IAG grows insurance profit by 11% in 2018 FY

Insurance Australia Group (IAG) has increased insurance profit by 10.8 percent year on year to A$1.41 billion ($1.02 billion) in its 2018 financial year on lower expenses.

Gross written premium grew 1.8 percent year on year to A$11.65 billion over the period. Net claims expense, commission expense and underwriting expense fell between the 2018 and 2017 financial years, helping to push underwriting profit up to A$1.18 billion from A$1.04 billion.

“This is a solid result for IAG with an encouraging improved underlying performance, in line with our expectations,” said CEO Peter Harmer.

“We’ve met the guidance we provided last year, slightly exceeding the reported margin component thanks to favourable natural perils and higher reserve releases than anticipated,” Harmer added.

IAG has delivered on its strategic review to assess options for its Asian businesses, with the company announcing in June sale agreements for its operations in Thailand, Indonesia and Vietnam. An after-tax profit of at least A$200 million is expected to be identified in IAG’s FY19 results from the combined transactions, after allowance for related costs and foreign currency translation reserve effects.

For the 2019 financial year, IAG anticipates further rate increases across short tail personal and commercial classes and gross written premium growth of between 2 percent and 4 percent. The modest expected volume effect - personal lines growth (notably motor) is expected to be offset by a slight decline in commercial (further remediation activity).

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