NZ growth outpaces Australia for IAG

WELLINGTON: Australian insurance giant IAG’s premium growth from its New Zealand operations was nearly twice as brisk as in its home market in the six months ended December, although down 42% from a year earlier.

IAG, which claims about 45% of New Zealand’s insurance market through brands including AMI, State and Lumley, reported 5.5% growth in New Zealand premiums in the latest six months, down from the 9.5% growth in the yearearlier six months in New Zealand dollars.

A slight foreign exchange benefit, compared with a drag in the previous first half, meant the growth in Australian dollars was 6.6%, to

$A1.268 billion, up from 5.5% to $A1.19 billion a year earlier.

In Australia, gross written premiums (GWP) grew at a more sedate 3.4%.

The New Zealand profit margin rose from 14.2% in the previous first half to 24.9%.

That compares with the Australian profit margin of 10.7%, down from 11.4%.

IAG managing director Peter Harmer said that the New Zealand business ‘‘continued to perform well, with solid

GWP growth supported by sustained margins’’.

The margin improvement was largely driven by higher premiums and higher commercial rates were partially offset by lower volumes, the company said.

About 59% of gross written premiums were consumer policies and the remainder business.

About 43% were sold directly, 41% through a broker or agent and 16% came from its ‘‘affinity’’ banking partners, ASB, BNZ, Westpac and the Cooperative Bank.

The IAG group reported an overall 9.3% drop in net profit for the latest six months, its result hit by net natural peril claims coming in $A110 million above its allowance, largely because of a serious hailstorm in Sydney in December.

IAG is forecasting total gross written premium growth of 254% for the year ending June, compared with 4.1% in the first half and a reported insurance margin of 16%18% compared with 13.7% in the first half.

That is assuming net losses from natural perils for the year total $A608 million, reserve releases of about 2% and no material movement in foreign exchange rates or investment markets.

That would mean claims from natural perils coming in at no more than $A300 million in the second half. — BusinessDesk