IAG Full Year Profits Slump Financial Schools Reviews

IAG Full Year Profits Slump

Written by Robert White on August 24, 2010 – 6:45 pm

Australian insurance major IAG has had its bottom line severely hit by storms that have raged in Melbourne and Perth, as well as losses incurred at its UK division.

Australia’s largest general insurance company as measured by written premiums said its net profit for the year ending June 30th fell precipitously year on year. Net profit dropped from $181 million last year, to just under half, or $91 million this year, after the insurer’s UK unit generated a substantial loss, and unprecedented weather in Melbourne and Perth drove up natural peril claim costs.

IAG had previously issued guidance warning of the poor result late last month, when it said it expected its full year insurance margin, a closely watched measure of the profitability of its underwriting business was expected to fall to 7 per cent.

The insurer absorbed a pre tax charged $367 million incurred by its UK unit, after a profound rise in claims at its UK motor insurance business, in line with previous guidance.

Revenue at the insurer fell to $9.38 billion, and the company says it will pay a final dividend of 4.5 cents a share, down from 6 cents a share in the previous year, which was in line with guidance.

The insurer is now forecasting gross written premium growth of 3 to 5 per cent in the current financial, and is maintaining its guidance for insurance margin during the 2011 financial year of between 10.5 to 12.5 per cent.

“Our focus for FY11 is to build on the strong performance we have seen from our largest businesses in Australia and New Zealand and to restore profitability in the UK, while continuing to pursue growth opportunities in our chosen markets, particularly Asia,” the group’s chief executive Michael Wilkins said.

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