Insured Stability

Insured Stability

Finding Synergies

IAG, providing personal and commercial insurance products under a range of brands including NRMA Insurance, SGIO, SGIC, Swann Insurance, State and Circle, claims for itself the title of the largest general insurance group in Australia and New Zealand. As well as providing a full range of general insurance products, IAG also provides financial products and services for people nearing or in retirement under the brand ClearView Retirement Solutions. In January 2003, following the decision by CGU's UK-based parent company Aviva plc to sell, IAG welcomed the CGU Insurance Group into the family, with the acquisition including all CGU Insurance Group divisions and stakes in joint ventures with other insurers, together with its subsidiaries.

The acquisition was premised on a determination the merger would be transparent to CGU's customers, and that all existing business channels and established brands would continue to operate. Customers were promised they would continue to receive the same products and services from brands they had come to know and trust. Policy benefits, terms and conditions and claims servicing processes would not change.

But the acquisition was also seen as attractive precisely because IAG and CGU largely operate using different distribution models. By taking on CGU's business, IAG could expect to greatly enhance its position in the SME commercial, rural and intermediated personal channels. Indeed the companies claimed CGU's expertise with intermediaries and business partners - which it remains committed to further developing and enhancing - was one of the key reasons IAG pursued the acquisition.

Issa's job is to help ensure the merged organisation achieves the maximum synergy benefits while maintaining needed flexibility to move forward on new technology initiatives.

Come Together

To kick the merger process off, IAG first put together a program office headed by an IAG executive and manned by people from the front lines of both businesses, to manage the planning and design phases of the merger. There was also significant board level governance of the entire project. "We've had to keep our board informed very regularly about how we're going, because from the board's perspective, we paid nearly $2 billion for CGU and they really want us to deliver on the integration, and it's very high profile in the board," Issa says.

One of Issa's team was seconded to the group full time, as were subject matter area experts from the technology side of the business. The 12- to 14-strong project team was also able to draw on other people with expertise on an "as needs" basis. The office, which has recently handed execution of the work back to the businesses and technology services, began by defining both companies' entire work streams - both functional and business - as the first steps to drawing up a brand new business model.

"We took the best people we could out of the front line in those businesses, and actually put them into the program office and the different work streams that we had, in order for them to actually come up with what the new business model was going to look like," Issa says. "See, you've got to take your best people and put them into those positions; otherwise, if you take whoever is left around who hasn't got much to do, you're not going to get the right result.

"It seems to happen in project teams; you know, people usually say: 'Who's available?' rather than: 'Who's the best person for the job?' It's a hard decision, because yes, sometimes you do take people out of their current roles, which are critical, and you have to put them into these roles, but I think if you don't, as I said, you don't get the right outcomes."

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