Nrma Float: Why It'll Pay To Belong

Sydney Morning Herald

Thursday February 17, 2000

By ANNE LAMPE and MORGAN MELLISH

The NRMA's 1.8 million members will receive between $400 and $4,240 worth of shares if the insurance and road service group goes ahead with its plan to demutualise and float on the stock exchange.

The plan, which members will vote on in April, will further increase share ownership throughout the country but it will not be as big a windfall as AMP's demutualisation.

The average NRMA member with 10 years' road service membership and two insurance policies will receive shares worth between $1,775 and $2,222, far less than the typical $5,000 worth of shares received by AMP policyholders two years ago.

The NRMA's information memo says that if the insurance arm is valued at $3.2 billion when it floats, one-year road service members with no insurance policies will receive $400 worth of shares, rising to $1,469 if they have been members for 50 years.

The figures rise for years of membership and with each insurance policy held. At the highest end using a $4 billion valuation those with 50 years of membership and five policies will receive $4,240 worth of shares.

The NRMA estimates that it has members or policyholders in nearly every home in NSW and the ACT and it will begin the huge mail-out on March 10.

Members will then have about a month before voting either by proxy or by attending the meeting on April 19.

The NRMA is planning an advertising blitz aimed at ensuring that members vote. But it has been warned by the Supreme Court not to do ``push-polling" and that it must present a ``yes" and ``no" case.

``Members can feel confident that the information memorandum they receive is fair and balanced," the NRMA president, Mr Nicholas Whitlam, said. ``The document includes a full statement of the reasons for and against the proposal."

He declined to say whether he thought members would approve the proposal but said the last board election which returned his pro-demutualisation team to power indicated that many members wanted the option.

The latest proposal which is costing $107 million is much more complex than the previous demutualisation attempt in 1994 which was aborted after a challenge by the dissident directors Mr Richard Talbot and Ms Dawn Fraser.

Mr Talbot has also challenged the present proposal but the Supreme Court has given the go-ahead for the vote.

Under the plan, NRMA Insurance the largest general insurer in the country will be listed on the stock exchange while the road services organisation, NRMA Ltd, will remain mutually owned.

The road services group will receive 10 per cent of the shares in the float and there will still be strong links between it and the listed insurance company.

``This will enable the association to focus on what it ought to focus on, which is being the best motoring club in the world," Mr Whitlam said.

To put aside concerns about profiteering by the road services group, the NRMA has guaranteed that road service membership fees now $46 annually will not be increased (apart from the GST) until June 2001. After that, fee rises would be linked to inflation.

Shares will only be issued to members and policyholders but fund managers and the public will be able to buy them through a facility similar to that used by the AMP.

NRMA directors, as members and policy holders, will receive shares between a minimum of $800 worth (Mr Mark Coyne) up to a maximum of about $6,000 worth for Mr Whitlam.

© 2000 Sydney Morning Herald

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