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Case Title:

Insurance Australia Group: Expansion Strategies

Publication Year : 2007

Authors: Siddharth Purohit, Joel Sarosh Thadamalla

Industry: Insurance

Region:Australia

Case Code: VMG0011A

Teaching Note: Available

Structured Assignment: Available

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Abstract:

Insurance Australia Group Limited (IAGL) faced with competition back home recognized the need to generate scale in Australia and New Zealand and diversify the Group’s business by geography, product and distribution channels to spread its risks and ensure sustainable profitability. The Group also planned to expand internationally to achieve its targeted Gross Written Premium growth rates over a long term and with UK purchase the group was expecting GWP growth rates at the higher end of the range.

To be successful and remain profitable over a long period of time in the general insurance business and be able to generate annual compounding double-digit growth rates in both Premium Income and Profit, IAGL planned to achieve through both organic as well as through acquisition. But following Tort Law reforms, falling premiums due to reducing claims costs, in addition to smash repairer disputes, competitive pressures IAGL’s organic growth rate was affected.

IAGL had set a clear aim to increase top and bottom line performance by an average 15% a year over the next 10 years. But the Australian insurance market was only growing between 4% and 6% a year. Would IAGL be able to outgrow the risk and achieve its financial goals and enhance shareholder value?

Pedagogical Objectives:

  • To discuss the expansion strategies of Insurance Australia Group Limited (IAGL)
  • To discuss the strategic fit between UK insurance industry and IAGL
  • To analyse the acquisition decision of IAGL.

Keywords : Insurance Australia Group Limited; Vision, Mission & Goals Case Study; IGA; Australia Prudential Regulatory Authority (APRA); Insurance Industry; Carbon Credit; Carbon Neutral; UK insurance market; Motor Insurance; General Insurance; Market Share; Claims; Risks; Managing Costs; International Regulations; Financial Services Authority [FSA]; Strategy; Sustainability; Mission; Vision; Acquisition; Gross Written Premiums; Segments of Insurance Business; Social Security; Community; Peripheral vision; shareholder value

Contents:

  • Insurance Industry
  • Insurance Australia Group Limited
  • Paying Claims
  • Pricing Risk
  • Managing Costs and reducing risks

  • Long Term Strategy
  • Asian operations
  • Corporate Sustainability
  • Road Ahead

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