Comprehensive Report and Analysis of Insurance Australia Financial Performance

Comprehensive Report and Analysis of Insurance Australia Financial Performance 1
COMPREHENSIVE REPORT AND ANALYSIS OF INSURANCE AUSTRALIA
FINANCIAL PERFORMANCE
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Comprehensive Report and Analysis of Insurance Australia Financial Performance 2
Comprehensive Report and Analysis of Insurance Australia Financial Performance
1. Company Brief Overview
Insurance Australia Group is the Australian based insurance firm operating across New
Zealand, Asia and Australia. It provides several commercial and personal insurance services
and products mainly home and motor vehicle insurance. Insurance Australia Group is mostly
involved in underwriting of the general insurance as well as related services and investing
operations. Its major division comprises of consumer division or segment that offers general
insurance services and products to families and individuals across Australia, the business
segment that offer some commercial insurance to different businesses both small and large
across Australia, the WIFI and Swann that offer general insurance underwritten within New
Zealand. It is considered as multinational insurance organization whose headquarter is in
Sydney. The company was formed by demutualization of NRMA insurance in 2000 and
return of shares to different members of the NRMA. As a result the NRMA interchanged it
name to the Insurance Australia Group.
2. Ownership-Governance Structure of IAG
i) Key shareholders
The company shareholders include Capital Research and Management, Black Rock Fund
Advisors, Newton Investment Management Ltd, Vanguard Investment Australia, Norges
Bank Investment Management, Colonial First Statement Australia Ltd, Fidelity Management
and Research, Legg Manson Australia and Bershire Hathway Inc. Given that the company is
a public limited company, there is not shareholder with more than 20% shareholding in this
firm. Therefore, since the amount of shareholding ranges from 5% to 0.73%, the company
can be considered a non-family organization or business.

Comprehensive Report and Analysis of Insurance Australia Financial Performance 3
ii) Main People Involved in IAG Governance
The Chairman
IAG chairman is Elizabeth Bryan who the director of the company on December 2014.
Elizabeth was also the chairman of Nomination Committee and is required to attend all the
board meetings. In addition, Bryan is the chairman of the Insurance Manufacturers of the
Australia Pty Limited.
Board members 
The company board of the directors comprises of Elizabeth Bryan AM, Duncan Boyle,
Doctor Helen Nugent, Hugh Fletcher, Jonathan Nicholson, Philip Twyman, Tom Pockett,
Sheila McGregor, Michelle Tredenick and Peter Harmer. These members are usually
accountable to the shareholder for operations, performance as well as affairs of the company.
These members also serve and represent interest of the company’s shareholders and
collectively appraise and oversee policies, performance and strategies of the firm.
CEO
Besides, Insurance Australia CEO is Peter Harmer.
In this case, there are no individuals with similar surname as substantial shareholders. Hence,
there is no family member or owner in IAG governance. Furthermore, there is no similar
surname for those shareholders with around 5% shareholdings meaning that there is no
shareholder that is involved in governance of the company.
3. Fundamental Ratios
Short term solvency (Liquidity ratios)

Comprehensive Report and Analysis of Insurance Australia Financial Performance 4
They are those ratios used in measuring an organization capability of settling it short-term
debt commitments (Santosuosso 2014). In other words, it measures the capability of an
organization in converting is current assets into liquid cash such that it could settle or repay it
short-term or current debt commitments. The major liquidity ratios that can be computed for
IAG include;
Current Ratio
This ratio is used in measuring an entity’s capacity in settling or paying off all its current debt
obligations (Babalola & Abiola 2013).. In this case, higher ratio is more preferred than lower
one since it represents better organization’s liquidity condition. In this case, IAG current ratio
for 2016 and 2017 was;
2017 = 25457/ 20,305 = 1.25
2016 = 25,785/ 20312 = 1.27
Long term solvency (Financial Leverage ratios)
These are referred to financial ratio used in measuring the capability of an entity in meeting
or settling its long- and short-term debt commitments on time (Babalola & Abiola 2013). The
ratio assists in measuring whether an entity’s net income would be in a position to cover all
its total debt commitments. The most important ratio examined in this case are debt ratio as
well as debt to equity.
Debt Ratio
The ratio measures percentage of an organization’s total asset which is being financed by
debts (Babalola & Abiola 2013).. Here, higher figure is less preferred since it signifies higher