AMI underpins 40% lift in IAG's New Zealand premium revenue

Insurance Australia Group's $380 million purchase of the beleaguered AMI Insurance helped boost the firm's New Zealand premium revenue by 40 percent in its first half.

The New Zealand unit, the country's biggest underwriter across the NZI, State and AMI bands, lifted profit to $A53 million in the six months ended December 31 from $A34 million a year earlier, with a 40 percent increase in gross written premium (GWP) revenue to A$751 million.

The bulk of the premium increase came from the AMI acquisition, and excluding that business, GWP rose 8.4 percent.

"In New Zealand, the underlying performance of the business has remained strong with an improved reported insurance margin of 8.3 percent," chief executive Mike Wilkins says in a statement. "The acquisition of AMI has cemented our market-leading position in the country and its integration is tracking to plan."

Profitability in New Zealand is expected to stay strong, with significant price increases expected to offset rising costs, lower costs achieved from better integration of AMI, disciplined underwriting and containing costs on claims, IAG says.

The Australian parent more than tripled net profit to $A461 million with a 14 percent gain in GWP. It expects GWP annual growth of between 9.5 percent and 11.5 percent and an insurance margin from ongoing operations of between 12.5 percent and 14.5 percent. That margin forecast is up from the 11 percent to 13 percent range previously forecast.

The Sydney insurer's board declared an interim dividend of 11 Australian cents per share, more than twice the 5 cents a year earlier. The return is payable on April 3 with a record date of March 6.

The shares rose 3 percent to $A5.58 on the ASX today and have gained 13 percent this year.

(BusinessDesk)

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2 Comments & Questions

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Meantime IAG and the other major insurers continue their bullying strategy of grinding us Christchurch policyholders into the dirt, over our earthquake claims, knowing full well that many of us will eventually give up the fight and accept the mere pittances they are offering. Vero state that they are not going to do anything about the reinstatement about our severely damaged home until 2015, but if we will accept a (grossly inadequate) cash settlement we can call it quits! I am all for insurance companies seeking to maximise their returns to shareholders, but if I was IAG I would not be boasting about their record profits in the hearing of their Christchurch policy holders!

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I absolutely agree BLT - I'm also from Christchurch and have been living away from my broken home for two years now. I keep hearing from IAG that I'm a priority because of my unliveable home status - yeah right! Whilst IAG are raking in record profits, they are up to their old games of deny, delay, defend. Can't wait to get paid out so I can search for another insurer who will meet it's commitments in a timely manner.

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