ACC702 Managerial Accounting Assignment Help

ACC702 Managerial Accounting Assignment Help

ACC702 Managerial Accounting Assignment Help

Introduction

The main purpose of the report is to compare the companies of same industry and to make a conclusion on the basis of the research done from the information taken from the financial statements and other sources and four companies are taken which are:

AMP Insurance Ltd.: The insurance company is 165 years old and committed to help the customers to control their finances and manage the future finances. It is a leading wealth management company of Australia and New Zealand.

IAG insurance: A company engaged in general insurance and investing activities which include personal insurance, commercial insurance in Australia, New Zealand and few other countries.

QBE Insurance: It is the part of QBE Insurance Group and it is one of the top 20 general insurance companies which are headquartered in Sydney.

Suncorp Insurance: It is a provider of general insurance, banking, investment banking and other services in Australia and New Zealand. The company incorporated in the year 2010.

Suncorp Insurance

Accounting Systems and Performance Measurement systems

1)AMP Insurance

 

AMP Insurance

Mission

Its mission is to create a better tomorrow for everyone.

Vision

To become the number one choice for the people because the company give the customers the freedom and flexibility to have a look after their financial wellbeing which is best suited for them (AMP, 2015).

Corporate goals

The main goal of the company is to help people identify and achieve their goals by providing technology and experiences.

Review of Chairman and CEO’s statements

The company’s independent chairman is Simon McKeon and according to his statement in the annual report of 2015, the team AMP have witnesses the strength and resilience of AMP and also the company maintained its growth momentum in the current challenging markets. The company expanded its presence offshore with the collaboration of the leading companies around the world like China Life in China and Mitsubishi in Japan. The company aimed at providing good returns for the shareholders.

 

The CEO of the company is Craig Miller and according to him the company is putting its customers at the heart of everything the company do.

 

Listing of chairman, and Executives

Independent Chairman- Simon McKeon: He is specialist in the mergers and acquisitions, raising fund and giving strategic advices. He is also the Australian of the year 2011and awarded an honorary Doctorate of Public Health by La Trobe University.

Chief Executive Officer- Craig Meller: He was appointed in AMP in Jan 2014 and prior to that he was a director of AMP Life limited from October 2007.

Independent Director- Patricia Akopaintz: She has more than 25 years of experience in the management and consultancy industry in Australia and overseas.

Independent Director:Catherine Brenner: She has experience in Investment banking and she is also a corporate lawyer.

Independent Director- Brian Clark: Has 10 years of experience in senior executive roles played in Vodafone (AMP, 2015)

Remuneration of Management Team

Remuneration in the company is designed by matching the interests and value of the employees. The remuneration should be such which attract the best talents to be with the company. The remuneration strategy and policies are influenced by the People and Remuneration Committee (PRC). The PRC takes advice from the advisors when needed.

For executives, there is a fixed remuneration which includes base salary, superannuation and any other salary sacrificed benefits and variable incentives are short term and long term rewards based on company’s performance.

The fixed remuneration for the executives other than CEO makes up 23% of their total remuneration and the rest of it is based on the performance of the company.

For CEO, 19% of the total remuneration is fixed and the rest is based on the performance of the company

The managing director is not included in the remuneration but they share profits of the company (AMP, 2015)

Remuneration Details

Contents of remuneration

CEO

Executives

Short term incentives

38% of the total remuneration

42% of the total remuneration

Long term incentives

43% of the total remuneration

35% of the total remuneration

Fixed salary

19% of the total remuneration

23% of the total remuneration

Package

Linked to the performance of the company

Linked to the performance of the company

Share prices in last 5 years

Average share prices of shares of AMP in last five years (2012-2016)

2012

2013

2014

2015

2016

4 AUD

5 AUD

4.40 AUD

5.50 AUD

5.40 AUD

Share prices in last 5 years

Share price chart of AMP Ltd. (Financialtimes, 2015)

The company AMP Ltd. seen continues growth in recent years. It is successful in meeting the challenges of the environment of industry and delivered growth by controlling their costs and making the capital position strong. The company’s share price was highest in the months of January- July 2015 in the past 5 years (Preliminary 2015 AMP Ltd Earnings Presentation – Final 2016, 2016).

According to (Financialtimes, 2015), the revenues of the company fall 18.8% but the company continue to grow in income. The company dividends per share and EPS increased with the time and there is a positive trend in payment of dividends. The Earning Per share and Dividend per share are with the par with the average of the industry in the same.

Share price chart of AMP Ltd

Rise in the Dividend per share (AMP, 2015)

$828 million was given AMP to the shareholders as dividends from the profits of the company. The strategy of the company is to gain no. 1 position in the industry by expanding the business. For this, company has achieved new systems which help the company in taking the feedbacks from the customer and providing the services to satisfy the customer. New call centre technology has also been launched.

Company has been successful in reducing the costs by delivering the services on time and within the budget. Also, company launched new services for the investors and expanded business offshore too. AMP pleased its shareholders with a $1.1 billion profit in the year 2016 which is 7% more than the last year but the shares of AMP are at the same level like previous year (Financialtimes, 2015).

2) QBE Insurance

 

QBE Insurance

Mission

To bring operational excellence in the company in the coming years.

Vision

To be the company in the industry which builds the strongest partnership with the customers (Qbe, 2016)

Review of Chairman

According to the Chairman of QBE, The current competition in the industry is fierce but from his perspective QBE is well equipped with the services which are able to succeed in this competitive industry. QBE is well equipped with the product lines and functions in various places to cater various segments. QBE has delivered its promises well and is looking for a better future.

Listing of chairman, and Executives

Chairman-W. Marston Becker: appointed as an independent and non executive director of QBE in 2013 and as a chairman in 2014. He has over 35 years of experience in general insurance, investment banking and private equity.

Deputy Chairman-John M Green: He was appointed in QEB as non executive director in 2010 and he has experience of working as partners in major law firms.

Independent non executive Director- Stephen Fitzgerald: He has an experience of many years in the major corporations like Goldman Sachs and PineBridge Investments.

Independent non executive Director: Margaret Leung: She was appointed in QBE in 2013. She is also a member of the audit committee.

Independent Director- John Neal: Has 30 years of experience in insurance industry (QBE, 2016).

Remuneration of Management Team

  • Remuneration in the company is set according to the remuneration framework and is aligned with the performance of the company.
  • There are fixed remuneration and short term and long incentives for the employees.
  • The fixed remuneration of CEO increased with effect from April 2015. Also the fixed income increased for David Duclos and Colin Fagen. It is same for rest of the members.
  • There is a non executive director fees which increased by 3%.

 

Remuneration Details

Contents of remuneration

CEO

Executives

Short term incentives

30.8% of the total remuneration

36.4% of the total remuneration

Long term incentives

46.1% of the total remuneration

27.2% of the total remuneration

Fixed salary

23.1% of the total remuneration

36.4% of the total remuneration

Package

Linked to the performance of the company

Linked to the performance of the company

Share prices in last 5 years

Average share prices of shares of QBE in last five years (2012-2016)

2012

2013

2014

2015

2016

13.8 AUD

11.8 AUD

13.8 AUD

10.3 AUD

10.7 AUD

Share prices in last 5 years

5 year performance of QBE Australia (FTmarkets, 2016)

The highest share price of QBE Insurance Group Ltd. is during July 2013 to Jan 2014. The revenue feel from year on year as the costs selling cost, administrative cost and general costs have increased which brought a decrease of 7.41% of decrease in the net income (Interim 2015 QBE Insurance Group Ltd Earnings Call - Final 2015, 2015).

5 year performance of QBE Australia

Revenue and Net income of QBE Insurance Group (FTmarkets, 2016)

It is seen that the dividend per share of the company increased from 20.36% and earnings per share fell but while comparing the 5 years figures, the DPS and EPS are at par with the industry average. In 2015, the company successfully improved the short term performance for future. The company is looking towards the profitable growth            of the company to have increased earnings and dividends. The company not only performed in Australia but also in emerging markets like Hong Kong, Miami. The period of 2015 was a transition period for the company where the company improved its performance and returned to growth. The targets for 2016 are for better business and to invest in the strategic growth and operational excellence. The company knows and expect 2016 to be a more challenging year for the business so the business has planned its activities to meet the challenges (QBE, 2016).

3) IAG (Insurance Australia Group)

 

IAG

Purpose

To become more sustainable business over a long term and to give better returns to the investors.

Vision

To be the most loved and successful insurer in Asia Pacific

Review of Chairman

According to the Chairman of IBA, the company is aimed to provide security to millions of people across Australia, New Zealand and many other parts. IAG is ready to move into a digital future by taking up the challenges and grabbing the opportunities. The company also provides a handsome return to its investors and the company is ready to be the most successful in the industry (“IAG gets approval to expand insurance offering", 2014).

Listing of chairman, and Executives

Chairman- Brian Schwartz: appointed as a director in 2005 and became chairman in 2010. He has experience of working in groups like Westfield, Scentre group and Brambles limited.

Managing Director and CEO- Michael Wilkins: He was appointed in IAG as MD and CEO in 2008.

Deputy Chairman and Independent Non-Executive Director- Elizabeth Bryan: She has an experience of major corporations like Virgin Australia Holdings Limited, Westpac Banking Corporation and Caltex Australia Limited.

Independent non executive Director:Yasmin Allen: appointed as a director of IAG in 2004 and also a member of People and Remuneration Committee and Audit Committee...

Independent Director- Alison Deans: Has experience of over 20 years in general management (IAG, 2016)

Remuneration of Management Team

  • Remuneration is decided in the company by considering the performance of the business and the shareholders returns.
  • Fixed remuneration of the company is competitive with the increase of 1.5% to the executives.
  • Average short term incentives payment was 61% of the maximum achievable for the group CEO and executives.
  • The Long term incentives were vested in full (IAG, 2016)

Remuneration Details

Contents of remuneration

CEO

Executives

Short term incentives

$4000

37.5% of the total remuneration

Long term incentives

$14000

37.5% of the total remuneration

Fixed salary

Incresaed by 1.5% in FY 15 and other benefits are consistant. $2000

25% of the total remuneration

Package

$12000

Linked to the performance of the company

Average share prices of shares of IAG Insurance in last five years (2012-2016)

2012

2013

2014

2015

2016

2.9 AUD

4.7 AUD

5.7 AUD

6.2 AUD

5.2 AUD

Share prices in last 5 years

 Share prices in last 5 years

Share Comparison Chart (FTmarkets, 2016)

It is clear from the share price chart of IAG that the share prices of the company were at peak during July 2014 to July 2015. The operational performance of the company is sound. The Profit After tax for the financial year was $830 million ("IAG gets approval to expand insurance offering", 2014).

The net income of the company fell 14.15% and the revenue increased. The earnings per share of the company fell and the Dividend per share also fell but the earning per share is above the industry average. It is clear from the share chart that the performance of the company fell as the share price fell from the year 2015 in 2016 (FTmarkets, 2016).

4) Suncorp

 

Suncorp Insurance

Purpose

To give easier, accessible and enjoyable life to the customers

Vision

To make the bright future of the community by providing big and bold ideas and healthy and happier lives for everyone (suncorpgroup, 2016).

Review of Chairman

According to the Chairman of Suncorp, it is a well capitalised and low risk company with a strong foundation and provides value to the customers, employee, shareholders and communities. The company declared a very positive result despite instability in economic environment.

Listing of chairman, and Executives

Chairman- Dr Ziggy Switkowski AO: appointed as a director in 2005 and became chairman in 2011. He held senior executive positions in the major industries.

Managing Director and CEO- Michael A Cameron: He has over 30 years of experience in finance and business.

Non- Executive Director- William J Barlett: He has over 35 years of experience in accounting.

Non executive Director: Audette E Excel AO: appointed as a director of Suncorp in 2012 and named as Australia’s 2016 Leading Philanthropist by Philanthropy Australia.

Non Executive Director- sally Herman: Is a director of Suncorp group since 2015 and also a member of Audit committee (suncorpgroup, 2016).

Remuneration of Management Team

Remuneration in the company follows a ‘pay for performance’ culture. The remuneration of executives are linked to the objectives of the company

Fixed remuneration of the company includes base salary and superannuation and increased for all the executives.

Short term incentives reduced from 125% of the fixed remuneration to 100%

The Long term incentives remained the same i.e. 100% of fixed remuneration (FTmarkets, Profile Suncorp, 2016)

Remuneration Details

Contents of remuneration

CEO

Executives

Short term incentives

30% of the total remuneration

33% of the total remuneration

Long term incentives

41% of the total remuneration

34% of the total remuneration

Fixed salary

29% of the total remuneration

33% of the total remuneration

Package

Linked to the performance of the company

Linked to the performance of the company

Share prices in last 5 years

Average share prices of shares of Suncorp insurance in last five years (2012-2016)

2012

2013

2014

2015

2016

7.8 AUD

11.5 AUD

13.7 AUD

12.9 AUD

12.9 AUD

Share prices in last 5 years

Share Comparison Chart (FTmarkets, Profile Suncorp, 2016)

It is clear from the above chart containing the share price information of Suncorp in the last 5 years that the share prices of the company is highest during Oct 2014 to Oct 2015 (FTmarkets, Profile Suncorp, 2016)

The Net Profit after Tax of the company is $624 million and this was achieved when there are fluctuations in the market and other economical factors. The total Shareholders Returns of the group was negative 0.9% for the year ended 30 June 2016 but this is better than the peer group which gave results which are negative 6.5% (Suncorp reports decline in profit", 2013).

The revenue of the company fell 7.39%. Both the Dividend Per share and Earnings per share dropped. DPS was 10.53% and EPS was 8.50% (FTmarkets, Profile Suncorp, 2016)

Summary and Comparison of Findings

It is found that all the four companies discussed above are among the well established and major insurance companies of Australia. While going through the research done on the performance of these companies it is found that, IAG disappointed its shareholders in the financial year ending June 16’ with its weak performance compared to other companies whereas AMP pleased its shareholders with a good amount of profit. IAG is also planning to expand its business to other markets like New Zealand which enhance its share in the market of insurance in the world ("IAG says it is positive about the insurance market in New Zealand", 2012). The board of Directors are well equipped and are well paid in order to retain them. All the companies are trying their best to achieve their mission and vision but the DPS and EPS of AMP increased while in QBE DPS increased and EPS dropped. Both of them fell in IAG and in Suncorp too both of them dropped. The net profit margins of the four companies are as follows:

Company

AMP Insurance

Suncorp Group

IAG Insurance

QEB Insurance

Net profit margin

16.36%

6.75%

4.27%

3.29%

AMP is the best insurance company as it delivers the highest Net Profit Margin among all i.e. 16.36% and also the increased DPS and EPS.

Conclusion

It can be concluded that AMP is the best insurance company in the year ended 2011 on the basis of the shareholder return it is providing to the shareholders and QBE has also performed well by providing more DPS before but the earning per share fell compared to previous year. Due to the merger with the major insurance company AXA, this has probably become the largest insurance provider in Australia.

References 

"IAG gets approval to expand insurance offering", 2014, Global Banking News (GBN), .

"IAG says it is positive about the insurance market in New Zealand", 2012, Global Banking News (GBN), .

"QBE Insurance reports loss", 2014, Global Banking News (GBN), .

"Suncorp reports decline in profit", 2013, Global Banking News (GBN), .

Amp (2015). amp annual report. Retrieved 08 29, 2016, from https://www.amp.com.au/content/dam/amp/digitalhub/common/Documents/global/amp_annual_report.pdf

Financial Times (2015). Financials. Retrieved 08 29, 2016, from http://markets.ft.com/data/equities/tearsheet/financials?s=AMP:ASX

Financial Times (2016). Charts. Retrieved 08 29, 2016, from http://markets.ft.com/data/equities/tearsheet/charts?s=QBE:ASX

Financial Times (2016). financials IAG. Retrieved 08 29, 2016, from http://markets.ft.com/data/equities/tearsheet/financials?s=IAG:ASX

Financial Times (2016). Profile Suncorp. Retrieved 08 29, 2016, from http://markets.ft.com/data/equities/tearsheet/profile?s=SUN:ASX

Iag  (2016). results and reports. Retrieved 08 29, 2016, from http://www.iag.com.au/results-and-reports

Interim 2015 QBE Insurance Group Ltd Earnings Call - Final 2015, , CQ-Roll Call, Inc.

Preliminary 2015 AMP Ltd Earnings Presentation - Final 2016, , CQ-Roll Call, Inc.

Qbe (2016). About . Retrieved 08 29, 2016, from https://www.qbe.com.au/about

Qbe (2016). Report presentations. Retrieved 08 29, 2016, from https://www.group.qbe.com/investor-centre/reports-presentations

Suncorpgroup (2016). Financial Performance management. Retrieved 08 29, 2016, from http://www.suncorpgroup.com.au/annual-review-2016/performance/financial-performance.html