The year ended 30 June 2001 was undoubtedly one of the most important in the Association's 81 year history.
Members of the Association and members of what is now NRMA Insurance Group Limited (“NIGL”) overwhelmingly supported the demutualisation of NRMA Insurance Limited in 2000. As a result:
- NIGL listed on the Stock Exchange
- members received on average $2000 in shares in NIGL
- the Association continued as a mutual, and
- the Association received more than $350 million in cash and NIGL shares.
The funds received from the demutualisation will allow us to upgrade our equipment and systems. Meanwhile, these new funds have been invested in a diversified long-term share portfolio as well as some strategic investments associated with our motoring focus, such as NIGL and ERG. Our total investment portfolio has a market value in excess of $650 million.
There have been some teething problems between NIGL and the Association since demutualisation. This is to be expected as we go our separate ways. Those matters that have not been settled are being mediated.
For its part, NIGL has announced plans to change its name to Insurance Australia Group Limited. We welcome this proposal since, among other things, it will further differentiate us from our former subsidiary.
So, with the Association now dramatically recapitalised, we continue – proudly – as Australia 's largest mutual. We have around 2 million private members who account for 2.5 million separate subscriptions.
Financially, we are very healthy and, as expected, we recorded an operating loss of $13.9 million. This is $5.5 million better than1999-2000. Operating losses can be expected to continue for the next several years. Going forward, income and capital gains from our investment portfolio are likely to exceed operating losses. This has been the case in the past and, given our new financial resources, is likely to be so in the future.
With Board support and participation, CEO Rob Carter and his team have devised a 10 year strategy designed to realise the Association's vision of being the world's best motoring and travel association. Central to this vision is the importance of our services to members, starting with our legendary emergency Road Service.
It is important to understand that the Association remains a mutual, as it has been since its establishment in 1920. The election for our Board is the fifth largest election in Australia and the largest non-government election in the country. The bi-annual Board election is held this year and there are six positions to be filled. I encourage all members to participate by voting for their preferred candidates.
We have a new Code of Conduct, unanimously adopted by the Board, to which all Directors must adhere. Any Director failing to meet its high standards will be referred to mediation. It is hoped this will help redress the more than $1 million spent over the past year on litigation initiated by former Directors.
Members show great loyalty to this fine organisation. From year to year members have the opportunity to renew their membership or let it lapse. Membership of the NRMA is entirely voluntary. It is clear that members feel “it pays to belong”, because so few drop out when their renewal is due. It is for the Board and management to ensure that loyalty is justified and well rewarded.
Our staff have been outstanding through 2000-2001. They have met the challenge of a busy year with an unstinting commitment to members' needs and expectations. At the heart of our organisation our Road Service remains world-class and reasonably priced. On behalf of the Board I record our thanks to all NRMA staff – from patrols and their support, through the branch staff to senior management – for their dedication and commitment.