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IAG seeks new CIO for $11.9 billion in assets

  • 7 February, 2012
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John Stratton, who oversees $11.9 billion as chief investment officer of Insurance Australia Group (IAG), will leave the company in late April to join Brit Insurance in a similar role.

Stratton will be the London-based chief investment officer of Brit Insurance and report to chief executive Mark Cloutier, according to an IAG spokesman and a Brit Insurance statement.

Stratton has been CIO at Sydney-based IAG since 2003. IAG is assessing investment professionals within the company and at other businesses as it seeks to replace Stratton, the spokesman says.

Stratton was responsible for portfolios that invested IAG’s insurance reserves and excess operational capital. Both provided a return of 5.9 per cent for the financial year ending July 2011 but invested different amounts of capital in fixed income, cash, stocks and alternative assets, the company’s report to investors, issued on August 25, 2011, shows.

Ninety-nine per cent of IAG’s $8.3 billion in so-called technical reserves, or funds used to back outstanding insurance liabilities, was invested in fixed interest and cash securities. They helped earn income of $489 million. The remaining 1 per cent was invested in alternative assets.

Fixed income and cash securities were 58.9 per cent of the $3.6 billion of so-called shareholders’ funds, which represent shareholder equity not used in day-to-day business. The securities helped earn $213 million of income. Australian stocks were 18.1 per cent of the portfolio and international stocks 5.4 per cent. Alternative assets were 17.6 per cent.

Stratton oversaw an increase in IAG’s investments in “growth” assets. Since July 2009, the proportion of its investments in stocks and alternative assets grew from less than 22 per cent to 41.1 per cent.

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