Insignia Financial Ltd is an
Australia
Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
n
financial services
Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...
company that originated with the
Independent Order of Odd Fellows
The Independent Order of Odd Fellows (IOOF) is a non-political and non-sectarian international fraternal order of Odd Fellowship. It was founded in 1819 by Thomas Wildey in Baltimore, Maryland, United States. Evolving from the Order of Odd ...
and was formerly known as IOOF Holdings Ltd. It provides clients with a range of financial services including
financial advice
A financial adviser or financial advisor is a professional who provides financial services to clients based on their financial situation. In many countries, financial advisors must complete specific training and be registered with a regulatory ...
,
investment management
Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institut ...
,
superannuation
A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments ...
and estate and trustee services. It is listed on the
ASX 200
The S&P/ASX 200 index is a market-capitalization weighted and float-adjusted stock market index of stocks listed on the Australian Securities Exchange. The index is maintained by Standard & Poor's and is considered the benchmark for Austr ...
.
IOOF was founded in 1846 as a
friendly society
A friendly society (sometimes called a benefit society, mutual aid society, benevolent society, fraternal organization or ROSCA) is a mutual association for the purposes of insurance, pensions, savings or cooperative banking. It is a mutual org ...
which was formed to provide aid to its members throughout times of sickness and unemployment, as many friendly societies were formed before the widespread introduction of government welfare packages. The society funded these activities through joining fees and re-occurring membership fees.
[Stevenson, M. (2009). Independent Order of Oddfellows. Retrieved 21 April 2021, from https://collections.museumsvictoria.com.au/articles/2783]
The company has since grown, with offices located in
Sydney
Sydney ( ) is the capital city of the state of New South Wales, and the most populous city in both Australia and Oceania. Located on Australia's east coast, the metropolis surrounds Sydney Harbour and extends about towards the Blue Mountain ...
,
Melbourne
Melbourne ( ; Boonwurrung/Woiwurrung: ''Narrm'' or ''Naarm'') is the capital and most populous city of the Australian state of Victoria, and the second-most populous city in both Australia and Oceania. Its name generally refers to a met ...
,
Perth
Perth is the capital and largest city of the Australian state of Western Australia. It is the fourth most populous city in Australia and Oceania, with a population of 2.1 million (80% of the state) living in Greater Perth in 2020. Perth is ...
,
Adelaide
Adelaide ( ) is the capital city of South Australia, the state's largest city and the fifth-most populous city in Australia. "Adelaide" may refer to either Greater Adelaide (including the Adelaide Hills) or the Adelaide city centre. The dem ...
,
Brisbane
Brisbane ( ) is the capital and most populous city of the states and territories of Australia, Australian state of Queensland, and the list of cities in Australia by population, third-most populous city in Australia and Oceania, with a populati ...
and
Hobart
Hobart ( ; Nuennonne/Palawa kani: ''nipaluna'') is the capital and most populous city of the Australian island state of Tasmania. Home to almost half of all Tasmanians, it is the least-populated Australian state capital city, and second-small ...
. It currently services approximately two million customers and employs some 5000 employees.
[About IOOF. (2021). Retrieved 23 April 2021, from https://www.ioof.com.au/about-us/about-ioof]
IOOF Holdings Ltd changed its name to Insignia Financial Ltd. at the 25 November 2021 AGM.
History
IOOF originated as a friendly society with roots leading back to
England
England is a country that is part of the United Kingdom. It shares land borders with Wales to its west and Scotland to its north. The Irish Sea lies northwest and the Celtic Sea to the southwest. It is separated from continental Europe b ...
and the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
.
[Blainey, G. (1991). Odd Fellows (1st ed.). Sydney: ]Allen & Unwin
George Allen & Unwin was a British publishing company formed in 1911 when Sir Stanley Unwin purchased a controlling interest in George Allen & Co. It went on to become one of the leading publishers of the twentieth century and to establish an ...
. Weinbren, D., & James, B. (2005). Getting a Grip: The Roles of Friendly Societies in Australia and Britain Reappraised. Labour History, (88), 87-103. doi:10.2307/27516038 The majority of these societies were formed before government intervened to provide financial welfare where — for a small membership fee — members would receive financial aid and protection for themselves and their family in times of sickness, death and old age.
These friendly societies were particularly socially-oriented holding regular meetings which provided entertainment. This emerged particularly in rural and mining communities.
Originally named the 'Independent Order of Odd Fellows', IOOF was brought to
Australia
Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
and established in
Sydney
Sydney ( ) is the capital city of the state of New South Wales, and the most populous city in both Australia and Oceania. Located on Australia's east coast, the metropolis surrounds Sydney Harbour and extends about towards the Blue Mountain ...
in 1836, but was quickly abolished by the disruption to society caused by the
gold rush
A gold rush or gold fever is a discovery of gold—sometimes accompanied by other precious metals and rare-earth minerals—that brings an onrush of miners seeking their fortune. Major gold rushes took place in the 19th century in Australia, New Z ...
in
Victoria
Victoria most commonly refers to:
* Victoria (Australia), a state of the Commonwealth of Australia
* Victoria, British Columbia, provincial capital of British Columbia, Canada
* Victoria (mythology), Roman goddess of Victory
* Victoria, Seychelle ...
. As such, IOOF flourished in Victoria and almost fully disappeared in Sydney.
Friendly Societies had their greatest expansion in Australia during the late 19th and early 20th century.
[Weinbren, D., & James, B. (2005). Getting a Grip: The Roles of Friendly Societies in Australia and Britain Reappraised. Labour History, (88), 87-103. doi:10.2307/27516038] In fact, a paper published by the
Liverpool University Press
Liverpool University Press (LUP), founded in 1899, is the third oldest university press in England after Oxford University Press and Cambridge University Press. As the press of the University of Liverpool, it specialises in modern languages, li ...
in 1909 showed that an estimate of approximately 500,000 people were members of a friendly society. This means that around 46% of Australians were benefitting from the services provided by the societies out of a population of 4.8 million.
Prospects also had to sign a form stating that they and their wife were of good health. If the prospects passed all the requirements, local lodge members would vote on the suitability of the prospect by placing either a black or white ball into a ballot box. If more than 3 black balls were placed in the box, the prospect was rejected. This process was hence named '
blackballing
Blackballing is a rejection in a traditional form of secret ballot, where a white ball or ballot constitutes a vote in support and a black ball signifies opposition. The system is typically used where an organization's rules provide that one or t ...
'.
During the latter part of the 20th century, the trend towards memberships in friendly societies deteriorated. Friendly societies lost over 30% of their total assets in four years between 1996 and 2000. As government assistance became more prevalent and tax benefits once given to the societies' insurance bond dwindled, it became more economically beneficial to become a customer rather than a member.
On 14 June 2002 IOOF
demutualised
Demutualization is the process by which a customer-owned mutual organization (''mutual'') or co-operative changes legal form to a joint stock company. It is sometimes called stocking or privatization. As part of the demutualization process, memb ...
and distributed their accumulated wealth across its approximately 70,000 members. The catalyst that started the process of IOOF's demutualisation was the demutualisation of the Over 50s mutual friendly society in June 2001, in which 96.5 per cent of their 45,000 members voted in favour of the move. CEO at the time Rob Turner stated that the "strong affirmative vote at Over 50s will mean an early review of the option for the society.". When taken to a vote, 95% of IOOF's members voted in favour of the move to demutualise where each member was given a fixed entitlement of 140 shares as well as additional shares based on the type, number, size and duration of the policies they held. At the time of demutualization, IOOF was valued at $135m to $158m.
On 4 December 2003, IOOF
floated on the
Australian Securities Exchange
Australian Securities Exchange Ltd or ASX, is an Australian public company that operates Australia's primary securities exchange, the Australian Securities Exchange (sometimes referred to outside of Australia as, or confused within Australia as ...
with an issue price of $3.15. The move to float on the ASX resulted in excess of $41.8 million being raised.
[Taylor, M. (2003). IOOF starts listed life on a high , Money Management. Retrieved 13 May 2021, from https://www.moneymanagement.com.au/news/financial-planning/ioof-starts-listed-life-high] IOOF began trading on the ASX on 5 December 2003, opening at a price of $3.80 – signifying a 64 per cent premium over the original issue price.
IOOF Holdings Ltd changed its name to Insignia Financial Ltd. at the 25 November 2021 AGM.
Acquisitions
ANZ's Pensions and Investment Business
On 3 February 2020, IOOF announced the successful acquisition of
ANZ's OnePath Pensions and Investments Business. IOOF originally announced the plan to acquire OnePath in on 17 October 2017 with the company entering a
trading halt
A trading halt occurs in the U.S. when a stock exchange stops trading on a specific security for a certain time period. The halt, which can happen a few times a day per security if FINRA deems it, usually lasts for one hour, but is not limited to ...
pending the capital raising of $450m through institutional placements.
MLC
In August 2020, announced it had agreed terms to purchase wealth management business
MLC from the
National Australia Bank
National Australia Bank (abbreviated NAB, branded nab) is one of the four largest financial institutions in Australia (colloquially referred to as "The Big Four") in terms of market capitalisation, earnings and customers. NAB was ranked 21st-la ...
. This deal to buy its 134-year-old rival would see IOOF's funds under management (FUM) to increase from $202 billion to a headline figure of $510 billion. It would make IOOF the largest provider of financial advice in Australia.
[Grieve, C. (2020). IOOF put on notice to prove merit of MLC takeover. Retrieved 11 May 2021, from https://www.smh.com.au/business/banking-and-finance/ioof-put-on-notice-to-prove-merit-of-mlc-takeover-20201125-p56hvs.html] The transaction was completed on 31 May 2021.
IOOF Foundation
In order to recognise the long history of providing support to the community as a friendly society, throughout the process of IOOF's Demutualisation in 2002, the company formed the IOOF Foundation. The foundation provides grants that aid Australian not-for-profit organisations primarily working with disadvantaged families, youth and aged care. According to the ACNC, which the IOOF foundation registered with on 7 May 2014, IOOF gives priority to aged care initiatives that commit to improving the quality of life for individuals and their families that struggle to be self-sufficient by providing long-term solutions that help families move out of poverty or avoid a crisis. IOOF also supports disadvantaged children and youth by funding educational initiatives that help break the cycle of disadvantage. The foundation will favour applicants that address the need for education and training for young people.
As of 30 June 2021, the IOOF Foundation has donated over $16 million to community organisations since inception.
Criticism
MLC Takeover
The announcement that IOOF would purchase MLC resulted in a negative reaction from most shareholders which saw the share price fall from a pre-announcement trading halt on a price of $4.63 to a close of $3.83, a 20% decline in 3 months. At the annual general meeting, almost one-fifth of shareholders voted against IOOF's remuneration report amidst ongoing concerns from investors.
Shareholders were not unhappy with the acquisition of MLC, rather with the price that IOOF agreed to pay.
[Vickovic, A., & Baird, L. (2020). IOOF fends off AGM challenge, rejects critics. Retrieved 20 March 2021, from https://www.afr.com/companies/financial-services/you-butchered-the-share-price-ioof-rocked-by-protest-votes-20201125-p56hpk] The CEO of IOOF, Renato Mota, rejected the accusation that IOOF overpaid, stating: 'By any measure, we did not overpay'.
However, even notable analyst
Morningstar described the MLC acquisition as ‘high risk’ in terms of risk imposed on the company's balance sheet, but stated that they are confident that these issues can be dealt with in the appropriate manner.
2018 Disqualification of Top Executives
In December 2018, the
Australian Prudential Regulation Authority
The Australian Prudential Regulation Authority (APRA) is a statutory authority of the Australian Government and the prudential regulator of the Australian financial services industry. APRA was established on 1 July 1998 in response to the recomm ...
(APRA) moved to disqualify five top IOOF executives accusing them of breaching the Superannuation Industry Supervision (SIS) Act and failing to meet prudential standards. According to APRA, IOOF allegedly made an accounting error which resulted in members not receiving the full amount they were entitled. Instead of compensating the members using company resources, IOOF was accused of using member's reserves from their superannuation fund to compensate the members. In light of the publication of the scandal, the value of IOOF fell $900 million with its share price falling 35.4 per cent, to a nine-year low.
In September 2019, APRA failed to disqualify the executives with a 300-page judgement failing to prove the case which was subsequently ruled out by
Justice Jayne Jagot.
[Chau, D. (2019). APRA fails to disqualify IOOF executives, in case full of 'systematic weakness'. Retrieved 20 April 2021, from https://www.abc.net.au/news/2019-09-20/ioof-wins-case-against-apra/11532498#:~:text=Sport,APRA%20fails%20to%20disqualify%20IOOF%20executives,case%20full%20of%20'systematic%20weakness'
] As a result of the inquiry from APRA and the subsequent crash in the share price, IOOF released a statement to the ASX announcing that the current CEO at the time, Chris Kelaher, would leave the company following his return from leave.
See also
*
Independent Order of Odd Fellows
The Independent Order of Odd Fellows (IOOF) is a non-political and non-sectarian international fraternal order of Odd Fellowship. It was founded in 1819 by Thomas Wildey in Baltimore, Maryland, United States. Evolving from the Order of Odd ...
References
External links
*
{{S&P/ASX 200
Financial services companies of Australia
Companies based in Melbourne
Independent Order of Odd Fellows
Companies listed on the Australian Securities Exchange
Financial services companies established in 1846
Australian companies established in 1846