INSURANCE AUSTRALIA PROFIT FALLS ON UK WRITE-OFFS
Source: The Star, 23 August 2012
Insurance Australia Group (IAG), the country's top car and home insurer, reported 17.2% fall in annual net profit after writing off the entire goodwill of its UK operations. While IAG is expanding into Asia, it is reviewing its ailing UK operations after multiple write-offs. The company posted a second-half profit of A$119 million compared with A$89 million a year ago. Its annual net profit fell to A$207 million from A$250 million last year. Insurance margin stood at 10.6% and IAG expects its margins to improve to 11%-13% this year. The company announced a dividend of 12 cents. IAG also announced the review of the UK operations, which contributes 7% of its gross written premium in May. A review of IAG's past disclosures showed the UK business had a net tangible value of A$250 million with goodwill and intangible making up around A$300 million. IAG has spent about A$1.7 billion since 2006 to expand in the UK, but has taken multiple charges to cover additional claim.