Strong Flags Departure From Struggling Iag

The Age

Wednesday November 12, 2008

Danny John, Sydney

THE last remaining boardroom links with Insurance Australia Group's early days as a listed company following its demutalisation from the NRMA motoring organisation will be severed with the impending departure of its chairman of seven years, James Strong.

Mr Strong, who has overseen IAG's rise to record profits, then last year's ignominious $261million net loss, announced yesterday that he would step down during his last stint as a director and quit the board - almost certainly before his retirement date in 2011.

His decision comes after a traumatic year for the owner of some of the country's best-known insurance brands, which not only saw a drop in earnings for the third successive year, but the loss of chief executive Michael Hawker and the controversy surrounding rival QBE's failed takeover attempt.

Mr Strong, who became chairman in August 2001, has borne the brunt of criticism for IAG's plunging value, which has been exacerbated by an ill-timed $2 billion British expansion over the past two years.

Mr Strong's pre-emptive announcement about his impending departure helped take some of the sting out the vocal criticism levelled against him and the IAG board at yesterday's annual meeting in Sydney, although it did not stop nearly 20% of investors voting against his re-election.

He told shareholders he intended to stay as chairman for an unspecified period to provide "continuity and stability" while the new management turned the company around.

The search for a successor has been quietly under way since the middle of this year even as Mr Strong prepared to stand for re-election for a final three years.

Mr Strong's eventual exit, likely to happen in 18 months, will leave former investment banker Yasmin Allen as IAG's longest-serving director, having joined in 2004.

A likely internal successor as chairman is Phillip Twyman, a former senior insurance industry executive who has just filled one of the board vacancies. However, Mr Strong said the board would be looking for at least one director who could fill the top position.

The IAG chairman also accepted yesterday that the company had made mistakes last year, even though some of the factors that blighted its financial performance were outside its control.

The board was "not making excuses" he said. "Rather, we accept responsibility for this performance and have taken a number of actions in response."

The next year would be one of "rebuilding". IAG's shares fell 4 to $3.97.

© 2008 The Age

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