Breaking News
FONT-SIZE Plus   Neg
Share SHARE

Insurance Australia Group To Cut 600 Jobs On CGU Revamp

Insurance Australia Group Ltd. (IAUGF.PK) said late Thursday it will cut 600 jobs over the next three years due to the implementation of a new operating model at its commercial insurance unit CGU.

Melbourne-based CGU is a provider of general insurance to Australia's regional and rural communities, a workers' compensation provider and commercial insurer. Insurance Australia acquired CGU in 2003.

Insurance Australia said the revised operating model at CGU will enable it to move to an integrated, function-based organization with common approaches to account management, underwriting and claims.

This will remove areas of duplication within the business and enable it to provide more efficient and consistent service to intermediaries and business partners, the company noted.

Insurance Australia expects the new model to generate initial pre-tax cost savings of A$25 million in financial year 2013. The company projects annual cost savings of around A$65 million pre-tax by the end of financial year 2015.

Mike Wilkins, Managing Director and CEO of IAG, said, "Since resetting its strategy in 2008, CGU's focus on remediation and rebuilding has improved its underlying performance by around $160 million on an annualised basis. With the work to improve the fundamentals of the business well progressed, we believe the time is right to accelerate the actions we are taking."

Insurance Australia said that the cost of implementing the operating model was about A$75 million pre-tax. Of this, A$35 million would be recognized in the second half of the 2012 financial year, while the balance will be incurred in the 2013 financial year.

The company will recognize these items as a corporate cost in its reported results, reflecting their one-off nature.

In Friday's trading on the Australian stock exchange, IAG.AX is trading at A$3.29, up A$0.095 or 2.97 percent on a volume of 4.19 million shares.

Register
To receive FREE breaking news email alerts for Insurance Australia Group Ltd. and others in your portfolio

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
The Philippine economy grew more-than-expected in the second quarter on strong support from foreign demand, figures from the National Statistical Coordination Board showed Thursday. Gross domestic product for the second quarter advanced 6.4 percent year-on-year, exceeding economists' expectation for 6.1 percent growth. This followed by a revised 5.6 percent rise seen in the first quarter. Hewlett-Packard has recalled the AC power cords for its HP and Compaq notebook computer, citing a tendency to overheat, causing a potential fire and burn hazard. HP requests that consumers stop using the cord immediately and contact them to order a replacement cord free of charge. A UN report describing terrible atrocities carried out by Islamic State militants in Syria says children as young as 10 are being recruited and trained at ISIS camps as fighters. The report, based on 480 interviews and and evidence collected between 20 January and 15 July, chronicles the unimaginable brutality and human cost of the Syrian conflict. The report by the independent international com
comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.