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TIO MAC Report Statement of Corporate Intent 1 July 2008-30 June 2009



TIO MAC Report Statement of Corporate Intent 1 July 2008-30 June 2009

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Tabled paper 541


Tabled Papers for 11th Assembly 2008 - 2012; Tabled Papers; ParliamentNT




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3 CORPORATE KEY RESULT AREAS 3.1 Performance With an overall group loss of $58.7m a disappointing result for 2008/09, the normalised result provides a pragmatic picture of the true underlying operational performance of the business of $12.4m. As predicted earlier in the year, TIO's overall financial performance was impacted by global financial recession and the weakness of the investment market. Australian equities continued the weakness of the previous year to fall by almost 40 per cent before recovering over May and June to finish 20 per cent down for the year. International equities performed similarly while global listed property fared somewhat worse. Even the normally safe haven of bonds proved turbulent. While the impact on TIO was significant it was moderated by a decision to maintain an underweight position in equities and a transition to more defence overall asset allocation. TIO remains in a sound capital position well positioned to both withstand the investment challenges and to capitalise on investment opportunities. NT House was sold realising a profit over the carrying value. The sale completed a process of diversification of our investment portfolio instigated by the Board in 2007 and has achieved the Board's objective of decreasing the concentration of risk and increasing the capital adequacy of the insurance business. 2008/09 Budget Normalised Profit $m (before tax) Actual Insurance -17.31 11.3 -3.6 Banking -0.22 2.8 2.7 MAC -41.13 4.8 13.3 GROUP -58.66 18.9 12.4 TIO seeks to continually evolve its understanding of risk and the management of its risk profile. During the year TIO has undertaken Dynamic Financial Analysis (DFA) modelling which aims to identify the key sources of volatility in the Insurance and MAC businesses and assist in understanding how these can be managed and mitigated through the use of varying capital and reinsurance strategies. 3.2 Customers Customers remain at the core of TIO's operations and much of the work undertaken this year has been to focus our efforts on better meeting customer needs within the context of a more competitive environment and a global investment downturn. Global economic events saw unprecedented failures in banking around the world. In Australia, the Federal Government responded with an economic stimulus package as well as 8