This morning, Insurance Australia Group (ASX: IAG) revealed its financial results for the six month period to 31 December 2017.
Insurance Australia Group is one of Australia’s biggest insurers with brands such as NRMA, CGU, SGIO, SGIC, WFI and Swann Insurance.
The results below are comparing against the six month period to 31 December 2016. Here are some of the main points:
- Gross written premiums (GWP) up 0.6% to $5.83 billion
- Insurance profit increased by 30.1% to $743 million
- Profit up 23.5% to $551 million
- Profit per share up 33.4% to 26.66 cents
- Dividend up 7.7% to 14 cents per share
Insurance Australia Group said that the result was driven by rate increases which addressed claims inflation, notably in motor. There was ongoing momentum in commercial rates whilst overall there were steady volumes.
The underlying profit margin increased because of reduced pressure on motor profitability, a reversion to the normal Australian large commercial losses and net natural peril costs were $78 million below the allowance.
The New Zealand business was strong with gross written premium growth of 9.5%.
The Asian segment contributed $15 million of earnings compared to $2 million last year. The Thailand subsidiary returned to profit whilst there were higher profits in Malaysia and India.
Insurance Australia Group CEO Peter Harmer said “This is an encouraging result for IAG. It reflects solid like-for-like gross written premium growth of nearly 4%, primarily through rate increases in commercial and consumer, along with some volume growth in motor”.
Management provided guidance for the rest of FY18 as ‘low single digit’ gross written premium growth and an improvement in underlying insurance profit margins. The business expects to release around 3% of reserves assuming the continuation of the current benign inflationary environment.
We have raised our full year reported margin guidance to 15.5% to 17.5%. – Harmer
The dividend is expected to be paid on the 29th of March 2018.
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