep relevant experience over three decades in general insurance. I've spent my career helping insurance businesses grow, modernize, and perform at scale across the U.S. and Canada. I've worked in both personal and commercial insurance, ranging from startups to some of the largest insurance companies in North America, including Travelers, Allstate, and Aviva.
I've led major performance transformations. My experience spans underwriting, pricing, operations, claims, distribution, data, and AI. Prior to IAG, I worked in a very large consulting firm advising senior insurance executives on strategy, technology, and AI. My passion has always been strategy and execution, building high-performing businesses that combine talented people, great customer experiences, and long-term resilience to generate exceptional financial outcomes. As I see it, the opportunity here is to take this business from being good to great. I'm gonna talk to you first about the retail business, then I'll come back to talk about the intermediated business after Jarrod. Our retail business is the personal lines market leader. Our brands are among the most trusted and established in New Zealand.
AMI is the leading direct brand in the market, and this month it will celebrate 100 years in business, and it's actually just the baby of the bunch. State is the third-largest direct brand in the market. It enjoys widespread brand recognition, and it's 121 years in business this year. We also serve customers through our major bank partners. Together, this gives us a tremendous breadth across the market, generating more than AUD 2 billion in GWP and proudly serving 1.7 million customers. We represent over 1/3 of the personal lines market. The headline here is that we are growing. In the first half of this year, we grew our market share in an otherwise flat market. Our customers are happier. We've proudly achieved an impressive 7-point lift in NPS across all of Retail since July as a result of our actions.
Our opportunity now is to reach new customers and deepen our relationship with existing customers. We'll do that by building on our growth momentum, simplifying customer experiences, and continuing to scale our hub businesses, which offer services beyond insurance, all to deepen our customer relationships. Our strategy is to continue building growth momentum as market conditions improve. We expect the New Zealand personal lines insurance market to return to growth after six flat quarters. This growth will be driven by a combination of moderate system growth of items and very modest rate actions. We're closely monitoring geopolitical events and can respond quickly to claims inflation. To date, cost pressures have been modest. We're seeing some minor increases in motor parts. We're responding accordingly. We'll recognize and we'll respond to changing customer preferences as well.
Customers increasingly expect simpler, more digital, personalized experiences at a price they can afford. At the same time, AI will fundamentally reshape how customers interact with insurers, particularly how they discover, compare, and buy insurance. We're already seeing signs of this shift. For example, AMI and State have seen changes in organic website traffic as more customers find what they need via AI summaries. Our digital content must ensure that our brands are visible and well-represented to LLMs. Looking ahead, emerging AI native agents and aggregators will help customers interpret policy terms, benchmark products, and proactively monitor the market for better terms. We see this as an opportunity, not a threat. In response, we will leverage our strong brand propositions, as trust will remain a critical factor. We'll deliver simple, digital, and more engaging personalized experiences.
We'll ensure we have sharp competitive pricing, which is always gonna be a key part of the purchasing decision. We'll increase our operating agility to respond to a more dynamic competitive environment. As you're hearing the recurring theme, we'll scale AI as a strategic capability to help us grow and increase productivity. Let's talk about the strength of our brand propositions. AMI has been the primary driver of growth for New Zealand Retail this year. Just like our member clubs, AMI offers a range of connected services. Our free AMI Roadside Rescue service offer is unique in the market, it is having a proven growth impact. It was rated number one roadside service by Consumer NZ, proving it's not only free, it's a better proposition. We're adding further value through discounted motor servicing and road fitness tests using existing capacity to extend the proposition and deliver the service.
The impact on the AMI brand in a short space of time has just been exceptional, and we know from our experience in Australia the halo benefits a member brand can bring. AMI strategic NPS has lifted five points since first quarter, a huge shift in a metric that's notoriously difficult to move quickly. AMI is forecast to grow personal lines items by 8% by the end of FY 2026. About 60% of this has come from the Aon deal, giving their customers the opportunity to move to AMI. Thanks to the strength of the AMI proposition, the majority are saying yes to the offer. We're seeing similar increases in building our non-insurance customer database as customer base, serving over 11,000 customers to date. It's been so successful, we plan to launch two new standalone mechanical repair sites in Auckland this year.
On top of the 10 AMI MotorHub and six AMI HomeHub locations we already have in place. This vertical integration not only helps deliver a seamless customer experience, it does so with superior economics for us, with internal motor repairs costing 20% less versus similar third-party repairs. AMI and State can create more personalized and engaging experiences through our digital apps. Over 60% of our customers are digitally registered, and around 30% have downloaded the app. Today, our app offers always-on convenience in your pocket. You can open and book Roadside Rescue and track the vehicle on its way to you. You can amend or renew your policy, and half of our app customers now elect to pay using Apple Pay or Google Pay. You can also lodge a claim.
In fact, I recently had a rock strike my windscreen, so I was able to experience our touch-free service for myself. I lodged a claim in our app. I selected a location, a time, and date that was convenient for me. I dropped my car off, came back after lunch, and drove off with a new windscreen. Amazing. We also offer proactive notifications like weather events and even marketing offers. As we continue to expand our capability, these experiences will become much richer. Like faster claims experiences, where our customers simply upload photos for instant assessment, assignment, and scheduling of a claim. Soon, offers to help manage your car or your home with a range of risk prevention services.
Increasing the appeal of digital service, it's not only great for customers, it lowers our cost to serve. This will be a key priority as we move forward in 2027. As Neil mentioned, our retail business is at scale on the modern platform, enabling pricing precision, speed, and cost efficiency. We have almost 2 million policies on the platform, we're unlocking operating efficiencies from reduced system complexity, removing both cost and remediation risks, bringing our AMI and State teams together in a single sales and servicing team. We're also leveraging the Earnix pricing platform and using risk-based pricing. We now price at a much more granular level, with the ability to refresh pricing fortnightly, ensuring we remain responsive to loss trends and cost pressures. Automated underwriting decisioning is improving speed and consistency while we're maintaining our strong risk discipline.
To date, we've removed over 200,000 manual referrals to underwriters. We're now at 90% straight-through automated decisions for personal lines, we're targeting 99% straight-through processing for motor and 95% straight-through processing for home. In claims, our supply chain scale is delivering clear cost benefits. Through greater vertical integration and repairs, stronger partnerships with motor parts suppliers, and our procurement scale, we're materially improving claims unit costs and customer repair outcomes. As we all know, continuing to drive down the underlying cost gives us more margin to reinvest in growth. Similar to what you heard from Neil, our investments in technology have created an excellent foundation for us to scale an AI-led transformation. Our business is ready. Around 90% of our data has been ingested on Google's data platform, giving us a single scalable source of truth.
That matters because AI outcomes are only as good as the data that underlies them. We have modern cloud-based platforms from several key systems partners, including Guidewire, NICE, Microsoft, Earnix, and Google. That means we get out-of-the-box AI capability and evergreen updates, allowing us to focus on building our AI strategic capability on processes that matter most to us and to our customers. Beyond the technical foundations, our people have experience with AI. We have active AI use cases being widely used in the business. As an example, our knowledge helper agents and claim summary agents assist our frontline employees in delivering faster, accurate answers to customers. These tools, combined with targeted process reengineering, have cut our average claim settlement time in half, getting our customers back on their feet faster.
The business and technology are working closely, building AI agents that unlock increased productivity, efficiency, and workforce flexibility within clear guardrails. Now we have a clear opportunity to accelerate, moving from good individual use cases to a systematic enterprise-wide AI transformation. For the last two years, I've been helping clients leverage AI to seize opportunities and solve thorny problems. If there's been one consistent predictor of success, it's that widespread AI transformation works best when it's CEO-led. Based on my experience and what I've learned so far, there is a fantastic opportunity to transform our business using AI as a true strategic capability. It's early days. I look forward to sharing more on this in our next update.
Overall, even in uncertain times, our retail outlook is positive. What gives me confidence is that we have an AMI proposition that's winning in the market. We have a multi-brand portfolio that gives us scale and breadth. We can deepen customer relationships through our hub services and by unlocking the full value of our data with a single view of the customer.
We'll continue to obsess over the customer and build richer digital experiences and lower our cost to serve. As I mentioned, I see a huge opportunity for us to scale AI strategically across the business, increasing operational agility and productivity. Together, this means we can deliver growth and margin. Finally, our highest priority is disciplined execution, strengthening a market leader today and extending that leadership for the long term. Thank you. I'd now like to invite my colleagues up to the stage for a Q&A, and as they come up, we'll show a short video that brings our AI journey to life.
These days around us, AI is everywhere. It's already started to actually transform our lives. It's in our homes, it's on our phones, it's in the car with time of commute, it's our workplace. We started actually our AI journey quite a while back before even GenAI, almost a decade back, where we, early on it was still an emerging technology. Soon we realized that the importance of doing it responsibly and having the right ethical frameworks in place. Introduce these various modes of adoptions or pillars, as we call it, deploy, shape, and compose to ensure that we can create the benefits safely and at a scale across the company. Now AI is accessible through everyday language. That company-wide movements, we had a name for it, we call it Inclusive Innovation.
Processes that we have in CTP have in the past been really hard to automate and get those efficiencies in. There is an amazing opportunity to use some of those AI tools to help augment and potentially automate some of our claim activities. If we're able to help them recover faster, that ultimately means it's a win for them, obviously. They get back to work, they get back to life much faster, and it also means that our claims costs are reduced.
We operate in the procurement space, it's a really interesting space for AI because you have the junction between legal and the business and purchasing. AI is really a tool that we see as freeing up some of our time so that we can focus on more of those strategic initiatives and allow stakeholders to get quick and immediate service from our team. We do have metrics in terms of the bot usage, we estimate that some of those queries would save, you know, between 20 to an hour in terms of the time.
As of today, we have about 600 AI activators trained across IAG. This community so far has created more than 700 agents.
Working with portfolio team, they might come to a belief or a hypothesis that there is a particular claim driver. The traditional way for us to actually find this out is to review maybe 10,000 or 15,000 different claims. Each of those claims will be structured, unstructured data. I was able to really just run through 15,000 different claims in the span of about 1 hour. That gives us a much clearer view of what's happening in the portfolio. We have more sophisticated, more informed pricing and management of our risks.
Bring that customer obsession, bring that critical thinking to make judgments where they need to be done. I see a future where human and agents work closely together and humans actually bring what really matters. That will be the superpower.
Hey, thanks, team. Just how we're gonna run this now is we'll just do we've sort of broken up questions into three little buckets. We've got a break now for 20-odd minutes, then we'll hear back from Jarrod and Phil, then we'll open up again for questions on sort of the intermediate commercial businesses. Then William's gonna come up and talk about some of the financial and reinsurance aspects, then we'll open up for questions again. Then I'll sit on all three of those panels, just so we can sort of manage questions as we go along and don't have a load of them after a couple of hours of presentation. Why don't we just open it up? Mark's in the room for those on the video.
Mark's in the room with a roaming mic. He'll be sort of directing a bit of traffic here. Over to you, Mark.
Thanks. Kieren Chidgey from UBS. Nick, I might start on agentic commerce. It was mentioned a couple of times there. Just keen for you to unpack in a bit more detail how you're currently thinking about it. You know, we've clearly seen a reluctance to support price comparison websites for the obvious reasons historically, but it sounds like you want to lean into some of the agentic apps that no doubt will appear here soon. You know, is that gonna be brand specific? Is it gonna be across the bigger brands like NRMA Insurance? Are you gonna open up pricing engines to these apps? Can you just give us a feel for why you're comfortable sort of leaning into that and why you're not gonna commoditize what is a very strong brand?
Yeah. Thanks, Kieren. I mean, I'll ask the team to come in and to give us a bit of support around sort of bringing that to life in some of our brands. But sort of the macro is gonna have to be that we're gonna meet our customers where they wanna be met with insurance needs. I mean, either that's through a broker, an agent, an authorized rep, coming in direct either through an NRMA or a one of our club partnerships or finance institutions. We kind of have to I mean, one of the great advantages of our business model is that we are set up for that.
I think that is just an extension of that story, this topic, which is, you know, we're assuming over time, more and more consumers are gonna wanna buy their insurance products, particularly direct, particularly retail. I think we should save that question also for Jarrod and Phil when we talk about intermediated and relationships with partners. Maybe we'll park that for that part of the discussion and just concentrate on the retail. I think the reality is that we are gonna engage. I think that, I mean, Phil sort of mentioned it that in a way it's not the same as a price comparison because it's gonna be able to look at the full strength of your proposition, your wording, your price, the capability, your claim strength, actually what your brand stands for.
I think those, not just in our sector, but just as a general theme, those companies with strong brands, with strong relationships that stand for something, I think in a, in a sort of a changing environment, agentic commerce world, they're gonna do well. I think if you don't have those things, then that's gonna be a problem for you. Actually that's not IAG. I mean, our retail brands have got many of those things in spades. I think actually there's an opportunity to bring that to life more, but maybe I've gone and stolen all their thunder. Julie and Phil, maybe just sort of bring it to life in how you're thinking in some of the brands.
Sure. I mean, we've got pretty strong, pretty well-diversified distribution now. It's direct, it's digital, it's call centers, online, we work through partners. We've got incredibly strong APIs. When we look at the opportunities, the risks and the opportunities through agentic, we see it as another channel. I think it's, you know, it's too early to say whether the pricing engines will open up. I definitely think it'll want to price. It may actually make some of our data more defensible. We're really kind of focused on being ready for that and prepared for the way that our customers wanna meet us, as Nick said.
Phil?
Same. I think I would just be echoing the sentiment of we wanna meet our customers. We want them to be able to come through any door they want to come to us. AI agents, I think, I, it's not something that we're afraid of, but it's actually we see as another opportunity for customers to get to know us better and get to know our true value, not just the price, but the whole what we offer, and I think we'll outperform our competitors when they do that.
I think just to close for me, just the authenticity of our brands. I mean, they really are real. I mean, we talk about it a lot. I think people in this room and on the video would know that. We're super proud of the way we show up and look after our customers, and I think that gets more exposed in this world. I mean, so maybe this is gonna turn out to be I know there's concern. Actually, it may be a positive.
Nick, can I just.
Yeah.
Just add one comment? I think, there's sort of two aspects to how we show up, right? One is being visible and clear and having a digital presence that can be accessed by others. The other is the actual agentic execution within other tool sets. I think perhaps some of what you're hearing in the confidence is that if we were in a position where we had 10, 12, 14 claims policy pricing platforms, our ability to expose that consistently externally and actually support those.
To feel.
Those new channels is very difficult. Some of the sort of confidence you're hearing, I think, is because having done the consolidation work and gone retail first, we feel like we actually can really focus the energy and effort to supporting those channels in a much cleaner kind of way.
Mark next.
Good day, Mark [Tomlinson], [Hunter Green]. Last week both APRA and ASIC wrote to regulated institutions regarding one of the latest AI models. How are you embracing that in your technology stack?
Yeah. They were, I mean, I'll make some comments here and there's sort of a whole lot of topics in those. Those who are not familiar, those letters were really around the governance, the systems and process to which financial institutions are running AI, and sort of putting the whole financial services industry on notice essentially, sort of look after yourselves and look after your customers really. I mean, it doesn't feel like that was new, the issues that were being raised. I mean, it rightly does raise a whole lot of things.
I mean, the starting point for us though is pretty good because what you don't wanna have is enormous amount of complexity in your business in the first place that you're trying to tap things onto. Neil sort of answered it before when we were talking about answering Kieren's question. Actually we feel like we've got sort of the house in order and we're well on the path to have that. That doesn't mean that these issues aren't real, it just makes it a bit easier to line ourselves up. It's all about how are we thinking about the governance, how are we deploying. You can tell even the way we've got a methodology to deploy. This is not a random walk at IAG.
We've really been thoughtful about how do we get, you know, 15,000 people excited, how do we govern and ensure that we're structuring, controlling that and putting guardrails around it. I mean, I'll just ask Julie, another sort of aspect they didn't raise so much in those letters is really around sort of the ethical concerns that sometimes come out of this topic and we've given some thinking around that as well as around just making sure that we don't inadvertently exclude people or somehow in sort of desiring to do something good for a customer end up not. Julie might make some comments around that and agree.
I mean, just for your information, in 2019 we founded an institute called Gradient Institute. It was a collaboration between The University of Sydney, ourselves, and the CSIRO, that institute is around looking at building ethics into algorithms. It's released a lot of research. It's had a lot to do with how the government and various different organizations have built regulation and risk into their, the way they put standards out. I'd encourage you to do that, we're using to have a look at that website. We're using a lot of that information in the way that we're building out our algorithms and AI applications now, making sure that we're leaning into the ethical, repeatable, reusable side as much as the opportunity.
Let me just a few things from me. I think this idea of inclusiveness around these tools is pretty important to us. This is not kind of a small center-of-excellence-type capability. That's probably a fast path in the short term, but actually, the long term here is to have an organization that has a culture awareness, understanding of responsible ethical use, but also a level of governance and control around how we deploy these capabilities into production that is really stringent. You'd have heard Some of you have picked this up. In the video, there was a comment about 700 agents, and when I was presenting, I talked about 92.
That's actually the difference between those that are in incubation, creativity, experimentation, and those that we've gone through the validation, verification, and control process to be comfortable having them in production in our organization today. Again, this language and categorization is all about the level of governance, control, and risk associated with different models, the level of business continuity we need to have around them, and so on. That gives us that sort of framework to step into this space.
Hi there. Simon Fitzgerald here from Jefferies. Just a wider question on AI. Obviously the adoption here is absolutely fascinating, but what's also interesting is just the speed at which they can be deployed. You know, I think there was a comment made before that productivity through technology is our long-term value creation. I'm interested to know I suspect that a lot of insurers will be using these, and it just becomes the standard as opposed to anything else. Like, could you make some comments about how you see this as an advantage longer term, Nick?
Yeah. I mean, I'd say one of, not the source of competitive advantage. I mean, the point's right, that we're not gonna be the only financial services, only insurance company that's embracing this topic and deploying at a pace and looking for sort of productivity, efficiency, improved customer experience. I mean, what we also know is our industry's got lots and lots of legacy systems, and lots and lots of things that don't talk very well to each other. I mean, Neil's sort of stepped us through that we've done some heavy lifting here. That doesn't mean that the next step is, you know, we're there already, but it does make it a bit easier.
We've also We went retail first on how we've deployed this and how we've really sort of put a, put a new platform in place. We do feel like our capacity to engage, build sort of the next step change, which really feels like it's happening now, we've kind of got the building blocks set, and I'd say probably, you know, more set than others. However, the point is also right, that no doubt everyone else is also thinking about how they can accelerate whatever plans they've got and embrace this. It's just a bit easier when we've got our assets lined up. We've also got the scale.
I think that really is an advantage because across Australian-New Zealand markets, we've got wonderful insight and history and data and understanding and, you know, This technology and capability really allows us to use that knowledge to a greater extent. If you've got it like we do, I think that's got to be a source of competitive advantage.
I think that call around just the power of our data. I mean, we have abstracted our data from every core system. We've organized that into information about a house, a car, a person, whatever that might be, and we don't need to ask the same amount of questions as others might because we already know the answers to those things. I think that, gathered over decades, is quite unique.
I might just throw to Phil, because Phil worked in the industry for 30 years and stepped out for two and turned onto the other side, giving us advice and then.
Encouraging.
Saw a light and came back, luckily. I mean, what's your observation of us, but also what you're seeing across many other insurers?
Yeah.
Markets.
I think generally, when you start this journey, the big questions are, "Well, how's your data?" Because if you want to train models to make decisions based on your data, if it's not clean, consistent, accurate, you're gonna get bad answers. Then, "How's your processes?" Because if you're gonna use AI models to automate or take humans out of the equation and do these processes, if they're inefficient, you're just automating bad process. It's gonna make it go faster, which is gonna make it worse. The third one is, "Do you have the fundamental technologies in place, generally cloud-based, to do these things that you wanna do?" IAG is unique in that we can go, "Yes, yes." That, to me, is quite the accelerator and great foundation to start from.
Okay. It's Nigel Pittaway from Citi. Just slightly changing tack. Just wanted to ask that with your modern tech stack and 61.5 tNPS in motor, do you think your difficulties in Australian motor unit growth are largely over?
I mean, some thoughts, and I'll ask Julie to come in as well. I mean, we sort of showed those, that great slide, I think, for New South Wales and Victoria for NRMA and RAC. It sort of shows the market grew just over 10 and us just under that. In the last three years, actually, it's not as it's even, it's even closer. I wouldn't characterize it the way you said. I would say that we know our price point has been, you know, has been challenging, that we know that that's been tougher than home. We know competition has been pretty heavy in the motor classes, particularly in New South Wales and Victoria.
What we can also see, and we made some changes, and I'll get Julie to make some comment now, that actually we've turned that a little bit. Maybe you come in rather than me say any more.
Sure. If I look at the direct business in Australia, across New South Wales and Victoria, we've seen a little bit of volume loss, as we said, in motor. Victoria, we've explained before, because of the conditions in the market, we've been holding our share there. In New South Wales, it's been new business growth. We've put a lot of work in over the last six months to kind of turn that around and reshape some of that portfolio, and we're pretty comfortable with the way it looks. I mean, we're always going to be selecting the risks that we think meet our risk profile.
You know, bringing in RACQ, and we've got growth going through South Australia, gives us a bit more ability to balance. We've sharpened some of our marketing, we've reshaped some of our media spend, we're feeling comfortable with the outlook.
Sid.
Anything this side? I'll race around the other side to talk amongst yourselves for a little while.
For those on the video, Mark's now running across the room with a microphone.
Thanks, Mark. Siddharth Parameswaran from JP Morgan. Just a follow-up question on growth, aspirational growth ambitions. I think you've got a target particularly for RIA of AUD 15 billion of GWP, ex the acquisitions. It implies around 5% growth. You're expecting the market to grow at 6%. Are you still targeting? It seems that it's a revised target of below market. Am I reading that correctly?
I think you're overthinking that.
Yeah.
I mean, as a general theme, the 2025 is sort of, let's say the current run rate of our business. Let's pick for June 2026, let's say the business is riding about 18 and a half. Actually, the run rate's more than that, because it's got RAC, it's got an extra two months of RACQ in it, so let's call it 18.75 or something like that. That's today, right? That's our business right now. Well, really, what we're really saying is we're going to grow that roughly at 6%, plus the inclusion of RAC in W.A. That sort of run rate business plus the inclusion of W.A. gets us to the 2025. Our version of that is each of the businesses.
Sorry, my question was specifically about RIA targets, yeah.
Within that, it's the same sort of math. It's the current run rate. You know, we've got an extra couple of months, extra two months of RACQ.
Yeah.
Last year only had 10 months, and then 6%+ the inclusion of WA.
Sorry, you're targeting 6% organic growth?
Yeah, we're saying I mean.
That's what you're hoping to get market share.
Well, actually, what we've said is we're targeting.
Market.
Market growth.
Yeah, yeah.
What the assumption on market growth, which is what, you know, we put up on there, was sort of 6%.
Yeah. No, I mean, the only reason was it specifically before you had targets of aspiring for market share, for market growth, but it wasn't particularly put that way this way.
I think we think that is market growth.
Yeah.
We're projecting outwards to FY 2030. We're expecting the market to grow about 6%. We're saying that we will grow organically at that level and bring in the RAC W.A. and the full run rate of RACQ.
Okay.
It might be in the rounding.
It's 4.5%. My numbers are around 4.5% versus your 6%, so it's over 5 years that compounds to a difference, but it's sort of consistent.
The theme is the one Julie said, so that might be rounding. At that, what the story is the one we said.
Okay. Fair enough. Okay. Just, I mean, the chart you showed on NRMA in particular and it, you know, growing close to market, just where have the difficulties been by state? If you could give us some help in understanding, you know, and what actually happened in those other areas.
I mean, we've given you the publicly available data from a CGU perspective from the APRA stats, so you can check that, and we've shared our RAC, our NRMA Insurance position just to try to give you a bit of a sense that in our home states they're growing. Obviously in Queensland, if we look at Queensland from the NRMA Insurance book, it's a little bit behind. We've been very focused on RACQ, and that'll be our growth engine going forward, and that is going pretty well, ahead of our targets on growth, so we're pleased with that. In South Australia, we've transitioned our brands to NRMA Insurance. We've got home and motor volume growth going through South Australia that we're pleased with. It's also supported by the CTP book. In W.A. our shares have been more muted.
We're obviously, again, focused on the RAC W.A. acquisition there. Again, that would be our future growth lever through that market. Across the country, home's growing strongly, so it really has been a motor and new business story, particularly in New South Wales.
Hi, Freya Kong from Bank of America. Just a follow-up on Sid's question and your outlook and confidence for market growth over the next five years. I think addressing under-insurance has always been a structural growth driver that the industry's pointed to, but affordability is getting worse, not better, and we've seen instances of the government having to step in to help with that with the Cyclone Reinsurance Pool. Any steps you can take as an industry to address this and drive the growth?
No, I think there's quite a few, and we're certainly working with government around this topic, and I think we'll probably hear a little bit about that in the budget tonight and tomorrow around sort of putting some money away to sort of do some more exploring with the industry around what we could do. It's not good for our country, and I'll sort of say something similar for New Zealand, around sort of just excluding an element of the population that have sort of ended up with being exposed to sort of certain risks predominantly around natural perils that sort of exclude them from insurance. I think there has to be that ends up being a country issue.
One thing is the industry knows a lot, and IAG knows a lot and is very helpful when the government's trying to work through what could be done. You know, we are definitely working with the right people around, with other members of the industry and the industry association around what potential solutions could be. I mean, Julie's heavily involved in this topic. I mean, you might want to make some comments around the HIP.
Yeah, I mean, the ICA is very focused on bringing the industry together to collaborate on how we might increase availability, if you like, particularly in some of these flood-challenged areas. There is a group called the Hazards Insurance Partnership. That brings together almost every Department of government, I would say, and most insurers to try to have a look at what we might be able to do to change affordability in some of those spaces and availability. That work's underway. Obviously the work that we put into our technology and simplification will help us be more cost efficient over time, and that's really important to us. You know, those are the areas as well we're looking from an affordability perspective.
Last question. Andrew?
Yeah, Andrew Adams, Barrenjoey . Can you just help me understand where the benefits of AI come through for investors? I guess looking at guidance, and I don't want to get bogged down on the rounding, but it does seem to imply, you know, a recovery in premium rates in retail but flat or lower margins in retail because it all looks to be coming from intermediated. I would have thought AI, I'd get some expense savings or the ability to reinvest back into premiums. Where am I seeing AI in the financials?
I mean, my sense will be obviously it's not just gonna be IAG, right? It's gonna be the market, there's gonna be wholesale change, I think, in sort of cost structures that could occur over the next sort of five, six years that hopefully go to affordability. Maybe, you know, some of this gets the discussion we just had around the affordability of our. It's not good for people to be excluded from insurance. Actually this may be helpful because I think risk is on, remember. Yes, AI is gonna probably help with some of our expense cost structures, productivity efficiency. Against that, risk is on. The products are gonna go up.
If we're successful in AI.
Sorry?
If we're successful in AI.
Yeah.
the industry growth arguably over the next five years could be closer to zero or much lower than what it's historically been or?
I doubt that because I think risk will continue with a population growth.
You doubt we're gonna be successful or you doubt that there'll be low growth?
I doubt there'll be low growth. I'm confident the industry will be successful in deploying capability to improve customer experience, take some inefficiency out of the way the system works, both right across the system, by the way, not just in the I know we're talking about retail now. Against that, I think, one, that could actually be helpful, so that may expand the market because it goes to affordability, so more people can actually buy insurance. Against that as well, I think risk is on. Yes, there may be some productivity efficiency from cost point of view. Against that, I see the risk profile of our country only going one way, which is up.
You know, that's why I think the net of that, you know, we're sort of forecasting at 6%, my view is that's likely to be low, my sense would be that we'll end up having at an industry level premium growth at or above that. Mark's given me the wind up. Hey, thank you panel, thanks for the questions. We'll roll now into the other part of our business, our intermediated business. Start with you, Jarrod. Thank you.
No, you're right. Come on. Okay. Good afternoon, everyone, and thank you for joining us. Today I wanna do more than just share numbers. I wanna share the story of how CGU and WFI are shaping the future of intermediated insurance in Australia. Before I take you through our strategy, I'd like to answer a question I'm sure a number of you want answered, which is how confident am I in our capability to navigate the commercial insurance market cycle, which has softened since this time last year. I've seen many of these cycles over my career, and since first joining IAG I've become really focused, not just on rebuilding the foundations of this business, but on preparing for this softer phase of the cycle.
The investments we've made in strong underwriting discipline, pricing sophistication, people capability and operational efficiency position us well to deliver through the cycle. We have strong reputable brands in CGU and WFI, diverse portfolios and channels to market, not all of which are as exposed to the cycle to the same extent. In 2025 we were very deliberate in taking cost out of the business and restructuring around a functional model to drive operational efficiency, and that will be fully enabled with AI. Since exceeding our 250 profit milestone in 2024, we've demonstrated the ability to achieve half on half stable underlying margins. Today's capabilities position us well for the cycle we are in.
Our ambition is much greater, our in-flight strategic investments in AI, process and technology transformation and broader capability uplift put us on track to achieve a sustainable 13 + insurance margin by 2030. By then, we will have taken out at least 3 percentage points of cost to run our business. We will also have more agile connectivity to our brokers. The ability to bring product innovations to market quickly as customer needs change. Our focus hasn't shifted. We're committed to hitting our annual financial targets, managing margins through the soft market and transforming our operating model. These aren't just aspirations, they are actions that drive outcomes for our customers, brokers, and shareholders. IAG operates with meaningful scale across commercial, SME, agri, and personal lines. Over AUD 4.5 billion in GWP.
That scale and quality of partnerships allows us to invest in data, AI, process transformation, while maintaining our underwriting discipline. Growth here is intentional and targeted. This, and our foundational insurance capability already delivered, provides the confidence in achieving these targets. Across the industry, expectations are moving quickly from customers and brokers. They're looking for speed, consistency, and relevance, not just price, and that's shifting the basis of competition. At the same time, technology, particularly AI, is reshaping how we price risk, select business, and serve customers, and that's right across the value chain. Alongside that, the risk environment remains complex and increasingly dynamic, which raises the bar on execution. Our response is deliberate. We're investing where benefits compound, in capability that strengthens over time, in efficiency that is structural, and in control that is built into how we operate.
Our vision is to be recognized globally as a leading intermediated insurer. We're focused on the areas that matter most, growing and succeeding in our market, leading with customers and brokers, driving operational efficiency, embedding risk control by design, and engaging our people. We've set ambitious targets for 2030. A plus 13%+ insurance margin, number one in NPS across WFI, CGU, and claims. A 10% admin ratio, 100% straight-through processing on SME, agri, and personal lines, 90%+ automated controls, and an outstanding employee engagement score above 78%. These aren't just numbers, they're outcomes that reflect the discipline and delivery we're embedding across the business. How are we gonna get there? We're gonna focus on four priorities. Customer obsession, accelerating growth and expanding our market by delivering exceptional customer experiences.
Insurance excellence, driving underwriting excellence, leveraging data and Generative AI, ensuring capital efficiency and governance. Future-fit operations, redesigning our control environment, building a platform for profitable growth, striving for operational excellence. Exceptional people, outcome-driven, exceeding customer expectations, fostering a culture of engagement and consistent innovation. Let's look at some of these in a little more detail. What really drives our ambition is our obsession with customers. Today, we're delivering measurable results. Our broker cost, our broker pulse scores is up, claims NPS is rising, retention rates in preferred segments are improving. These aren't just metrics, they're proof that our customer program is translating into real value. More GWP through higher retention, lower cost to serve, fewer complaints, targeted GWP growth, elevated customer experience. We've set the foundations. Our CX team is established.
Customer experience is built in to our Commercial Enterprise Platform and AI journeys. We're tightening measurement so we can manage it like any other performance driver. In insurance, customer experience, especially at claim time, is what builds loyalty and uplifts retention. This is about growth, not just marketing. Looking ahead, our ambition is to completely embed customer obsession into our organizational DNA. We're integrating digital and human channels, delivering tailored products and solutions that reflect emerging risk our customers are facing. What really sets us apart is our commitment to insurance excellence. Our pricing sophistication continues to evolve, enabling us to better price risk and deliver underlying margin. This is about strong risk assessment, agile underwriting that drive improved margins across our portfolio. We've laid solid foundations, underwriting pricing discipline, robust reinsurance protection, and strategic data asset building.
Looking ahead, we're accelerating the build of our underwriting function of the future. We're delivering new tools, like the underwriting workbench and product factory, and optimizing our portfolio. Our ambition for 2030 is clear: fully integrate AI-enabled risk assessment in underwriting, develop continuously evolving pricing mechanisms, evolve our risk appetite to serve emerging customer exposures. Operational excellence is the engine behind everything we deliver. We've established and embedded our operations function, redesigning end-to-end processes, and we've started with claims, and launched skills and capability uplift programs across the business. We're automating claims lodgement and validation, and our CEP delivery is on time and on budget. Looking ahead, we're continuing AI-enabled automation across all remaining processes.
We're completing CEP delivery for all planned lines of business and processes, and integrating redesign work across the value chain. Our ambition is to recognize all benefits from CEP delivery, the operating model changes we've already implemented, and the broader tech modernization we'll step into. We're shifting from manual detective and corrective controls to automated preventative controls, making our business more resilient and more efficient. Let's bring it all together and look ahead to our Ambition 2030. Our target is clear. We're aiming for a 13%+ insurance margin by 2030. It's not just about hitting number, it's about building a business that's resilient, relevant, and ready to lead. We want to be recognized as a leading commercial insurer. We're transforming our technology stack, enabling us to capture disruption opportunities as they arise. This is a deliberate re-engineering of the insurance value chain.
We're investing early where advantage compounds: data, AI, and process redesign. These investments are already delivering results, and they'll continue to drive value as we move forward. Aligning product and service propositions will enable us to gain market share, and we'll see a 3 percentage point improvement in our cost to run the business. That will be tangible progress and a measurable outcome that our strategy is delivering. As I wrap up, I just want to leave you with a clear sense of where we're headed. We're not just aiming for financial targets. We're building a business that's resilient, relevant, and ready to lead the industry. Our actions are deliberate and future-focused. We have momentum, we have confidence, and we have a clear plan to deliver on our 2030 Ambitions. I thank you for your time and attention today.
I'm gonna pass back to Phil, and he's gonna take you through NZI Intermediated business in New Zealand plans. Thank you.
Great. Thanks, Jarrod. [Non-English content] again, everyone. I'm excited to be back on stage representing our intermediated business in New Zealand. NZI is New Zealand's leading commercial insurer, and we serve customers via our broker network. The NZI brand is 167 years young with a storied history, and we enjoy strong, long-standing relationships with our broker partners. First, I'd like to share some market context on the New Zealand market. The intermediated market makes up about half of the overall insurance market in New Zealand. Around 80% of our GWP is spread across five key broker partners, comprised of three global and two local networks. It's a diversified broker partner mix, which reduces our concentration risk, and our broker NPS scores consistently outrank competitors across various surveys. What differentiates our business is our scale and our local capability.
We have deep on-the-ground broker and customer relationships, strong local underwriting expertise, and a leading claims capability. Together, they enable faster decisions and better outcomes at the moments that matter most. We've also evolved the proposition beyond traditional insurance with our risk solutions, strengthening risk assurance, prevention, and customer engagement. Taken together, these fundamentals give us a strong defensible market position and a platform from which we can continue to invest, modernize, and grow with discipline. We're currently well into a soft market. I've seen a few of these during my career, just like Jarrod. Heightened levels of offshore capital are driving down commercial rates. Corporate property rates are down 10%-30% year-over-year. SME property and commercial motor vehicle are both down about 5%-10% year-over-year. Our priority is discipline, not chasing volume at any price.
The good news is we are starting to see signs of potential recovery. It's way too early to declare victory, as a market leader, we will lead the market with targeted modest rate increases. The team has been communicating inflationary rate increases are coming, we're working with our brokers to manage expectations. We're also seeing more managing general agencies enter the market. Most MGAs specialize in specific segments, often with a modern tech stack that gives them speed to quote and bind. The potential for AI-native brokers would further intensify the competitive landscape. Our strategic response really differs across our key customer segments. In our corporate segment, we remain relationship-led and disciplined on price. These are the largest businesses in New Zealand, we enjoy strong tri-partite relationships with our brokers and customers, where we provide sector-based expertise.
The SME mid-market segment is our largest cohort, and it's less exposed to the price cycle. The opportunity here is to invest in digital capabilities to lift speed to quote and respond to brokers' needs faster. Migrating onto the Commercial Enterprise Platform is a key strategic priority, with planning commencing in FY 2027 and commencing in FY 2028. In the interim, we'll continue to modernize the business through pricing sophistication, process optimization, and targeted use of data and AI.
We see the smaller personal rural segment as an opportunity to explore agency models to better serve our brokers and our customers. As an example, we've invested in Ag Guard to target growth in the rural market. Ag Guard launched a digital end-to-end proposition tailored to rural customer needs earlier this year to improve service and increase efficiency. Early feedback is very positive. A recent quote from a broker was, "Super fast and responsive. Blowing your competition out of the water." That's the kind of feedback we like to hear. We'll continue to pursue targeted growth through our agency investments.
Similar to retail, we continue to introduce unique propositions to reduce reliance on price-led competition. NZI risk solutions enable us to win customers on value even when we're not the cheapest. These services shift insurance from a once-a-year transaction to an ongoing relationship. As an example, our FleetFit retention rates are 95% and generate strong lifetime value. You know, we're amazing when there's a claim, but the best claim is the one that never happens. By identifying and mitigating risk upfront, we reduce both the frequency and severity of claims, and that's good for customers, and it's also good for us.
As an example, in 2,000 electrical inspections, we found over 4,000 serious defects that could have resulted in a serious fire. Actions like these where we reduce preventable loss mean less downtime for our customers and improve relationships that stand the test of time. This creates a virtuous cycle. Customers and brokers see our value as a partner, and we achieve stronger portfolio quality and returns. This is how we balance growth, affordability, and profitability through the cycle, and why these solutions are a core part of our long-term strategy. NZI is a high-quality business with strong fundamentals. We're the market leader in commercial, we're the leading brand with brokers, and we're differentiated through our local claims capability and our unique risk solutions. While we are operating through a soft part of the cycle, we'll lead out of it with discipline.
Looking ahead, our strategic investments will modernize the business, including migration to the Commercial Enterprise Platform and some targeted bets in alternative distribution where it makes sense. Together, these actions ensure NZI is well-placed to sustain and deepen its leadership as the market evolves. Thank you. I'd now like to invite my colleagues up on the stage for Q&A. No video this time.
We'll just do the same again, hey? Mark's just gonna facilitate questions.
Nigel Pittaway from Citi. Just starting off on the comment you just made on AI native brokers could further intensify the competitive landscape, what do you think are the factors that are gonna most dictate the prevalence of those native brokers and whether or not they're significant?
To my comment, the factors will be how quickly the AI evolves and becomes easy for brokers to utilize them to interact with companies, and how receptive companies are to interacting with them.
Do you, I mean, do you think it's likely that they're, you know, come 2030, they're gonna be very prevalent in the, in the marketplace? How are you thinking about that?
I wouldn't dare speculate on how prevalent, but I'd say we're gonna prepare ourselves to deal with brokers. It's a similar answer that we gave to customers, is we want to deal with customers the way they want to come to us. We want to deal with brokers the way they want to interact with us if it makes sense for us from a business standpoint.
Nigel, there's a higher order question of, intermediaries are wonderfully entrepreneurial and we're working on the basis that change is occurring. We're changing our business to meet our customers. No doubt they're doing something very similar. We know that advice is sought. Our industry and our products is complicated on one spectrum, and hence we have the advice model and therefore the broker model, why it exists in the first place. We're working on the basis that they're a very relevant part of the insurance industry and therefore a very important part of the way these guys are running their businesses.
No doubt there's a lot of engagement with AI within their businesses and how we're connecting and a lot of efficiency and productivity, but just the concept, you know, we're working on the basis that they're a relevant participant in the market.
Just, Nigel, just add in 2030, I'd hate to speculate what the world's going to look like then from an AI perspective.
Sure.
In the engagements I'm having broadly across the broker community, the focus is really much on frictional cost.
Yeah.
How do they free up their time? How do they enable their brokers to be spending that quality time with the client to make the real difference and what the client really values?
Maybe just one quick follow-up. I mean, just as you said you'd been fortuitous in that you've got your sort of modern system in place in retail as before, you know, the market changes, do you have any concerns that given you're still in this transformation process that that's all gonna happen a bit quickly for you given you won't have completed the transformation?
I'm comfortable with where we are on that journey, compared to our peers. We're still able to connect, so we have strong connectivity layer. I think that's the first place things will change. Our delivery timeline, so we deliver a lot of our commoditized products, if you like, straight through pro the SME, our small business products get delivered through next year. We'll be moving pretty fast to a, what could be a fully AI-enabled capability. I'm comfortable with the, where we're positioned.
Probably more so from the product construct that we're building. What that will enable us to do with dynamic product offerings to our broker partners, that's where I think we have a true advantage. That will take some time for others to catch up, I'd say.
Thanks.
Kieren Chidgey, UBS. Jarrod, can you just unpack sort of how you're thinking about the timing of the cost ratio improvements in your business? You're talking about acceleration of the Commercial platform. You know, is that 3% improvement in FY 2030 number? When will we start seeing sort of the expense ratios start to fall?
If I look at our Commercial Enterprise Platform, I'll get the acronym right. You know, we complete delivery in 2028. We really start recognizing full value in FY 2029. That's when the real marginal gain comes. In the interim though, and we've started at claims because we have a single consistent platform across Guidewire for claims, we will get some efficiencies on our claims handling expenses there. Mainly at the front end of the business, and what we're seeing there is that's our biggest turnover area of our business from a staffing perspective. That's enabling us just modify the number of new recruits we bring into that space. We're already starting to recognize some savings there with the ingestion models that we've already deployed.
It'll be modest as we deploy and have those deploy cost, and then it'll accelerate at the back end towards the FY 2029 and FY 2030 years.
Just second question, sort of you started your presentation by articulating your confidence in managing the business through the cycle. You know, in the short term, in the position we're in at the moment in markets, is there a risk margin short term go down before they go back up?
It's a challenging environment. If I put that in context of our portfolio, I mean, we've got a global segment, a major account segment that is highly competitive at the moment, heavily influenced by global capacity. That's by far and away the smallest segment of our business, so circa 10%. Middle market, which is generally defined assets somewhere between 20 million and 250 million, that's our rough split. Less dynamic in pricing, less international capital flow, flows in there. We've still got SME, agri, personal lines that we're still getting right in that business.
The overall balance that we have in our portfolio and separately, having our WFI business, that's a non-broker business that has a more stable, less impacted from pro, we feel that that balance will enable us to manage through the challenges we see in specific segments. What we will see though is potentially, growth will slow, and we've already seen that, as we have to make decisions to step away from business that we feel is too impactful to margins, and we have seen that already through this year.
Siddharth Parameswaran from JP Morgan. Just a question around some of the actions that have been taken before about getting a separate license for intermediated, you know. Could you talk about what that has done for your business in terms of increasing optionality, what you're actually seeking to do with that optionality?
Yeah, sure, Sid. I mean, it sort of starts with a philosophy which we've reinforced again today around, you know, we think of ourselves as a retail and intermediated business. You can see it even the way we've presented our business, the two retail, the two intermediated, there's a lot of similarities there, obviously. When we all had already separated out, not because of the license, but because I thought that was the best way to run the company, sort of how we go to market. I mean, in Australia, Julie and Jarrod, we'd already separated our teams, claims, pricing, that was already in separate teams, not because of a license, just because we thought that was the best way to run the business and that sort of had already been replicated in New Zealand.
The license in my mind was really lining up the balance sheet with the business. It's kind of the story. Ensuring that we, we really were running the, each of these businesses not separately, but really focused on their brands, their customer segments, and the balance sheet that supported that part of the business. I think what it also does, a separate license for CGU in Australia, it does give us a bit more flexibility on funding, on capital structures and the likes, that we're not fixated on as a concept. Does create some flexibility in our business model going forward. That's, that's not our main focus actually. Our main focus is at the front of the business.
The way we've set it up. Sorry, and last comment. With the way we're running technology platforms, when we originally called the technology platform we built for the retail businesses, the enterprise platform, because we're gonna roll it out everywhere exactly the same. We kind of We did that with claims, but we kind of worked out for sort of policy and sort of the front of the business sales, we sort of needed the uniqueness, the products are quite different, and I was worried we're gonna have a project that was sort of half done everywhere. That's sort of that nightmare. We didn't do that. In fact, the retail has it. We now, you can see our language, we call that the Retail Enterprise Platform. That supports the retail business.
Jarrod, we call it calling the commercial platform. The commercial, you know, we're calling that different. Guidewire's in both, so it's not completely separate. We really are running the company like that. I think a license and a separate balance sheet gives us optionality. It's not really in the way we run our company. It's not really driving anything.
We're done.
So we'll. That's a wrap-up from Mark. Hey, thank you panel, and thanks for the questions. Now we'll change lastly to William, who's just going to take us through some of the financials and reinsurance aspects of our business.
Good afternoon all. Welcome to the last presentation of the afternoon. This is my second investor day as IAG CFO. Building on the progress over the past two years, I'll bring together everything that you've heard from Nick , Neil , Jarrod, Julie, and Phil into the IAG financial model shown on this slide. Starting with the top line, and based on our operational plans and forecast industry growth in Australia and New Zealand, average annual GWP growth of mid-single digit is clearly achievable. I'll outline how our reinsurance strategy provides strong downside protection and low volatility. This means IAG can deliver a sustainable reported insurance margin of at least 15% with additional material potential upside. Together, this provides an ROE of greater than 15% and high single-digit EPS growth.
Our dividend payout policy of 60%-80% provides a sustainable and growing dividend to our shareholders. Additionally, we expect to generate excess returns that can be reinvested back into growth opportunities or used for capital management, typically buybacks, which will continue to reduce our share count. In combination, we believe this positions us well to achieve top quartile total shareholder returns. Firstly, on expenses, we remain focused and on track to our sub-11 admin ratio target, and I'll unpack for you some of the moving parts. Like many firms, we face pressures on our cost base, primarily from technology and the investments we're making to support future growth. These will be more than offset by process and efficiency benefits, reducing the proportion of premiums that it takes to maintain and run IAG and allowing us to invest more in growth, transformation, and customer initiatives.
As you've heard today, the management team has a strong focus on improving efficiency and productivity. For example, Neil detailed our consolidated technology roadmap and how AI is being employed throughout the organization. Julie talked to digital transformation and how 65% of new business sales are via this channel, and it now takes 50% less time to quote home and motor online. Jarrod described how accelerated Commercial Enterprise Platform and operating model changes are structurally lowering total controllable expenses, thereby improving productivity. Phil mentioned various benefits of operating on a single platform for the retail business, namely fewer systems to use and products to sell, more automated processes, and having blended teams across sales and service functions.
These are just a few examples, and we've worked hard to entrench an organization-wide focus on granular itemized productivity improvements, and we have strong rigor in tracking the financial outcomes, giving confidence in delivering the benefits. Tech and AI are already delivering around AUD 350 million in claims benefits and around AUD 130 million in expense savings towards our efficiency targets. As a result of this, we anticipate maintaining a competitive claims ratio and achieving a reduction in our expense ratio. Specifically, the admin ratio on an ex-levies basis improved in 1H 2026 to 11.7%, and we expect this to reduce to under 11% in FY 2027.
Within our FY 2027 spend, we include a further around AUD 400 million investment in tech and AI as we continue to execute at pace on the exciting opportunities ahead. I'll now discuss our strong capital foundations. Our capital targets are anchored around robust regulatory capital target ranges. We have a resilient capital platform that is diversified by type, duration, and provider. As shown on this slide, IAG has been innovative in its use of reinsurance to reduce earnings volatility and capital requirements over time. This low volatility capital light strategy has allowed us to invest in the business, make acquisitions without the need to raise equity, and return surplus capital to shareholders via on-market buybacks. Since FY 2014, the ratio of GWP to prescribed capital has improved from around AUD 3 per dollar of capital in FY 2014 to approximately AUD 6 now.
While part of this trend can be attributed to capital allocation initiatives, this has also been driven by IAG's innovative reinsurance arrangements. The original whole of account quota share deals provided the foundation, and this was further extended by the long-term perils volatility and adverse development covers. On this slide, I've shown the schematic which outlines the three core components of our overall reinsurance strategy. The 35% quota share arrangements, the main catastrophe protection, and volatility cover all serve different purposes, and I'll talk to the specifics of each in more detail over the next few slides. The combination of all of these protections lowers earnings volatility, provides balance sheet protection, and materially reduces our exposure to natural perils. Firstly, on the whole of account quota shares. These are diversified by counterparty and maturity.
Since 2015, when IAG first announced the 20% deal, they've increased in quantum to now result in 35% of our consolidated business being ceded to our reinsurance partners. Following the recent acquisition of RACQ Insurance, we've integrated it into our reinsurance program by canceling its previous quota share arrangements and replacing it with a 2.5% share in IAG's on similar terms to our existing arrangements. This has already contributed the bulk of the run rate synergies of over AUD 50 million that we identified at the time of the acquisition. Cumulatively, these quota share deals have reduced our regulatory capital requirements by over AUD 1 billion and provide approximately a 5-point uplift to our insurance margin from a combination of fixed and profit commissions and savings on other reinsurance costs.
Secondly, in relation to our main catastrophe protection, this cover is renewed annually on the first of January. It provides significant balance sheet protection for gross perils costs up to AUD 10 billion. It has one full reinstatement purchased, which is a unique feature of the local market. This cover addresses the significant regulatory requirements that we face, particularly in New Zealand, which requires cover for a 1 in a 1,000 year event, which is among the most conservative in the world. We also adopt a panel of partners for this protection. It includes both annual and multi-year capacity. Additionally, it has been placed on favorable terms given that we don't need to place the full cover. As a result of our quota shares, we only need to place 65% of the capacity on this program.
Importantly, the counterparty credit rating is also very strong, with over 90% being rated A+ or higher. The final component of our reinsurance program is the perils volatility cover. This pioneering protection recognizes the potential for perils to impact the financial stability of Australian and New Zealand insurance companies. This is a long-term deal that provides significant downside protection, and in future years, the annual attachment only increases relative to underlying aggregate exposure. I also want to highlight that as the cover was not utilized in FY 2025, the AUD 1 billion of protection, or AUD 680 million on a net basis, is available now and every year for the remainder of the arrangement through to June 29.
With pricing fixed over the term of the arrangement, this effectively gives us flexibility in how the impact of perils assumptions and reinsurance costs are reflected in customer premiums. There's a profit commission component that's built into the economics of the transaction. Given that this is modeled over five years under the IFRS GMM approach, it's relatively stable and is not materially impacted by perils activity in any discrete financial period. At the time of the announcement of this cover, in conjunction with the adverse development cover, we indicated the incremental cost of the downside protection was around 50 to 100 basis points of the group insurance margin. This is included in the margin targets that we're discussing today. In the slide on the right, I have also provided further detail on the long-term perils volatility cover and its impact on our peril modeling.
The significant downside protection that I referred to earlier means our peril costs are capped at our allowance in around 95% of scenarios. In 40% of scenarios, from the peril allowance up to the AUD 1 billion limit each year of the cover, we're covered in full, meaning our reported results will be in line with our peril allowance. In approximately 55% of outcomes, the peril outcome is below allowance, and so we will retain the favorable perils upside in our earnings. Finally, most importantly, the lower chart shows the mean of these expected net peril outcomes.
The favorable upside skew gives an average benefit through time of over AUD 100 million insurance profit in the margin, and this is an average potential upside of over 1 point per year of margin, which is a key component of our longer-term financial model. Bringing all of this together to help you understand the various impacts on IAG's reported margin, I've included the key components on this slide. Firstly, as we've indicated, our underlying margin target is around 15%, and in any financial period that could be impacted by a range of factors, including the commercial rate cycle, competition, claims frequency and inflation, and investment market volatility. On top of this, we expect reinsurance profit commission on our whole of account quota shares.
That has been an increasing feature of our results, and we've been risk-adjusting the recognition of this additional upside. As the arrangements come closer to their maturity dates, recognition is expected to increase. Going forward, it's reasonable to expect at least 100 basis points in profit commission, and this could potentially increase to 200 basis points. Finally, as discussed in the previous slide, we have average perils upside of approximately 100 basis points a year. We note there is variability from year to year in this number, so we'll continue to build our guidance on our stated perils allowance. The upside won't be built into margin guidance, but still we think it's an important feature for the market to understand.
Putting this all together, we expect to deliver a reported margin through the cycle of at least 15%, with average potential upside of 1-2 points per year. Obviously, this upside provides us with optionality to reinvest for growth. For comparison, I'll remind you that our reported margin at the recent half year was 17.7% excluding the one-off RACQ impact. In FY 2025, which of course was a favorable perils year, our reported insurance margin then was 17.5%. These margin settings drive our greater than 15% ROE and high single-digit EPS growth that set us up to deliver top quartile shareholder returns for you. With that, I'll ask Nick to join me on stage for the next and final Q&A session.
Thanks, mate.
Hey, guys. Andrew from Macquarie. Couple of questions if I can. Let's start, William, with that last slide. If there are very few realistic scenarios that are gonna get you below 15% reported insurance margin, and you're adding on an additional 100 to 200 basis points of benefit from the profit share, from the quota share, why don't you just step the guidance up? Like, I don't understand.
Okay, thanks, Andrew. I'd say two things. One is, of course, the underlying margin, depending on the period and those things I mentioned, whether it's commercial cycle, competition, you know, claims frequency, inflation, investments. You know, that could be in different points in that 14-16 range is what we expect the underlying margin to be. You have on top of that, of course, the profit commissions, 1-2 points. You can see the range is 15 up. What we don't wanna do is build in the perils into the perils upside potential into 'cause you do know in which year that's gonna come. We had it in 2025. It doesn't look like we're getting it in 2026. Over time, that's definitely upside. We 're not gonna build that extra component into the guide.
In a way, aren't we saying it's 15%+ and the perils allowance we've got is very strong? That's I mean, we're And then we're sort of saying, investors, we're laying it out for you. You know, we think, you know, that 15%+ margin ROE, high single-digit EPS growth, that's sort of the expectation that you as an investor with some upside the way it felt, the way William has sort of set it out.
The other one I had was a couple of your global peers have started to take net provisions for Greensill. There's discussions going on through the court process at the moment. Where are you in that process, and could you potentially take a net provision for that in FY 2026? Thanks.
There's sort of no change to what we, I mean, we went to a lot of trouble to disclose that, and we've sort of adjusted that a little bit over the last couple of years. What we said at February is still the same. The net nil position of IAG. There's, you know, there's a court date scheduled for later in the year. There's a requirement to go through a process of mediation, that's sort of not about someone blinking. It's about a formal process that one needs to go through. That's sort of occurring at the moment. Sort of our net position is unchanged from the disclosure we provided.
Kieren Chidgey, UBS.
Actually, sorry, even stronger. The fact pack of what we disclosed, that is the fact pack today.
Couple of questions. William, if I can just start on the reinsurance quota share profit commission, the range of 100 to 200 basis points. If we see outcomes in line with CAT budget, do you land at the top end of that range?
It, there's a perils component in there as well. Obviously, our core budget, our core underlying earnings, and in fact even the perils part in our reported margin is so strongly protected as we've described by the perils volatility cover. In looking at the profit commission, some of those things can come in. It sort of depend also what's happening with perils.
Okay. I'm not particularly clear on what that response was. I guess the question is a fairly simple one. If we see outcomes in line with CAT budget sort of over the next few years, will we see 200 points of benefit from quota share profit commission?
Yeah. You would be, you'd be close. You'd be around that, yes. However, again, the other thing I mentioned was that because we risk adjust it, we're not gonna, you know, we're not gonna, you know, the amount of that will tend to grow as we get closer to the maturity dates of the.
Of the quota shares.
Different arrangements.
Sorry, can I say one other thing? Obviously, the quota share, profit share commission is the whole of the business, not just on the perils outcome. Therefore, that's also with the assumption that the underlying business.
Underlies.
is sort of delivering the 15.
In the range. Yep.
Yeah.
Similarly on the aggregate, if we see CAT budget outcomes, where would the contribution of that profit commission go? I know it sits within the 14%-16%.
Yeah.
Is that, you know, I think you've been booking at about AUD 80 mil per annum. Does that go up from what we've seen recently?
Yeah. I don't think we've disclosed precisely AUD 80 mil, I think that's been reverse engineered from some of our things we have shown. No, that, I mean, that cover the, as you know, you know, the premium and the other features that cover are relatively stable through time. You shouldn't expect that to change very much.
Okay. Final question, just the math behind sort of getting from 5% GWP growth to high single digit EPS growth. Is that dependent on landing above 15% and having that buffer to recycle into capital management? If you're at 15% margin, can you still deliver high single digit EPS growth?
Yes, we believe we can do that if we're at a 15% margin. We have of course our 60%-80% dividend payout. We'd expect to invest a little bit of that, you know, in growth and capital requirements supporting growth. Over time, we expect that also supports some additional level of capital management, typically buybacks. If we deliver above, then we can either accelerate or we've got more capacity to reinvest further in growth.
Remembering our dividend policy is not on underlying. Our dividend policy is on just how much money we make. If there's a range there from 60% to 80%, but, you know, if we have a couple of good years from perils or, you know, that, an element of that just immediately goes into the dividend policy. Sure, we've got a range in there to, you know, potentially go to the bottom and do more buybacks or something like that. Don't forget the dividend policy is on absolute earnings, not on underlying.
Richard Amland, CLSA. Now that we've heard from all the business units, I'd like to go back to the 6% GWP and sort of see if I can get some relativities between the business units. I'm not necessarily convinced that you can keep growing home at 9%-10% per annum, but you can offset that with recovery or acceleration in intermediated. Within the 6%, can you just talk to, and you don't have to give percentages if you're uncomfortable, but just sort of how that stacks up between the home motor intermediated Australian, intermediated New Zealand?
I mean, the themes are gonna be, aren't they? In the next year or two, intermediated is gonna be tough as it sort of it's coming through a softer cycle. One assumes that changes. We know the history of that business is that does change. We would be assuming that, yeah, the next one to two years, that would be, you know, low to sort of single-digit type growth. You know, we've got some change happening in New Zealand and, you know, we know that, you know, our commercial business, our intermediate business in Australia has got many attributes that aren't big into town, that's helpful.
On the other side of that, I think on motor, you know, we're seeing a reduction of some of those inflationary pressures, sort of if I made a 12-month view. Sure, the Middle East at the moment may cause some increase in parts, but I think that's definitely has come down quite a lot. I think the challenge is around property, actually, where it feels like that's inflation which has been sticky and just hasn't gone away. Pre Middle East was still there. Building costs and sort of claims, you know, the cost of rebuilds for us, but I think it's not unique to the insurance industry, just the housing markets. I think the Middle East is gonna make that go longer, that inflationary pressure.
I already see inflation in our home and therefore pricing, you know, stronger for longer, if that's the right expression. I see the question of affordability. I mean, that's a challenge, but, you know, that's what we're experiencing, that inflationary pressure and that's just not, it's not coming off on property classes.
How much attrition are you building if you can raise prices? I think you'll lose customers.
I mean, not much is the answer to that. I mean, we're not seeing that. That's not our lived experience of sort of people effectively opting out. We see a little bit of it examples in motor and second and third cars and people dropping out their covers, but not less so in property. Contents maybe versus property, versus comprehensive versus the home. Sorry.
Just a point of clarification. What sort of investment yields are you assuming in that 15% margin?
Sort of investment yield. I think at the moment, we're assuming something between 5 and 5.5.
Nigel Pittaway, Citi here again. Just maybe a quick clarification on New Zealand. I mean, previously you've said that obviously New Zealand's over earning, you expect it to come back. Presumably within this target, we're expecting New Zealand to be a little bit above the 15%. How soon do you think it's gonna get there?
I mean, it's probably the same question we asked Jarrod too about how soon are you gonna get there? I think the themes for us, Nigel, in the way we've thought about all this is we've got a retail business that's delivering at 15%, maybe a little bit above. We've got our intermediated business in Australia sort of run rates sort of 11%, 12%. That's drifting up over the next couple of years. You've then you've got to proportionalize these, the numbers here, versus, you know, the size of the businesses. Then New Zealand, not, definitely not dramatic, but definitely we're expecting that to come back a bit. The theme, the sort of that, the package of that comes back to this. You can see the makeup's a little bit different.
Okay. Just on conditions there at the moment, I mean, I don't know whether you can say anything about actual conditions now today. Just in New Zealand, does, you know, has it come back as quickly as you thought or is that often today?
In large, I mean, no. No. I mean, we've been very disciplined in I mean, on retail, sort of pretty much the same. On commercial is where we're really seeing quite a, you know, change in the pricing environment the last 12- 24 months. We've been very disciplined, you know, that's impacted growth. Margins are still okay. I do expect them over the next couple of years to drift down.
Okay. Thank you.
Last chance for questions. Looks like we might have answered all of the sell side questions today. That's a first. We'll take that as a win. We're done.
That's a wrap up. Hey, thanks everyone for coming along today. I mean, the themes we wanna leave you with, and this is a very quick wrap up everyone, because I know you've been sitting here for a long time. You know, we feel like we're in good shape at IAG. We've done a lot of heavy lifting to get the business where we wanna be. You know, we are rightly focused on sort of Ambition 2030 around sort of the core planks of us, around customer, around this sort of insurance excellence we're phrasing it. Be really good at running an insurance company. About the running of our operations, you heard a load about that, and there really is change, more change happening.
Of course, the people that are gonna drive that and sort of the culture and us and the capability that we've got within the company. Outcomes, I mean we tried to be quite specific on the outcomes we're delivering in Ambition 2030. That's really around the size of the company, AUD 25+ billion . The sort of profitability margins of 15%+ , insurance margin 15% + ROE, and really this high single-digit EPS and sort of growing dividend return to shareholders. We wanna leave that with you as the outcomes we're gonna deliver over the next four years. Hey, thank you one and all. Those people online, thanks for staying with us over the last couple of hours.
Those in the room, thanks for those that came out and saw our sites. Our people are really proud to show off what we've got. You probably saw a fair bit of that when you were there. We invite you to refreshments in the room here on Sussex Street. Hey, thanks again everyone.