Australasia’s largest general insurer IAG is forecasting better earnings in the year ahead, with profit margins likely to be between 10.5-12.5% of its premium income.
That compares to the margin of 7% revealed with the company’s annual results released yesterday, for the year to June 30.
Insurance Australia Group (IAG) achieved a net profit of $A91 million for the year to June 30, half of the $A181 it achieved in the same time last year.
Annual insurance profits fell from $A515 million to $A493 million.
IAG chief executive Michael Wilkins said the result was impacted by weakened by the impact of the Melbourne and Perth storms in March, which generated almost 75,000 claims and a net cost of $A210 million in the second half.
However, there was strong underlying performance improvement in the home markets of Australia and New Zealand, which generated close to 90% of gross written premium (GWP).
Collectively, those businesses delivered an insurance margin of 13.2%, up from 6.8% last year.
“Our focus on underwriting discipline, risk selection, cost control and the customer experience is delivering results,” said Mr Wilkins.
New Zealand operations, where IAG offers insurance under the NZI and State Insurance brands, saw insurance profit rise to $A131 million and GWP rise by 3.6% in NZ dollar terms.
IAG has 35% of the general insurance market in New Zealand.
“Our New Zealand business has produced a significantly improved result this year with an insurance margin of 14.7% (compared to nothing last year),” said Mr Wilkens.
“This was largely driven by a combination of rate increases across all portfolios, improved underwriting disciplines, claim initiatives and tight cost management, aided by more benign weather conditions.”
IAG’s focus for the year ahead was to build on the performance of its largest businesses in Australia and New Zealand, restore profitability in the UK and pursue growth opportunities in chosen markets, particularly Asia, he said.
Georgina Bond
Fri, 27 Aug 2010