昆士兰州-美好的一天，接下来是RACQ

2025E1,0940.450.45-1,070.80 2026E1,1080.460.451,050.00 2027E1,1720.480.471,105.30 Simon Fitzgerald * | Equity Analyst61 293642982 | sfitzgerald@jefferies.comWilliam Richardson * | Equity Analyst+61 293642983 | wrichardson@jefferies.comSource: FactSet The Long View: Insurance Australia Group LtdInvestment Thesis / Where We DifferIAG is the largest insurer in Australia and New Zealand and operates someof the most established, iconic brands in both regions. The company islikely to benefit in the near term from moderating claims inflation and higherreturns on investment assets. Further, the retirement of legacy platformsand a turnaround in IIA will contribute to improve margins. The companyalso has strong relationships with its quote-share partners, which lowersearnings volatility and costs associated with reinsurance expenses.Base Case,AUD9.80, +12%Our PT for IAG is based on our blended NPV ofdistributable earnings (DCF) and P/BV multipleapproach. In terms of underwriting performance,we forecast an improved claims ratio for FY25f.EPS growth in FY25f is mostly attributable topremium growth and lower Perils claims.Sustainability MattersTop Material Issue(s):1) Sudden asset revaluations due to capital allocation shifts towardssustainable options. 2) Commitment to Net Zero by 2050, 50% emissions reduction by 2030. 3)Advocating change to disaster resilience and emergency responses to protect customers and theirproperty.Company Consideration(s):1) Cutting insurance coverage of companies that aren't working towardsnet zero. 2) Developing products to incentivise customer shifts to Net Zero. 3) Reducing peril eventlosses through providing data and expertise to improve disaster resilience in communities most atrisk. 4) Ever growing issue of Climate Change risk and shifting asset security levels.Qs to Mgmt:1) Are reinsurance costs sustainable given the significant catastrophe events that haveoccurred in recent years? 2) What new processes are you implementing to reduce environmentalimpacts? 3) Why are you forecasting 6 years to cut emissions by 50% and then 20 years to cut down100%? Is this too slow?Please see important disclosure information on pages 5 - 11 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Risk/Reward - 12 Month View1413121110987654Upside Scenario,AUD13.50, +55%Assumptionsrelated to our upside scenarioinclude:•Lower Natural Perils leading to a claims ratiobelow our base case.•Sustained high investment earnings.•Improved market share.•Premium rate increases sustained at highsingle digits. 20252024Downside Scenario,AUD4.50, -48%Assumptions related to our downside scenarioinclude:•Higher reinsurance costs with capacityexiting the market.•A reduction in investment income due todeclining interest rates.•Poor underwriting performance with a spike inclaims.•Lower market share through increasedcompetition.Catalysts•Reinsurance prices decline and receiveimprovements in attachment points.•Continued strong recovery in IntermediatedInsurance.•GWP growth in Direct Insurance.•NZ business maintains and grows its positionas the largest General Insurer.•Successful court result and the subsequentrelease of business interruption funds.•Low frequency and financial cost of naturalperils.•Reductions in claims inflation. 2 Figure 2 - IAG Earnings Revisions.Earnings RevisionsVariableGross Earned PremiumInsurance Profit / LossPre-Tax ProfitCash EarningsStatutory ProfitReported Insurance MarginEPS - Stat BasicEPS - Cash Dil AdjDPSSource: JefferiesFigure 3 - IAG Gross Written Premium ($m).10,00011,00012,00013,00014,00015,00016,00017,00018,00019,00020,00020202021Source: Company, JefferiesFigure 5 - IAG Insurance Profit ($m).4006008001000120014001600180020202021Source: Company, JefferiesPlease see important disclosure information on pages 5 - 11 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Figure 7 - IAG Financial Summary.Insurance Aust. GroupRATINGYear endINCOME STATEMENTInsurance RevenueInsurance Services ExpNet Reinsurance (exp) / IncomeInsurance Services ResultInsurance Finance Income / (exp)Insurance Operating Profit / (Loss)Gross Written PremiumGross Earned PremiumReinsurance ExpensesNet Earned PremiumGrowth in NEPNet Claims ExpensesLoss RatioOperating ExpensesUnderwriting Profit / (Loss)Invest. Income Tech ReservesInsurance Profit / (Loss)Net Corporate ExpensesInterest (Exp) / IncomeProfit / (Loss) Fee Based Bus.Profit / (Loss) from AssociatesInvest. Income ShareholdersPre-Tax ProfitTax ExpensesTax Rate (%)Non-Controlling InterestAmortisation & ImpairmentsStatutory NPATNet Adjustments, Tax & AmortisationCash EarningsEPS - Cash BasicEPS - Cash Adj DilutedEPS - Stat Diluted Add Int. on NotesEFPOWA - BasicDividendGROWTH/PROFITABILITY RATIOSGWP GrowthEPS - Cash Basic GrowthEPS Cash Diluted GrowthCombined RatioAdministration RatioReported Insurance MarginUnderlying Insurance MarginExpense RatioROE - Ca