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IAG reports jump in NZ profit, has optimistic outlook

BUSINESSDESK: Insurance Australia Group's New Zealand subsidiary, the nation's largest general insurer, reports a $A103 million annual profit, reflecting a 27% increase in gross written premiums, and has reiterated a willingness to enter the workplace insurance market if it is deregulated.

The subsidiary of Australia's largest insurance company, which has the State Insurance, AMI and NZI brands, has been the target of protests from disgruntled policyholders in Christchurch, but its results released in Australia shows a healthy revival in earnings.

Profit in the 12 months ended June 30 surged from $A3 million a year earlier and is a turnaround from a $A87 million loss in the second half of the previous year.

New Zealand gross written premiums were $A1.2 billion, a 24% rise in local currency terms.

The insurer is predicting growth in gross written premiums in 2013 from a combination of increased premiums and a full-year contribution of the AMI business it bought.

AMI will be earnings accretive in its first full year of operation, the company says.

Overall, the New Zealand business produced an insurance margin of 10.4% for the full year and 13% in the second half.

Rate increases and the contribution of AMI produced a net earned premium of 40% in the second half of the 2012 financial year.

The AMI integration is well advanced and will produce cost synergies of $30 million in two years, the company says. The government kept the Christchurch earthquake liabilities to facilitate the sale of AMI to IAG after the Christchurch earthquakes.

IAG has 55% of the home contents market in New Zealand and 60% of the motor insurance business.

"Significant rate increases have been implemented to recover substantially higher reinsurance costs," the company says.

IAG New Zealand contributes 13% of the earnings of the Australian parent, which today reported a 17% decline in full-year profit to $A207 million on writedowns of its UK operations.

IAG says it is working with the Earthquake Commission to resolve issues to get solutions for Christchurch residents.

The company acknowledges that customers are finding it more difficult to afford insurance with a trebling of EQC levies and it says it is working on underwriting initiatives to address this.

It reiterates that it is interested in entering the workplace insurance market if the government opens ACC to competition.

If revised schemes to introduce choice to the work account and extending the accredited employers programme facilitated true competition IAG will consider entering the business.

The shares last trade at $A3.84 on the ASX and have jumped 29% in the past six months.


Comments and questions

"IAG says it is working with the Earthquake Commission to resolve issues to get solutions for Christchurch residents" - what a TUI ad in the making! IAG/State are working at a snail's pace. My house was red stickered (meaning I had a $10K fine if I entered the property as it was't safe) in Feb 2011. Since that time I have been paying a mortgage, rates and insurance on my home, plus paying rent. I am still owed a large sum by IAG/State for my contents and am awaiting my offer on my home so that I know what my options are. Every time I email my claims manager, I get the standard response "I'll get back to you". Funny that - I'm still waiting and have been for almost 19 months. IAG/State say that they are being held up by my land (by EQC) and EQC say that this shouldn't be holding up things .... they each blame each other and I see it as just another stalling tactic so they can both keep their money in the bank and drive me closer to the brink.

IAG your 100% premium increase for our home insurance has made it quite clear we live in a high cost, high risk neighborhood.
But the share the love and do the job your getting paid for.
16 months and still waiting for a payout.


Its not hard to report profits when you double premiums and not pay out?It's a disgrace, get more people on the job and get your clients in Ch-Ch sorted out, we are still waiting????

This profit is an obscenity in light of earthquake victims worse than shabby treatment to date. So the actuaries and underwriters gamble hasn't paid off and now IAG and their associated brands refuse to honour the deal. One day I hope we have a government with the guts to penalise these shysters, but with Eqc govt are part of the problem also.

The insurance company profits continue to rise even after major liabilities for claims, by way of massive premium hikes to customers. The clear facts are that any profit made after claims and operating costs are actually excess customer premiums.
Insurance companies have been collecting tens of billions over many decades and when it's time to hand over the cash due to a disaster they start doubling premiums for people not even affected.
Surely what they should be doing is liquidating their assets to pay for increased reinsurance from overseas.
What I will be doing know is hunt around for the cheapest premiums constantly, damn the loyalty.

What loyalty mate? Are you from a different planet or zomething? By the way NOW you actually spell without a K you KNOW? You know what I mean now?

Take you prozac! Sheesh! Maybe it was a typo.

Anyone outside Christchurch who is still with any IAG insurer (NZI, State, AMI, ASB etc) needs to have their head examined! You may have a cheaper premium but talk to anyone who has had to make a large claim - they are by far the worst insurer to deal with. I guess you get what you pay for. You have been warned...

Bullshxt. These guys are the WORST. Thy are the Great Pretenders. Nail them.

First of all pay up all of these outstanding claims in Chch, YOU B*STARDS, than start counting your losses. You should be futterly ashamed of coming up with these so called "results"! You do make my blood boil!!!!!!!!!!!!!!!!!!!! And I'm sure I'm one of many here in Canterbury that feel this come you are all acting so sheepish???Start speaking up for yourselves because Gerry B(ullshit) will only give ewes lip service. I will certainly remember your company name when you are going- going- gone down the tubes and have my own celebration of VICTORY!!!!!!!!!!! have started a survey of Quake-hit Cantabrians rating Insurance companies. It doesnt surprise me that IAG/State have been rated the worst to date by the "real people that matter" & have raked in a "huge increase in profit". Stands to reason, the huge profit is made off the increases they have imposed on them & by not paying out to those that need/deserve to be! Suffice to say, I wont be giving my business to IAG/State any longer niether will my family & others we can influence/inform if this is a leading example of how they treat people during/after a national disaster in our country. "SHAMEFUL" Hit them where it hurts New Zealanders, "in there pockets $'s", dont have to live in Canterbury to withdraw our business & take it elsewhere!

PS: Interesting to see in the survey that Lumley's, Tower & AMI-Sothern Response is leading to date in progress.....

Yes nz be warned. If you are ever as unfortunate as us to have a major disaster, IAG is not who you want to be insured with. Learn from how they are treating us and move while you can. As above post says there are some insurers who are doing a better job. Go to them. IAG are a disgrace.

Make note NZ they are after ACC as well....and if their total inability to respond appropriately to our earthquakes is anything to go by Fight to keep ACC intact.
I have JUST got a case manager. House, retaining walls all broken....disgusting Neo Capitalist Charlatans

Stuff your love IAG, what absolute usery and profiteering off the back of the misery of those affected by the biggest natural disaster to hit NZ. You are disgusting, devoid of any ethics, or moral integrity.

Go back to "your lucky country" if you are only here to collect huge premiums and you refuse to pay out when the Sh... hits the fan!
I would classify your bunch worse than bank robbers because in your case there seems to be no punishment if & when you get caught out and you are stealing directly of Joe Citizen. Wake up Gerry B, start earning your "salary" and whip this bunch into shape, yesterday rather than tomorrow! Enough is enough, shape up or ship out!

NOW it's good to KNOW that someone is spell checking my comments.
Continuing on, I have 10 policies with state(IAG).The other week I received a renewal notice for one policy stating that my premium was increasing 85%. A few days later I got a phone call from IAG, how strange. The woman wanted to let me know that my premium increased by 85% but it wasn't their fault. Then I thought, so what the HELL ARE YOU RINGING ME FOR?? Maybe she was going to give me a discount for having 10 policies!?!! No, I'm afraid she didn't do that. She said that EQC levy went up 200%, the reinsurance levy for them went up so they had to recover it from Joe Public. So I told her what I posted in my previous comment #5. She didn't seem phased and that was end of conversation.
As the renewals come in this year one by one I will be saying goodbye to IAG.

Profiteering scum! IAG must be rubbing their hands with glee over this excuse to hike premiums whilst making EQC payout the bulk of the settlements. The moment the market opens up I'll be dumping IAG as will everyone I know. Their name is mud and policies aren't worth the paper they're written on.

Take a look at the Insurance Watch survey, that will give you some idea of IAG's future prospects. Acted like dishonest, underhanded cheats in Queensland, same behaviour in Christchurch. They got slammed by the Queensland judicical review (which they refused to cooperate with) for poor customer service, withholding of information and failing to settle claims. Sounds very familiar!

Both EQC and Insurance companies will have high profits as they are not paying out their claims to their customers..and the Government is working hard to ruin people life supporting the insurance businesses...on the positive not is good to see people working well together to make personal interests....inspiring for the future